Honda Brio Another Made for India Car

I have written earlier on the effort made by multinationals in India on making products exclusively for Indian consumers. Honda Brio is new addition to that list; another notable recent addition would be Toyota Etios, again in the car segment. Brio is according to economic times the fourth new car to hit the Indian roads in the last ten days. This is in stark contrast to the pre-liberalization days when the choice use to be limited to either an Ambassador or a Fiat and Maruti 800 in the later days.

For both Honda and Toyota the new small cars are the cheapest cars in their stables, and both the companies are looking at them to drive volumes and reach out to tier II and tier III cities. But one does feel that it is a little too late, hope not too little though, given their reputation. Were they expecting that Indian's would line up for Corolla's and Cities. Though these models do sell and would keep selling, but would never be volume drivers. In that even the American auto makers (supposed to have lost their nimbleness to the Japanese) have had better offerings in the segment, in fact Figo has turned out to be a game changer for Ford in India. But then maybe they made an entry and the consumers will decide the winners.

Perhaps one more realization for the auto makers has been that maximum activity is in the 4-6 lakh segment and not the bottom of the market , which players like even Nano are finding it difficult to crack. So every serious player in the car market has a very strong offering in that bracket. The bottom line is that the choice for the consumer is increasing..........

Why is Nano not selling?

This question has been bogging me ever since I read the news that they have been able to sell only 500 odd Nanos for the month of November. This is a figure which has surprised many, including me given the fact that Nano is the cheapest car in the world. Nano had in fact brought India and the Indian automobile industry into highlight as no other event had dine earlier, there were worries that Indian roads will soon be full of Nanos and the already congested road infrastructure would fall apart . I myself has written a post earlier in how Nano is perhaps a car for the BOP consumer..

I tried speaking to a few others to understand the possible reasons for the low sales, I will just briefly list the possible reasons ,

Price on road is much higher than the initially 1 lakh tag and many consumer feel that they can always upgrade to a Alto by stretching a bit more.
Not being seen as a car , because of it's looks and the fact that it cannot be driven beyond a certain speed..
The fire incidents have only added to the perception of quality and safely issue with the car.
Inadequate credit facility to push the sales of the car, especially to be upgrade the two-wheeler owner to upgrade (he is the target consumer)
Maybe the car buyer in India has upgraded, they don’t want to buy a low-priced car and would want to start with the next level of cars.
The issue of low-price itself could be the one which is hampering the sales, as a car is seen as a status symbol and a low-priced car defeats that basic purpose of owning a car.
Even the issue of delayed deliveries may have added to the problems and many consumer have felt disheartened by the long waiting periods initially..

I might have left out some more reasons, but still find it very difficult to come to terms with the fact that in country of our size a product like Nano could not find more than 500 buyers, I think there is bound to be some thing is not getting covered, and perhaps in the coming days we will be able to understand the issue better...

Even Carl-Peter Forster, managing director and CEO, Tata Motors said “These are new ways of marketing the Nano. To be frank, we are learning as we do. We market a passenger car to customers that are either never there to dream of a passenger car or they couldn’t afford a passenger car. It’s a very different way of marketing. It means new channels for the dealers.”

Raining Cars in India

I have written earlier that cars and economic growth were connected, at least they were during the last fifty years , though now things are changing. But even then one can observe how the increasing prosperity in India is getting reflected in the type and number of cars which are plying on the roads today. Every month we find that the car sales touching a new record level in terms of numbers , and the only aberration perhaps would be the low sales figure of Nano in November, apart from that for almost every car company sales have been good..

The segment which saw maximum activity in the initial days of liberalization was the entry level, the 800's , Alto's and Santro's, but now the focus is slowly shifting to the next level which is defined by cars like Swift, i10, i20. And we have a lot of players who are looking at this segment which is just above the entry level. Players like Toyota and Honda have their new cars entering this segment and knowing both the companies and their reputation one can foresee the life of entrenched players like Maruti and Hyundai getting more and more difficult in the coming days and the consumer spoilt for choice. Toyota Etios is predicted to be a game changer in the segment ...

At one time a company like Maruti could afford to continue with the same model for more than two decades, but those are days which have gone and the marketer of today can hardly afford to relax, he has to respond and be on the treadmill of continuous improvement to just retain its place in the market...

Car Sales and Production Delays

Last few months have been really good for the car Industry, we have seen record sales happening(July saw a 38% growth). With India becoming the fastest growing automobile markets in the world, this is in the backdrop of the sales stagnating in the US market. The growth is fueled by the series of new models launched by car manufacturers, especially in the B segment of the market, demand from rural markets, and with the Indian market entering the beginning of the festive season I think the next few months are going to be even more exciting for the automobile industry. Most of us get into the serious shopping mode only during the festivals and companies also wait to launch best of their schemes during this period, or is it the other way round ...a chicken and egg situation!!!!

