[Stribog]

Every auto forum, enthusiast conversation these days when it comes to 4 wheeler brands devolves ultimately into "why the tin can makers thrive while huge brands like Toyota, VAG fail".

I believe rather than look at why xyz brands fail(ed), we should look at what makes a successful brand, successful in India.

One way to understand this is, is to plot it on the Price Benefit grid from which we would get the customer value proposition.

https://chsorens.wordpress.com/princ...e-proposition/

There are 2 ways a brand can be successful in offering a compelling value proposition, or as one infamous Godfather said, "make you an offer you can't refuse".

1- Offer more benefits for less price, this is also known as "the steal"
2- Offer more benefits for a higher price, this is the brand premium.

The only exceptions here would be married to the Dussenbery effect aka the demonstration effect, but these too need a compelling value proposition.

https://en.wikipedia.org/wiki/James_Duesenberry

To break the Step 1 or 2 as listed above, a brand needs to establish a halo product, and penetrate enough in the market that just by its presence it can scale up the price / value proposition. One brand that does this very well would be Apple (world over and in India too) or even the 1+ brand.


So moving back to the 2 options available.

There are some key elements that anyone in the none luxury end of the market looks for, and these are brand agnostic.

1 - Peace of mind. Now this is largely subjective and market driven. The average lay car buyer does not spend hours in auto forums like this, do research etc. They go by market consciousness or a wide unspoken belief system. Here for instance, a MS is known to give you absolute peace of mind. Right or wrong, this is an absolute belief and other brands can break this (not unless say MS themselves score self goals)

2 - Accessibility to dealers, and consequently ASS networks - No one likes driving 1 hour just to give your car for a service, at least no layperson will.

3 - Cost of ASS - Again, the average customer services the car in authorised service centres during the warranty period and possibly shifting to the nearest Garage (not some exclusive F(n)G). So distances again come into play here. And things like DIY for simple or complex fixes are absolutely ruled out.

These are not directly related to the product but tangential to it, the product needs to be,

1 - Cost Effective! NOT CHEAP. Ask Tata and the failure of their Nano to understand just how this phenomenon works. You CANNOT market something as cheap, it just wont work because the demonstration effect (see above) kicks in. You can't be seen in something "cheap", so cost effective is the key word.

2 - Features - I have not studied other markets, but the Indian market likes to consume VFM products, be it cars or underwear and a feature list, which will be compared against its competition is a vital element here.

3 - Then comes in, with much smaller weightage things like displacement, engine tune etc etc.

All of the above are considered features, not just the features you might find in your car.

Don't forget, the buying of a car in India is not a personal affair but a family affair (As many in our own forum will testify), so you can wax eloquent on the DSG autobox or the torque etc, and if you are on the right side of 40, you will get shut down by whatever your mom, wife, dad, elder bro, uncle have to say about it.

Plot all this on a Maslowian hierarchy of needs, https://www.simplypsychology.org/maslow.html

Aspects like say the GNCAP would be right on top, far removed from baser day to day requirements.

MS Operates on the Less Price, More Features area of the grid. Their dealer network is unmatched, they are legendary for their peace of mind, bullet proof reliability, ASS is a given, be it Ladakh or some remote village near Kanyakumari. And the Dussenbury kicks in here, you see your friends, neighbors own a MS, it then becomes that much more easier to pick up a MS.

Hyundai got this very early on in the game, they are basically MS v 2.0 but with a wider spread of products (MS usually CANNOT sell in the B segment and above category, and don't even make cars for the D + category).

The likes of VAG, Ford, Toyota are neither here nor there. So in the price benefit grid they would be in the More price, lesser benefits or same price, same benefits areas.

So a product like a Figo, quite a compelling product no doubt but it is in the highly competitive same price, same benefits area which its competition has saturated.


New entrants like SAIC have studied this market and come up with a product that far exceeds the less price, more benefits segment which is why they move so many units of a 20L average OTR sticker price product. Nissan after a dismal performance in the High price, less benefits segment of the grid, has knocked it out of the park with its Magnite which is entirely in the less price, more benefits (though things like dealer network remain poor, but that is how compelling this product is).

Blaming abstract elements like tax policies (SAIC and Kia have the same tax policies a Ford or VAG have don't they?), or worse, the "market" is just inexplicable to me.

If OEM's like VAG, Ford etc want to succeed? And they can, the Indian auto market has been growing at a crazy clip and will continue to do so for the next few decades, they have to take a page from the likes of Nissan and reinvent themselves.

