Tiago – The ‘Real Hero’ in Tata Motors comeback!



Tata Motors has made a huge image makeover in the past 3 years and has helped the OEM slowly gain market share which it had previously lost. Tata Motors in now currently challenging the No.3 Spot in the Top 3 OEMs and is progressively strengthening its hold. So what exactly changed in the recent years for Tata Motors that allowed Tata Motors in the path of regaining its lost glory –

  • Project HorizoNext – Way back in 2013, Tata initiated HORIZONEXT, a four-pronged customer-focused strategy to provide the best customer experience — from best vehicle experience to superlative purchase experience and followed by technology-intense after market service support. Tata Motors products were reeling with Quality-related issues and the Dealership Service Experience was nothing but a nightmare. The HORIZONEXT helped the OEM to work on improving its overall quality levels of the products/new launches and also elevate the dealership interaction experience.
  • Shift from Taxi Segment – Tata’s Indica & Indigo duo which were the mainstay of the OEMs volumes during 2010-2014 was slowly deteriorating the brand’s acceptance amongst personal usage buyers. The company had sought to bring about a change in its brand positioning from an automaker that makes cars for commercial operations like taxis to an automaker who makes cars for personal use. As of today; apart from Zest/Bolt none of the OEMs models are offered in Taxi segment. Tata Motors has completely shifted focus from the Taxi segment and even the upcoming line of products are bound to cater to personal usage buyers (Harrier, 45X).
  • Shooing away from the ‘cheap’ tag – The lesson was learnt from its most ambitious project – Nano. Touted as the world’s cheapest car, did not live up to the expectations in spite of several makeovers and its production was recently halted citing low volumes. Post Nano; none of the new launches carried the ‘cheap’/’cheapest’ tag in the segment. Rather segment-best features were marketed as the USPs (Ex: Harman Music system which was earlier available in high end cars were featured in Zest/Tiago).
  • JLR Support – Jaguar Land Rover’s support in product development has helped Tata Motors to bring a vast improvement in the quality of products introduced in the recent times. It was told that Tata had taken a lot of cues from JLR while designing the Hexa and a lot of JLR pedigree shall be seen in upcoming SUV Harrier as well.
  • Expanding Market Base – With Hexa & Nexon; Tata marked its entry to bigger MUVs & Compact SUVs space. Tata Motors current portfolio of products does not cater to the premium hatches, vans, bigger sedans, larger SUVs segment. However, the future lineup of products shall enable Tata Motors make its presence felt in these segments. By 2019, with a string of new products in the aforementioned segments, Tata Motors hopes to cover 95 per cent of the market!
  • Improved Customer Engagement – Tata Motors has taken huge stride in terms of engaging its customers online and also support the customer communities accordingly. Ex: A bunch of Tata Nexon Owners have joined together and formed ‘The Nexon Tribe’ and is organizing get together drives/meets and the same is backed by Tata Motors. Such associations will further enhance the brand association and loyalty of the customers.
Source
  • Enhanced Dealership Network – Currently Tata has ~650 outlets. The OEM is targeting 1500 outlets by 2020. With the expansion Tata is trying to enhance the customer experience as well in these touch points.



With all these efforts this could well be the strongest comeback in the history of the Indian car industry. However, there is one model which has stood the test of time and has evolved as the biggest enabler in terms of Tata Motors comeback – TIAGO. 1,84,278 units of Tiago’s have been sold in the past 32 months and has contributed to ~40% of Tata’s volumes in this timeline.

  • Tiago’s contribution to the OEMs volumes have increased over the past 2 years and the averages too have shot upto ~8k units/mth in 2018 (v/s 6k units/mth in 2017).
  • Tiago has achieved this feat by overcoming some strong competition in its segment (namely Kwid, Celerio, etc) and is unseen in the industry to see a Brand increase its yearly average post 2-years of its launch!
  • Tiago was also instrumental in helping Tata Motor’s leverage its platform to bring compact sedan Tigor. Though Tigor hasn’t seen significant volumes; the recent facelift may just help it gain the required momentum.
  • Offlate; Tiago is also seeing a jump in its ranking in the Top selling cars list (recently in Sep’18, it ranked 12th)

Tiago has proven its worth over time and it wouldn’t be wrong to say that it has played an extremely significant role in terms of helping Tata Motors revive its brand identity and also elevated the parent as a serious challenger in the fight for the Top 3 OEMs!

2018 YTD Passenger Car Industry Analysis

2017 vs 2018 (January to September YTD)

With three quarters of the year behind us and two big festive season to go before the year ends, situation has become little challenging for auto manufacturers, due to rise in input costs and fuel prices. As both these factors are impacting the consumer sentiments at large. Let us see how passenger car market has performed so far in 2018 compared to same period (January-September) in 2017.

