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Old 4th November 2011, 13:39   #136
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I surmise that the top rings of management of these big auto companies are somewhat like our top political leaders. They are surrounded by "yes sir", "you are so right sir", "that is a really a great idea sir" kind of guys.

These people apparently are not in touch with the market or reality. That is why these foolish launches sometimes.

A bit off topic, but I also think there is a similar problem with "which models to launch" topic. All the big companies, Suzuki, Hyundai, Ford, Fiat, Nissan, Toyota they have lots of models worldwide that are just perfect for India, but no they would for some unfathomable reason not launch them.

A few examples if I may.

Suzuki has Jimny, which is being sold in many countries, but for some strange reason, they will sell the Gypsy.

Toyota has so many cars that can just blow the market. They wont bring it. I think if they bring that Landcruiser (LC70 or 80 I guess) series which are plain jane models, won't they really be a hit here? But they just would not. Some "genius" sitting on top decides, it is better to launch LC200 instead.

Nissan has so many cars, but they start with Teana, 370Z.

Same story for Ford, Fiat etc.

All of these companies have in their portfolio so many cars that can give many market leaders here like Swift, Ritz, Bolero, Scorpio and some not so great sellers but still Safari etc give a run for their money. But, no they wont do that. Because some sycophant is saying "you are right sir" India is not mature enough for these cars.

Coming back to the topic, the same cars that are sold in other countries for reasonable prices, but the moment they bring these to India, they somehow want to be bracketed in "premium" segment and hence the pricing.

I am really proud of the fact that actually Indian customers are more discerning than I would dare say any other country. Indian customer never goes for marketing gimmicks. Only and only if the product is worth it, it sells.

Alas, so many stories of the same are not seen by these honchos sitting high in their ivory towers surrounded by the "yessir" brigade and not seeing the reality.

Regards
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Old 4th November 2011, 14:59   #137
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Thank you, GTO for starting this thread.

While most manufacturers have the occasional dud in their product lines, some manufacturers manage to botch their pricing strategy for pretty much all their cars.
Even Hyundai, who normally get it right, screwed up their pricing with the Terracan and the i20 diesel.

No one is as overpriced as Honda, though. They were lucky insofar as most Indian consumers place FAR too much value on the Honda brand (my own wife is a die-hard Honda loyalist) so they always got away with pricing their City too high. They got even cockier with the Jazz, and even the most gullible sucker finally said 'Enough'.
I'm aware that this may not be the populist opinion on this board, but it's something I stand by.


The point I most resonate with in GTO's post is "How on earth did they get it so wrong???"

When a new car is released, you can literally take one look at the what's being offered vs how it's priced and decide whether it's going to be a hit or a flop. Nine times out of ten, you'd be right. So how do car manufacturers get it so ***-backward?

Someone in Ford's management team deserves to be slapped or fired or both. Ford has always struggled with value perception in this country and they go and price the Fiesta (with that hideous rear-end) more than the Vento and the City. Amazing.
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Old 4th November 2011, 16:55   #138
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

GTO, this thread touches a raw nerve and a very painful one indeed.

It may be inappropriate to comment on other brands when I have been at the receiving end from Ford Motors myself.

What started off as a lot of excitement on looking forward to a newer version of the Fiesta, ended in a damp squib.The new Fiesta is a good product, no doubt, which has been killed by the company on account of :
  • Higher pricing than anticipated
  • Lower Engine Specs than initially claimed - 1.5 liter engine instead of the 1.6 liter one
IMHO, The killing of Fiesta as a product can be taken up as a case study on “How Not To Launch A Car”

So, Big Money + Big Talent = Runaway Success does not hold good when the manufacturer does not gauge in the pulse of the local market (Kitna deti hai + Kitne ki hai + Kitne saal chalegi + Resale kya hai etc.)

This further entails balancing of hidden variables like Good Management, Planning, Buget Control, Quality Control, Market Pulse, Realistic Approach etc.

Hope FM considers relaunching this otherwise good car with validated market feedback.

Till date I have yet to see another Fiesta on the roads in Delhi sans mine.
Same for Kizashi. The only Kizashi I have seen is a Gurgaon registered one on the Gurgaon toll plaza.