Offering products that do not resonate with the market would be the shortest way to Harakiri.

[Sentinel17]

Right now,it doesnt matter which company pulls which strings.None of them can defeat Hyundai and Hyundai cannot defeat Maruti for the next 5-6 years.
What I am really interested to see is how the market reacts to EV’s.With EV’s,reliabilty becomes much better,maintenance is low for every EV and an effective range can pretty much be acheived by anyone.Do you think Maruthi can still hold onto their market share?

[CARDEEP]

Maruti-Suzuki's success can solely be attributed to Govt support & policies. Afterall it was Govt owned company back then. It offered peace of mind ownership courtesy widespread dealership & Japanese control on quality & procedures. Had Maruti not happened to Suzuki, it would have been a defunct brand owned by Toyota like Nissan owned Datsun.

Hyundai was able to replicate some of Suzuki's successes because of their tall boy Santro which redefined the market, & was ably supported by service network. The role of Accent & Diesel Verna cannot be ignored. Kia, courtesy Hyundai, has done the homework well & entered the appropriate segment to make an impression than go for sheer numbers.

SAIC's MG brand is successful because of gizmos & marketing blitz & having a competitive product in entry-level aspirational segment.

Other marquee brands are too busy for smaller markets than being in mass market like India. They want Indians to squeeze the last penny from the purses, & in many cases their vehicles are too delicate to be driven over puddles. Of course, they all blame Govts for tax structure, but conveniently ignore their profit margins that are often bigger/ fatter than cost of manufacturing the vehicle.

[GTO]

The reasons why Maruti clicked are entirely different from Hyundai. The reasons why the two newcomers were successful are also vastly different. Kia & MG both did their branding right, although Kia was 10X more aggressive with the product, variants, engines, dealers, production, logistics etc. Imagine giving your suppliers a commitment of 8000 Seltos a month before your factory is even ready!!! That was deadly. For a Chinese brand, I think MG did a fair job with the Hector; the product also did a lot of self-selling due to the size, features & bling.

Originally Posted by Sentinel17

Right now,it doesnt matter which company pulls which strings.None of them can defeat Hyundai and Hyundai cannot defeat Maruti for the next 5-6 years.

But not everyone wants to beat Hyundai or Maruti. If I was the CEO of a car company that is at no 5 or 6, am meeting my targets and enjoying profits + a little growth every year, I'm happy. It's a misnomer that every car company wants to be the no.1, no.2 or even no.3.

Originally Posted by CARDEEP

Maruti-Suzuki's success can solely be attributed to Govt support & policies.

Early success, definitely yes. It was pretty much run like 'Government Motors' for the first decade. But post liberalisation, all MNCs arrived and Maruti actually slumped. From the 2000s till date, I will state that Maruti's success is well earned, well deserved and fought hard for. There has been no favouritism for it from the authorities.

[TorqueIndia]

There is something wrong the thread caption. Success cannot be related to all of these listed brands, also failures cannot be related all of those unlisted brands. I would say Maruti and Hyundai hard worked, earned and stabilized their positions over the years. We relate success with them because of their long standing consistent high volume history. I don't think we can relate the same for Kia & MG, rather they had a better introduction to our market compared to the competition. They are still infants in the Indian car scene.

Kia to some extend have proved themselves what they are doing and where they are going, also it's kind of market share expansion of Hyundai itself. Story of MG is different, there is not much confidence about the brand or its future, we have seen many financially sound brands coming and exiting. Also we had already seen the same strategy as of MG few years before with a better product - JEEP COMPASS. MG was just following very much similar marketing and product strategies like that of Jeep. Jeep was also fairly successful in their work with COMPASS which sold around 60,000 units at that higher price point and very limited reach.

They had a better introduction, now they need too prove it with consistent performance which is the key. Sales are already dwindling for many new comers.

I blindly kept my faith with KIA and enjoyed their success, later with poor crash rating they cheated.

[Sentinel17]

Originally Posted by GTO

But not everyone wants to beat Hyundai or Maruti. If I was the CEO of a car company that is at no 5 or 6, am meeting my targets and enjoying profits + a little growth every year, I'm happy. It's a misnomer that every car company wants to be the no.1, no.2 or even no.3.

