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Old 1st November 2011, 14:37   #61
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by bkbkr1212 View Post
Or is it that people associate cars with the respective brands way too much for the manufacturer to succeed in all segments?
What I am trying to say is:-
Manufacturers like Maruti, Hyundai,Tata
Quote:
So it it that us customers tie a manufacturer to a certain segment?
Offer good product at VFM price and customer will come knocking on your door. Chevrolet's best selling car in India, and what it was best known for, was the 3.xx lakh rupee Spark. The Aveo & UVA were duds, and the Optra has tanked over the last 4 - 5 years. The outdated Tavera & its taxi customers don't bring any "brand value" home.

Still, the Cruze came and conquered the 10+ lakh sedan segment. It's fighting right up there with the Altis for the No.1 spot....and has even overtaken the Toyota on occasion. Inspite of not offering a petrol engine (that the Altis does, thus widening its customer base).

Therefore, I disagree with you on the brand part. Yes, brand is everything at >20 lakhs. But it's not the case when we are talking about the <20 lakh segments.

Last edited by GTO : 1st November 2011 at 14:41.
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Old 1st November 2011, 14:40   #62
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Apart from the Aria, most if not all mentioned here could be argued to have started out life as a 'foreign' car. So, designed for more mature markets, and more expensive tastes. If you bring it in here as is, the headline is the situation we arrive at.

We need to more adequately factor in the (truly detrimental, in my opinion) impact taxes and cesses have on auto prices here.

If what is a 12 L car abroad turns into a 20L one here, obviously it's not going to meet the expectations of the revised target audience! The 20L guys will look at the 12L lack of features and give a thumbs down, and happily spend even bigger bucks on something everyone else will know they have spent on!

Auto manufacturers have to bite the bullet, cheapen mercilessly, and then still come in at what is the top-end abroad equivalent price for the bottom end variant here. Obviously we will yell, especially since we feel we are getting shafted!

If they decide to manufacture here, we complain quality of plastics et al have gone down. And if we want slush-moulded soft-touch dashboards, we don't want to pay for them.

Polo Highlines go up to 14L in the UK. Can we put the money where our mouths are if we are given that option here, or will we say its not VFM? That's why there is a Figo, I guess.

At this rate, we need to go back to the older days where each manufacturer had one bread-and-butter product that did reasonably well for its price.
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Old 1st November 2011, 14:48   #63
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

The Logan was a victim of its own hype as a very affordable alternative to the sedans but turned to be rather pricey. Add to that the dated looks and not so stellar performance. Whatever sales it did was mostly due to the cab-sector.

Aria too was priced high. That too from the company which is known for its VFM vehicles or more cars per car !!!

Bottom line is one basic thing...Indian market, to a large extent, is price sensitive.
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Old 1st November 2011, 14:49   #64
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by comfortablynumb View Post
Would you include the Thar also in this list?
How do you define success of a product, I'm not talking specifically to Thar, any automotive product for that matter.

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Originally Posted by tsk1979 View Post
you can hire an IIM topper, and put him in charge, but that will not mean he will give results. ------
Very well said!

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Originally Posted by mallumowgli View Post
Wouldn't the pot bellied top honchos be accountable for their decisions? Maybe for one or two jobs they can find a 'bakra' to put the blame on. The development cost of vehicles runs into crores - 700 to 800 crores for Indian vehicles, am I right? And for foreign manufacturers, introducing a vehicle in the Indian market means lot of money sunk. And no one questions these guys even then?
Actually, somehow or the other way they find a scapegoat-- thanks to attrition, people (scapegoats) once they realize the truth start moving on, those who don't, suffer. Development cost runs into lots of crores which gets recovered after some time (mostly). When something goes wrong the Indian constitution policy is used "We swim together we sink together". This might sound crass, but it's the truth.


