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Old 20th June 2011, 13:14   #1
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Default VW Marketing strategy: Is Beetle Overpriced?

A friend of mine and I were discussing about the WV Beetle and its price in India. At 23Lacs odd I thought it was over priced, if they sold it for 15lac it will be a hit.
He said it was part of their Marketing strategy to build a brand image. Beetle is an iconic car, they did not want to have the overheads of setting up a plant in India ( Assumption: there wont be a sizable market for a coupe in the 15 lac category)

They worked the following way:
Launched Octavia, established skoda as a premier brand, higher than its European stature, if not east European. Then came out with Fabia, costliest hatchback. After 4-5 years of market research, launched Beetle (dont know when they launched Audi) EXPENSIVE, to make a brand image, not to sell volumes, just import and sell it to rich folk as their second car! after this was done they slashed the Skoda prices (with a murmur that Skoda belongs to the VW family) and launched Golf, Jetta etc.

After knowing that Beetle India is supplied with their old engine I was willing to buy the argument that (Although now I think its really overpriced) it was sold to those who couldnt care less about the money, as a second car.

1,984 cc (1.984 L; 121.1 cu in) I4 SOHC 8V 116 PS (85 kW; 114 hp) @5200 172 Nm (127 lbft) @3200
Engine that is sold in India was discontinued in 2003 for the western market. ( where they sell 2480 cc engine that gives impressive 150PS) Its not like it get assembled in Germany, they stopped it in 1999, now it gets assembled in Mexico or, surprise surprise Vietnam!


Now Beetle was originally launched as a people's car.. thats the image in the western market, its sold in a price range slightly higher than a decent quality sedan

Beetle MSRP $17,365 - $20,440, Corolla MSRP: $15,900 - $18,600, Jetta MSRP: $15,365 - $25,295

We get a Corolla for 12.5 lacs and a Jetta for 14.5 lacs in India.

Jan 2011 sales figures from another thread
Beetle : 20
Jetta : 247
Civic : 508
Corolla : 490

Polo : 3,023
Fabia : 1460
i20 : 5,773
Swift : 11353

Not that VW India have a great record in strategy or delivery, Fabia was ridiculously overpriced when launched in 2007, top end going for 8.2! Even after 4 years one has to wait for Fabia spare parts. (Skoda India, after 5 years is still a private limited, so may not be making enough profits. Polo delivery and repair is ridiculously slow)

I think they slashed the prices cause nobody was buying it, not because they wanted to introduce Polo , they adjusted the price for Polo accordingly. ( Fabia 7lac, Polo 7.2lac)

Dont know about the cost of assembly line, if they can have assembly line for Audi they can have it for Beetle, if there is demand of course.

Now the questions are
Is Beetle over priced? Or it works in their grand brand building strategy? Is there a sizable market for a 15 lac powerful coupe in India? and If the 15 lac coupe sells well does it add to their brand building?
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Old 20th June 2011, 15:33   #2
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

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Originally Posted by MoonRunner View Post
Now the questions are
Is Beetle over priced? Or it works in their grand brand building strategy? Is there a sizable market for a 15 lac powerful coupe in India? and If the 15 lac coupe sells well does it add to their brand building?
Off course it is over priced, why. Well we all (including myself) can only guess.

Sometimes these manufacturers see illogical reasons to launch the product as a CBU assuming that the product will not generate enough volumes to justify a local assembly plant investment.

Guess what, the product fails nevertheless as it is over priced.

Examples, Kizashi in recent past (A killer product losing out because of absurd pricing) and many many more.
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Old 20th June 2011, 17:12   #3
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

not trying to defend VW here, but we are missing 2 points here .

1 ) Bettle was more or less launched in india as a part of brand building exercise . VW pretty well knows that what sells in indian market . just like FIAT 500 .

2 ) As for as i know , beetle is import fully and thus attracts 110 % excise duty from GOI .

Overpriced yes but mainly due to taxes .
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Old 20th June 2011, 17:33   #4
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

No prizes for guessing, the Beetle is overpriced. IMO, the Beetle, much like the 500, is a collectors item. The Beetle remained the flagship model for VW for decades and they have revived it as a 'tribute' to the evergreen car. Remember, the post WWII identity of Volkswagen (People's Car) was the Beetle. We can safely assume that the usual automotive market dynamics do not apply to the Beetle, as VW does not intend to really make serious money out of it.

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Dont know about the cost of assembly line, if they can have assembly line for Audi they can have it for Beetle, if there is demand of course.
The Beetle is based on the PQ34 platform, which is shared by the Octavia (manufactured in India). Other cars on this platform are Audi TT, VW Jetta and Golf. So, in theory, VW can start local assembly of the Beetle or assemble SKDs. However, volumes do not make it feasible.
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Old 20th June 2011, 17:44   #5
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

The Beetle isn't just overpriced; its a total rip-off at that price which can almost buy you a better equipped VW Passat. Being a CBU & with our tax structure for imports, the Beetle price tag doesn't come as a surprise. VW expects the Beetle to sell for its iconic image alone which obviously doesn't match the Indian market's mindset.
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Old 20th June 2011, 17:47   #6
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

this might be slightly OT here, but i would like to say this, for such an expensive car a small car, it doesnt even come with a rear wheel drive like the original beetle, despite being so over priced that is. [even after subtracting the 110% tax, it is still a little excess of 11lakh rupees almost twice the price of a premium hatch here.]

(say at a lakh more/less may be with a diesel engine=really torquey engine and rear wheel drive would slightly tip it off towards being more value for money proposition?)
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Old 20th June 2011, 19:05   #7
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

Quote:
Originally Posted by .sushilkumar View Post
not trying to defend VW here, but we are missing 2 points here .

1 ) Bettle was more or less launched in india as a part of brand building exercise . VW pretty well knows that what sells in indian market . just like FIAT 500 .

2 ) As for as i know , beetle is import fully and thus attracts 110 % excise duty from GOI .

Overpriced yes but mainly due to taxes .
Both these observations are spot on , I guess VW wants the snobbish pricing (with or without 110% tax ) - thats the positioning of this product. Also a comment on treating VW and Skoda as one and the same, which is incorrect. These companies more or less follow independent market and pricing strategy even though they maybe from the same group. Even in India thats very apparent where competing products Fabia Vs Polo , Jetta vs Laura , Superb Vs Passat compete for space
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Old 21st June 2011, 11:15   #8
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

It is highly over priced.
But the fact that they are still importing it in reflects that VW never want to do any serious volumes. But I do not see a market for it here even if they halve the price.
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Old 21st June 2011, 11:27   #9
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Default Re: VW Marketing strategy: Is Beetle Overpriced?

Look at the beetle as an marketing eye candy, on the billboards, the newspaper ads, in the showrooms etc.

The beetle provides that contrasting flavour to the entire VW line-up in India. I mean, from the Polo to the Passat they almost have the same conservative design theme and the Beetle is quite the opposite to that.

I was drawn to the yellow Beetle in the VW showroom when we went to book a Vento for a friend. The moment we sat inside the car, we were shocked! That's the crappiest interior ever on a 20L car!
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