Braving recession and competition, new auto beauties lure consumers

first_imgJameel Khan bought his first Mercedes on January 16. A Mercedes cap that is. He bought it from the souvenir shop of Daimler Chrysler India’s stall at Delhi’s Pragati Maidan, venue of the bi-annual beauty contest of the Indian auto industry. Khan is no Babe in Toyland. The final year,Jameel Khan bought his first Mercedes on January 16. A Mercedes cap that is. He bought it from the souvenir shop of Daimler Chrysler India’s stall at Delhi’s Pragati Maidan, venue of the bi-annual beauty contest of the Indian auto industry.Khan is no Babe in Toyland. The final year MBA student knows the cars he admires are not the cars he can drive. “I’ll have a job this year and a car by next year. I have come to the Auto Expo to see what choices I will have then: Indica, Palio, Santro, Alto or something new,” says Khan, who believes he will one day “own a Merc” – the car.Khan’s resolve could spell nirvana for the Rs 50,000-crore Indian auto industry, which is struggling to attract customers. Indians bought 3,94,589 cars between April and December 2001, about 10,000 less than they did in the same months of 2000. Sales of MUVs (multi-utility vehicles like the Safari, Bolero) also fell while scooters sales were flat.The only exception was motorcycles. Their sales zoomed past the two-million mark, up from 1.54 million during April-December 2000. The dismal demand for cars came in a year when auto giants ranging from Maruti to Ford lined up what they thought were their mechanical marvels: Mondeo, Alto, Accord and Sonata, to name just a few of the dozens of launches last year. None seems to have excited customers.Click here to EnlargeSo what do automakers do? Wait for buyers or try and lure them with newer models and variants. The Auto Expo 2002 proved that the industry has chosen to drive along the second path. A bevy of new vehicles catering to varied tastes and pocket sizes is making a bee-line for Indian roads.Such bravery is not because manufacturers want to delight Indian consumers but because of a compelling need to follow the new thumb rules of the Indian auto market. Amidst the cacophony of 900 auto exhibitors at the Auto Expo, the following laws of survival clearly emerged:Models must change every year, or even sooner: Cosmetically or substantially, automobiles must change their look and feel continually. When Hyundai wanted to pep up its Santro sales, it added power steering, new rearlights and a few other features. Says A.P. Gandhi, president, Hyundai Motor India: “Today, the Indian customer knows what you are doing globally.You can ignore that only at your peril.” GM and Ford have launched 2002 variants of their existing models in India. The four-year-old Indica has had four variants and an Indica Sport will hit the roads in a few months. Just as that happens, the Tatas are developing a new platform for Indica. Says Rajiv Dubey, general manager, Tata Engineering: “Customers teach us something every day. The car I make today is better than the car I made yesterday.”The company that exemplifies this rule most – some would say, in extreme – is Fiat India. It not only launched Palio in four variants in September 2001 but is adding four more models within four months of the launch. Is this going too far, too soon?”In today’s market you can’t lose time in adding value,” says Vijay Chandorikar, director (commercial), Fiat India. Industry captains say the profusion of models will ensure that there is a car at every lakh, starting from Rs 3 lakh.No company can survive on a single product: Not even Hindustan Motors (hm) and its vintage Ambassador. For the first time in 40 years, the company unveiled its first significantly redesigned Ambassador Classic with a retro look. Of course, hm has grown beyond the Ambassador in the past few years.It makes the Lancer in collaboration with Mitsubishi and will now make engines for Ford Ikon. Ambassador’s old running mate Premier is dead because it failed to offer multiple choices. As Ratan Tata, chairman, Tata Engineering, said after unveiling the Tata Sedan: “You must be present in all segments. If there is a gap, you are denying the customer a choice.”advertisementClick here to EnlargeTrue, the Indian market is skewed in favour of small cars: about 62 per cent of the cars sold are from A (Maruti 800) and B (e.g. Zen, Indica, Santro) segments. A company could dominate the industry by only making small cars. But that’s changing. Though A is the largest segment, B is the fastest growing. And the emergence of a new D segment (Sonata, Accord, Mondeo) points to a pick up in the C segment (Ikon, Accent, Esteem). No wonder the king of small cars, Maruti Udyog, has Baleno and Versa in its stable.A good car will sell even in a bad market: Though still too young to be pronounced a winner, Palio sold 8,000 cars within three months of its launch with more customers waiting in the queue. This at a time when car sales are falling. Obviously, the 8,000 buyers saw in Palio things they did not see in other cars. An even more substantive instance is that of the Indica, probably the least celebrated auto success of recent times.In a market hit by recession, its sales grew from 32,130 cars in April-December 2000 to 41,423 in April-December 2001 – a 29 per cent growth. That too, without any discounts or freebies. What’s the trick? It’s not the price, the product or the marketing. It’s a combination of all three. Avers Dubey: “If the elements of the products are appropriately offered, it will succeed. Ultimately a product must sell on pull factors (its own strength) and not push factors (price cuts, freebies).”Made for India can sell abroad: Ford India sold 10,106 cars – mostly Ikons – between April and December 2001. In the same nine months it exported 22,792 Ikons, mostly to South Africa and Mexico. The previous year its exports were zero. Tata Safari is selling in Spain and Italy. Hyundai exports have zoomed. But Ford’s experience is most instructive because Ikon was designed especially for India. Its success abroad proves that cars made for India can be sold abroad.True, such instances are still very few and more cars will be imported into India than will be exported, but car makers have begun to believe that India can make cars for the global market. Says David E. Friedman, Managing Director of Ford India: “A vehicle that works in India will work in other markets.” Reason: “There isn’t any other market where demands of pricing, roads, climate and utility are as exacting as India.”What’s true of cars is truer for two-wheelers. Yamaha, which is infusing Rs 350 crore into its Indian venture, will use India as a manufacturing base to cater to 60 foreign markets.In discovering new rules, the auto industry is discovering new customers. Points out Ashok Leyland Chairman R. Seshasayee: “Every time you discover a new segment, you discover new customers.”advertisementAnd there are lots of new customers to discover in India, which still has 250 persons per car, versus 1.4 in US and 25 in Thailand.last_img

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