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Old 9th October 2011, 08:22   #1
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Smile The Most Important Feature: A "VFM Tag"

What is the most important feature for a Car Manufacturer in India? Engine? Airbags & ABS? Na - that could be for us TBHPians. By far, the most important factor is Price - and also the feeling of "Value For Money".

Gone are the days where we had few manufacturers and everyone pretty much priced cars on their own logic, the aggressive competition means only cars priced to move will succeed.

And this comes in many varieties:
1. Price-to-Size: In Simple terms, “Am I getting the biggest car for my money?” One reason why people would go ecstatic over XUV500 but give thumbs down to Yeti.

2. Price-to-Brand: We will pay more for certain brands, but we expect other brands to be cheaper. Fortuner costing 20L+ OK as it’s a Toyota, Aria crossing 15L is a no-no. Obviously, high priced desi T isn’t our cup of coffee .

3. Price-to-Shape: will pay more for a Sedan than a hatch (also price-to-size?).
At one point we were a sedan crazy nation, but the trend looks diminished now. The signs of a maturing market? Swift/i20 top ends versions cost much higher than Indigo CS or Verito and no one is even giving it second thought. It’s not completely vanished though, what else is the reason for the innumerous boot-jobs we have? “Pay a little more saar, and upgrade to a Sedan!”
4. Price-to-Goldilocks: Yes, this article is about price - but Price isn’t the only thing. Sometime for us its "Too expensive", "Too Cheap" and "Just Right". We don’t want to own the cheapest car in the segment. That’s probably the reason Nano isn’t doing a booming business that everyone expect it should, and both Verito and Indigo CS aren’t doing a great numbers either.

Last edited by SkyWalker : 9th October 2011 at 08:23.
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Old 9th October 2011, 08:25   #2
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Default Re: The Most Important Feature: A "VFM Tag"

Case in Point

Ford Fiesta :
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A terrible mistake of adding features nobody wants and hiking up prices by around 1 Lac. Result: New Fiesta clocks less than half of the numbers of their 6 year replacement. Ouch! Ford neglected Price-to-Size - the car is smaller than City/Verna and Price-to-Brand : it was going against established brands with a higher sticker price.

Gen 3 City (ANHC) :
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The car started of very well (Price-to-Brand worked), but petrol price hikes and recent slew of new Sedans (Vento & Verna) made it look expensive in the market. Honda had the perfect answer - price cut up to 70K. The car became a segment topper immediately after the cuts. Instant Karma anyone?!

XUV500 :
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Packed with features and launched at a price which is nothing less than mouthwatering price. The XUV thread is now (New Mahindra SUV for 2011 - Pics on Pg. 109 *UPDATE* XUV500 launched at 10.8 lakhs)at 190+ pages and all are singing praises about it (including yours truly, who originally complained front grill is hideous and conveniently forgot about that after prices were announced ) Take that Aria!

Aria :
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A well built car, which should have been priced close to Innova, considering they are taking advantage of local manufacturing and thus fewer taxes. Tata's decided to do a "premium positioningĒ on this one. The Price-to-Band aware people did not agree, the car is selling in hundreds. And now that XUV is launched, it remains to be seen how low the sales numbers will go and how soon they would cut the prices.

Yeti :
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A well built and well specc-ed car. Skoda missed out a key piece on our minds - size/price Ratio. This could have been a killer car close to XUV Prices.


Beat & Figo :
Ford & Chevy more than doubled their market share ever since they introduced a Disel hatch which undercuts current market leaders.

Swift :
The new swift is certainly not fit into "Value For Money" any longer. Check out the reviews here (Maruti Swift : Test Drive & Review). But it does have one thing going for it - brand. Swift has been perceived as a great success, and Maruti can continue enjoying on its hard-earned reputation.

X1 and Assorted Luxury Cars:
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And Yes, you might be thinking - but this works in smaller only. Surely luxury car buyers donít fall for VFM. Until recently, yes. BMW upped the ante with corporate editions and X1 - The cheapest Beemer around. And we will soon here a Q3 taking the X1 head-on.

The game immediately picked up by others too. Audi Q5 has a business edition which keeps the 2.0 engine form A4, but brings down prices significantly to 37L. A6 had just a 3L engine's for A6. And now, the 2.0 engine is available for the A6, at a much cheaper sticker price.

