[MadinMumbai]

The overwhelming consensus from the posts above seems to be that the global giants are lazy and, or, incompetent.

Why don't we look at our asswise policies? Even if we buy the stupidity of 28% GST plus CESS plus 14% registration there is no getting over the fact that classification of categories is extremely problematic. Instead of safety, comfort, fuel efficiency, technology, etc., we have a taxation policy premised on archaic parameters like engine size and dimensions.

Now even an idiot will agree that size of engine and dimensions mean nothing. There are many examples of 1.2 litre engines being less efficient than a 1.5 litre engine. A 4.2 meter car being safer and more fuel efficient than a sub 4 meter car is not unheard of. This categorisation is arbitrary. It might have served a purpose when India was a poor country and making cheaper cars was the sole goal. There was a time when the government's only concern was that only 'important' people get cars and the rest be restricted from buying them.

Fact is global companies will not produce products for the whims of Indian policy makers. They make products for the global markets hoping to sell millions of pieces over many years. Their investments and recoveries are made basis that logic. Force fitting norms like 4 m or 1.2 litre for a market of a few thousand cars per year don't make a lot of sense given the cost of developing a product. Many of these auto majors came into India basis promises made by the Indian government and assumption that sooner or later the markets will arrive at a level playing field. After two decades many have given up hope of any sense prevailing.

We will be plagued with dodgy quality products, most running behind global standards by a decade or more, because there is no incentive for Maruti or Hyundai/Kia to push for better standards. There is no competition because our government policies have ensured it so. Maruti will continue to rule the roost despite being a non-player in the international markets.

GM and Ford have left, Toyota and Honda are in a perpetual pause mode. This is not because they are lazy or don't know how to make cars. By the logic expounded by some on this thread Maruti should be outselling GM/Ford/ Toyota/Honda across the world.

[NiInJa]

I wont talk about taxation, purchasing power of average salaried Indian and ownership cost of a car in our country as that has been discussed in lengths in a different thread. Plus, the macro economic factors here are too complicated to summarise in a few lines

On Tesla:
One reason why government is hell-bent on asking OEMs to manufacture here in India is because it has long term positive effects on economy. There are many success stories of Indian ancillary part manufacturers like Motherson (Sumi), Uno Minda, Varroc, Endurance, TVS-Lucas which simply would not exist or would be small time players in the global scene if India were to import and assemble cars here. If Tesla or any other company starts manufacturing here, it will help these ancillary suppliers/manufacturers as well. Think of it as a hen that lays golden eggs, and has life expectancy of 50 years minimum.

On GM, Ford, Harley Davidson:
The American philosophy of 'Go Big or go Home' came to bite them eventually. During my time with the big fours, I understood that US based companies emphasise on 'profitability in shortest time', else they simply exit the market either temporarily or permanently. And this is not just in automobile industry, but also in IT (although a little more complex). The company which I worked for earlier exited Middle East market, because the clients did not pay on time or negotiated a little too much causing loss of time and money to them.

GM and Ford kept on throwing their global cars in Indian market and waited to see which one stuck. They hit jackpot with some of their cars like the Cruze, Beat, Fiesta, Ecosport etc, but then, they did not have any plans for those products in the future once the competition and market evolved with changing regulations or customer preferences. So the good Figo was replaced with a cheap Figo, stripping down all of its characteristics. Think about it, the newer Figo was actually boring to look at than the old one, while Hyundai/Tata came up with a extremely desirable Grand-i10, i20, Tiago, Altroz. They continued to sell Ecosport, but did not care to launch a similar SUV that would compete with the Creta/Seltos riding on Ecosport's success. GM did something even more stupid, tried bringing old/cheap SAIC models (I forgot their names while typing this). Look at VAG, Renault or even Citroen or our home-grown manufacturers like Tata and Mahindra, they are making platforms specific to India and that takes time (and money). Ford and GM had the time and resources but failed to utilize them efficiently.