In fact, I can actually visualise what might have happened at the plant management meetings to result in this crazy pricing

Last edited by Sugeeta : 4th November 2011 at 16:58.
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Old 4th November 2011, 17:10   #139
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

One of our favorite topics to discuss is cars among others between friends and family.

Almost, everybody has one major peeve.

Why can't any car manufacturer make one car that would tick all the boxes for a typical buyer?

I cannot think of one car that satisfies all my needs - either the handling sucks or the interiors suck or a monkey has priced the model and so on..

One car, people - Just get one car, right !!!!

Cheers
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Old 5th November 2011, 00:11   #140
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I believe a big factor that plays a role here is the quality market research that they undertake. I come across market research interviews everyday and I can't believe how flawed they are, plus the interviewer is at times not really appropriate as he has little or no knowledge about the product. The inferences drawn from these market research interviews are highly doubtful.
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Old 5th November 2011, 01:39   #141
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Quote:
Originally Posted by novice_alto View Post
I surmise that the top rings of management of these big auto companies are somewhat like our top political leaders. They are surrounded by "yes sir", "you are so right sir", "that is a really a great idea sir" kind of guys.

These people apparently are not in touch with the market or reality. That is why these foolish launches sometimes.

A bit off topic, but I also think there is a similar problem with "which models to launch" topic. All the big companies, Suzuki, Hyundai, Ford, Fiat, Nissan, Toyota they have lots of models worldwide that are just perfect for India, but no they would for some unfathomable reason not launch them.

A few examples if I may.

Suzuki has Jimny, which is being sold in many countries, but for some strange reason, they will sell the Gypsy.

Toyota has so many cars that can just blow the market. They wont bring it. I think if they bring that Landcruiser (LC70 or 80 I guess) series which are plain jane models, won't they really be a hit here? But they just would not. Some "genius" sitting on top decides, it is better to launch LC200 instead.

Nissan has so many cars, but they start with Teana, 370Z.

Same story for Ford, Fiat etc.

All of these companies have in their portfolio so many cars that can give many market leaders here like Swift, Ritz, Bolero, Scorpio and some not so great sellers but still Safari etc give a run for their money. But, no they wont do that. Because some sycophant is saying "you are right sir" India is not mature enough for these cars.

Coming back to the topic, the same cars that are sold in other countries for reasonable prices, but the moment they bring these to India, they somehow want to be bracketed in "premium" segment and hence the pricing.

I am really proud of the fact that actually Indian customers are more discerning than I would dare say any other country. Indian customer never goes for marketing gimmicks. Only and only if the product is worth it, it sells.

Alas, so many stories of the same are not seen by these honchos sitting high in their ivory towers surrounded by the "yessir" brigade and not seeing the reality.

Regards
I do not agree with you totally, i agree there are lot of 'yes sir' guys, but for international manufactures its about converting an LHD car to RHD, and modify other bits to match Indian conditions which adds to R&D and cost, also Indian government tax laws are still strange that also adds to excise and other taxes. Its easier for us people to comment, however its tough considering market scenario, i feel with Aria TATA tried to change there image in India, however it did not help, same fate with Manza 'my father still calls Manza as Indigo Manza'.

When you start building a product a lot of things come into play, its easier for some manufacturers to get lot of stuff on market credit for others its tough. Also you cannot get everything in one price also depends on need of target market. As per my previous post how can you define Swift diesel expensive price to VFM, its a brand image in that hatchback segment, what most Indians define as 'choti gaadi' even though it is a little more longer than the small car, Maruti has a brand image in that section, Tata's have it in Taxi, Mahindra in SUV's/MUV's etc. when i first heard Aria pricing i was like ok, i am TBHP member so i know its a lot better car in quality but i never wanted to pay TATA that money, i would happily pay Mahindra.
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Old 5th November 2011, 08:51   #142
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I for one am grateful to these geniuses!

Thanks to their ridiculous launch prices the same cars are available in the used car market in a couple of years at mouthwatering prices, once the market has given its verdict on what the cars are really worth.

For example: I got a Hyundai Sonata Embera, petrol A/T, 2008 model, with 43,000 km on the clock, and full Hyundai service history for just 4 lakhs (car, insurance, transfer, and dealer commission). The same car that was priced at around 17 - 18 lakhs when new, and got a resounding thumbs down from the market.