Last edited by SkyWalker : 9th October 2011 at 08:31.
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Old 9th October 2011, 10:25   #3
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Default Re: The Most Important Feature: A "VFM Tag"

Well said! and bang on point!

How true does it get? People paying high prices for features which international brands offer, but look at our own Indian brand, TATA, still not the number one choice when it comes to hatchbacks and sedans! Why? The Price-To-Brand thing!

Another deal breaker for me is the A.S.S and experience right from booking to getting the car home. Why can't Indian manufacturers learn a thing or two about this?
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Old 9th October 2011, 11:14   #4
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Default Re: The Most Important Feature: A "VFM Tag"

Quote:
Originally Posted by SkyWalker View Post
By far, the most important factor is Price - and also the feeling of "Value For Money".
Absolutely. Price is not the main factor, perceived VFM is!
Quote:
Originally Posted by SkyWalker View Post
2. Price-to-Brand: We will pay more for certain brands, but we expect other brands to be cheaper.
Although there is no argument about the validity of this statement - I would just like to add one point - It takes only 1 very good VFM product to demolish this notion and make the manufacturer climb a step up the ladder.

For eg:-
1. Swift. If you trace back to the launch, everyone was skeptical whether the market will pay 5L + for a Maruti Suzuki, that too a hatchback!
2. XUV500 - For the first day (before the prices were announced) - most comments were questioning Mahindra's sanity. However, once the prices were announced and the VFM proposition became clear - the whole segment turned upside down.
Quote:
Originally Posted by SkyWalker View Post
That’s probably the reason Nano isn’t doing a booming business that everyone expect it should, and both Verito and Indigo CS aren’t doing a great numbers either.
Nano is 'perceived' as a 1L car thats selling at prices around 2L OTR. Absolutely not VFM at all for the aam-junta. You buy a car spending 2L+, and your neighbour asks - 'hey, you bought the 1L car?'!

I always feel its the 1L car price tag that killed Nano.
http://www.team-bhp.com/forum/indian...-lakh-car.html (Did Tata kill Nano when they announced a "1 Lakh" car?)
Quote:
Originally Posted by SkyWalker View Post
Cases in point
To add a few more-

1. Honda CRV - Once the segment leader. Gradual price increases, and petrol only option has killed the VFM factor and sales.

2. Sonata range- Case of 'Price to Brand'. Hyundai is just not premium enough in this segment.

3. SantaFE - 'Price to size/ presence' + 'Price to brand'. Hyundai did a big mistake pricing it way above segment leaders such as the fortuner.

4. Indica Vista, Indigo Manza, Sumo Grande - Classic case of 'price to brand'. Although in this case, the brands are Indica and Indigo - their previous generations and the image they had. Although the vehicles were superior to the older generation - the cheaper 'brand' (all three were trying to go a segment higher compared to older generation) gave it a heavy disadvantage right from launch.
Quote:
Originally Posted by ObsessedByFIAT View Post
Indian brand, TATA, still not the number one choice when it comes to hatchbacks and sedans! Why? The Price-To-Brand thing!
Not entirely brand factor. Maruti Suzuki is an 'Indian' brand as well, and is considered differently.

I know atleast 3 people who had owned Indica, and swore never to buy a TATA car again. TATA has to get the quality levels right upto the level of the Japs + they now need a new generation & exciting product portfolio to become segment toppers.

Last edited by CrAzY dRiVeR : 9th October 2011 at 11:17.
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Old 9th October 2011, 12:03   #5
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Default Re: The Most Important Feature: A "VFM Tag"

Quote:
Originally Posted by CrAzY dRiVeR View Post
Not entirely brand factor. Maruti Suzuki is an 'Indian' brand as well, and is considered differently.
Don't quite agree there.
1. "Suzuki" isn't exactly Indian.
2. Maruti as a brand has never been able to sell its more expensive cars here.
Baleno, SX4, Vitara, and more recently Kizashi are all examples.
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Old 9th October 2011, 12:44   #6
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Default Re: The Most Important Feature: A "VFM Tag"

Maruti makes its turnover over 70% of its monthly sales (80-90K units) of cars purely from low priced around 2.5- 4L Models like Alto(22K) WagonR(12K) Omni(8K) 800 (2K) Estilo (2K) Eeco(6K) add the petrol engined low priced entry variants of Swift, Ritz. Hence Maruti is essentially surviving on low const consicous buyers.

