Auto Companies: New Launches For Enhanced Sales

Most of the car makers are reporting reduction in sales volumes this year due to prevailing high interest rate, low demand and high inflation rate in the country. As the customer preference is changing fast and as there are too many products getting launched this has made the car market very competitive.

The product life cycle of vehicles has reduced by half nowadays. Earlier, vehicles used to be in the market for seven to eight years, but now it stays in the market hardly for three to four years. The only way for the manufacturers to up their sales is through new launches. To be a front runner in this race the companies are also under pressure to come up with these launches.

The total sales of the companies are reducing due to reduction in sales of old vehicles. Automakers like M&M, Tata Motors, Maruti Suzuki, Renault, Nissan Motor and local units of Hyundai Motors in India have lined up for investment of more than Rs 10000 crore to develop and come up with new cars in the market.

Taking the example of Tata Motors, the total sales of the company during the month of May has plunged by 24% as compared to May 2013. The sales of Indica, Indica Vista, Indigo, Venture, and Ace Magic have reduced by almost 50% during May 2014, as compared to May 2013. To revive its sales, Tata Motors would be relying more on the new launches and may discontinue some of its popular cars that are currently in the market. Tata's Zest and Bolt are the two new vehicles which are ready to launch in the Indian market. In addition to this, Safari Storme, Tata Venture could be re-launched, whereas Nano Plus and Nano AMT (Automated manual Transmission) are also ready to be launched as they are going through test drives.

As the product life cycle is shrinking, companies will have to come up with new and better products to stay in the competition. There was a time when a new vehicle used to be in the market for eight to ten years, but now keeping the vehicles for two years is tough, this is because of changing preference of the consumers. But on the other side, as the companies will come up with new products frequently the cost are expected to rise. Therefore the return on investment will be the biggest area of concern for the companies. To have a control on the cost, companies would move towards modular platform, where enhancing the commissioning of parts will lead to delivering different models at lower cost.

On one side where the economy has started to show some signs of improvement, on the other side auto companies have started to invest to revamp its sales. This move we can say will be helpful to auto companies to uplift the sales in the coming months.