Brand Image and Perception have a huge impact on consumer behavior and it in a way defines the extent a customer is ready to pay a particular brand’s product. Ex: A customer easily pays over ₹50k for an Apple Mobile phone; whereas he/she may not shell the same amount of money for a Mi phone. The primary reason is that Apple has over the years established its brand image as a tech innovator and customers perceive the quality of Apple products to be Top notch as well. So which automobile brand can command premium like Apple does in Cell Phones?
We have calculated the models sold by the respective OEMs in the Indian market and bifurcated it into different price range (0L-5L; 5L-15L and >15L).
- Do note that India’s biggest car maker Maruti has never been able to make a mark in ₹15+ Lakh price segment. Earlier Maruti did try to venture in premium segment with products like Kizashi and Grand Vitara; but both the models proved to be a dud. While Kizashi could sell only 785 units in its overall lifetime; Grand Vitara could sell 1,694 units over years of existence in the Indian market.
- Even in 2019; 100% of the portfolio of Maruti Suzuki were less than ₹15 Lakh price point and 36% of the cars sold by Maruti fared in ₹0L-5L price range.
- Maruti did try to command premium by launching a new channel ‘Nexa’; but surprisingly not a single model was launched through the channel which was priced over ₹15L!
- With success of Kwid and Triber, Renault has moved into high volume and low margin segment, major downside of this strategy could be brand image, free cash flow generation, dealer profitability and pricing power in long term.
- Renault had a promising launch in the Indian market where its first launch ‘Duster’ sold in good numbers. However; its decision to venture into entry-hatches (Kwid) proved an un-viable decision. While Duster’s brand equity dropped over years; the higher priced products like Captur failed to make an impact.
- Hyundai has been time and again trying to bring in premium products namely Elantra, Santa Fe, Tucson; etc but has faced limited success till date. However; both in terms of attempt & success – Hyundai fared better than Maruti.
- Mahindra, Tata & Ford have been able to sell butch SUVs in the ₹15+ L price range. However; the volumes as such needs to pull up to make a significant case.
- VW & Honda looks like they’ve lost the path. Honda had launched iconic products like Accord, Civic, CR-V in its yesteryear; but on the pursuit for volumes it lost the ‘premium’ tag that the brand commanded. While Accord, Civic & CR-V were blockbuster models when they were launched initially – it could not find buyers when they were relaunched recently. Starting with Brio in 2011, low cost-mass market driven strategy has costed Honda its premium sheen it use to enjoy a decade back with cars like Jazz, City, Civic, Accord & CRV
- Similarly VW seems to have lost its mojo – Only 5% of the cars it sold were in >₹15L price range.
- Despite Tata Nano inspired cheap products, like Etios & Liva, Toyota never lost its premium luster, it seems Corolla, Fortuner and Innova have had firmly rooted Toyota’s premium image in India – quite an interesting consumer behavior
(The article is written by Rohan Rishi. You can connect with him at firstname.lastname@example.org)