  • Industry grew by 6.9% so far over 2017
  • Maruti is growing much faster than the industry and yet doesn’t seems to be complacent in any way with product and technology onslaught
  • Hyundai has to wait for Santro’s launch to match industry’s growth rate by the year end
  • Tata has come very close to secure 3rd position, ceded to Mahindra in 2012
  • Despite good numbers from Amaze, Honda is yet reach last year’s numbers, largely due to City and Jazz’s numbers, feeling intense competition in respective segments
  • Ford’s growth is propped by Ecosport, no surprise why Ford in India is called one product wonder company
  • Similarly, Toyota’s growth is coming from mighty MUV ‘Innova’, rest of the story is not so hunky-dory
  • Despite facelift Kwid available in market, Renault is deep in red



Car Size

Car Size

  • Small cars (<4m) are major growth driver of the industry in the current year largely attributed to Maruti’s products
  • Mid-sized segment growth is pulled down by shrinking sedan segment
  • Large car growth is led by Toyota Innova, rest all are stagnant or declining



Body Type

  • India too caught the global SUV fever and growth of SUV/Crossover is no surprise
  • Sluggish growth rate of hatchback is largely attributed to shrinking base of small hatchbacks like Alto or Kwid
  • Large hatchbacks are doing pretty well
  • Mahindra Marazzo and upcoming Maruti Ertiga may bring MUV category back in black till year end



Sedan Segment

Though sedan segment appears to be growing, there is more than meets the eye. So we tried to peel the layers of onion to see how market demand shift towards SUV has impacted sedan segment’s growth.

Except for sub 4m sedan, every other sedan segment is in decline mode. Growth of sub 4m is led by only Maruti Dzire followed by recently launched Honda Amaze. Decline in premium sedan segment has been covered in one of our earlier article. The latest victim of compact SUV onslaught is mid-size sedan segment.

Since segment is de-growing YoY by 5.4%, 3rd generation Hyundai Verna launched in late 2017 has eaten into the Honda City and Maruti Ciaz’s pie. Despite the latter’s inherent strength, they were left with no choice other than to cede market share. Right now only relief for them is suicidal pricing of Toyota Yaris.

Toyota’s highly ambitious and miscalculated step has backfired badly. Four months since launch sales tapered down, so, Toyota has started offering discounts, that too in festive season. Moreover, Yaris doesn’t feel any special or premium over segment benchmark for two decades – Honda City, and at that price point Hyundai Creta looks far more lucrative too.

For manufactures, choice is simple now – start investing money, time and effort in SUV, where future market demand lies, instead of sedan! It seems, Ford’s global strategy to kill sedan by 2022, a more prudent decision, because at the end of the day, marketer’s job is to meet the needs of buyers, functional and emotional.

(The article is written by Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)

Santro Reborn!

Hyundai will have the media preview of its new car AH2(codenamed) on 4th October. The company recently launched  the Hyundai namkaran contest for its car. As per the reports Santro has emerged the most popular suffix. And why not, Santro has been the most successful car in Hyundai India’s portfolio. Santro had single handedly established Hyundai as a reputed OEM in the Indian landscape.

The 2018 Santro will be based upon old Hyundai i10 HA platform. The new car will sit between Hyundai Eon and Hyundai Grand i10. The Santro will be the company’s first product to feature an Automated Manual Transmission(AMT). Hyundai will market it as ‘Smart Auto’. The 2019 Hyundai AH2 will rival the likes of Renault Kwid, Maruti Celerio and the Tata Tiago. The Santro nameplate was really the gamechanger for Hyundai and it helped Hyundai to establish its foothold in India.

Lets have a look at the brief history and sales statistics of Hyundai Santro.

History

The Santro (also known as Atos and Amica) was the city car produced by Hyndai. The original Santro was introduced in the year 1997.Hyundai called it as ‘the sunshine car’.

Hyundai  Santro is sold under different names in various regions

  • Hyundai Amica –United Kingdom
  • Dodge Atos –Mexico
  • Kia Visto- Indonesia and South Korea
  • Inokom Atos –Malaysia

Electric Version :-

Hyundai also unveiled an electric car based on the Santro, the Atos EV. The car has the range of 193 km and can reach a top speed of 130 km/h.

In Indian market Hyundai Santro was launched in the year 1998. It was produced at Hyundai’s plant in Chennai. Santro crossed around 100000 unit sales in 2000. It was selling around 30000 a year when Hyundai decided to stop its production in 2014.

The first gen Hyundai Santro was powered by 1.0 Epsilon 4 cylinder engine producing 61 bhp and 110Nm of torque.

Hyundai Santro 1998

The Santro  got a mid life facelift in 1999 and was called Santro Zipdrive.

Hyundai Santro Zipdrive

In 2003 the car underwent a complete facelift and was named  Santro Xing. The Santro Xing was powered by 1.1 l Epsilon 4 cylinder engine producing 65 bhp and 98Nm of torque. This model had a dream run for its full lifecycle until 2014 without any significant changes.

