Global OEMs face challenges in local MPV segment

GM India announced recently that the Chevrolet Spin MPV, which was earlier confirmed for the domestic market, will not be launched now. Instead of launching the new MPV, the carmaker will now be introducing the Beat Activ soft-roader, based on the new-generation Beat hatchback that will also hit Indian shores later this year. Although the company says that the decision to shelve the Spin launch is largely based on changing customer preferences, formidable opposition from the likes of the Toyota Innova and the Maruti Ertiga and poor performance of the recent MPV launches by other manufacturers also seem to have a large bearing on the decision.

GM India's production-ready Spin MPV was displayed at Auto Expo 2016. Nevertheless, GM is not the sole OEM to have shelved its plans for an MPV in India. Hyundai Motor India, which had showcased the Hexa Space MPV (HND-7) at the 2012 Auto Expo, is believed to have put the project on hold and instead, is focusing on bringing the HND-14 concept-based compact SUV to production reality.

With global OEMs such as Chevrolet and Hyundai putting their MPV plans on hold, it seems that the overall appeal for the segment has fallen sharply. A testament to this is the poor performance of the models currently on sale in the segment in India compared to the level of success that compact SUVs have seen in recent times. There are a total of five offerings available in the MPV segment at the moment, starting with the entry-level Maruti Ertiga till the range-topping Toyota Innova Crysta.

Apart from these two models, none of the MPVs currently on sale have managed to catch the Indian buyer’s fancy. Other offerings in the segment include the Honda Mobilio, Renault Lodgy and Chevrolet Enjoy. Despite starting on a strong note, Honda’s Mobilio, which was launched in 2014, has seen a constant decline in sales and was also among the worst performers during FY 2015-16 with a decline of over 73%. Renault India’s Lodgy, which was launched in April last year, has also shared the Mobilio’s fate as sales fizzled out after the initial momentum. The Chevrolet Enjoy, which has largely been a vehicle for fleet owners, has only sold 31,784 units since its launch in April 2013.

The changing preferences of Indian buyers towards more feature-laden SUVs and crossovers along with the explosion of the compact SUV segment has pressurised volumes in the MPV segment. Of the 10 new mass market PVs that were launched in 2015-16, only one was an MPV (the Lodgy) while four compact SUV and crossovers hit the Indian markets during the fiscal. For an OEM, entering the booming compact SUV segment seems a much better bet than the not-so-promising MPV market. Furthermore, with most MPVs being diesel-engined, the rising uncertainty about the fuel in the country also puts a question mark on their growth prospects.