If Darwin loved cars...

IIPM, GURGAON

...he’d perhaps have a view similar to auto analyst Murad Ali Baig about the evolution of the Indian auto majors!

The world’s auto companies are flooding into the Indian market at such a dizzy speed that buyers are more confused. Buyers today can choose among about 40 different models with 200 options in petrol and diesel engines and trim levels.

Maruti, or rather Suzuki, commands half of India’s passenger car market dominating the small car segment with seven cars and four utility vehicles, but just a small share of the bigger cars. So the peppy new SX4 was recently launched to offer a bigger car. Customers are confident about Maruti’s wide network of service and spares and the company has wisely promoted this ASP.

Hyundai made a great success of their small Santro and changed public perceptions with their Shah Rukh Khan campaign that changed ugly into cute. They then did well with their Accent and even more spacious and powerful new Verna. However, they did not succeed in persuading higher income buyers to go for their bigger Elantra and Sonata brands.

Tata Motors on the other hand have done so well with a number of well priced models based on their 1405cc predominantly diesel engine. They offered outstanding warranty to overcome initial problems. They have now allied with Fiat in India to first make their excellent petrol Palio and later bring in larger models from Fiat’s big stable. But Fiat’s image badly needs refurbishing and this is taking time.

Mahindra & Mahindra’s Scorpio has succeeded in being a spacious and comfortable vehicle but it is not a car. So they have just launched a real car, the Logan that is a product of their new alliance with France’s biggest carmaker Renault.

Japan’s Honda has done brilliantly with their City and big Accord and with their new Civic that is positioned between them with high reputations for fuel efficiency and reliability needing little support from advertising and promotion. Honda’s main global rival, and Japan’s largest automaker, Toyota commands the personal utility vehicle segment with their very successful Innova, but it has a small presence with the Corolla and imported Camry.

GM now sources most of its products from their newly acquired Daewoo plantsin Korea from where we have their spacious Optra, the smaller Aveo and their new small Spark that evolved from the Daewoo Matiz. The U-VA is a shortened hatchback version of the Aveo positioned just above the Spark. None of these brands have strong associations in India so constant advertising and promotions are necessary to attract consumers.

Ford made India their base for a brand new Ikon platform and is doing the same for their slightly bigger Fiesta models that includes a semi sports Fusion. Ford is a strong brand but does not enjoy an image comparable to that of their Japanese rivals so needs brand and promotional support. The Skoda Octavia has also been a success story among bigger cars despite the fact that few buyers associated it with its parent company Volkswagen. Its strong image for solid cars with and economical diesel engines requires little support.

The luxury segment, dominated by the German brands, is growing fast. Mercedes Benz had been the first and they sold over 2,000 cars last year. Now BMW has set up a plant and Audi will soon follow suit. Among the imports are also a few exotic cars from Porsche, Lamborghini, Ferrari and others.

India’s car buyers are very savvy and mainly look for fuel efficiency, reliability, service and resale value. As affluence increases many buyers change their cars even before their first set of tyres need to be changed. The market is very volatile and new models are appearing every month to tempt them.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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