Hyundai Santro Xing

Finally Hyundai stopped its production inorder to accommodate newer models like Elite i20 in the assembly line.

Sales statistics of Hyundai Santro in India –

Santro’s volume trend in it’s 17 years existence in the Indian market

The erstwhile Santro had single handedly managed Hyundai’s volumes in India. In the first 10 years (i.e. 1998-2017); 76% of Hyundai India’s sales was contributed by Santro! (out of 11,40,116 Hyundai’s sold, 8,62,428 cars were Santro’s). Can the upcoming Santro work the same magic for Hyundai? Let’s wait and watch.

Sources: Hyundai India ,Wikipedia and IndianAutosBlog

(This article is written by  Gourav Saksham, a dentist by profession and a Petrohead by passion. You can connect with him at gouravsaksham@gmail.com)

Petrol v/s Diesel Car Sales Data – H1 2018

Fuel mix H1 (January-June) – 2018

With diesel petrol price difference settling around ₹ 8.5, petrol powered vehicles have gained more traction in the H1 (January-June) of 2018 and constitute 61% of total sales.

Company wise fuel split

Vehicle size (length) distribution

As size increases gradually, diesel becomes the obvious choice as a fuel.

Body Style distribution

  • In 2020, when BS6 emission norms will come into force, diesel engine for hatchback seems to become a passé.
  • With quite a few introduction of moncoque UV/crossover, petrol penetration is gaining strength. Petrol mix will become stronger, if, Maruti brings in petrol powered Brezza and S-Cross.

Chassis distribution

For heavy ladder chassis, diesel is still a preferred fuel.

Petrol Engine size distribution

Well, data is highly skewed in favor of 1200 cc engine. India is small car country and lower tax rate (as a government policy) on petrol engine upto the size of 1200cc has made it the most sold engine.

Diesel Engine size distribution

With all diesel Maruti cars running on Fiat made engine, 1250cc engine skews the engine size distribution. Nevertheless, larger diesel engine are not going out of favor for the large UV any time soon (read-post 2020). However, post 2020, diesel engine component manufacturer might face strong headwind from shift in demand for petrol engine – it is time to diversify to mitigate risk.

All models

(The article is written by Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)

The Evolution of Honda CR-V

The Honda  CR-V is a compact crossover manufactured by Honda  since 1995 and introduced in the North American market in 1997.CR-V was build on the Honda Civic Platform with a SUV body design,

CR-V stands for Compact Runabout Vehicle while the term Compact Recreational Vehicle is used in a British car review article that was republished by Honda.

In India the car that brought  the crossover to the mainstream is perhaps the Honda CR-V.The latest generation of the car will be launched in India around Diwali

Lets have a look at the evolution of the Honda CR-V in India and its sales statistics –

Before the CR-V

In the 80’s, Honda had toyed with the idea of a light off-road vehicle. Called the Honda Civic Shuttle 4WD, it was essentially a Civic with slightly raised ride height, larger mudflaps and, more importantly, a four-wheel drive system. Its four-wheel drive mechanism was a particular novelty. At the time, most 4WD mechanisms were mechanical which needed a lever to engage the said mode. In the Civic Shuttle 4WD, a simple flick of the switch engages the rear wheels and, later in its life, even gained a low-range transmission.

By the late 80’s, Honda introduced the second-generation Civic Shuttle 4WD. Also known as the Beagle, it followed the formula of its predecessor. Higher ground clearance, all-wheel drive and even underchassis skid plates were part of the package. Honda probably knew they were on to something at the time and set the precedent for one of Honda’s most successful models of all time.

First Generation (1995-2001, RD1-RD3)

With the experience gained from building the Civic Shuttle 4WD, Honda went on to develop their first, built from the ground-up SUV. With its design finalized in 1993, the production model made its debut in Japan in 1995, a few months ahead of the car it was based on, the sixth-generation Civic (EK). From its looks alone, this was no raised Civic wagon.

For starters, it came with a more advanced Realtime All-wheel drive system which meant there was no longer the need for a switch to send power to the rear wheels. Being based on the Civic, the CR-V got the suspension goodies from it as well. It had double wishbone suspension on all four corners, giving the first-generation CR-V a bit of dynamic flair. With a 2.0-liter engine under the hood, it initially had 126 PS but later gained 21 more horsepower for a total of 147 PS.

This generation of CR-V was built in various plants in 
Swindon
, United Kingdom (HUKM)
Sayama, Japan
Hsinchu, Taiwan
Santa RosaLaguna, Philippines (Honda Santa Rosa, Laguna Plant)
Ayutthaya, Thailand (Honda Ayutthaya Plant)
Karawang, Indonesia (Honda Karawang Plant)

It practically opened the floodgates for ‘Mini-SUVs’ and further broadened the appeal of the Honda brand. Also, who could forget the built-in table which also served as the cargo area’s floor?