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Originally Posted by SS-Traveller View Post
It is another story that they paid a consulting firm a huge sum of money to find out why vehicles were not selling in Brazil, and the report pointed this fact out to them - by which time it was too late!
Leaving aside the consulting firm, I am wondering about those who must have enjoyed a holiday in Brazil at the company's expense.

I remember asking a biggie once- "Sir, how was your trip to Brazil (project related) ?" He replied "Brazil is famous for two things- Beaches and Babes, baaki sab to baad mein (rest everything later)".

Spike

Last edited by Technocrat : 2nd November 2011 at 02:28. Reason: Removing objectionable word
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Old 1st November 2011, 15:21   #65
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

@anil, I think Hyundai could qualify here for some of their stories. Not to mention the high handed nature/ arrogance at some dealerships (not only Hyundai but across manufacturers) which should be discouraged by the company ROs. Is it possible this comes from the belief that their product is better just because it is priced higher? The SAs start bleeding from the ear trying to convince us that their car has all the relevant features and those absent in their car (and offered by the competition) are actually irrelevant

This gets me thinking on another topic though. Could it be possible that a few black sheep switch between these companies taking along their bad strategies/ hot air wherever they go? After all most manufacturers seem to have done this at some time or the other. I have seen that happening in my short career so far. As soon as you hear of some specific people, you just know what they are going to do to a project!
Perhaps there is just that one hotshot hiflying powerpoint presenter who seems to be able to convince top honchos to overprice their latest offering so that it is 'premium'?
Just so that people think that if a product is price higher it offers snob value. It is a different thing to apply cost accounting principles (using MS Excel as someone rightly said) to sell a bar of soap/ other FMCG than to sell/ position a car. After all, if the strategy fails for a bar of soap, 33% extra can still be offered free later.

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Old 1st November 2011, 15:35   #66
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Lightbulb Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by GTO View Post
My question is simple : How did the respective auto brands, with all the money, talent & research in the world, think they'd get away with it? What kind of research have they been really conducting? Did common sense ever figure in the brainstorming sessions? It's sad because each of the following cars brings a competent offering to its respective segment. Wasn't there one person of authority who put his hand up and said "Waitaminnut guys, I think we are completely missing the mark here"?
Such a long thread for an obvious no-brainer.

Yes, Indian companies (or many globally for that matter) are full of sycophants or individuals who simply lack the guts to say it like it is (or there is internal politics sabotaging it).

I've not worked for too long, but common sense is often overcome by hubris, inertia and backside-licking in most firms (esp large ones). People work for a pay cheque, not to do the very best they can do.

Like the quote says, common sense is rather uncommon.

So what really was the point of the thread?

I mean, someone like you would've met enough auto execs - you know the answer better than the average BHPian (excluding folks like behram saab/spike etc).

PS: Think of Airtel sponsoring crores on har friend zaroori hai crap and F1 and then firing employees and slashing other costs wantonly. That - coming from a company that generates billions of dollars in cash.
PPS: Fiat has been told forever (even rajeev kapoor said) that after sales/parts is where they falter and yet it remains a sore point over half a decade. Maybe they should hire Flipkart as a consultant for inventory management - given the horror stories of waiting for parts!

Quote:
Originally Posted by SS-Traveller View Post
M&M thought Brazil will be a walkover for their SUVs. Little did they realize that unlike India, diesel is not the most desirable fuel in Brazil - most vehicles run on ethanol, and M&M went into the market there with their eyes closed to this fact. It is another story that they paid a consulting firm a huge sum of money to find out why M&M vehicles were not selling in Brazil, and the report pointed this fact out to them - by which time it was too late!
I am sorry but you are trivializing the whole issue a la coffee table banter style, as if the company is stupid. It is groupthink like trakesht said and I alluded to it as well. The fact is that organizational dynamics are far more complex than any of us ever understood in college (atleast us MBA types) and it is the one key reason that can make or break organizations. But please - grant some intelligence to M&M and realize that sometimes the sum of the parts may actually be zero for HR complexity and not simple naivete.

