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Old 3rd September 2011, 08:33   #31
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Default Re: Is VW confused about their strategy in India?

I think VW has the potential to be the smartest player in the industry today. My suggestion is that they strip the Skoda variants slightly, only very slightly in comparison to the VW model. For ex. let the laura be from VW and Jetta be with Skoda ( Jetta loses out on Xenons, leather, DSG in all variants, ACC etc.). This way they can price the Skoda models around 1-2L cheaper then the VW model and there product portfolio can spread beautifully across all the segments.
Starting with the Fabia< Polo< Lauretta< Vento< Laura< Jetta< Superb< Passat< Audi!

This way they ensure that any customer buying a car from 5L to 30L will have atleast 1(or more) product from the group in his list.

To charge a premium for VW in India without giving any additional equipment over the Skoda will not work in India for long. We consider Skoda too as a premium brand in our country so not many people will pay 1L extra for a VW car which is basically the same and infact less on the goodies list.

PS: Is there any way VW can open some company owned showrooms? Atleast in the Metros where they sell the bulk of there cars. This may help to address a lot of concerns of the buyer regarding dealership experience. Also given the amount of money VW has they can easily afford huge spacious well laid out showrooms. The current showrooms are quite pathetic atleast in Delhi. VW Delhi north, VW ( DLF saket mall) are extremely congested. It doesn't go with the brands tag line of being a german masterpiece and Luxury. For a comparison you just need to enter Galaxy Toyota in Delhi to get an idea of how space can transform the whole experience of buying a car!

Last edited by drmohitg : 3rd September 2011 at 08:38.
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Old 3rd September 2011, 09:49   #32
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Default Re: Is VW confused about their strategy in India?

I agree. Many say that the VW is a "german" brand & has that quality & plushness. To be very honest, I have driven the vento, polo & passat (new) a lot & I must say that their competitors are actually more value for money.

Not just features, but tall claims made that VW cars have the best ride & handling in their segment is totally untrue. Ride quality of polo & vento, though good, is not the best in the segment.

But i do respect VW for the build strength of their cars. their cars are made tough & strong unlike the Japs & Koreans. So whatever they say about being "german" or build quality, their cars simply lack appeal IMHO. What I would want from them is they should include more features in their cars.

For example, polo top end should have Auto AC, a 4 cyl diesel heart, rear power window switches for driver, USB/Aux port for audio, etc. After all, you all selling a premium hatch. Just talking about brand image & build quality wont help in the long run.
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Old 3rd September 2011, 10:46   #33
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Default Re: Is VW confused about their strategy in India?

VW strategy in India seems to messed up mainly due to the presence of its sibling : Skoda. Skoda have had a 10 year headstart over VW and due to their top down strategy (launching premium models first) their brand is associated with a premium image. VW's strtategy of positioning themselves above Skoda is the main reason why I believe they are sitting in no man's land.

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Originally Posted by ethanhunt123 View Post
Solution to this? Probably as and when Skoda is launching newer models - strip them down and offer only Classic/Ambiente versions. If you want premium features, you have to buy the VW cousin in HL trim. But then this might backfire and it might end up loosing customers who think Skoda is turning cheap and VW is too expensive
Although the two share the same parentage and share engines and components at the back end, I believe the two companies operate as separate profit centres. The management of the two compnaies would be free to have their own market strategies to maximise their share of the Indian car market pie. VW India would have to view Skoda India as a serious competitor rather than a grateful cousin who would be willing to strip down features from thier models so that VW can position their models as they want.
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Old 3rd September 2011, 15:47   #34
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Originally Posted by .anshuman

Do you really think this is feasible? Why would Skoda price the Lauretta in the same price range as top end fabia? Expect little difference in Vento vs Lauretta pricing, on the same lines as Polo vs Fabia.
I agree that pricing the lauretta near the top end fabia may not happen but its certainly possible.

Maruti does it with the swift zxi and dzire lxi. Now there is little chance that people will buy the base model of the lauretta so technically its not overlapping.