Maruti's Swift/Ritz/Dezire diesel models alone which are above 5L are just overing 15-20% of monthly sales aound 15-20K monthly.

Maruti Suzuki's expensive sedan SX4 despite diesel engine doing moderately( maybe the strike now adds more to its sales wooes). Vitara and Kizhashi are pure sales duds.

If priced aggressively starting at 2.5L with A/C Hyundai Eon will eat into Alto/Wagon R pie considerably.

As for TATA's Nano Ratan Tata announced it as a 1L car and his famous quote A promise is a Promise is not holding and hence when Nano is more than 1L people lost interest in the broken promise by TAT's CEO himself. The Nano fire incidents added to its wooes and NO VFM found in Nano by buyers.

XUV has created interest as it cuts across all segments buyer belong to Sedan/MUV and SUV spanning Vento /Altis/Cruze to Innova to Existing SUVS. A vento buyer annoyed by its dealy who turns to XUV finds the same 5 months delivery and cross migration among segments will evoporate if Mahindra keeps delivery period more than 2-3 months for XUV. By December XUV's average sales trend will appear.

TATA is very consistent in Wrong pricing all through 2010 across all its models. Only vista has emerged with reasonable QC and features in its refresh version. Aria is NO VFM at all. Sure TATA is not in a position to demand high price for any of its offerings with unresolved presistent QC fit & finish, service issues . let alone Aria like premium pricing.

As for the perception of Indian Market say Ok to Pay more for a Brand-> Honda price cuts tells a real story. No competition scenario may feed illusive Brand premium, Indians when they get more competitive products they question a Brand demanding premium pricing.

Last edited by harimakesh : 9th October 2011 at 12:46.
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Old 9th October 2011, 13:01   #7
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Default Re: The Most Important Feature: A "VFM Tag"

VFM + Reliability + Niggle free nature is what counts (what ever be the brand and segment). I feel the car should not convert you into half baked mechanic and frequent visits to the service centre is a complete no, no for me. If VFM alone is what counts Tata will be India's largest car seller by a huge margin.
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Old 9th October 2011, 13:07   #8
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Default Re: The Most Important Feature: A "VFM Tag"

Quote:
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VFM + Reliability + Niggle free nature is what counts (what ever be the brand and segment). I feel the car should not convert you into half baked mechanic and frequent visits to the service centre is a complete no, no for me. If VFM alone is what counts Tata will be India's largest car seller by a huge margin.
Do you still find TATA a VFM car maker with its recent Pricing of Aria,
13 year old Indica with a DICOR engine, Grande, Safari , and Vista QJD Price Hikes?
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Old 9th October 2011, 13:12   #9
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Default Re: The Most Important Feature: A "VFM Tag"

Quote:
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VFM + Reliability + Niggle free nature is what counts
..............
If VFM alone is what counts Tata will be India's largest car seller by a huge margin.
I appreciate your feedback. As I mentioned VFM is not just about the price, and its certainly not about being the cheapest in the segment. There's a lot more at play here like:
  1. Perceived Brand - do I drive an El Cheapo brand? "Log kya sochenge?"?
  2. Time Invested - "I just want it to work! Period!"
  3. TCO - Total Cost of Ownership - "How does it roll up over 3-6 years in total costs?"

There will be a lot of people who might think Fortuner is VFM ("A 3.0 L, biggish Toyota SUV, at just 20L"). I am sure there's a lot of people who think its overpriced for the features too ("Have you seen the Innova like interiors?"). Truth is left to interpretation - but fact remains than Fortuner has enough bookings Toyota cant accommodate, and it's the top-selling SUV in India now. Of-course, unless you consider XUV as a competitor, coz i am sure it can easily do 3-4K/month.

Last edited by SkyWalker : 9th October 2011 at 13:16.
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Old 9th October 2011, 14:45   #10
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Default Re: The Most Important Feature: A "VFM Tag"

There is also one more factor that plays in our subconscious. As the price of a car keeps increasing, our expectations are bound to rise. That is why a XUV presumed to be priced upwards of 15L was an instant failure but we are ready to be more accomodative at 11L. Its just like you can somehow Digest the food served in a 3-tier Railway coach but make a lot of fuss if the scotch served in the business class of a jet is not upto your liking.

