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BW Businessworld

Will Nexon Go Uphill?

30 per cent jump in sales of utility vehicles in FY 16 to reach 7.6 lakh units

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Tata Motors has had successful launches back-to-back in the passenger vehicles market. Its small car, Tiago, is one of  the best sellers in its category, selling between 4,500-5,500 units per month. The home-grown auto major’s compact sedan, Tigor, is well received in the market too.

Tata Motors’ flirtation with the bigger sports utility  vehicle  (SUV) Hexa,  has so far had a modest market response and the company is ready to go whole hog into the segment now, with its upcoming model, Nexon. Nexon takes Tata Motors into the high-volume generating compact SUV segment.

The vehicle, which was teased recently, comes with new power trains, a 1.2L petrol engine from the Revotron series and a 1.5 L diesel engine from the Revotorq family, which are performance-oriented and offer higher fuel efficiency. Notwithstanding the high-power engine loaded into it, the road ahead may prove bumpy for the Nexon, as almost every carmaker has a flagship in the utility vehicle segment.

Maruti Suzuki and Hyundai continue to dominate the segment with their models, Vitara Brezza and Creta, both of which are doing exceptionally well. Both the carmakers sell around 10,000 units per month and command a respectable waiting period.  A prospective buyer for a Vitara Brezza, for instance, will have to wait a couple of months to be able to bring the vehicle home.

Now utility vehicle maker, Mahindra & Mahindra (M&M) has also announced plans of entering the sub four-meter segment after some not-so-successful small SUV launches. Considering M&M’s expertise in the utility vehicle segment and the news afloat of an imminent launch of an upgraded version of the top-selling Ford EcoSport utility vehicle, the space now becomes tepidly competitive.

A major challenge for the Tata Motors’ SUV will be to attract young car purchasers, the first-time owners of four-wheelers. Young motorists usually have a fascination for vehicles that are both sturdy and stylish. Even though Tata Motors has shed its image of  being the not-so-exciting budget carmaker, it is nosing its way into a crowded market space. The way it will market Nexon, will decide the fate of the car.  

Nexon winds its way into the market at a time when utility vehicle sales are growing rapidly, outpacing car sales many times over. According to the Society of Indian Automobile Manufacturers (SIAM), utility vehicle sales shot up by 30 per cent to 7,61,997 units in the last financial year, while passenger car sales grew at a modest 3.85 per cent to 2.1 million units. The trend is likely to persist in FY18 for utility vehicles, along with a good growth in car sales.

What could really give Nexon an edge, will be its price. With a competitive price, who knows, Nexon may be able to do a Tiago.