But what surprised me was the news that both Maruti & Hyundai will not be able to match the demand due to capacity constraints. It is a window of opportunity for the many other players in the market who have always been wanting to get that extra market share, but seeing it from the number one and number two car makers in India, seems strange, because this growth is something which has been happening for some time now and suddenly you do not have production to cater to the demand?? Loyalty for a brand is good thing to bank on , but how long will someone wait for a car , especially in an era where we have got used to the off-the-shelf availability across many categories.

And once a consumer switches and picks up a car from some other manufacturer , he may never give you another chance. I think Maruti & Hyundai need to watch out ...

Indian Car market morphing ???

Car market in India is going through rapid transformation, though the same can be said about many other sectors of the Indian economy, but then cars tend to attract more attention than others. In the last few months itself we have seen a slew of new launches by manufacturers, and the Indian consumer is spoilt for choice as he has never been before.

I will try to list the number of new cars which have been launched recently , starting with the obvious - Tata Nano which perhaps hogged most of the limelight, but then there were two new ones from Maruti Stable, Ritz and A-Star, and i20 from Hyundai. Honda Jazz and Fiat Grande Punto adding to the list in June. At the super premium end Land Cruiser by Toyota and Land Rover by Tata. One could also add Mahendra Xylo to the list . I personally have never seen these many launches in such a short period of time, so the scene is changing very rapidly, from the era of Ambassadors to Maruti 800 or Alto vs Santro to a more complex world....

One more observation which I have made is the sudden rise in interest among various car manufacturers to come out with alternate fuel (low-cost fuel) versions of various models. The LPG versions of various cars like Santro and Maruti WagonR, 800, spark make sense bu, but now we will soon have the option in premium cars also , like Toyota Corolla, SX4 , Skoda Octavia. Some food for thought on how Indian market differs , in the developed context maybe these would be seen as environment friendly and so on , but here it seen as option to reduce fuel cost.

One can see the various trends and changes in the car industry and obviously this is just the beginning ..............

Maruti Vs Hyundai Ads

I wanted to write on the Hyundai ad where it did a comparison of Maruti Suzuki's Ritz in the beginning of the month, but then somehow it slipped out of my mind, but now with Maruti reacting to Hyundai's ad by coming up with a comparative ad of A Star Vs i10 a few days back forced me to comment on it. link

Competititors reacting to each other's ad seems to be a futile exercise, because the focus of these ads is not the consumer, but a competitor and all you are trying do is to counter whatever was said in the earlier ad . A waste of resources and energy , which does not help in anyway the decision making process of buying a car.

Infact buying a car in India, especially at the entry level tends to be more involved and long drawn decision than in the developed context. For many of us it still means a substantial investment and the information we seek is much higher. Does this sort of mud-slinging contest of ads help in anyway the consumer wanting to buy a car? It may help massage the ego of a few in the companies but ....

This sort of reactive and comparative ads is not something which is new, Pepsi Vs Coke, Colgate Vs Pepsodent or the more recent Horlicks Vs Complan, and even for Hyundai and Maruti this is not new....

Buying Cars Made Easy at Maruti Suzuki

Was checking out the web page of Maruti Suzuki Limited when I saw the new feature which they have added to help people wanting to buy a car. Might have been there for some time ...



The feature helps one see all the cars in the portfolio and compare it with their requirement, and details can be got by clicking on each car.I have always found the Maruti Suzuki site to be more user friendly than the others.

Though this is not a new feature it was on the Toyota site at least 4-5 years back, though today they show all thier offerings in a different way, thought earlier one was much better...

"Made for India" Tag 1

"Made for India" is increasingly becoming a coveted tag these days. This is a far cry from the early days of liberalisation when many companies came in with their older (often discontinued ) models with a misplaced confidence that Indian consumers were just waiting to lap it up . But a rude shock awaited them with them the harsh truth that Indian consumers were as discerning as their counterparts in the other parts of the world . Even luxury brands like Merc have learnt their lessons and today their product portfolio has their latest offering, learning from their hard experience of consumer rejecting the initial model which was being used mostly as a taxi in New york, though it will be a long time before they start thinking about making cars for specifically Indians.