This is one of the main reasons why brands like Maruti and Tata are unable to sell vehicles upwards of 10L since the margin of error is very small there.

Also for some people VFM means just niggle free experience of ownership for a decade. And this is why Honda and Toyota relatively sell poorly spec vehicles at a much higher price tag.
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Old 9th October 2011, 15:19   #11
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Default Re: The Most Important Feature: A "VFM Tag"

Quote:
Originally Posted by SkyWalker View Post
1. Price-to-Size: In Simple terms, ďAm I getting the biggest car for my money?Ē One reason why people would go ecstatic over XUV500 but give thumbs down to Yeti.

Because YETI has nothing much to offer for 18 lacs. For 18 lacs one can get Captiva, Ford Endy. People in India are not off roader. When they spend 18 lacs they need everything precise. XUV price is mouth watering and Mahindra has really done a great job worth the car. XUV is not a Bolero or a Scorpio. Do you think if Mahindra was selling XUV at 18 lacs it would have sold ? or a Bolero at 10 lacs ? YETI price is against it.

2. Price-to-Brand: We will pay more for certain brands, but we expect other brands to be cheaper. Fortuner costing 20L+ OK as itís a Toyota, Aria crossing 15L is a no-no. Obviously, high priced desi T isnít our cup of coffee .

People pay more for a certain brand because of their value / goodwill the brand has made over the years. Its easy to launch a good product but standing by it and providing service for it is a hard task. That's what Toyota has done over the years. Arai is no way a 15 lac car. Look at the over all quality and build of the car. I agree Fortuner doesn't have much to offer for 20+ lacs but it has a good engine, decent handling, decent ride and its a TOYOTA!
My thoughts in BOLD above!
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Old 9th October 2011, 19:11   #12
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Default Re: The Most Important Feature: A "VFM Tag"

Tata must correct Aria price to 8L onwards to get hold of situation. they can do better without frills.
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Old 9th October 2011, 21:01   #13
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Default Re: The Most Important Feature: A "VFM Tag"

I totally believe in the VFM quotient.

For me, VFM means -

1) More car for less : The bigger the car for lesser the money, the better. (Toyota Fortuner for 14 lakhs on-road... yummy!)

2) Good engine : I dont care about numbers or 0-100 kmph timings. I do look at 20-80 & 40-100 timings. I see how responsive & how refined the engine is. Is turbo lag present? Drive a Punto & then drive a swift - the swift feels like a rocket. Mahindra's mHawk, Toyota's D-4D & TATA's Dicor - my pick is the mHawk. Its a joy to drive.

3) Big list of features ... and more : Yes, I admit. I want my car to be loaded with features. I want all the goodies money can buy. But that is the problem (money)! So I want maximum bang for the buck. I dont care how often I may use it, I want it in my car! USB/AUX/DVD, touchscreen, Cooler, ABS+EBD+TCS, cruise control, Auto headlights, auto wipers, tyre pressure sensors, cornering headlights, rear AC vents, etc.

What I dont care about is Brand Image. As far as I trust the brand, its okay for me. If i dont trust the brand (probably due to multiple bad experiences), it will take a lot to convince me to try their product.

Cars I feel are VFM:
XUV500, Scorpio mHawk, Punto 90 hp, Verna, Superb, etc.

Cars I feel are NOT VFM:
Swift, Polo, Innova, Fortuner, Aria, etc.
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Old 9th October 2011, 22:32   #14
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Default Re: The Most Important Feature: A "VFM Tag"

Skywaker - nice discussion theme and superb examples.

Yep we are a VFM crazy country. If I may add even the premium 30L plus cars sell a lot more in diesel trim, even then the buyer can afford to pay 50L plus for the car he still wants to save on the fuel costs on an ongoing basis.
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Old 9th October 2011, 23:15   #15
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Default Re: The Most Important Feature: A "VFM Tag"

Excellant discussion topic.

Just want to add practicality factore as well to the VFM factor.

I think this is Reason why Eeco/Omni sells inspite of being a soap box

Reason why costlier Cayenne sells more than any other Porsche on sale in India

Reason why 2door cars or convertibles dont sell well in India

Reason why Bolero sells well in the rural areas
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