Second Generation (2001-2006, RD4-RD9)

The new millennium saw an all-new Civic and, with that, an all-new CR-V. The second-generation model saw several significant updates and upgrades to the CR-V range. For its second iteration, the CR-V received an all-new engine in the form of the K20 series. The new engine packed i-VTEC, bringing variable valve timing to the CR-V for the first time. Also, the second-generation CR-V lost the impressive (but expensive to produce) double wishbone front suspension and in its place were a pair of struts.

The body also grew significantly from the first generation, giving it more room inside. Honda even kept the novel picnic table from the previous model.

When the facelift model was launched, it saw the return of the all-wheel drive variant but this time, it had more power to boot. All-wheel drive CR-Vs now came with a larger 2.4-liter i-VTEC engine with 160 PS and 220 Nm of torque. Over in Europe however, the CR-V received Honda’s first-ever in-house diesel engine: the i-CDTi. The 2.2-liter mill produced 150 PS and 350 Nm of torque, making it the most potent CR-V at the time

Third Generation (2006-2012, RE3-RE7)

By its third generation, Honda gave the CR-V a revolutionary redesign. Gone was the mini-SUV look of the past two models and in its place was a much larger, longer and rounder body. The side-opening rear door had been replaced by a more conventional upwards raising tailgate and the spare tire was moved to inside the car. Of course, the changes go beyond there.

The interior was comparably more upscale than before, bringing the CR-V upmarket. At the same time, this era of CR-V brought in more safety tech and equipment. It became the first CR-V to offer stability control, as well as a host of airbags from front to rear. With portable MP3 players becoming more popular, the third-generation CR-V also came with handy auxiliary ports. This was the CR-V for the iPod generation.

Aside from more tech, the engine range got significant upgrades. The 2.0-liter engine now uses the R20 block, making it run cleaner than the model it replaced. As for the 2.4-liter engine, it got a healthy boost and made 170 PS and 218 Nm of torque.

Fourth Generation (2012-2017, RM1-RM4)

The global economic crisis hit a lot of automakers hard and Honda was not spared. Despite that, the Japanese automaker persevered and came up with the fourth-generation CR-V. Whereas the the third-generation was a radical step, this particular model was more conservative. Still, it didn’t stop Honda from trying to keep the CR-V bang up to date.

It had an upgraded infotainment system and, along with that, a more informative driver information display to keep track of vehicle status. It also carried over the comprehensive safety suite from the previous model, making the CR-V one of the safest cars on the road. With the crossover segment becoming even more competitive, Honda made the rear quarters even bigger, giving it more room than its already spacious predecessor.

As for the engines, they were carried over from the old model meaning it was the 2.0-liter and 2.4-liter with the same power outputs. Over in other markets, they got a new turbodiesel in the form of the new i-DTEC engine. However, it won’t be long until we get this long-awaited engine.

Fifth Generation (2017-present,)

With the critical acclaim of the tenth-generation Civic, it’s safe to say that Honda pulled out all the stops with the fifth-generation CR-V. While the exterior is evolutionary, it’s quite the revolution under the hood. Over a decade since the first diesel CR-V set foot in Europe, the  Asians finally gets the i-DTEC engine. In India this motor will debut next month having 120 PS power and 300Nm torque.

Along with that engine, the all-new CR-V presents a series of firsts for the local market. The diesel-powered fifth-generation CR-V benefits from a nine-speed automatic transmission, replacing the old five-speed units which have served local-spec variants for ten years. That said, Honda did not ignore those who still prefer gas engines. The 2.0-liter engine now benefits from Earth Dreams tech and it’s now mated to a continuously variable transmission, a first for Asean-spec CR-Vs.

It’s also packed with a lot of safety tech too with  Electronic Parking Brake with Auto Brake Hold, Agile Handling Assist, Driver Attention Monitor, Vehicle Stability Assist, Hill Start Assist, Anti-Lock Braking System with Electronic Brake Distribution, Emergency Stop Signal, Multi-View Reverse Camera with Dynamic Guidelines, and a Low Tire Pressure Warning. A stark contrast to the first-generation model which didn’t even have Anti-lock brakes.

It’s been 22 years since Honda first showed the CR-V to the world and it’s quite a big lead since then. Who would have though that a CR-V would be packing features unimaginable from when it was first launched. The CR-V has also done a lot for the brand in those years, namely being the the car that would expand Honda’s crossover lineup both here and abroad.

The BR-V, HR-V, and even the Pilot (North America) can credit their existence to the original CR-V. Without it, Honda would have likely been left behind in the crossover market. As a die hard Honda fan, I could say that Honda’s original crossover has become a car for all classes.