Yep,you are right.Except Tata,no other company seems to be aiming for the top spot.
But the reason I stated that is because OP’s post seemed to compare other brands with the top sellers and outlining the measures necessary to become the best seller.(correct me if I am wrong)

[landcruiser123]

A huge chunk of cars in India are micro & compact cars with razor-thin profits. As of today, I feel like only the Koreans & Chinese are really aggressive in the Indian (and other major) markets as they are still relatively newer brands which are finally getting some level of mass acceptance(especially true for Kia in the US). Note: The Chinese haven't yet entered the US.

Toyota, Honda, Ford, Chevy, Ford, Chrysler, VW, Nissan are mature brands(at least globally, compared to the Koreans) which are busy focusing on bigger markets and just don't care about expanding in India.

On the global stage, Suzuki was and is never well accepted. They have pulled out of the US years ago as their cheap cars couldn't handle the American roads and drivers. If not for India, I'm willing to bet Suzuki cars would have been defunct or absorbed into another large Japanese company. Suzuki + Toyota partnership is probably the first step towards the merger, but that's a topic for different thread

[nitkel]

Probably an unpopular opinion, but I would say that we put a lot of emphasis on crash test results here (a good thing for sure) and make it the sole criteria for calling cars "tin cans". But, the fact remains that the probability of anyone having a big "life-threatening" crash in their whole lifetime is very small and there are a thousand other things that can and will kill you. Add to it that if you crash into a bigger vehicle like a bus or a truck at high speeds, then the NCAP results hardly matter and what would save you is pure luck. So, manufacturers are not at fault for providing cars only safe enough to pass local laws. They are in it to make money after all and the normal Indian buyer doesn't care too much either.

The common funda for success remains the same across all businesses. Give the customers what they want and you'll earn good money!

[audioholic]

While Maruti has always been an obvious first time choice for many car owners, I see Hyundai being the first choice as an upgrade to the same owners. I have observed this phenomenon in my own extended family. Whoever got their Altos or WagonRs as their first car are now moving to Hyundai hatchbacks or sedans. At least in the last three years I have heard of six such purchases. In addition to this, Hyundai and Kia are also proving to be very successful in attracting the newer generation crowds due to the features on offer and their rather aggressive design. That is IMO proving to do good for the sister brands. In addition to this, Hyundai has good presence and a long term reputation like Maruti and the whole thing about Maruti being cheap to maintain doesn't exist any longer. Of course it's still very reliable, but service costs are no longer cheap. Hence people are willing to strike off that factor in the decision making.

Lot of social media discussions about GNCAP safety ratings favoring Tata Mahindra, but I don't think this has changed anything in the market. At the most it is helping Tata come up the toppers list at the cost of a few other brands loss. This basically points to the group of customers who are willing to experiment outside of Maruti or Hyundai but doesn't seem to affect the rest of the customer base. That shows that these brands have bigger issues that keep away customers. And speaking of the rest of the brands, I think they should definitely study and understand what happens with the market leaders. Maybe then they will be able to understand why they didn't make their way up the market share. Perhaps they always rode in with their brand name attracting people and then lost steam due to average products OR average ownership experiences both of which are necessary for a brand to succeed in the long-term.

[prajwalmr62]

Originally Posted by nitkel

But, the fact remains that the probability of anyone having a big "life-threatening" crash in their whole lifetime is very small and there are a thousand other things that can and will kill you.

That might be true, but having a safer car does give you a lot of peace of mind. Also, we should always push manufacturers to produce much safer cars. I'd say we are heading in proper direction.

Most of the "life-threatening" accidents happen due to reckless driving and totally oblivious driver. So, whatever is "small" for you, is pretty much "high" for this particular group. We should focus on law enforcement and strict measures for license issuance, followed by safer cars. Cars are catching up, but law enforcement isn't.

[AROO7]

I would like to add my own observations to what OP stated about the mentioned brands success/failure-

The strongest point about MS in India is that-

• It has been in India for longer than Hyundai, Toyota, Kia, SAIC, Ford, and VAG.
• Optimized product offerings in line with government rules and regulations.
• Wider service and dealer network.
• Mass-produced spare parts, so after-sales service cost and ownership cost are comparatively low.

The last point was recently highlighted in Leonashi's post, here is thelink (Daylight robbery by Toyota | Some Glanza parts are priced 10x over Baleno's).

Coming to Hyundai-
These guys started competing with MS by giving more feel-good and comfort features. I remember when the Santro was the first to launch the biggest highlight was it had power windows, then with i10 they were the first to bring ORVM mounted side indicators to a sub 5 lakh car, ventilated seats in Verna, and many such examples.

