Kia Motors India’s new compact sports utility vehicle (SUV) Sonet garnered a good response, receiving more than 25,000 bookings. According to the Society of Indian Automobile Manufacturers (SIAM), the sub-four meter utility vehicle segment in India had average monthly sales of 32,906 in April-August last year.

In comparison, the 25,000 pre-bookings just for Sonet indicate strong customer response and portend heightened competition for existing products. “Competition is going to intensify. The product (Sonet) is highly rated (by customers and reviewers) and received 25,000 bookings in a lean period,” says an analyst on condition of anonymity.

Sonet competes with Maruti Suzuki India’s Brezza, Hyundai Motor India’s Venue, Mahindra & Mahindra’s (M&M) XUV300, Ford Ecosport, and Tata Motors’ Nexon. Of them Maruti Suzuki, Hyundai and M&M generate a large part of the compact SUV segment’s volumes and face greater competition.

“The Sonet could be an additional challenger to Maruti and M&M. This comes on the heels of the Hyundai Venue eating into Maruti’s share in the UV1 (utility vehicle) segment and Kia surpassing M&M to become the third largest player in the segment,” analysts at Motilal Oswal Financial Services Ltd said in a note.

Some say Sonet may undercut the demand for its group company’s vehicle Venue. “We believe the Sonet is likely to dent Hyundai Venue’s sales more than Brezza, given its similar pricing as well as similar engine options (1.2L, 1L petrol options vs 1.5L petrol option for Brezza),” analysts at Elara Securities (India) Pvt. Ltd said in a note. L is litre and indicates engine size.

Utility vehicles including Gypsy, Eritga, S-Cross, XL6 generated about 16% of Maruti’s domestic passenger vehicle sales last fiscal. While Brezza’s contribution to Maruti’s overall sales will be lower compared to total utility vehicles, the model generates sizable sales for the company.

Still, restrictions on public transport and consumers’ preference for personal transportation is holding Maruti in good stead. This is reflective in 25.6% rise in passenger cars sales last month. While entry level models saw strong growth, low inventories at dealers and upcoming festive season may lend support to near term sales.

“As per our channel checks, Maruti has bookings in excess of one month worth of production. This is partially due to lower production in the preceding months. Incentives have also turned materially lower. We expect this to offset the impact of higher commodity prices which would kick in from Q3,” analysts at PhillipCapital (India) Pvt. Ltd said in a note. Ends

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