Harley Davidson:
With their strategy to sell extremely expensive bikes in India with questionable customer support and spare part availability, it was never going to work in the long term. HD had a very niche customer base and to sustain on that was a bit to optimistic. Should have done their home work. And then, Harley was struggling across the globe. One of my friends owns a Harley and he keeps telling me how long he has to wait for certain consumables.

[sunilsreenivasg]

"One model cannot run the entire business" is one fact probably auto makers should understand. GM's beat, Ford's ecosport, Renault's Duster were the jewels. That success stories should have lead them for more innovative products. Instead, their next release of products made the crowd to look at other alternatives. That's never a good sign. Innovation is something that keeps anyone in the market. A classic example is on how Mahindra's and TATA's are surviving. Flagships like Kia and MG studied the crowd well and are releasing products based on market requirement. Hope many more companies innovate something that our crowd needs and as GTO said, we need more brands. We don't need many models from same brand.

[sukhbirST]

Fact is even buyers are struggling to buy and the prices keep going up while salaries have not gone up. If the loans were not available at current rates it would be even tougher to sell.

[sreejithkk]

I think that some of the manufactures are either too complacent to change, or at times, they did not marketed their products properly. Ford actually produced the original fiesta and ecosport too long, and they still had good number of takers. So we can't really blame that they failed because if our policy. The sub 4 meter rule came more than a decade ago, and if we are stating international manufactures are failing due to that even today, there is nothing much to say. If you see Renault has a great product called Triber, which decently sell. From the launch time itself, all media and some owners mentions that only major negative point of Triber is 1 liter NA engine. I always feel that, if Renault has introduced their turbocharged petrol engine and CVT combo in triber, the sales will increase by atleast 50%. But they still not launched this engine/transmission. And eventually if triber sales declines, whom should we blame? Renault or the consumers? Ford internationally has lots of SUVs above ecosport and below Endeavour, but they did not launch any. (SUV craze was already there in the international market way before it started in India, and they still missed the opportunity). Currently the MPV market is in good demand (Just look at the sales of Ertiga/XL6). Kia understood this and introducer carens. Honda already have an updated BRV, which looks way better than earlier BRV in Indonesia, but they may be still evaluating it for India, and might never launch it.(As they did with HRV for last 8 years). So if a manufacture cannot launch relevant product for a market that needs , they eventually fail. Most of these international players are already making smaller cars (smaller by global standards) for European and Asean market and many of them will make sense in India, if they ever launch it.

[dust-n-bones]

Originally Posted by landcruiser123

Anyone can point fingers at protectionist policies and high taxes, but the real reason is not being able to keep up with the ever changing customer expectations.

I would like to view this problem differently. We are talking about the likes of Ford, GM, Toyota, Honda - who operate successfully in the US - arguably the biggest market of ever changing consumer behavior (from big screens, turbochargers to the SUV craze), and regulation (seatbelts, airbags, crash tests, reliability ratings) which in fact trickles down to markets like India.

Are we suggesting that all the automakers, each with over 100 years on the cutting edge of consumer preferences are incompetent when it comes to India? 'They are lazy' is what I see most often as the apparent reason in this forum.

Maybe they are lazy because of a) India is a tiny and stagnant automotive market, b) the 'addressable market' for a new launch is microscopic (5-7% of overall market). Combine the two, and you have an impossible business case for a deep investment. Ford tried the impossible, and finally had to cut its losses.

There are very few success stories in India beyond the incumbents (Suzuki/Hyundai, Tata/Mahindra). Yes they work hard, and yes they know their customers. But when the incumbents benefit from policy barriers to entry (sub-4m, sub 10lakh, import restrictions, abrupt policy shifts etc), we end up with an imperfect market situation, 'oligopoly' - the kind that exists in India today.

And all of government, consumers, workers and investers suffer as a consequence.

[Livnletcarsliv]

While I agree with some points of the OP, I strongly disagree with some points.

