Two wheeler makers are more profitable than car makers in India despite having much cheaper unit prices. However, when it comes to launching new products successfully, car makers have been doing a better job than its two wheeler counterparts.
A study conducted by equity research firm CLSA analysed the model-wise sales performance of four and two wheeler companies in India since 2000. The luxury segments of both industries have been excluded since the dynamics are different.
While the performance of the top-4 car makers far exceeds the rest of the lineup, the front line two wheeler companies are closely packed. Leading car brands Maruti and Hyundai scored a success ration of 70% in new product introduction in the last 16 years compared to a ratio of 33-40% managed to top two wheeler makers.
The difference in performance comes despite two wheeler companies launching more products than four wheeler companies. Even the recent spurt in car sales is provided by new products such as Maruti Baleno, Vitara Brezza, Hyundai Creta, Toyota Innova Crysta and Mahindra KUV100. The old cars are being pushed with discounts.
The study categorized a product as successful based on garnering a market share of at least 10% in its sub-segment and sustaining it for 3-5 years from launch.