So automatically who was more inclined towards features and didn't want to follow the crowd went in for Hyundai and that's how they clinched the 2nd position here.

Coming to Toyota-
I don't think their strategy is misplaced they have huge profit margins from Innova Crysta and Fortuner, so even if they don't sell in MS kind of number they are making a really good profit. Lastly, Toyota is a company that won't bring a product in a jiffy unless and until they are fully satisfied they won't launch a new car or a new feature (read sunroof).

Coming to Tata-
They have safe cars but not well-engineered cars. It seems like they unlike Toyota are always in a jiffy to launch a car and end up lab testing the car on the consumers. So unless Tata fixes this, only having top-rated safe cars in its portfolio won't let it have the bigger share of the pie.

Coming to Ford-
Ford started with a sorry note by bringing an old car to India in the form of a Ford Escort. Eventually got dubbed as a brand whose cars are expensive to maintain and to date that image sticks to them, even though they have vastly reduced the ownership cost. Then they didn't bring as many products in the market, updated them frequently, and kept on deleting features. So eventually they are at the cusp of oblivion.

Coming to VAG-
These cars immediately struck a chord with the upper-middle class and became a status symbol for many. That's how they tasted early success. But repeated niggles, high upkeep costs, frequent breakdowns, parts unavailability, and cars based on decade-old platforms being sold up till now. These are the prime reason why they are lagging in the present time.

“To sum VAG and Ford, got driver's car, solid thud wala sound doors, well-engineered cars, etc but for an average Indian these are the least of his/her concerns. They want a fuss-free point A to point B transport and nothing more.”

Coming to SAIC-
This is a curious case as these guys came with a lot of pomp and show about their British origin but most of us knew what they actually were. Nevertheless, people fell for their cars because of the bling and big car looks. They also emulated Hyundai's strategy of giving feel-good features like a huge panoramic sunroof, big touchscreen, connected car tech, etc. that was mostly unheard of at that price point. People got so blinded by this that the car (MG Hector), which is rebadged and sold as Chevrolet Captiva (which was a sales dud when Chevrolet launched it in India) in other markets, was hit among the Indian Consumer.


To conclude MS is the big player in a segment where margins are wafer-thin and it has the monopoly so competing with it there is a suicide. Instead, carmakers like Ford, Toyota, and VAG can best do is focus on the lucrative 10-30 lakh crossover SUV segment. Sell high margin low volume products and still, they can survive the onslaught of MS and Hyundai and save themselves from being tagged as a failed marquee in India.

[padmrajravi]

All four of them get the product package right. Maruti and Hyundai customers also benefit from the general reliability perception about them. Kia and MG sell only because of their product packages. Their reliability ratings are still not evident, but still they sell.

In reality, they do a couple of important things very well. The first one is product packaging. You won't see any of them launching cars without android auto or apple car play in higher segments. The next one is media perception. You won't see any of them reacting softly to negative news. They take publicity very seriously and do everything they can to affect the media perception.

[Vin_Redline]

Originally Posted by Stribog

Every auto forum, enthusiast conversation these days when it comes to 4 wheeler brands devolves ultimately into "why the tin can makers thrive while huge brands like Toyota, VAG fail".

I, for one, seriously don't understand what the so called "automotive enthusiast's" problem is with Maruti/Kia/Hyundai. If you are someone who doesn't mind paying a premium for a 10year old strongly build car with bare bone interiors, please do so. But also the enthusiasts should understand that not everyone enjoys the privilege of having surplus money to spend at VAG ASS or/and some of us intend to keep a car for 8 years+ , and don't want to be driven in a 20 year old dated car 10 years from now.

Now why the enthusiast's marquee brand doesn't sell "enough" cars, the brands themselves should answer. My guess, they just lack the intend to compete.

Toyota - re-badged Marutis and some dated products - some premium priced to enjoy a big fat margin,.
VAG - horror ASS & premium pricing because they don't want to sell big numbers.
Honda - again content with what they have
Ford - they don't launch/update their products in time

Whether the "enthusiasts" believe it or not, the "tin-can" manufacturers read the market well and, most importantly, they manufacture machines that are usually well put together mechanically. And when they do have problems, it doesn't cost a fortune to fix it.

Some of us buy cars only twice or thrice in a lifetime and want to feel nice & plush inside the car, also don't want to spent our savings on its maintenance. For some, it's an upgrade from two wheelers. So you should then also compare a two wheeler with a poorly NCAP rated car in terms of safety. So they overlook build, prioritise VFM, reliable cars with "gizmos" and what's wrong in that??!