For eg - Ford, GM, Harley did not shut their operations/plants just in India. It did shut its presence in many other markets like Australia, Africa, the UK, etc. So it is not an Indian phenomenon that all these brands failed in India - It's a global restructuring and strategy for all these brands to focus on their strengths only.
For that matter, I totally blame Ford, GM, Harley for its failure in India. If Kia/MG can succeed, an Indian veteran like Ford should be able to.

On the other hand, Toyota doesn't need Maruti to survive in India. Toyota has all the bells and whistles to survive and sustain on its own in India.
Maruti is definitely not the jack of all trades. Maruti is surviving only because of the first-time car buyers and the majority (in the car buying class) middle-class buyers. Maruti, unless and until innovates and upgrades itself will definitely lose the market share (Even though it will still survive and sustain).


Unskilled, high-cost power are very insignificant costs.
And, I don't know what it means when you say high capital costs and high logistics costs in India. Isn't India supposed to be a lost-cost manufacturing hub (not just for automobiles but for everything)?

Other than this, I also strongly attribute this weaker automotive industry in India to the weaker policymakers and decision-makers at the top. I would want more and more intellectual and experienced minds at the top. I would want problem solvers and solution thinkers which I think is a major lagging factor of the present government.

Last but not the least, this automotive struggle is not just an Indian situation. It's a global situation. US car sales declined, European sales declined, car markets pulled out of bad markets, chip shortage/production issues, canceled global automotive events/product launches, etc. It will take some time to bounce back. Until then fingers crossed, and hope for the best.

[tiagoatrix]

Lot has been said by experienced enthusiasts here, I will add my thoughts.

1. Sometimes it is puzzling why companies pull out of India, at the end of the day its the decision of the company. Daweoo had a beautiful product but their exit is puzzling, Ford was very much relevant in Indian market, may be they were over bit over ambitious with market share.

2. Lack of freedom/ lack of products- for both the manufacturers and customers. An beautiful utility product like Triber is restricted by 4 meter law. Imagine a 4.3/4.4 M Triber. Global manufacturers have amazing product line up, they simply don't want to bring it to India because of the rules and regulations.

3. Parking space - I belive millions of Indians have the finance to buy a car but they don't because of lack of parking especially in cities.

4. Perception of a car - We Indians love to save, buy gold and real estate but car is still seen by many as a luxury (though the perception is slowly changing).

5. Over priced cars /High running cost / No Value for money - So, the starting price of a basic car is 4 Lac INR,Running cost /Maintenance /Insurance /tolls cost about 8-10K a month. So for a person earning 50,000 a month, 20-25% of the income goes into transportation. In this case public / rented mobility seems more budget friendly.

[V.Narayan]

I would phrase the question completely differently if I was an investor looking at putting big bucks into the car industry in India. ---

What have Suzuki, Hyundai, M&M and Tata done right and done well that they have a place under the sun in the 5th largest auto market in the world and a growing one at that. It is interesting that Suzuki and Hyundai were viewed with disdain (and still are) in many markets as also rans and Tata and M&M are home grown brands without the benefit of global scale. So ?-hmmmmm! - here is a unique large and growing market that isn't a clone of some high-income Western market and it has some very demanding parameters laid down by its customers - price, after sales service, price and availability of spares. The customer also seems to demand product reliability but doesn't care for safety. And on the flip side while central taxes are high the States want to offer lucrative long term concessions to set up production facilities, union-baazi seems very low and the customs duty protects the market to an extent from imports. From the experience of players in the wider automotive market, including 2-wheelers and commercial vehicles, the maxim seems to be that it takes time to get into the black but once you are there you can hold your position for decades {read Tata trucks, Ashok Leyland, Bajaj etc}. That is what I see. I don't buy the hackneyed stuck record that scratches on and on about taxes, sub-4 metre rule and allegedly dumb Govt polices which seems to be all that some see.

