By Neha Kalra, afaqs!, New Delhi, September 15, 2009
Section: News Category: Marketing
The premium hatchback is trying to close the gap between premium-ness and affordability. afaqs! takes a dig...
The Indian consumer has always been obsessed with the sedan - the big car – probably because it is traditionally associated with status, power and prestige. On the other hand, the hatchback was always considered to be the sedan's poor cousin. Therefore, while the sedan is the desirable car, buying a hatch usually implies a compromise.
As in India, in other developing markets as well, such as South America, Africa and some parts of Asia, car manufacturers have had to roll out sedan versions of their smaller vehicles. But not in developed markets, such as the UK, the US and even Japan, where a premium hatchback is associated with as much luxury and status as a sedan.
It might be a little premature to pass a verdict, but it does seem that India is coming of age, where its perception of the hatchback is concerned. Twenty-four years after the first hatchback hit the Indian roads - Maruti 800 was priced at only Rs 48,000 - the hatchback is slowly turning out to be a premium possession.
The new member in this segment - Honda Jazz - is trying to change the rules of the game. The base model of the car is priced (ex-showroom) close to Rs 7 lakh, much more expensive than many an entry-level sedan.
In comparison, a base model of Hyundai Accent comes at an ex-showroom price tag of Rs 4.8 lakh. Similarly, Maruti Swift Dzire - the sedan version of Swift, a premium hatchback - is available for Rs 4.6 lakh.
In 2005, Maruti Swift tried to turn around the hatchback segment, which had seen entrants such as the Hyundai Getz and Ford Fusion. Its looks, space and speed were comparable to a sedan.
The most visible difference between the hatch and the saloon is the boot space, which makes the latter a big car.
Also, a closer look at the growth of both, the hatchback and sedan, segments reveals that considering time to be a constant factor, the ratio of expansion of both the segments (in terms of prices) has been the same.
However, in terms of functionality, the premium hatchback is trying to match the sedan in all respects, be it power, speed, performance or even space.
Auto expert and editor, Autocar India, Hormazd Sorabjee says, "Today, there are hatches that offer as much boot space and leg space as a saloon." Maruti Swift, a hatchback, and its sedan version, Maruti Swift Dzire are based on the same platform. The price difference between the two is only Rs 60,000. Interestingly, the hatchback, in this case, sells more than the sedan. If 9,000 Swift hatchbacks are sold in a month, Dzire sells around 6,000 units.
Now, Honda Siel has tried a similar route. The new Honda Jazz is based on the same platform as the Honda City, the entry-level sedan from the company. However, Honda Siel has gone a step ahead and sells the hatchback at the same price as that of the sedan. Honda Siel raised the price of Honda City, just prior to the launch of Honda Jazz, and introduced Jazz for the same price.
"In fact, in most South East Asian markets where both Jazz and City exist, Jazz is priced higher than City," discloses Anita Sharma, general manager, marketing communications, Honda Siel Cars.
According to Sorabjee, more than functionality, what differentiates the hatch from a saloon is the status attached with each one. "Moving upwards from the bottom of a pyramid, the premium hatch would be a form of upgrade, but will continue to be a downgrade from the sedan segment," he adds.
The belief is that the sedan will continue to be associated with status and prestige, though the hatch could walk with a little more pride.
An ex-advertising professional and now a brand consultant, Cajetan Vaz rightly puts it. "It's almost like reverse snobbery. A old hatchback owner can show off his premium hatchback with pride. And for a sedan owner, a premium hatch is to make a statement that he chooses to ride a premium hatch, as he has been able to get convenience coupled with style."
For functional products, it is about value for money. But for products that are both functional and lifestyle, it is the other way round. And it seems that the premium hatchback is trying to close the gap between affordability and premium-ness, personality and style.
Jagdeep Kapoor, chairman and managing director, Samsika Marketing Consultants, opines, "There is a misconception amongst automobile companies that consumers look for value for price, when truly, that is not the case." He adds, "Indians have become world-class consumers. They don't mind indulging in products that become a lifestyle statement. Just like cosmetics, jewellery and attire, cars also belong to this category."
So, the premium hatchback segment is slowly trying to find its space in a price-conscious market like India.
Shashank Srivastava, chief general manager, marketing, Maruti Suzuki says, "There is certainly a market for this segment, but I strongly feel that India is not prepared for it yet. So, the growth of the premium hatchback in India might not be as fast as in developed markets."
People from the automobile industry concur that Jazz and the likes cannot be targeted at first-time buyers. And, the number and percentage of first-time buyers is on the rise - according to SIAM reports, in 2007, 38 per cent of car buyers were first-timers, in 2008, it was 44 per cent.
The opportunity for the Honda Jazz and the likes lies in the sedan buyers. But Honda needs to grapple with the fact that the A3 (sedan) segment, at 18 per cent for five years (swinging between 18-20 per cent, precisely), is not yet saturated. The prospective buyers continue to be the hatchback segment buyers who would consider the sedan as a natural upgradation, from an aspirational perspective. The percentage of this set of people is as high as about 80 per cent.
Sharma of Honda explains that the premium hatchback "is definitely targeted at the cream of the society. It is the youth, who, if given the money to buy a sedan, would prefer to opt for a hatch - probably the sons of the owners of the BMWs and Honda Accords." Considering that the company has got almost 50 per cent of its bookings from its existing Honda customers, it seems that Honda couldn't have made a safer bet.
However, the success of Jazz and Swift could open up a new market for the hatchback in the country - the premium one. It all depends on how the Jazz does, actually.
Gaurav Gupta, director, marketing, General Motors (GM) India, concludes, "If Honda is able to do a good job at whatever it is at, challenger players will get to have a piggyback ride on the success of established brands, such as the former."