Undercutting the vento by positioning the lauretta as exactly the same car might not be the best option. My 2C.
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Old 3rd September 2011, 19:28   #35
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Default Re: Is VW confused about their strategy in India?

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Originally Posted by vid6639 View Post
Why is it stupid mxx? Your are saying exactly what I am saying. If I was looking for a 30L car why would I even look at the Passat which costs the same as the Audi A4. I would go for the Audi right and not even consider the Passat.
Not true. See cars like accord, camry, superb, passat sells despite it being closer to a4/3/c. The 2 customer profiles are different. There will be a few people who will scale down to passat/superb, and few who will scale up and buy a4. But both have its takers.
BTW, passat seems to have decent numbers in August
A person going to buy Audi is going to buy Audi, not VW Audi or VW luxury edition. Audi is the only brand here. And it is a strong brand.

I hope you know that there are euro countries where vw group's SEAT brand is also sold along with skoda and vw. In those countries if you go to buy a hatch, you have polo, fabia and cupra- all 3 built on same platform with same engines, priced not very far from each other. Would you say vw is confused in those markets too? The thing is if you take the cars individually and analyze, all three have different strengths in features , space etc. I dont think vw group is confused in those markets.

As I said, vw india is not very old and it is early to analyze the outcome of their strategy.
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Old 3rd September 2011, 20:56   #36
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Default Re: Is VW confused about their strategy in India?

I'm going against the tide here, and do think that VW has had an extremely strong start. See, VW arrived late to the Indian market. With their machine gun approach (fire everywhere & hard), they have already overtaken Skoda & Honda (most months) in sales. That's no small feat if you consider their Polo was launched only last year & VW has had relevant products for a mere 18 months.

In terms of branding, and with some truly innovative marketing initiatives (talking Times of India?), VW has established itself as an aspirational brand. Remember, most cars are bought on the basis of their looks & brand (of course, the price & FE should fit customer budgets). One of the reasons that the Polo is a 3,000 / month seller is because of the badge & its aspiration value.

Then, in terms of product, I think they have gotten the Vento spot-on! The car is an absolute all-rounder, and even disbanded the Honda City from top spot earlier this year. Lets not forget that the Vento's VFM positioning (along with the Fluidic Verna) led to Honda cutting the prices of the City...such was the pressure.

Yes, in terms of the Jetta & Passat, Skoda has them beaten. But what do you think VW cares about more? The sub-10 lakh segment where all the volumes are, or the 15 - 20 lakh segment that only results in 3 digit sales. BTW, note that the Jetta getting bigger & cheaper (to produce) was a calculated decision for the American market. That's where VW expects mega volumes for the new Jetta.

Areas to improve? But of course!! The first thing VW need to tackle is their shoddy dealership experience. I cannot stress enough on the importance of this factor...it can literally make or break your brand in the longer run.

Second, get rid of the 3-cylinder engines in the Polo and bring in proper 4 cylinders.
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Old 3rd September 2011, 22:10   #37
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Default Re: Is VW confused about their strategy in India?

I think this is fantastic thread , have always been fascinated with market entry strategies of companies and how they strive to survive in a market with entrenched players . Overall I believe that its too early to take a call on VW's success or failure with India strategy - its just that these guys know how to prise open a market and dominate it , they have done it in China and they have the financial muscle and brand value to slug it out . IMO there is nothing wrong with 2-3 group company products in similar price bracket, our own home grown MSIL has successfully defended their B segment turf by having multiple products with the same badge ! The amount of money VW has sunk in and moves such as establishing their finance arm in India are sure signs that the company would be for the long haul - taking out equity of NBFC is a time taking affair riddled with government/RBI permission layers, believe me ! So if a company does not believe in market potential , they would never ever do it. I also do not believe in artificially lowering the value of the Skoda brand just to sustain the VW brand - have we forgotten what happened to Coke when they tried to kill Thums Up and promote Coke when they bought it from Parle ? Pepsi became No.1 in India - a better route woul have been to promote Thums UP to stymie Pepsi.

