Foreign Brain vs Desi Dimag in Indian Car Market

Published by MBA Skool Team, Published on January 01, 2015

It started with Hindustan motors in Kolkata, West Bengal, then Premiar, Mahindra & Mahindra, Maruti Suzuki, Tata Motors, Ashok Leyland and now India has the manufacturing facility of world’s biggest names in passenger vehicle industry. It has a very feel good effect in the common people of India on the street because they can test the experience the brands like Hyundai, Toyota, Volkswagen, Nissan, Renault, GM, Ford and many more. But the people who are waiting inside the showroom for the customers to selling their ‘Desi’ cars or people in the manufacturing unit whose working days have been reduced from six to four, three or two or have been given VRS to adjust with the low demand of market have lots of reason for feeling not good.

It is accepted that the reason behind this mainly the current recession in market but it’s also very much true that our Indian brands are falling behind to the shiny and fluidic designed and sophisticated featured cars of foreign big players. Ford had sold their ‘Figo’ more than 3 lakhs in first three years of launching and currently enjoying a huge demand of Ecosport. Simultaneously, Honda is frequently launching cars in the market with their highly innovative and most updated features and Nissan also has launched their much awaited ‘Datsun Go’. Renault is smiling after launching Duster with a huge success and last but not the least; Hyundai is also continuously celebrating after launching almost their every model because of high demand. These are only few, other foreign brands have also shown their dominance with their updated and fabulous models in the market. And yes of course, the market leader Maruti Suzuki is using their Japanese brain to design their cars and that’s why they have dominated the past, dominating the current and has a very high probability to dominate the market in future.

But currently the question is that in this current tough market what our real ‘Desi’ brands are doing? Are they not making any effort to rule the market instead of surviving? Answer is yes, they are really trying to make their edge more sharp for better penetration in the market. Mahindra has a great business strategy starting from the earlier. Recently they have changed their logo and made it sharper than before to indicate public about their cutting edge technology. Their ‘Bread and Butter’ Bolero had managed to sell around 1.5 Lakh per annum in the period of recession, Scorpio also managed to maintain the relevant indentation in market. But the most importantly they had seen a great success after launching XUV 500 with multiple sophisticated features and outstanding design. But, still their overall sales had shown a decline in recent months. They bought Korean Sangyon which is also yet to proof a good decision till now. Market attraction from XUV is declining day by day and they also have failed to succeed in their car division with the models like Verito, Verito Vibe, Xylo etc. The reason behind this low demand is not only the last years market slowdown but along with the focus of people towards the foreign brand like Renault Duster, Ford Figo contributed in a large extent. It is really become very difficult for Indian brands to competent with foreign big brands in terms technical advantage specially is case of passenger vehicle. As mentioned earlier, Mahindra has a very good business and product development strategy than the other ‘Desi’ car manufacturer and their greatly focused business model to the changing market scenario will help to survive and later dominate in the market. Though their strategy of accruing Sangyon has not proved a great beneficial decision till now but in long term it will definitely become a success. And yes of course they are now having the advantage of getting the technical learning’s from Sangyone to implement in their Indian brands.

What another ‘Desi’ brand Tata Motors is doing? They really ran their passenger car business in commercial vehicle model and currently experiencing low market demand. They continued the Indica, Indigo brand continuously without any relevant change which made the customer bored over the period and they shifted their focus towards other brands. Unfortunately their dream car Nano also could not make a great market due to many reasons like delay to hit the market due to shifting of manufacturing unit from Singur to Sanand which diverted people’s attraction towards the other brands and reduced the interest. Next is ‘Cheapest car’ publicity, because of which many people turned off form Nano, and last but not the least, the quality of Nano.

Though it is late, but Tata Motors now finally wake up to grab the market. The reason behind the success now a days in automobile industry not only quality, but other facts like aesthetic looks, sophisticated features, ease of buying and uniqueness matter a lot. It is true that Tata Motor’s cars have a good quality throughout, but somewhere there was a lack of refreshment, modernization, sharpness which ultimately reduced their sales. To get succeed in current market scenario, the car should have great styling, quality, and features which must suites to era of smart phone and facebook.

They have currently launched much awaited ‘Zest’ model and will launch ‘Bolt’ in few days. First I would like to appreciate the nomenclature of the cars as ‘Bolt and Zest’. This kind of exciting names will definitely help to attract the customer. They also marketed the cars with a great effort like sponsoring film fare, IPL team, Bollywood movie, making newly looked showroom etc. This will definitely help to improve the visibility. Apart from this time they have done a great homework to make this car very attractive. This car was designed jointly by the team of UK, India and Korea. This car is equipped with many modern and attractive features like new turbo charged engine, multi driving mode, excellent design, great cabin space and powerful AC and very much updated electronics and safety features.

When I personally took the experience of riding the car, believe me, it was an amazing experience and I believe that, Zest will definitely attract the people towards the showroom and will be a great success.

Tata Motors Hatchback model ‘Bolt’ also will have similar kind of attractive features with humanities line like ‘Zest’ and hopefully will be a great success. They have also lined up cars like Nano Diesel, Kite, Nexon etc. with latest and refreshed design and most updated features to bring back the customers again in their showroom.

At last, what is the ‘Myantra’ for the success of ‘Desi Car’ business in today’s competitive market??

1. Unique and attractive: Every new car should be unique and attractive. It must catch the attraction of buyer among the crowed of other brands.

2. New smart feature: A car manufacturer should understand the voice of customer very well i.e. what exactly the customers are demanding. We are living in the age of smart phone, smart TV so why not smart car? We should learn how the company Apple and Samsung is bringing refreshed and sophisticated models one after another. Like this if a car company wants to be successful for a long time, now days they should come up with new and refreshed models frequently.

3. Fuel Efficient: Hugely significant.

4. Warranty: Extending the warranty is like a competition and is definitely attracts the buyer.

5. Better Marketing: To improve the brand visibility and to make the customer aware the brand, holistic marketing strategy must require.

These are only the story of outside world, but to sustain the business organization should focus on the world which customer cant show from the outside too.

1. Manufacturing process should be always better to maintain the consistency and quality cost, delivery.

2. Cost reduction: Innovative thinking for performing VAVE (Value analysis and value engineering) or cost reduction steps should be taken seriously to reduce the process and product cost. Because only this helps to survive a company during low demand.

3. Strong and better supply chain management: Supply chain acts like the blood of an automotive industry, so for the best output, this should be managed effectively. The vendors of automotive industries always tries to build up better relationship with their customer but an OEM(Original equipment manufacturer) also should establish a good relationship with their supplier which will help to bring out the best from them and will make them consistent.

4. Improvement of employee engagement: Better human resource policy always makes an employee happy and helps to perform best at his work place. So, human resource policy plays a great role to bring out the full effort from an employee which ultimately helps to make a better product.

5. Serious Audit: Internal and external audit of the company involved in supply chain should be conducted more effectively. This will help to evaluate the supplier accurately and rational expectation can be made to them.

So, to sustain in this competitive market, our ‘Desi’ car brands should work very very hard to match themselves with the voice of modern customers. This should be very consistent too. The hard work will improve their quality, cost and delivery achievement and will help to compete with the foreign player. This is the time for doing and they have to do this must, otherwise the next and last option of ‘Die’ is obvious.

This article has been authored by Arijit Hawlader from Indian Institute of Management Raipur.

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