Last edited by GTO : 1st November 2011 at 18:46. Reason: No inappropriate language. And it would be great if you keep things more polite
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Old 1st November 2011, 15:36   #67
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by trakesht View Post
The major reason is
Groupthink - Wikipedia, the free encyclopedia

People who have worked in NPI teams would be aware of this phenomenon
Thanks a lot. The link was very informative.

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Originally Posted by bkbkr1212 View Post
Oh, my colleague says Honda dealer informed him that Jazz has a waiting period of 9 months. Not sure how true is that.
9 Months of waiting period for Jazz. That is absolutely absurd.
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Old 1st November 2011, 17:16   #68
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

edit: and of course, SST saab - sometimes consultants are hired when the answers are already known, but the report is then used as an "independent" counsel for settling internal organizational scores. Again, more than meets the eye.

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Originally Posted by raul View Post
The India car market is overpriced compared to other markets, never mind taxes, even for equal income, get in purchasing power parity and folks income levels here and it becomes hugely so.
Overpriced? I'm sorry but you seem fairly detached from reality - when did ever car markets get adjusted for purchasin power parity and income levels? And I would like you to compare entry level cars (forget the mercs of the world) and say, tell me why an i10 in Lucknow seems overpriced to you, compared to one in London? Suggest you take a reality check and cut out the rhetoric. PPP is the most irrelevant canard in the book.

Speaking of overpriced cars by income levels - consider Honda City's sales vs the nano's sales. Price is not the entire story.

of course, i'm not advocating more taxes - just saying the picture is incomplete compared to your simplistic rhetoric above!

PS: I want to buy 100gm of gold adjusted for PPP and indian average income levels. Heck, make that 1kg!!

Last edited by GTO : 1st November 2011 at 18:47. Reason: No acronyms for cars to be used. And again, keep the rude tone off the forum please
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Old 1st November 2011, 17:41   #69
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

A company might have the best accountants, engineers, MBAs and so on, but how many of them are actually car guys? There is a tendency among MBA grads especially, to stick to the 'tools of analysis' as if they were holy grail. How many of them chuck away the rule book and try to learn and understand the sector they are in? Or are they just drones like Tanvir said?

You cannot have a bunch of accountants and management consultants (no offence, I have the greatest regard for them) crunch numbers and rely on fancy studies/analysis like they do in the FMCG or consumer durables sector.

Things are slightly different in the auto sector. Buying a car is second only to buying/building a home in the bigger scheme of things. It is both a rational & emotional buy. Someone used the words 'pulse of the market' earlier. How very apt.
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Old 1st November 2011, 18:16   #70
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by phamilyman View Post

PS: Think of Airtel sponsoring crores on har friend zaroori hai crap and F1 and then firing employees and slashing other costs wantonly. That - coming from a company that generates billions of dollars in cash.

PPS: Fiat has been told forever (even rajeev kapoor said) that after sales/parts is where they falter and yet it remains a sore point over half a decade. Maybe they should hire Flipkart as a consultant for inventory management - given the horror stories of waiting for parts!

I am sorry but you are trivializing the whole issue a la coffee table banter style, as if the company is stupid. ...
I agree on all the 3 points . A little OT but I always wondered what purpose does crap like "har friend" serve? Rather than focusing on service delivery they come up with such trash!!!

FIAT remains an engima - they are loved by many but seem disinterested. Nothing, it appears, can rouse them from their stupor.

And lastly, hugely simplistic view on Mahindra Brazil. Every company makes mistakes ( I can't think of any which hasn't) but to not give them any credit is simply unfair.
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Old 1st November 2011, 18:39   #71
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Quote:
Originally Posted by mallumowgli
Wouldn't the pot bellied top honchos be accountable for their decisions?

...

And no one questions these guys even then?
Let's take that specific example of the VP signing off on the car seat.

Can one conclusively prove, controlling for all other factors, that the car's lacklustre sales were due to the poor seat design (alone, or at least primarily because of)?