If you come into any market in any industry that is tough, large, and growing do not presume you can transplant products, policies, attitudes and overhead costs like you could in your mature Western or Japanese home market. It doesn't work in home detergents and it does not in cars either.

Ford, GM, VW have all tried to clone their approach in their home markets and paste it here in this rather different and difficult market along with their significant overheads and then matched it with a desire for early profits to fulfill the needs of the stock markets given their own challenges worldwide.

Can the Indian tax structure be improved - it jolly well can. But no business is ever made or unmade on the basis of tax structures alone. To blame Govt policies as the key to these companies coming undone reflects a lack of understanding of how a business is built and how its cost structures are determined to match the price points at which customers will buy.

From a geo-political point of view I'm no friend of China but I would expect the Chinese OEMs to have the business acumen, lack of arrogance, staying power and long term perspective to make a success in India's tough market. The Americans auto OEMs are short on all three attributes.

As a retired entrepreneur with two businesses behind me I would never be empathetic to a large corporation that cannot find its way in any large growing market in any industry. Suzuki and Hyundai are doing well not just due to their own efforts but also the lack of mental muscle, agility and open mindedness of the competition.

[NiInJa]

Originally Posted by dust-n-bones

Are we suggesting that all the automakers, each with over 100 years on the cutting edge of consumer preferences are incompetent when it comes to India? 'They are lazy' is what I see most often as the apparent reason in this forum.

Not lazy, but they definitely lacked the will power to adapt to Indian market conditions and did not think in longest terms (I am talking about 20 years) It is too late now.

Originally Posted by dust-n-bones

Maybe they are lazy because of a) India is a tiny and stagnant automotive market, b) the 'addressable market' for a new launch is microscopic (5-7% of overall market). Combine the two, and you have an impossible business case for a deep investment. Ford tried the impossible, and finally had to cut its losses.

You are probably looking at the last five years or maybe seven years of Ford India. Achieving profitability is automobile industry is not just selling more cars, it has a lot to do with efficient manufacturing and supply chain as well. And achieving that takes a lot of time. You will have to go way back in time and see how they started losing the game in due course.

Compare Ford versus Toyota in late 90s or early 2000's. Ford entered the Indian market way back in early 2000's and had some desirable offerings like the Ikon, Escort etc, so initial reputation was not a problem, but I don't recall them being extremely reliable or reasonable to purchase as most parts were not localised. Toyota on the other hand improved on the basics of car ownership and also improved their manufacturing processes with a simple Qualis and improved upon both: the brand's reputation and manufacturing. Once this was done, they launched better and renowned products like the Corolla and Innova which became a hit in our market. While Toyota came with Camry, Corolla and Innova, Ford's Mondeo failed and Fiesta though was a success initially, the next generation couldn't sell well despite being a great product, why? because they did not get the manufacturing right. Most parts were imported which made the car too costly compared to competition. If they had planned ahead just like Toyota did, they would be reaping the benefits of the same. Thus they lost the pie of premium sedans, and Ford's Endeavour could not compete with Fortuner for same reasons: perception of Reliability and ownership cost

Ford and Toyota never had a cost effective hatchback/sedan platform then, but Toyota tried with their Etios and Liva which was a success in relative terms: Their Etios was extremely reliable and helped strengthen their reputation of reliability/ease of ownership even further. Ford too got it right with their Figo but there was another issue, they did not have efficient small petrol engines for fuel conscious India. They launched the Dragon series 3 cylinder engine in 2017 or 2018 which was cheap to manufacture as well as efficient with better low end torque, this came in a little too late, by 2017/2018 the competition had moved way ahead. As mentioned in my above post they didn't really capitalise on initial success that their products gave. Ikon, Fiesta, Figo and Ecosport.

Originally Posted by dust-n-bones

There are very few success stories in India beyond the incumbents (Suzuki/Hyundai, Tata/Mahindra)..... But when the incumbents benefit from policy barriers to entry.....we end up with an imperfect market situation, 'oligopoly' - the kind that exists in India today.
.