I am attaching a pretty interesting link to VW group strategy presentation made by their chairman of the board, it has some facts and figures -
http://www.volkswagenag.com/vwag/vwc...Top%20Copy.pdf

Interestingly it also contains the answer to our wondering the family look concept , please refer to slide 18 under modular tool kit strategy. [ BTW , GTO the size of Vento's and Jetta's headlights are the same , so are the shoulder mirrors. Modular kitts ]
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Old 3rd September 2011, 22:53   #38
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Default Re: Is VW confused about their strategy in India?

VW is tightening it's purse strings as the Maharashtra Govt. has withdrawn tax sops and GOI has changed it's rate of taxes for CKD's. VW feels there is no political will and stable atmosphere to do business in India. Source: ACI, Sept, 2011.
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Old 4th September 2011, 02:13   #39
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Default Re: Is VW confused about their strategy in India?

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Originally Posted by Durango Dude View Post
VW is tightening it's purse strings as the Maharashtra Govt. has withdrawn tax sops and GOI has changed it's rate of taxes for CKD's. VW feels there is no political will and stable atmosphere to do business in India. Source: ACI, Sept, 2011.
Thats all media fodder - every country has its own set of regulations and changes too . I am sure VW has encountered even more stupid regulations in China than the ones supposedly irking them now . The scenario is such nowadays that if Maharashtra acts funny then there is Gujarat , Karnataka , Tamil Nadu, etc waiting in line with competitive sops - aren't many companies making a beeline for Gujarat ? These sort of posturing keeps on happening but its unlikely that long term goal posts are moved .
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Old 4th September 2011, 08:53   #40
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Default Re: Is VW confused about their strategy in India?

I am not sure if VW is confused with their strategy in India. Maybe they were a bit complacent (e.g.; 3-pot engines for the Polo) and a bit opaque in the way they do business (e.g.; cutting down on cosmetics from the Vento, while retaining them on the website and brochures). But it looks like the car-buying public is not really bothered of this, and has lapped up VW as a successful (and even premium) brand. No mean achievement that they have already established themselves as a volume player in some segments.

Saw this piece of information from Autocar India, on VW going slow on their India plans:
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Old 4th September 2011, 11:00   #41
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Default Re: Is VW confused about their strategy in India?

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Thats all media fodder - every country has its own set of regulations and changes too . I am sure VW has encountered even more stupid regulations in China than the ones supposedly irking them now . ...
As for regulations, it cannot be denied that India has wide unpredictability in regulatory and enforcement matters.

1. Tax benefits plays a very big role in commercial viability and returns in a competitive market. Rolling out tax benefits to woo a car maker and then withdrawing it after the investments have been made will certainly affect the car maker's plans and question the seriousness of intent of the state.

2. Think about Nano being forced to more out of WB after the state could not manage to get land. By then Tatas and the vendors had heavily invested in Singur. So much capital and resources down the drain.

3. Then there is no clear deregulation policy for petroleum products. Govt navigates based on decibels by various stakeholders despite policy recommendations made by rational, knowledgeable and well meaning people. So the gap between petrol and diesel widens creating upheaval in car makers like Honda who have no diesel engines in their stable.

This is not just true of the auto industry but just about any regulatory matter. By regulation I also mean enforcement of regulation. Sorry for going OT but I feel strongly about it.

One lawyer who I met summed up the regulators' / lawmakers' attitude neatly in a joke which I want to share:

A man had just stepped out of a building for a smoke but saw a no-smoking sign at the gate. He asked the security guard outside whether he can smoke. The guard said, "Ofcourse not. Can't you see the no-smoking sign?". To which he replied, "But there are so many cigarette butts on the floor. Surely a lot of people have smoked here". To which the guard said, "That's true Sir, but they never asked me if they could smoke".

Cheers,

P.S: I am not sure what "even more stupid regulations" VW has encountered in China and would like to know if anyone has any facts on the same.
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Old 4th September 2011, 11:32   #42
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Default Re: Is VW confused about their strategy in India?

Good analysis Vid and thanks for starting this thread !