Section: News Category: Marketing
The premium hatchback is trying to close the gap between premium-ness and affordability. afaqs! takes a dig...
The Indian consumer has always been obsessed with the sedan - the big car – probably because it is traditionally associated with status, power and prestige. On the other hand, the hatchback was always considered to be the sedan's poor cousin. Therefore, while the sedan is the desirable car, buying a hatch usually implies a compromise.
As in India, in other developing markets as well, such as South America, Africa and some parts of Asia, car manufacturers have had to roll out sedan versions of their smaller vehicles. But not in developed markets, such as the UK, the US and even Japan, where a premium hatchback is associated with as much luxury and status as a sedan.
It might be a little premature to pass a verdict, but it does seem that India is coming of age, where its perception of the hatchback is concerned. Twenty-four years after the first hatchback hit the Indian roads - Maruti 800 was priced at only Rs 48,000 - the hatchback is slowly turning out to be a premium possession.
The new member in this segment - Honda Jazz - is trying to change the rules of the game. The base model of the car is priced (ex-showroom) close to Rs 7 lakh, much more expensive than many an entry-level sedan.
In comparison, a base model of Hyundai Accent comes at an ex-showroom price tag of Rs 4.8 lakh. Similarly, Maruti Swift Dzire - the sedan version of Swift, a premium hatchback - is available for Rs 4.6 lakh.
In 2005, Maruti Swift tried to turn around the hatchback segment, which had seen entrants such as the Hyundai Getz and Ford Fusion. Its looks, space and speed were comparable to a sedan.
Also, a closer look at the growth of both, the hatchback and sedan, segments reveals that considering time to be a constant factor, the ratio of expansion of both the segments (in terms of prices) has been the same.
However, in terms of functionality, the premium hatchback is trying to match the sedan in all respects, be it power, speed, performance or even space.
Auto expert and editor, Autocar India, Hormazd Sorabjee says, "Today, there are hatches that offer as much boot space and leg space as a saloon." Maruti Swift, a hatchback, and its sedan version, Maruti Swift Dzire are based on the same platform. The price difference between the two is only Rs 60,000. Interestingly, the hatchback, in this case, sells more than the sedan. If 9,000 Swift hatchbacks are sold in a month, Dzire sells around 6,000 units.
Now, Honda Siel has tried a similar route. The new Honda Jazz is based on the same platform as the Honda City, the entry-level sedan from the company. However, Honda Siel has gone a step ahead and sells the hatchback at the same price as that of the sedan. Honda Siel raised the price of Honda City, just prior to the launch of Honda Jazz, and introduced Jazz for the same price.
"In fact, in most South East Asian markets where both Jazz and City exist, Jazz is priced higher than City," discloses Anita Sharma, general manager, marketing communications, Honda Siel Cars.
According to Sorabjee, more than functionality, what differentiates the hatch from a saloon is the status attached with each one. "Moving upwards from the bottom of a pyramid, the premium hatch would be a form of upgrade, but will continue to be a downgrade from the sedan segment," he adds.
The belief is that the sedan will continue to be associated with status and prestige, though the hatch could walk with a little more pride.
An ex-advertising professional and now a brand consultant, Cajetan Vaz rightly puts it. "It's almost like reverse snobbery. A old hatchback owner can show off his premium hatchback with pride. And for a sedan owner, a premium hatch is to make a statement that he chooses to ride a premium hatch, as he has been able to get convenience coupled with style."
For functional products, it is about value for money. But for products that are both functional and lifestyle, it is the other way round. And it seems that the premium hatchback is trying to close the gap between affordability and premium-ness, personality and style.
Jagdeep Kapoor, chairman and managing director, Samsika Marketing Consultants, opines, "There is a misconception amongst automobile companies that consumers look for value for price, when truly, that is not the case." He adds, "Indians have become world-class consumers. They don't mind indulging in products that become a lifestyle statement. Just like cosmetics, jewellery and attire, cars also belong to this category."
So, the premium hatchback segment is slowly trying to find its space in a price-conscious market like India.
Shashank Srivastava, chief general manager, marketing, Maruti Suzuki says, "There is certainly a market for this segment, but I strongly feel that India is not prepared for it yet. So, the growth of the premium hatchback in India might not be as fast as in developed markets."
People from the automobile industry concur that Jazz and the likes cannot be targeted at first-time buyers. And, the number and percentage of first-time buyers is on the rise - according to SIAM reports, in 2007, 38 per cent of car buyers were first-timers, in 2008, it was 44 per cent.
The opportunity for the Honda Jazz and the likes lies in the sedan buyers. But Honda needs to grapple with the fact that the A3 (sedan) segment, at 18 per cent for five years (swinging between 18-20 per cent, precisely), is not yet saturated. The prospective buyers continue to be the hatchback segment buyers who would consider the sedan as a natural upgradation, from an aspirational perspective. The percentage of this set of people is as high as about 80 per cent.
Sharma of Honda explains that the premium hatchback "is definitely targeted at the cream of the society. It is the youth, who, if given the money to buy a sedan, would prefer to opt for a hatch - probably the sons of the owners of the BMWs and Honda Accords." Considering that the company has got almost 50 per cent of its bookings from its existing Honda customers, it seems that Honda couldn't have made a safer bet.
However, the success of Jazz and Swift could open up a new market for the hatchback in the country - the premium one. It all depends on how the Jazz does, actually.
Gaurav Gupta, director, marketing, General Motors (GM) India, concludes, "If Honda is able to do a good job at whatever it is at, challenger players will get to have a piggyback ride on the success of established brands, such as the former."
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