Ford, Hyundai, Toyota entered Indian market around the same time. If in the first 10 years, the company does not understand how things 'work' in India, then its their own fault. They are industry leaders and should have shown some innovation to face such 'barriers'. Why couldn't they launch a sub4m sedan like Hyundai's Xcent, Maruti's Dzire right around the same time? The Aspire came in so late, it was one generation behind in terms of design (The new gen Figo and Aspire are sold as economical cars around the world) Look at how the sub-4m SUVs are, the Tata Punch, Nissan Magnite, Renault Kiger, all are great looking cars. If Ford were serious about India, they could have used their might to bring a competitive sub-4m car along with their dragon series engine. I don't agree that Tata/Mahindra/Maruti had any advantage over Americans when it comes to policy barriers. They just adapted quickly, that's all. Note that their initial models were ugly: the first Indigo eCS, Swift Dzire, but they evolved over time. Ford/GM simply did not, VAG and Renault Nissan have understood this and are moving in that direction.

[Peri_patetic99]

Originally Posted by Raghu M

HD - Let's admit it, India is not a market for super bikes and nor will it ever be. Given the Indian mentality (which is more mature than the Western thought process), no middle class earning member will pour in 8L to 10L on a super bike, instead they will keep their family happy by buying a reasonably good car in that price bracket. So, who is at fault here? Definitely the brand. They need to do proper homework before setting foot in any offshore lands.


I think all the global brands take India very lightly. Achieving success in western world doesn't entitle them to be great brands. Surviving in India is the acid test for all these brands. I am surprised that no one mentioned about Apple. It's a huge brand overseas, but it is not no.1 in India.

agreed on all the other points except these two. There is a market for super bikes in India, although it is small. Look at triumph, which has managed to achieve a YoY growth despite challenges like the chip shortage and lower demand due to the pandemic. It's all about doing the homework before coming to competitive countries like India, Kawasaki enjoys reasonable success because they have a diversified portfolio where the ninja 300 targets the lower end/ beginner rider spectrum. HD had the street 750 as the base model, which was expensive and not many people would consider it at that price point, they should have introduced something that would cater to the masses while being instantly recognisable as a Harley( i.e. similar design language). case in point, the RE interceptor has been a good seller even though it ranges between 3-4 lakh, at which point cars like the base alto are also available. it's a well engineered product and of course having the RE logo associated to it helps. Harley could've followed suit and introduced some bike maybe 50k-1 lakh more than the interceptor and I'm sure it would've brought the numbers that the brand expected.

Going a bit off-topic, apple enjoys good amount of success in India because of the associated premiumness and has been able to get a good market share/ growth because they slowly reduced the entry price point for the iPhone, it's bestseller product and didn't dilute the core values( no ads in the smooth OS, good and consistent cameras, premium build quality) unlike what ford did with the second gen Figo and aspire, and what chevy did by bringing Chinese-manufactured SAIC products that wouldn't have worked anyway in a market where more features are expected with a reasonable price(Kia).

[Equus]

Ford and GM have also exited many other markets including Brazil, which is considered somewhat similar to ours!

I have no sympathy towards GM but Ford. The product mix was always questionable but well, they hit the sweet spot with Ecosport. And then, they focus on exports?! Didnt evolve the product too.. It could easily have hit 7-8K per month given how easily its competitors are selling. Endeavour always commanded respect and was profitable too. Some more SUVs (Escape, Territory) would have done better than the Mustang. Imagine if they had a good product (or two) between the Ecosport & the Endy?!!

Just look at Kia - now with the Carens, they are going to touch the sky!!

[fiat_tarun]

Originally Posted by GTO

As a customer & an enthusiast, I don't like how 2 companies (Maruti & Hyundai-Kia) control ~70 percent of the market. Throw in Tata & Mahindra, and you have 4 groups controlling 85 - 90% of the car market. That leaves all the other MNCs fighting for scraps, just 10 - 15% of remaining customers.