All these high priced market flops of today will be the used car buyers dream of tomorrow.
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Old 5th November 2011, 13:20   #143
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Quote:
Originally Posted by GTO View Post
Guys, please note that this is not a thread to discuss why the cars failed. I want to stress on how top management seemed to lack common sense in their final decision. If it was so obvious to us laymen, how come it wasn't to them?
...
I haven't read the 10+ pages of the thread yet, maybe someone has brought this point up.

I think, the analysis made by GTO is slightly flawed. The problem is in the selection of cars. The analysis only uses failed cars which were overpriced and come to the conclusion that overpricing was the reason for the failure.
I recently read a book called "Fooled by randomness" by Nicholas Nassim Taleb who describes this phenomenon where people select a few stocks that follow a particular trend and then assume all stocks that follow this trend will make money in the future. The author had said we need to take all the models and see if there is a consistent pattern.

So, in our case we should check if there are any cars which were reasonably priced and failed. Or, any overpriced cars that succeeded. Only if we don't find any examples, we can conclude that overpricing is the CAUSE of failure. Then ONLY can we criticize the management for lack of common sense.

Now, I don't know cars as well as others in this forum, some examples I can think of that contradicts the analysis are -
  • Honda city - Overpriced for the last 2 years, yet was segment leader
  • Honda civic - Seems very popular( atleast in team-bhp) and yet costs 16 lakhs when mitsubishi cedia is available for 12 lakhs!
Hmm... I seem to have found only Honda examples. I would definetly not blame Honda for overpricing Jazz expecting it to sell like city!

Disclaimer - I own a Honda city...though after they dropped prices.

Now, examples of cars that were well priced but failed -
  • All fiats - palio,punto,linea.
  • chevrolet optra - good car.My brother had one, but was a failure.
I am sure others can think of more examples.

Now in conclusion, I feel management is responsible for the profit of a company. If they feel they can take a risk of overpricing the product, they will do it.

Honda has been managing with only petrol engines as they have enough profit from previous years. Overpricing their cars have helped them survive till their diesel arrives!
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Old 5th November 2011, 14:11   #144
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

It indeed is a strange proposition that top companies have avoided the Indian turf when it comes to flushing models globally successful. Jimny, Toyota Yaris, even a VW Fox (against Alto) or even a Lupo against Nano are all great cars that can be launched in India with presumably massive success. But somewhere at the top of management in these companies doesn't want to hear. Why? only they can tell.
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Old 5th November 2011, 15:40   #145
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by iashishi View Post
So, in our case we should check if there are any cars which were reasonably priced and failed. Or, any overpriced cars that succeeded. Only if we don't find any examples, we can conclude that overpricing is the CAUSE of failure. Then ONLY can we criticize the management for lack of common sense.

Now, I don't know cars as well as others in this forum, some examples I can think of that contradicts the analysis are -
  • Honda city - Overpriced for the last 2 years, yet was segment leader
  • Honda civic - Seems very popular( atleast in team-bhp) and yet costs 16 lakhs when mitsubishi cedia is available for 12 lakhs!
Honda City was getting a 'walkover' all these years, since they did not have an opposition team (competitors) on the ground . So folks who wanted a decent sedan in that segment did not have a choice. Now, the numbers do the talking.

Of course there are overpriced cars which sell well due to various other factors (Swift/Vista top-end version).
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Old 5th November 2011, 18:36   #146
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

some great machines indeed but no takers... sadly!

I just can't understand the mind behind mitsubishi india and hindustan motors. they have many duds in their collection. the cedia, the fantastic montero or the super (or super expensive) EVO X.

If only they had priced the Montero at 28-30 lacs, it would have been selling like hotcakes! and also the new lancer never made it to indian shores for god know what reason!

and similarly maruti Kizashi, though a superb car, is super flop. I have just seen one or two on mumbai roads till date! and this inspite it being a great car which drives superb and looks awesome!

Last edited by magikrider : 5th November 2011 at 18:38.
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Old 5th November 2011, 19:06   #147
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by Dr.Suraj View Post


Renault - COMPLETE idiots. I have serious doubts that probably their top level executives are 'rejects' from other companies or NOT Indians.
They could not have been more STUPID.