If yes, there could (not definitely) be reasonable ground to fire/demote the VP.

Coming to the larger/generic picture, I don't think any public company would allow bad leadership to continue despite repeated failings. Shareholder activism will see to that, if not the CEO and/or the board. But you can't fire a top leader on a whim (a single product failure) especially if the person has a proven track record thus far. And very few people enter top leadership without proven track records.

Except Renault/Fiat (and Maruti and Hyundai in the 10+ lacs INR range) each of the other makes under discussion in this thread have so far enjoyed success with some model or the other in India. No CEO/board worth their salt will replace their top product development people just because they came out with *one* badly priced product in the midst of a generally successful run.

Regards,
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Old 1st November 2011, 18:51   #72
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

TATA erring big time in their pricing.
Aria: they made a 7 seater for buyers to assume and compare it with Innova like MUV and then they say it is a crossover AWD. Any serious 4x4 aspirants don't like an MUV Van type looking ARIA. To trade in atleast pricing should have been better. There came the bomb! Aria Flopped miserably. Aria is not an aspirational vehicle.

Aria 15L Plus priced vehicle not having proper center console? Whatever is now at the center console is a design disaster while folding middle seat comes in its way .


Tata's charitable words didnot appeal to two wheeler to firsttime car buyers and hence Nano flopped. In India Buying a car is a benchmark achievement /event in an individual's life. People hesitate to associate with cheap/charitiable car to mark this personal goal. To add fire incidents no rear hatch and Auto engine note.

Maruti cannot sell anything more than 9L. It is a small car company. Vitara or Kizhashi both are wrongly priced.

Jazz could have sold if Honda launched it at current prices. Honda was taught a lesson Indian way.

New Ford Fiesta: Got carried away by the success of Figo but Ford promptly got arrogant and forgot to note down the fundamental reason for Figo's success is its price. Phew!

Last edited by harimakesh : 1st November 2011 at 18:53.
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Old 1st November 2011, 19:10   #73
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Spadix has a good point. Let me throw a different logic. This thread is turnin into a cricket discussion where hardly anyone can run a good 22 yards yet we dissect tendulkar's shot selection like he's a Johnny come lately.

Maser you miss the point when u portray auto co folks are number driven ostriches with nary a clue for a pulse of the real world! You think uber respected folks like spike n behram had no clue? Yet thar has not set sales charts on fire.

Life is complicated
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Old 1st November 2011, 19:26   #74
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Got a youtube link to share?
Hi,
Transcript at
Forbes India Magazine - Rajiv Bajaj: Being Original to Succeed

Regards
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Old 1st November 2011, 19:37   #75
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

The problem with indian car company top bosses is that they do not "listen" to some of their own internal staff, staff who are sometimes very bright, hardworking, intelligent and have the "knowledge from the field" as to what exactly consumers want and do not want.

These managers, with fancy designations, having climbed the corporate ladder and having esconsced themselves in the corner office get out of touch with ground reality.
Coupled to this they will inevitably have a "coterie" - a bunch of "yes men" who will always fall in line to their impractical and utopian thoughts w.r.t. product, pricing, positioning, selling process, advertisement etc, however wrong it may be!

These "head honcho's" do not look beyond their "yes men" - whose only job is to oil up their bosses ( i call it "liquid engineering" (with due apologies to Castrol for stealing their line!).
These "yes-men power centres" are typically second in command and they are completely bereft of good ideas in any respect - and they shoot down any good ideas that may emanate from the junior guys.
Thus the OEM goes ahead with some half baked, ill - researched brainwave which spells doom for their particular product.

It takes a lot of guts, humility and most importantly, a remarkable dilution of top bosses ego's to take in suggestions from outside.

A "listening company" - by listening i mean, listening to external customers as well as the company's internal customers, (internal staff that is), who have "hands-on" experience , will always succeed in whatever they produce -and this is irrespective of the industry in which they operate in.
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