This interest of developing products specifically for Indian market has been around for some years now, though with the global financial turmoil we might be one of those few countries with any growth left. One company which has done this seriously is and achieved substantial success in India is Nokia. Nokia 1100 was one of its first mobiles to designed exclusively for Indian markets. The torch light , unique grip were introduced specifically to cater to the specific needs of Indian consumers, weather and usage. The latest is the proposed introduction of ' Nokia Life Tools' service would be an additional service with focus on e-mail, agriculture and education which would enhance its standing in the Indian market.

Coming back to automobiles, we have been waiting for a long time for the Toyota Indian car, but the company is taking its own time to come up with it. Latest is MUL which says it will come up with a its first made in India car by 2010-11 and ford has also been planning to come up with a small car for both Indian as well as export markets. And Nano has brought a lot of interest in low cost cars and many companies want to develop such cars for the Indian market.

We have come a full circle of days when people spoke about only global products to localisation to developing products exclusively for a market, in the next part we will look at a few more examples of MNCs which had to develop products exclusively for Indian markets...

Death of a Product - Maruti 800?

There is ample literature on how a product needs to be killed.There are prescriptions available on how the issue of retiring a product has to be carefully done keeping in mind the consumers who would still be using the product.

One product in India, about which we have been hearing the eminent death for a very long time is the ubiquitous Maruti 800. When Maruti Alto was launched, it was said to be a replacement for 800 and every one started saying it is time to be say goodbye to it. But then it was not withdrawn though even the company might have initially thought of it as a replacement for the aging 800. And the decision of not withdrawing it proved right as both Alto and 800 did very well in the market. Today i saw one more news item which said that phase-out of the model was more or less certain, link.

There are many reasons why 800 still continues to sell, it is still the cheapest car which can be bought in India and the company has made the investments long back and has recovered the money long back and thus continuing the production till the die lasts makes sense for the company. And in a country like India having presence in all possible price points make sense for a company and that too if the price point is the lowest in the market.

Though one does get a feeling that it maybe a time to say bye to a model which has sold 27,50,000+ since launch, as it is driven by the new emission norms which would come to force in the coming days, but then you never know......

All-Women Car

Whenever i see products like a All Women Car, An exclusive shampoo for men..., it makes me think are we pushing things a little too far, though some of my reader have disagreed with me when I had written earlier on men's shampoo issue, but the proposed launch of All Women Car has again raked-up the issue in my mind....

A excerpt from the article "The car, with electronic parking aids and a jack making it easier to change a wheel, will be painted in soft "feminine" colours and include interior design features aimed specifically at women,"

To read more on the All-Women car, link

The company - Iran Khodro

Demand for Low Frills Models

In the interview to Business Standard , Mr Shinzo Nakanishi MD of Maruti Suzuki shared interesting insights into the preference of car buyers in India. To quote from the interview

MARUTI ALTO

"Ten per cent of Alto sales come from the standard model, 30 per cent from the model with air-conditioning, and 60 per cent from the premium model, which, apart from the air-condition, also has power steering and is the most expensive".

MARUTI 800

" At one time 30 per cent of the sales came from air-conditioned models and the rest was from the non air-conditioned model. Now it is the opposite — 70 per cent of the sales come from the air-conditioned car. Of the 60,000 units we sell every month, only about 4,000 are non-air-conditioned".

This interview was with reference to the entry of tata nano into the market in the next quarter..

I was trying to think about the reasons of why this should happen, because if one were to take this information on face value it would mean that today we don't have a market for a no-frills model in India.

The logic that maruti is giving is that the consumers have moved up the value chain and are now looking for more frills in their cars, which is true to a certain extent. One more reason could be the easy availability of car loans which help the consumers to upgrade from the base no-frills model to the next model.

But in the context of nano the target segment is would be those people who have not thought of buying a car unless it is as cheap as what is being proposed by Tata. So these car buyers who are willing to upgrade are anyway not the target customers, they are looking at a segment which has not been accessed till now and for them a no-frills model would make a lot of sense.

But then nano will also try to upgrade and push its customers to the next model with more frills as they would be making more margins there than the base model......

To read the full interview, Link

Integrated Marketing Communications - An Art Mastered by Marutisuzuki????

There are different ways in which IMC- Integrated Marketing Communications is interpreted, more traditional way of looking at it is to ensure that you send a consistent and uniform message across the various means of communication, be it print, TV, Internet, and FM and integrate this with the variety of communication disciplines like general ads, dierct response, sales promo and PR.

If one were to follow this definition of IMC one company which has been good at achieving this sort integration is the car major Maruti Suzuki. Whenever they launch a new car one can see how they are able to hit the consumer consistently across all media and modes of communication. I had observed it when they had done it with the launch of SX4,and see the same thing happening with Swift Dezire, and thought it would be worth documenting it....