Just a couple of days a go Autocar[or was it overdrive] take a few koleos to the highest motorable road in india. The Renault india head was present there. So, bert D'souza asks him "how has the indian customers responded to the fluence and the koleos?". He replies by saying "oo, the response has been overwhelming! I was like .
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Old 5th November 2011, 22:16   #148
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by SPIKE ARRESTOR View Post

I remember a pot bellied Vice President who did not know how to sit properly in his office chair, being invited to clear the final design of a driver seat for one of the "premium" products. What else do you expect from such actions?

Quote:
Originally Posted by Behemoth View Post
The inside reality of most of the large organizations is completely different from what outsiders perceive. They are driven less by passion and more by bureaucracy!
Quote:
Originally Posted by phamilyman View Post
So then, its like any industry - people work for a paycheck (not the very best that they can do), internal politics is always there. Then occasional duds will be there, no?
IMHO, these three statements sums up the ground reality in any industry these days. The top management belongs to old stalwarts who are veterans in the industry and have done some spectacular feat in their younger " license raj" days. They are usually most media savvy.

The middle management belongs to posers who have mostly done their bit by pleasing the boss, small men corrupted by every little drop of power and eager to retain it by what ever means, threatened by new age of information overload.

The youngest brigade who joins to soon find all that romanticism is an illusion that lies in the green lawns of their recently erstwhile classrooms and living room of their parents. The quicker they learn about the real world skills, the more successful they are. Talent does not matter, money does.

No wonder attrition is over 10-20% across industries. Most people leave a job before any assessment can be made about their true worth. Paychecks keep getting bigger and bigger. Finally, one day, a rookie takes over as a supervisor. What to do, all the industies are growing so fast, there is an acute shortage of middle managers. As a result, it is the product which suffers.

In such a situation what do you expect the top management to do? Dissolve the company? Or keep lower targets and keep meeting them? I would do the latter, and say the following:

Quote:
Originally Posted by scuderiamania View Post
JSo, bert D'souza asks him "how has the indian customers responded to the fluence and the koleos?". He replies by saying "oo, the response has been overwhelming! I was like .

Quote:
Originally Posted by bkbkr1212 View Post
What I am trying to say is:-
Manufacturers like Maruti, Hyundai,Tata (with possible exception of Verna and Safari )are known as small segment guys.
I think Maruti needs to launch a premium brand aka Lexus or Acura if it wants to really play in the specialty segment.

Quote:
Originally Posted by iashishi View Post
I recently read a book called "Fooled by randomness" by Nicholas Nassim Taleb who describes this phenomenon where people select a few stocks that follow a particular trend and then assume all stocks that follow this trend will make money in the future.

OT: While I agree with you, I found NMT to be too pessimistic.

Last edited by dot : 5th November 2011 at 22:22.
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Old 5th November 2011, 23:11   #149
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Quote:
Originally Posted by scuderiamania View Post
Just a couple of days a go Autocar[or was it overdrive] take a few koleos to the highest motorable road in india. The Renault india head was present there. So, bert D'souza asks him "how has the indian customers responded to the fluence and the koleos?". He replies by saying "oo, the response has been overwhelming! I was like .
Thanks for this bit of info.

So now we all know, including me - that they are utterly dis-illusioned right upto the top!

They are in a state of delusion - then will follow 'Denial' - to accept the fact that they have failed.

Then will follow the blame game.

With the ultimate exit of the company from Indian markets (maybe?).

Which shall be followed by a nice book (written with major excerpts or plagiarism - from our dear Team BHP forum & from GTO's post - of HOW NOT TO LAUNCH A Car in India!).



Personally, I feel one should dig deeper into the lifestyle, temperament, vision & personality of the top execs of such companies.

A lot may be discovered.
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Old 6th November 2011, 08:44   #150
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Excellent Topic GTO.

I always wonder who these IVY Leagues who sit at the top of these companies are? My feeling is that they are just some hot shot product/marketing managers who jump from MNC to MNC regardless of the product. So they spend x no of years selling detergents and shampo for Unilever or P&G and then get a to job in Tata selling cars. They have no passion for Autos like us.

The golden rule is that you have to make a model a hit when it is launched else you are doomed. I can understand companies like Fluence who are new to the Indian market. Who the bloody hell heads up Marketing in Tata. He should like to second prize in stupidity. The top spot is permanently reserved for the head (if he has one, that is) of Hindustan Motors.
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