If anybody wants the marquee brands to succeed (sell more numbers) ask them to
- update their products (in time)
- do better QC
- reduce margin, price them affordably thus sell more numbers
OR ask the govt. to
- cut taxes
- make NCAP like ratings mandatory.

[ashokabs]

The desire to become no. 1 or 2 in the market depends on so many factors. Large MNC auto companies may not want to become no. 1 in India owing to the difficulty of doing business in India and the historical difficulty of changing taxation rates. To illustrate when I was working my company was world no. 2 and an early entrant to India in the 1940s. When I asked the Chairman (UK based) why they didn't expand in India as it was understood that India and China are the next big growth markets. He said that the unpredictability of taxation and related factors make it difficult to predict profitability.

Also, large MNCs are dipping their fingers to test the market and keep their powder dry until the market becomes favourable to their products. This is why they entered China as well and grew enormously when the Govt had policies that favoured them - India famously lost out.

In India it is the companies that depend on the Indian market for a large portion of their growth and profitability - MS, Tata Motors and M&M who would want to compete for no.1 or 2. Remember there are advantages to any company of being no. 1 or 2. While two of them are Indian companies notwithstanding Tata Motors investment in JLR, MS is also dependant on India as it is their largest market.

I agree that Indians look at value for money even in the luxury segments. Sure there are enthusiasts but they are limited in numbers and the market hardly exists for them only. Whether it be 'kitna deti hai' or what features does it provide these are important considerations in many of our markets in India. My feeling is that there is also a very regional element of wants, needs and likes in India - i.e. East, West, North and South have different needs that are regionally and culturally defined.

I would also say that SAIC and Kia would be considered successful if they can grow their market and be around for say another 6-7 years. I think long term strategy and the Govt policy will play a major role.

[Godzilla]

A successful business depends on how well they grasp the current market trends and utilise the same. Maruti did well in their time (when their market share increased), now Kia and Hyundai was able to effectively understand and deliver. Infact Koreans have that in their DNA (read culture). Please google ‘Nunchi’.

Market needs are dynamic, it shifted from wanting a small hatch (M800) to small refined hatch (swift) to Family SUV (Creta and Seltos).

1. A company should be able to predict these needs much in advance and create long term pipeline of products. Maruti still doesn’t have an SUV in the Creta space, meaning they have become the laggards. Indians now prefer more premium products and they started disliking made to a budget looking ones. Kia Sonet vs Brezza.

2. The art of marketing: Hyundai and Especially Kia did a splendid job in marketing their products. I remember seeing the first Kia ad 100s of times, it was damn good(the one with the tiger and ballet dancers). They positioned it as a premium brand, which made them more desirable. MG too did well here.

3. Market research: Kia has done exceptionally well here from identifying what a potential customer will want from cooled seats to sunroof. They nailed it. They exactly knew which features customers will not compromise. Nissan Kicks did not have sun roof or automatics when launched these are huge misses at that time.

4. India first approach: Many companies jump into India with half the heart and experimental attitude. This will not work. India is a complex market, it is not simply another market where companies can bring the product that succeeded in other markets and just sell it here. The company has to view India as a prime area to focus. Kia and Hyundai did and Nissan and Ford failed to do that.

5. The art of variants and pricing: Kia provided everything multiple engines, transmissions, interior colours, GT variant to ensure they cater to everyone. The spread of pricing for Seltos was so wide that people with any budget can go for their cars from 10-20 lakhs. It is more like having multiple products, Maruti essentially introduced 10 different products between 3-12 lakhs. Kia sold 1 product in 10 different ways between 10-20 lakhs. Who is smarter ? All the cost in developing multiple products is saved. Also do note that Kia Seltos is a global product so Kia saved a lot of money there as well. Please note that they realised they had to change the chassis of Indian variants to cut corners which IMO could have been avoided.

To summarise Indians love premium brand positioning (read Skoda, Kia vs cheap positioning Nano), Feature rich product vs a solid driver’s car (Most people give precedence to looks, space and features rather than driving dynamics or safety) The case of Ford. Many Indians see their cars as a flashy style statement more than an instrument to travel. Also what India lacks compared to other markets is safe and relatively empty roads to explore a fun driver focused car. Even if I buy a BMW M340i I have to hunt for good roads to experience the pleasure of driving it. So I don’t blame any Indian opting for a plush, spacious, feature rich car against a beautifully balanced, less spacious, stiff riding car.