It all started with the extensive coverage the launch got on the various channels running programe on cars, saw a detailed coverage given on the NDTV's programe of cars. Then when i was watching the score for the India South Africa test match , they had a banner ad there for dezire. If you happen to buy the latest issue of BS Motoring Dezire is on its cover page....

And there would be a TV Ad campaign and the press campaign for the total impact of the launch. What I have been impressed with is the consistency with which they have been doing with all there new launches....from getting good coverage in magazines and TV channels, and then being there in the right place on the internet so that they are able to reach the customer at every point of contact, even if one were to visit the website and click on cars the default page is the dezire page which i thought was a clever way of telling consumers about the new offering....

The exclusiev website for the brand is up and running , link

Tata Motors and Land Rover and Jaguar

This blog is supposed to cover issues related to marketing in India, so I could not afford to miss out the Tata Motors Deal buying the Land Rover and Jaguar Halewood plant for $2.3 Billion. The deal has been in news for a very long time, and I myself have written about it in the last few months but thought will compile links and put up a few photos,

Land Rover is considered to be a heritage brand, second oldest SUV brand next only to jeep…. Official Website link

Wikipedia cover a lot on the two brands, Land Rover Link and Jaguar Wiki Link

The stock markets have reacted sharply with Tata Motors shares plummeting after the announcement of the deal, i have been a non-believer in stock markets and have my own opinion on the deal , but what do reader feel about the deal, to start off I will share what is generally know about the deal,

The things going in favor of the deal include the access to engine technology which would be among the best in the world, and above all access to world class brands which customer have a lot of confidence on ....

Things against the deal include the fact that Tata Motors with their Nano are planning to dominate the lower end of the market, how would this high-end premium offering fit in its portfolio, and issues related to the debt burden attached with the deal….

More More on Nano

I know most of you would be tired of reading on Nano as all newspapers and blogs are full of rave reviews of Nano-the one lakh rupee car launched by the Tata's in the Auto Expo. But the fact it is a quintessential Indian Car manufactured by an Indian company with a team of Indian engineers makes it even more special.

People have called it "if not reinventing the wheel, at least reinventing the automobile", anticipating the impact it is going to have on the overall automobile market. The city corporations across the country have expressed their worries about the impact Nano could have on the urban infrastructure and the overall impact on our dependency on fuel resources. But leaving out the negatives I personally feel that it is a time for celebration and acknowledging the prowess which has been exhibited by an Indian company in coming up with the world’s cheapest car, and with almost no negative reviews about the car it seems that Tata Motors has pulled it out, A car which would obviously change the way Tata Motors is and the auto industry, giving sleepless nights to both car and two wheeler manufactures alike....

Whoever I spoke to have been talking about the possibility of buying more than one nanos, we obviously will see a long waiting list and other delays which would happen as happens with most new launches, hopefully it would be handled well by Tata Motors.

Nano Tata 1 Lakh Car Unveiled in Auto Expo 2008

We have been following the developments related to the launch of the Tata 1 Lakh Car in the blog so thought should post something on it's launch. I have posted only the photos and the article links, will post comments on the issue later..............Links of Coverage in Economic Times Business Standard and Business Line..
More information on tatapeoplecar
Update : Ratan Tata's Interview on Nano in Economic Times

Suzuki - 'from denial to price reduction' reaction to Tata 1 Lakh car

Tata's seem to be the flavor of the month in terms of the media coverage and news. This is media attention is only going to increase in the coming days with the Jan 2008 launch of its 1- lakh car at the Auto Expo in Delhi. As it had happened with Indica, competitors and other auto manufactures were in a state of denial that an Indian company could come up with a world class car, now the same is happening with the 1 Lakh car, Suzuki initially denied that it was possible to manufacture a car at $2500, and then a few weeks back questioned the ability of Tata's to produce a car at the price with adequate safety and emission norms. Now the news is that Suzuki is planning to slash the prices of its iconic 800, some are even saying that it might try and match the prices . To quote the managing director Shinzo Nakanishi "We will have to do at least that,”.

From the consumers point of view it is a new year gift from Suzuki and Tata Motors, and the reinforcement of the belief that competition is good for consumers. With the coming of the world's cheapest car the dynamics of the auto industry might change forever. But then what would happen to consumers who have brought Maruti 800 for so many years, will they not feel cheated? Would it lead to a similar reaction as happened with iphone? Maybe one of first reactions would be that consumers would postpone their purchase decision till dust settles down in the low priced car wars............