...

Perfectly put GTO. At the end of the day it is a business and the numbers honestly are not very attractive.

India saw its peak passenger vehicle sales in 2018—2019 with 3.4 million vehicles sold, and since then it's only been going down.



Since then we have been at less than 3m vehicles a year of which ~70% is with the top 2 players which leaves about 900k vehicles a year for all the other players, realistically about 10% for a European or American player which is about 300k. Over and above this, you need to develop an India specific vehicle to be successful, have high local content and then you have pricing pressure with the ultra competitive market and ever increasing tax structures.

To add to this, we have the highly unpredictable regulatory environment. BS4 to BS6 in just 2 years, diesel bans overnight, threats on banning ICE vehicles, ethanol blending targets overnight and the latest one - 6 airbags for all vehicles in 8 months. Yes we need legislation to make driving safer, our air cleaner but please give OEM's a road map and sufficient time to plan and implement these transitions.

Just imagine someone like a PSA who has been developing their India spec. cars for the past 2 years or so, suddenly realises that by the time they launch their cars, the 6 airbag rule will be just a few months away for which they have to re-engineer the vehicles and spend crores into redevelopment which could have easily been avoided if we had a clear road map. All this directly hits the bottom line and no headquarters is going to be thrilled with that.

Additionally all this has made vehicles so much more expensive and there has been no intention from the government to rationalise taxes to increase demand. A compensation (even partially) for the cost increase on account of the introduction of all the new technology to meet various legislations would send a very positive message to investors in this industry.

By 2021 we were supposed to be the 3rd largest car market after China and the US but in reality we are 5th now and the future isn't looking all that rosy anymore - we are not going to be the next China and I think that is what Ford and the likes looked at before pumping in more money once the Mahindra JV fell through.

Car ownership in India is still around ~27 per 1000 and we need a vision to take that to 100 or 200 to really make our market attractive and allow more players to participate successfully. Given our infrastructure and policy decisions toward the car industry it looks very unlikely that we will ever get to those numbers.

As an enthusiast I truly feel sad that we will never get to experience the real performance / enthusiast cars we drool over online or when we travel abroad. It is what it is...

[Eddy]

Originally Posted by GTO

As a customer & an enthusiast, I don't like how 2 companies (Maruti & Hyundai-Kia) control ~70 percent of the market. Throw in Tata & Mahindra, and you have 4 groups controlling 85 - 90% of the car market. That leaves all the other MNCs fighting for scraps, just 10 - 15% of remaining customers.
]

This is intriguing, but what will be better is if we get to know the market share by revenue/value . It'll be interesting to compare it with volume. The percebtages may even out slightly.

[kiku007]

Quoting from https://www.team-bhp.com/forum/india...ml#post5175274 (The rise and fall of Ford India | The most comprehensive study)

Originally Posted by kiku007

The problem was that people wanted one reason/villain to blame for Ford's exit. The reasons are actually many and ultimately Ford was accountable for everything that transpired.

However, take a look at the below chart. Sure, Hyundai has emerged as the winner. That's one against so many other leading global automakers who have failed or underperformed. It'll be imprudent to dismiss them all as incompetent.




Who is accountable for the Indian car market not growing/maturing to the level they were told they would?

"The Indian market is different" seems to be the convenient term that people use to ignore the inconvenient truth that the Indian economy and its auto sector has not grown as it was told it would two/three decades ago.

A market where Maruti has to deliberate so long if they can sell the Jimny.

A market where every global automaker including Hyundai/KIA resort to blatant cost cutting to the point where the quality and safety of the same model isn't the same (for local vs. export) even at 2 million rupees. It is just ridiculous.

The chip shortage has shown auto makers that it is better to be focused on high-margins on low volumes than low-margins on high volumes. It'll be interesting to see how this develops.