Even as Honda’s crossover range keeps growing, the CR-V is still the name that first comes to mind when someone says ‘Honda SUV’. Needless to say, it has become part of the local motoring landscape.

Sales statistics of Honda CRV in the Indian market

Source :Wikipedia

(This article is written by  Gourav Saksham, a dentist by profession and a Petrohead by passion. You can connect with him at gouravsaksham@gmail.com)

Statewise Car Sales – Q1 FY19

We have been trying to understand the state-wise car sales statistics and were able to cover since FY17 extensively. As shared earlier in our posts, the vast diversity of the sub-continent is evident in the car sales and the Market Share varies surprisingly as well. Yes, you read it right! This time we have gone a step ahead and tried to cover the market reach data for top 2 OEMs. Before jumping on to the numbers, would like to explain the complexity of our market and want to highlight these points –

  • India has 33 states (as per the consideration here & includes the Union Territories such as Pondicherry, etc)
  • Maharashtra alone contributes to ~10% of national volumes!
  • East Zone has highest number of states (13), but volume contribution is the least in 4 Zones
  • In terms of land area, Rajasthan stands No. 1 in India (source). However in terms of Passenger Vehicle (PV) sales, it Ranks 9th! Trivia – Rajasthan is bigger than Oman in terms of area!
  • In Q1 FY19, Mizoram has witnessed the highest YoY growth (70%) in India!
  • Passenger Car industry has grown a healthy 19.92% in Q1 FY19 v/s Q1 FY18! East Zone grew the highest at 27%

Statewise Passenger Cars Sales Data for Apr’18-June’18 (Q1) –

Please Note:

  1. The Zones have been ranked as per volumes. West is ranked 1 and is just marginally (2944 units) ahead from North Zone which is ranked 2nd!
  2. In Every Zone, the States have been sorted as per their volumes. Ex: Kerala is the first state in South Zone (as it has the highest volume in the Zone for Q1)
  3. Industry Comparison with the same period Last Year done as well to understand the state’s and region’s performance. YoY growth of those states has been highlighted whose growth was lower than their respective average. Ex: Tripura grew 26% and is highlighted in red as the growth was lower than East Zone’s YoY growth rate of 27%.

Ranking of States basis volumes:

  • The 33 states have been ranked as per H1 volumes
  • Every state’s contribution to All India volumes have been calculated as well
  • Top 10 states contributed to ~70% of the national volumes. And Top 5 states contributed to ~42% of National Volumes. This is also an excellent indicator of statewise variance in terms of car sales.

  • Maruti + Hyundai contributes to 68.36% of passenger vehicle sales in India. Maruti alone contributes to 52.6% of passenger vehicle sales!
  • In Jammu & Kashmir, Maruti + Hyundai’s Market Share was a mind boggling 83%.
  • In terms of Zone-wise presence – Maruti has the least market share in East Zone & Hyundai has the lowest Market Share in South Zone!
  • Hyundai has single digit Market Shares only in 2 markets – Nagaland & Andaman!

Global Commercial Vehicle Market (2007-2017)

After 2007 sub-prime crisis, demand for CV plunged and de-growth continued till 2009. During tough financial times several Governments had put monetary and fiscal stimulus in place (Keynesian Economic Theory) and market demand regained, and by 2011 it was again back to 2007 level. 2011 onwards global demand had gained traction and is growing at steady pace now.

The USA is by far the biggest CV market. Global CV growth is always in line with the US market growth trajectory, thanks to American’s love for pick-up (Light commercial vehicles).

However, global growth hasn’t been homogenous, as several countries have gone through strained financial condition in last 10 years, coupled with tepid demand owing to inherent cyclical nature of CV industry. India too is case in point, by 2011 India reached #4 rank but then slipped to #6, followed by shallow recovery.

Top 30 Country-Market of 2017

Data Source : OICA CV sales data (Commercial vehicles include light commercial vehicles, heavy trucks, coaches and buses)
  • The USA has lion’s share in the global market
  • Top 30 countries account for 95% of global CV sales
  • Out of top 30 countries, almost 11 have witnessed ‘0’ or negative growth in last 10 years due to stagnation or declining economic activities in respective countries

High Growth Region (2007-2017)

  • These are the countries having substantial base year market size and sustained growth rate of 5% and above over a decade
  • These are the key markets and CV OEM need to watch out these countries as their future growth engine
  • Economic recovery in Brazil & Russia, which suffered economic recession in recent past, now have high chances of better growth in coming years as oil and commodity prices have started hardening

Declining Major Markets (2007-2017)

  • Crude Oil price crash of 2015 was a major setback for Russia and Saudi Arabia and the reason for declining CV market
  • Spanish and Italian market witnessed massive decline at the height of European Sovereign Debt crisis around the year 2012, since then both are on recovery path
  • In last 4 years Japanese market growth rate has been almost flat, it is more like a saturated market now

Continent

  • Canada and the USA are growing at healthy rate in line with their economic growth trajectory
  • After 2010, Asian market growth has remained largely flat
  • Overall European market has contracted in last decade

North America

Africa

Central & South America

Asia

Europe

The Past & Future of Badge Engineering!