Tata's Small Car as a Taxi

I read this news item in the economic times Tata's small car may become taxi operators' choice and then there was a question raised in one of the discussions* which promoted me to raise this issue .The article says that many of the Taxi Operators across the country are postponing their plans to buy Indica and other small cars and are waiting for the Auto Expo in Jan when the Tata's would unveil the new car. The fact that the other products in the Tata Motors stable, Sumo and Indica have both the reputation of being cheap to run and affordable to own, the taxi operators expect the same from the new offering.

But as a marketer would it be a good idea if your car sells as a Taxi? World wide car manufactures have resisted being seen as a Taxi reasons being the impact on the Brand image and also because in the developed markets the Taxi business is very well organized with big players who have a lot of bargaining power and thus are able to get the best price possible. Though in the Indian market the Taxi operators are small and mostly unorganized market, but the first factor of the impact of the brand image is a factor which needs to be taken care of . Would a first time buyer (the expected target customer) be really keen on buying a car which is is running around the town as a Taxi? Or maybe it might not be as much as a criteria as we are talking about an entry car. In Srilanka I had read that Baja Autoriksha's are being used as a family transport vehicle........................

* By Vinayak during the Indica presentation.

Islamic car - Segmentation Strategy?

Malaysian automaker Proton along with Iran and Turkey are planning to build an Islamic car. The additional features are supposed to be a compass to find the direction of Mecca and a compartment to keep the Koran in. The realization that as a marketer one needs to be able to address the cultural differences among consumer while designing products and communications has always been acknowledged and we even have a separate sub-discipline called multi-cultural marketing which specifically addresses these issues. The question this proposed new product introduction raises is "Is a need for a specific product like this in the first place or is that the case of a marketer trying to exploit the religious sentiments of a specific set of consumers?" There have been many critical comments on the idea already, saying that it is cynical marketing.

The idea that one should target specific needs of customers within larger markets through segmentation is a well accepted marketing strategy which has lead to many successes. But from what is available in the media the only additional features it boasts of is the compass and compartments for Koran and the Scarf. The company has also made claims that it has identified a huge gap in the market. Lets us suppose for a minute that there is indeed a need for such additional features in a car how long will it the competition to add a few compartments and compass to their exiting models and bring out their own versions of the Islamic Car?

Price Point Strategy

In this post I would like to highlight the strategy adopted by Maruti Udyog Limited (MUL) to dominate the market. It follows a price-point-strategy where in they have products available in almost all possible price points. If one were to study the number of variants and products available

1. Maruti800 from 198460 to 222272 (4 variants, including the metallic & non-metallic)
2. Alto from 239029 to 294175 (6 variants, including the metallic & non-metallic).
3. Zen Estilo from 325626 to 383162 (6 variants, including the metallic & non-metallic).
4. WagonR from 332982 to 456815 (14 variants, including the metallic & non-metallic).
5. Versa from 368162 to 479419 (3 variants)
6. Esteem from 451374 to 516 (3 variants)*
7. SX4 from 625000 to 731000 (3 Variants)
8. Swift from 405763 to 531458 (7 Variants)
9. Grand Vitara from 1393805 to 1493085 (2 Variants)

* Withdrawn

A total of 46 variants covering the price range from sub 2 Lakh to 7310000, and two variants in the 14-15 lakh bracket....

And further the news paper reports on the future plans of the company says that it has plans to introduce Swift Sedan shortly , which will be priced lower than SX4, It also plans to launch a big car in the range of 10-12 lakhs which seems to be an apparent whole in the price range offered by the company.

The logic provided by the company is that this strategy enables them to ward-off competition, retain customers in their fold when they want to upgrade and to give a feeling to the customers that MUL can provide them with variants at all price points.

The question which comes to my mind is this based on understanding the needs of the customers of a strategy driven by competition and market forces.....??

Update on the Tata 1 Lakh Car........

The much awaited 1 lakh car of Tata's would soon be launched and this is generating a lot of buzz in the media . The company has managed to keep the details of the project under wraps and the Chairman Ratan Tata himself is supposed to be personally looking into the project. This sort of hype and buzz creation helps in a new product launch. The latest information which is supposed to have leaked is that the car would have a rear engine and also sport the world’s first 800 cc, turbo-charged, CRDi diesel engine. The company is working on two engine options for the Rs 1-lakh car. The petrol version with a 600 cc engine will debut first in 2008. The diesel version will follow later, probably in 2009.

As we get nearer to the launch we will keep getting more information and details about the car. It is not only people like me and you , but automobile manufacturers across the world are keenly watching..................

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