I think the problem with their strategy is how to position the cars, especially the ones for the mass market where volume play is name of the game. Given that the parent holding company will definitely influence the VW, Skoda and Audi brands to base their products with as many common parts under the hood as possible to maximise their ROI and research/design efforts it becomes a big challenge in terms of differentiation. I find this very similar to what Ford/GM faced earlier and probaby even now (for example the Ford and Mercury brands even had 1:1 equivalent brand models with just styling and branding being different) !
Also, with more consumer awareness it's increasingly difficult to change just the styling and sell similar stuff at higher prices.
In my opinion a big opportunity they have not tapped into is how to use the after sales service synergies across these brands which if they do will give more confidence and will benefit consumers (taking a cue from their production facilities being shared for these brands). But now this seems very difficult because of brand-wise dealerships sort of giving a competitor feeling rather than a sisterly/sibling feeling but I'm no business maverick/MBA to comment on this.

Last edited by NPV : 4th September 2011 at 11:36.
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Old 4th September 2011, 12:31   #43
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Default Re: Is VW confused about their strategy in India?

Creating internal competition within your own brand portfolio to expend the market/ ensure you cover all flanks/segments is a great idea. Many a marketer has tried this successfully. The problem arises in differentiating these successfully in a scenario where not only the parts are common but are rolling off the same production line, as in the case of Skoda/VW.

However, one factor carmakers probably bank upon is: how many car buyers actually KNOW that Skoda/VW/Audi are sister companies? Hell I'm a so-called petrolhead and didn't know that Lamborghini is a VW group brand till GTO brought it up on the Lamby owners grouses thread.

I have heard a friend of mine (fairly knowledgeable about cars) say that his Fiat MJD engine is 1.4 litre, not 1.3 and way superior to the Swift's DDiS. The "national engine" was news to him. So, well...
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Old 4th September 2011, 13:07   #44
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Default Re: Is VW confused about their strategy in India?

Not confused, I'd say. But they require to focus their attention on some flaws that need immediate correction.

One big flaw would be their weak service network. They need to beef it up, and beef it up as quickly as possible. If they don't, the brand will not only lose its strength, it will lose potential customers and existing customers too!

Another big flaw is the 3-pot engines. Why, VW, why? Why don't you leave the 3-pot lumps to Maruti. They do a decent job of that. Why don't you'll stick to making robust and adequately powered cars? The 3-pot engines you find the the Polo need to go.

VW has got their work cut out for them, now. Their plans have come off, with the Polo being an absolute success, and the Vento too. Their PR and marketing has been spot on as well. And now, with the new Up! on its way, things are going to get better for VW. But first, they need to address their issues.

If there is any company that's confused, I'd say it's Skoda. Here is a post of mine from the Laura vRS thread:


Quote:
Originally Posted by suhaas307 View Post
Top Gear says that steering-mounted controls come in the way of driver-enjoyment, or something like that. Apparently, the steering-wheel should be free of buttons and other such mundane things. If it's a car that's got performance as its priority, then there should be no distractions for the driver, in the form of buttons on the steering wheel. A plane-jane steering wheel shows that this car means serious business. Right.

I sort of agree with them on this.

But there are two things I can't seem to fathom.

With buttons on the steering wheel, won't the driver be less distracted while driving, since it gives them the option to control audio-settings and so on without having to take his/hands off the steering wheel, thus giving 'driving' the priority?

Also, if this is truly a drivers' car, distinguished from the other 'sedate' Laura variants, why does it come with the same 1.8 engine that produces the same 160 horses. They should have might as well included the steering-mounted audio-controls in that case. After all, how much more serious a car is it, than the regular Laura?



Skoda is completely and utterly confused.



Again, a great feature. Much like the electrically-adjustable seats. What are they doing by omitting these features? Making it lighter, so that it can go 0.5 seconds faster to a 100 from a standstill? Pah!

Last edited by suhaas307 : 4th September 2011 at 13:09.
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Old 4th September 2011, 20:53   #45
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Default Re: Is VW confused about their strategy in India?

i remembered reading articles discossing the same thing happening in europe. when i just tried to search for the article i find this...

http://www.team-bhp.com/forum/intern...-vs-skoda.html (VW vs Skoda?)
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