First of all what’s Badge Engineering/Cross Badging (Source:Wiki)- 

Badge engineering, sometimes called Cross Badging, is the practice of applying a different badge or trademark (brand, logo or manufacturer’s name/make/marque) to an existing product (e.g., an automobile) and subsequently marketing the variant as a distinct product. Due to the high cost of designing and engineering a new model or establishing a brand (which may take many years to gain acceptance), economies of scale make it less expensive to rebadge a product once or multiple times than to create different models.

The term badge engineering is an intentionally ironic misnomer, in that little or no actual engineering takes place.

Cross Badging : Season 2.0

Toyota and Suzuki joined hands in February 2017 for long term partnership to collaborate in the field of upcoming hybrid and electric drivetrain, autonomous vehicle and slew of other futuristic technological areas to remain relevant in future and save cost in future product and technology development. In November 2017 press statement they have outlined the long term plan to introduce EV in India by 2020. Further in March 2018, for India they had short and medium term plan and decided to sell cross badged products in India and put up a compete and collaborate arrangement in place. Initially they have planned to supply vehicle where they don’t have direct presence. So Toyota will provide Corolla (Premium Sedan) to Maruti – as new flagship model, since Maruti has long unfulfilled ambition to go premium. In turn, Maruti will provide its best-selling sub 4m Brezza (C-SUV) & Baleno (Hatchback) to add to Toyota’s bottom end portfolio, and utilize its showroom space.

Cross badging or Badge Re-engineering concept in India is quite old. Hindustan Motor’s Ambassador (50s) was cross badged Morris Oxford (UK), popular Premier Padmini (60s) was actually cross badged Fiat 1100 (Italy). And then there are many like Chevrolet (Subaru, Daewoo, Isuzu, SAIC), Reanult (Dacia) et al.

But the current cross badging concept in India is little different. As in case of Ambassador or Padmini, only Indian badged product were on sale and not the foreign badge simultaneously in Indian market. This concept of cross badging and sale of same vehicle under two different brands in Indian market at the same time, targeting same consumer segment, was introduced by VW with group company – Skoda (2011), and later followed by Renault (2012) with alliance partner Nissan. Their products were identical except for the front facial which usually remains in line with the family looks of the respective brand. Incidentally both were late to Indian car market. Question is, has this strategy really worked as envisaged by the manufacturers. Let us see through the sales number analysis.

Platform sharing within group companies is very common but cross badged products just have cosmetic differentiation, more of a gimmick. Product cannibalization is obvious and is understood beforehand, as real objective is to achieve higher incremental sales, expand product portfolio at lowest possible cost and keep the showrooms busy with some real business.

Advantage

  • Quick to Market : New product development from scratch takes around 3 years, to move from drawing board to finished product at the showroom and new product on older or existing platform too takes at least a year. But cross badged products gets ready in just couple of months, which translate into better return on investment (RoI) at low risk, if product succeeds.
  • Low Product Development Cost : In some of the existing cases it was as low as ₹ 15 Crore as oppose to platform sharing which cost minimum ₹ 150 Crore. Badge reengineering involves minor tweaks in design and minor retooling at the factory and vendor level. So it calls for small incremental investment and improves RoI.

Challenge

Since Product differentiation is very low with no additional functional or emotional benefit for consumer, other than badge appeal; pricing, positioning and selling becomes a tricky task, as potential customer are well informed these days.

Cross Badging Season 1.0 :  Product Performance

VW Vento + Skoda Rapid

  • In short run it worked a little, slightly better incremental sales was achieved with acceptable level of cannibalization, when diesel engines were in high demand.
  • When Honda City came back with a diesel engine in 2014, it decimated competitors except for the new kid – Ciaz which has had a Value for money tag.
  • Within 2 years together, individual and combined market share shrink to half.
  • Together Rapid+Vento had better ranking but still never able to reach #1.
  • After 2017 Skoda Rapid update, it totally cannibalized VW Vento.

Nissan Sunny + Renault Scala

  • Sunny’s market share dropped to half after Scala’s launch.

Scala demanded price premium over the Sunny for not so familiar Renault logo then and it lost the plot in first year itself and later got discontinued due to poor sales.

Renault Duster + Nissan Terrano

  • Duster with all the bulges around looks like a mini Hippo but Terrano was more chiseled and give an impression of mini Rhino and for that it demands a price premium of ₹ 70k+.
  • Terrano though filled the Nissan’s product portfolio gap but was never successful in bringing volumes due to its pricing.
  • First mover advantage faded quickly with the arrival of formidable Hyundai Creta.
  • Duster is still able to hold but Terrano is almost on verge of discontinuation.

