Siddharth strategises to safeguard manufacturer' interests in India
EVER SINCE THE DOWNFALL OF GENERAL Motors in India there has been some rather ridiculous and yet understandable speculation about others who may go the same way. The name that tops that list is – believe it or not – world number one carmaker Volkswagen! Well that shouldn’t be a shock, considering that very title was held by GM not so long ago! People believe that it will either be the Volkswagen Group, Nissan or Ford that will be the next big name to drop out of India. Now I don’t believe that to be true, as each of them have invested 1000s of crores in to this market for some time now. They have also been very clear about the need to succeed in India as it is destined to become the world’s third biggest car market in the not-so-distant future, behind only China and the United States.
In the case of Nissan, it is true that the brand has failed to make a mark, but the combined entity of Renault-Nissan (including the meagre contributions of the Datsun brand) still commands a respectable share of the market. Ford used to have a more formidable position by share of market, but has slipped as the market itself has grown. And the real reason is the inexplicable failure of the new generation Figo and its sedan alter ego – Figo Aspire, to perform to the levels expected. The EcoSport continues to hold on, though I reckon its flagging sales will get a shot in the arm when the facelift arrives this festive season. And then there is the Endeavour, and brand-shaping Mustang that play flagship roles still.
Volkswagen on the other hand has bigger problems. Its group brands VW and Škoda have still not had a runaway hit on their hands – unlike the bold start made by the first Octavia in 2001. The VW brand finds exports to be higher numbers in most months than domestic sales and that is very worrying. Add to that the disdainful treatment of the apparently important Indian market – by refusing to bring us the next generation MQB-based Polo just yet, or offering a Tiguan as a luxury product, and even ignoring India when it comes to flagship global models like the new Passat or Golf. I am not suggesting we get stripped down versions of these cars, nor that VW should blindly launch them at whatever prices they come to with the current Indian taxation regime.
So what am I suggesting? There needs to be a three-pronged plan in my view that each company needs to take on – to protect their existing investments, and future potential from India. First – invest more. Yes you read me right! More investments towards a) ramping up technological prowess of Indian ops to accommodate future ready technologies and platforms (case in point MQB from VW Group). This will allow for greater flexibility to offer Indian made world-class cars to other markets while still being able to achieve the economies of scale needed to keep prices competitive. This would also mean transferring some tech to the Indian operations to allow for much higher percentages of local sourcing – though Ford has done some of that already. Second – think local, but project global. As vague as that sounds, these brands need to realise the value of keeping the Indian consumer in good humour by offering global nameplates in India at regular intervals. Would that be cost effective – not always, but you need marquee products like the VW Golf, Ford Focus, or even the Honda Civic (yes dragging Honda in conveniently yet aptly here!) to project the strength of their brands on a worldwide scale. The Indian consumer will pay for value – at higher price points too – if they see it that is. And Third, perhaps most important – get the network right. Each of them has been here long enough to understand the Indian market, and its consumers for the most part. The cost of ownership and overall customer experience needs to be enhanced severely. Ford has indeed begun this journey but VW and Škoda have miles to go.
Is this a guaranteed success plan I have envisioned for these brands? Of course not – it will also take a lot of hard work, sincerity and commitment to see it through. And they certainly have enough people working to figure out these strategies and needn’t concern themselves with what I have to say! But cutting corners on product will only get you so far – despite the success of the two strongest brands in the market. And so instead of trying to emulate the success of those two players, by doing what they do, Ford, VW and Nissan need to focus on getting what they already do, right. So give us a locally made Kicks, and follow it up with a locally made Juke! Be bold and throw us a fully loaded Fiesta hatch, Focus sedan and Kuga compact SUV! And yes it's high time we got more than just the Polo and Vento (okay and Ameo) VW India! The Tiguan (and imminent arrival of the Kodiaq) are steps in the right direction. But blitz us with more. To not only excite the market, but to safeguard your own long-term interest in this very important, tough and complex market. Yeh dil maange more – and how! ⌧
‘The Indian buyer isn't in the mood to accept 'for India only' type models