Nissan Micra + Renault Pulse

  • In very short run it worked very little as incremental sales was achieved but later very few were ready to pay ₹ 15k extra for Renault’s badge slapped on Micra.
  • Micra’s sales dropped badly after the launch of Pulse.

Platform Sharing

Products sold under different brands but made on same platform having same body shape either to serve same consumer segment at similar price point or to cater to needs of different consumer segment at different price point has actually produced much better results. Though it calls for higher investment but it helps in augmenting market much better.

Conclusion

Except for external design, logo and sales channel, products have had very little differentiation, in short no additional functional or emotional benefit for consumer except for the badge, in case any potential customer has some brand preference or loyalty. Eventually cheaper one did better or as in some cases, rather the one which actually survived.

But VW and Renault were new entrant then and products were relatively new and neither one enjoyed much of brand awareness in Indian market. Toyota-Maruti case becomes more interesting because both are deeply entrenched brand in their own right and product intended to be shared across the brands are best seller in their respective category. Toyota badge will naturally command price premium, so will they be able to sell already successful product at much higher price with mere cosmetic changes and get away with what newbies were not able to do? Also, will Maruti badge do justice to global best seller Corolla or end up eroding the brand image of Corolla, akin to what Zen Estilo did to brand Zen? Moreover rebadged Corolla will be real test for Maruti’s sales channel NEXA. After sales service of both the companies are benchmark in the industry, Maruti for its reach and Toyota for its standards. So providing service for cross badged product could be a challenge. Just imagine that the Toyota has to train service staff to manage the Fiat’s diesel engine too, unless they decide to offer only petrol or hybrid engine.

Well, history is littered with more of unsuccessful stories. So, will Maruti Corolla (Could be called Kizashi?) and Toyota Brezza & Toyota Baleno going to change that? Only time will tell, when products land in real battle ground. Because many a times customer or consumer do not behave in the same way as they state during market research process before the launch and that’s the biggest challenge for marketers and product planners.

Kia needs to be careful with the positioning of their products alongside the parent Hyundai in Indian market. Although their products are highly differentiated in terms of styling in the international market and with no baggage in India, Kia could use this as an opportunity to gain premium positioning in Indian market and fill the gap where Hyundai is not very successful i.e above ₹ 15 Lakh segment.

Different School of Thought

Departing from cross badging concept, Maruti in past has tried little different approach of launching two slightly different product at similar price point. Largely based on Steve Jobs (former Apple CEO) famous saying – “If you don’t cannibalize yourself, someone else will”. Maruti’s idea was to offer variety when potential buyer visits a Maruti showroom, so that there could be a better chance people leave the showroom with a Maruti product, and keep Maruti’s sales register ringing.

Wagon R – Zen Estilo

 

Zen Estilo was first move by Maruti to cannibalize its own product Wagon R by launching it at similar price point with slightly different body styling. Strikingly it was also available in pink color, never seen before in the industry.

Instead of cannibalizing Wagon R, Estilo was able to bring incremental sales and due to platform sharing, unlike old Zen, it was able to achieve cost synergy as well and offer better ROI due to incremental investment on platform. But Zen Estilo was never able to live up to the original jelly bean shaped Zen, in terms of sales. In Spanish Estilo means style, but it was more of a stylish Wagon R, (some sort of! rather than boxy wagon R), but never ‘stylish’ Zen. Original Zen was launched by Maruti in 1993, had first all-aluminum engine block and in those days it was sometimes regarded as first hot hatch.

Some feels that Zen Estilo, till its existence (2013), has had eroded the robust Zen Brand to certain extent, build over a decade. But then, product brand name can be resurrected based on product’s strength and the best example is Baleno. Currently the name plate is used by a very successful hatchback; you may relate to if you do remember the old Baleno name plate was used by not so successful sedan, launched by Maruti in 1999.

2014 onwards Wagon R was joined by similarly priced, Maruti’s guinea pig – Celerio. Since launch, Maruti has kept on experimenting with Celerio, for example – it was first to have AMT technology, now discontinued Maruti’s in-house developed 800cc two-cylinder diesel engine, and also the cross-gimmick called Celerio X. But Celerio doesn’t share platform with the Wagon R, perhaps upcoming next gen Wagon R might.

Ritz-Swift

Ritz was launched in the year 2009 and the approach was extension of Zen Estilo-Wagon R experiment and had more meat. Ritz and Swift were meant to cater two different segments of consumer. It seems Maruti has properly segmented the market based on consumer need and tailored Ritz to address a different segment. To elaborate, Swift was aimed at segment of single-young buyer looking for lively performance (advertisement slogan – “You’re The Fuel”), but Swift had a major shortcoming – small and not very practical boot and claustrophobic rear seat. Practicality of boot and rear seat space was key concern area for young buyers having family and their need was to have ample space for carrying luggage. With the Ritz, Maruti decided to address those needs by redesigning the same platform to generate more space at the back bench and practical boot space. On downside it became slightly boxy at the back, apparently designer tried hard to mask that effect but end result was not that exciting. Thus you will see Ritz in the fleet of Taxi aggregators, but never Swift.

Ritz too brought in incremental sales unlike the cross badged products from other manufacturers failed to. Product planning approach seems to be spot on but when styling became a key decisive factor for customer in purchase decision process, Ritz lost to Swift. So, Ritz was not upgraded when Swift transgressed to newer generation in 2011.

In both the cases Maruti was successfully able to augment the market. With success of Kwid, Renault became overambitious and decided to imitate Maruti’s old approach and take its product portfolio to next level with the Captur, but look where they have landed with overpricing and grown up hatchback styling, a reminder of S-Cross launch. When it comes to SUV, what works in Europe may not work in India, because Indian’s love SUV to have strong street presence just like the Americans. Maruti resorted to quick price cut followed by facial update to save the S-Cross. Hopefully Nissan has learnt a lesson before bringing Kicks to Indian market.

Honda’s Earnest Effort

Unlike Hyundai (i20 Active~15%) and Toyota (Etios Cross~7%), Honda put more effort while developing the cross-version of the hatchback. While Hyundai and Toyota cross-version only had side cladding, redesigned bumpers and roof rails to appear rugged, Honda redesigned headlamps and tail lamps completely along with the sheet metal in the front and the rear to beef up the stance with increase ground clearance.

Result is apparent, WRV is lot more expensive than Jazz but it is selling much better too because it is able to offer emotional benefit of C-SUV styling which consumer do value these day. Honda may bring in a proper 4m-C-SUV in future but currently it is riding on the SUV-craze wave much smoothly with WRV.

Bottom line, cross badging has not turned out be a gravy train as envisaged by the manufactures in the past but there are other innovative ways to augment market.

Leading Passenger Vehicle Manufacturing Countries (2000-2017)

In last 2 decades PV Manufacturing Countries have witnessed major upheaval. With rapid economic growth of world’s most populous Asian Economies, world is different now. Below is comparison of the year 2000 with 2017.

Data Source: OICA

OICA Vehicle Type Definition

  • Passenger Vehicles are motor vehicles with at least four wheels, used for the transport of passengers, and comprising no more than eight seats in addition to the driver’s seat.
  • Commercial Vehicles include light commercial vehicles, heavy trucks, coaches and buses.
  • With above classification, let us put the USA production numbers in perspective. Americans love pick-up, popularly called truck in the USA. They happen to be bestselling vehicles in the USA (like Ford F-150, Chevrolet Silverado, Dodge RAM), however, they are classified as light commercial vehicle (CV) and thus not reflecting in these figures. When it comes to CV, list is little different with the USA standing at pole position just like China in PV. Also, Mexico and Canada, leading exporter of CV to the USA, ranks #3 & #4 respectively. Thailand too is in the same league.

PV Production Market Share – Major Gainers & Losers

  • Till 2000 India was closely matched to China’s production numbers but after that China has witnessed exponential growth compare to India’s modest figures, which today made China the biggest, way ahead of any other country of the world.
  • The USA and France has seen negative growth in the period under consideration, and Japan and Germany has seen almost flat growth in growing global market.
  • Demand form emerging nations has grown and since these countries are having tariff (import duty) and non-tariff entry barrier (ownership through JV, local content requirement etc) in place, has ensured, automakers across globe to start local manufacturing.

Continent-wise PV Production Market Share

Subprime Crisis of USA (2007) followed by Sovereign Debt Crisis of Europe (2010), were the inflection point which dramatically shifted the base of production to Asia.

Crisis made Detroit giants to lose their Global #1 and # 2 ranks and prized assets of Europe were later acquired by Asian companies. In the hindsight, some of those who rushed for podium position to gain most from the misfortune of the American automobile giants were later mired in controversies themselves, like, Toyota (Takata-Airbags-Recall), Volkswagen (Diesel-Emission-Scandal), Nissan (Vehicle-Inspection-Scandal).

Asia

  • Fast growing markets of underdeveloped Asian countries of yesteryears have become new production hub; notable countries are China, India, Thailand, Indonesia and Iran.
  • Japan and South Korea are still very competitive and leading exporter.

Europe

  • Production base is slowly shifting to low-wage East European Nation.
  • Germany and Spain are still very competitive and leading exporter.

North America

  • North Americas low wage story is similar to East Europe, where production is being shifted to Mexico.
  • NAFTA is under re-negotiation, driven by President Donald Trump, may soon alter these numbers, in future.

Global PV Production Market Share

Global PV Production Ranking

(The article is written by Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)