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Old 1st November 2011, 19:58   #76
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by crackingride View Post
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.
The Altis pays the same taxes as the Fluence. How is it that the Toyota offers so much more at a lesser price? Or the Cruze?

If you are hinting toward import content, well, that's just too bad. The customer couldn't be bothered about customs duties. A brand that wants to remain competitive will build / assemble cars here.

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Such a long thread for an obvious no-brainer.
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So what really was the point of the thread?
Really not so obvious to me. I have learned 10X more than I have contributed on this thread, or knew previously. We are all here to share info & learn, Phamilyman.

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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.
Considering that there are many more outright successes than failures in the market, perhaps it would be too much to generalise the above comments to all manufacturers / large companies. Not denying the issues, but many companies clearly emerge as winners despite.

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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.
Actually, I disagree with that statement. If Fiat is a flop because of after-sales, Tata (identical after-sales), Skoda (even worse, generally), Audi and gang should have shut shop long ago. I can tell you for a fact that Mahindra after-sales is much worse than Fiat. They are still doing rather well, aren't they? If you think Fiat's only problem is after-sales, well, I completely disagree. Lets continue the Fiat discussion on another thread to avoid going anymore off-topic here.

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A company might have the best accountants, engineers, MBAs and so on, but how many of them are actually car guys?
Not necessarily a bad thing. A true car guy may be blinded by emotion and enthusiastic tastes. Take Toyota for instance...I'm pretty sure a large majority of Toyota management aren't "petrolheads". But they sure know how to build great cars. Toyota makes no claims about building track-burners....and they do make cars that are extremely relevant to the market. How many cars from the Top 20 list each month are from companies that have petrolhead CEOs?

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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.
I cannot design or engineer a car. I'm pretty sure you can't either. Should we stop reviewing them, or talking about product disadvantages then? This thread does have hard facts that the "Tendulkars" (i.e. top management) have obviously erred upon, and the market's response to the overpriced duds only validates the same. It doesn't matter where the truth is coming from...whether its a layman or a Tendulkar. Facts are still facts at the end of the day.

Last edited by GTO : 1st November 2011 at 20:00.
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Old 1st November 2011, 20:59   #77
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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You think uber respected folks like spike n behram had no clue? Yet thar has not set sales charts on fire.
Man, you are keeping a 4 year old wine (me) alongside a 31 year old wine (BD).

Just for the record, as so much is being discussed about TXXr sales chart, I would like to mention -
(Current sales for the vehicle = 7.2 x Projected sales volume) i.e. a 620% hike from the normal in Corporate terms :-P (I am not at liberty to post the projected volume, but my data is 100 % genuine). Everyone is after seeing the current figures itself, imagine the kind of groundwork done prior to its conception!

Now why only 7.2?? Not because the product is a dud / failure, it is manufacturing constraint (ramp up), otherwise it could have been much higher.

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The problem with indian car company top ----
arjab, you have hit the nail left, right, centre!

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It doesn't matter where the truth is coming from...whether its a layman or a Tendulkar. Facts are still facts at the end of the day.
Absolutely!

Spike

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Old 1st November 2011, 21:00   #78
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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I am sorry but you are trivializing the whole issue a la coffee table banter style, as if the company is stupid.
...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.
So you do agree that HR complexity IS responsible for creating those duds.
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...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.
Isn't that exactly what we (the unfortunate non-MBA types) would like to learn from people who understand that...
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...organizational dynamics are far more complex than any of us ever understood in college (atleast us MBA types)
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Old 1st November 2011, 21:09   #79
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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A company might have the best accountants, engineers, MBAs and so on, but how many of them are actually car guys? .... 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.
True, the best in one field does not mean that they will be good in a particular industry. The automobile industry as a whole does attract many "car guys/gals" and many do make it to the upper echelons of mgmt. where they have a hand in setting strategy, pricing and marketing. However, quite a bit depends on trying new strategies etc. Tata Aria is held out as an example of misplaced pricing. However, hindsight is always 20/20. We can only guess what actually resulted in them deciding on their chosen pricing. There are a lot of smart people in Tata (and in most car companies) and they'll learn and as long as there is a next time, benefit.
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Old 1st November 2011, 21:17   #80
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I don't know if someone has already brought this point:
Not everything is designed to sell in large numbers and help to make money. Some products are designed to change the brand image or provide well-roundedness to the portfolio.
For example, something like Aria could have been designed to stretch/spread the brand to higher segments. Premium pricing means it may remain out of reach for many but soon it may become aspirational brand and may help in the sales of the lesser siblings. Of course to make it happen several things have to be well synchronised.
I am not saying that this is the case with Aria or any other product but it is a possibility that the product could have more strategic role.

Last edited by Guna : 1st November 2011 at 21:33.
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Old 1st November 2011, 21:26   #81
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I think the manufacturers (at-least Tata) wanted to be seen as a premium brand. They tried doing it in one go, one product. They might have improved tremendously in quality with Vista, Manza and Aria but have way to go. They wanted to move from the cheap and taxi image to a more premium positioning.

What they didn't factor in is it's takes long time to change the how people perceive brands.
It took about a generation for Toyota and Honda to move away from the eco box image, though they had the most reliable cars. It's the same with Hyundai; if I am not wrong they still sell at a discount compared to the Japanese cars. It's the same with Lexus; it still sells at a discount to Merc and BMW though it's the best-selling luxury brand in US and also the most reliable.

The correct way of moving up the value chain is progressively with each generation, like Mahindra is doing now. Bolero>Scorpio/Xylo>XUV 500 and Honda, Nissan and Toyota did. This way, it's easier managing the expectations.

How much ever research and analysis they do, end of the day, it's comes down to deciding X or Y. This comes down to instincts; your research will take you only up to a level. Over reliance on analysis and research might have bad consequences (products like Pontiac Aztek would have made it to production if anyone with the right mind had independently decided without seeing what research says).
All manufacturers do mistakes, VW with its Phaeton, Bajaj's decision to quit 100 CC and concentrate on more premium offerings etc. It's about how quick they realize that and correct it. When these companies first came to India, didn't they all gauge the market and its size incorrectly? The first foreign cars manufactured/assembled in India were premium sedans.

Sergio Marchionne (accountant) and Alan Mulally were not even in the car business but they and their companies are doing pretty well. Life time car guys have messed it up. So, instincts and a bit of leap of faith. What if the financial downturn had continued, Ford would have lost everything, all assets including its logo was mortgaged. When Boeing first introduced 707 in 59, it had invested more money on the project than the company's total net worth. Just imagine if things had gone wrong.

I guess it’s about taking calculated risks. If it clicks the managers become heroes else we will have lengthy discussions on what and why it went wrong

Last edited by AdityaLN : 1st November 2011 at 21:30.
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Old 1st November 2011, 21:50   #82
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I would like to relate this to real estate.

1. Some dumbos who wish to sell their land hang on to "I ask 10 times the price because it's my land, and people would queue up to buy from me". They are never able to sell.
2. Some other dumbos sell at a loss because they are not willing to research the market trend / want to sell the next day.
3. But some sensible fellows are able to sell at the optimum price / time because they ask around and do enough research.

Last edited by jinojohnt : 1st November 2011 at 21:52.
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Old 1st November 2011, 22:57   #83
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by AdityaLN View Post
I think the manufacturers (at-least Tata) wanted to be seen as a premium brand. They tried doing it in one go, one product. They might have improved tremendously in quality with Vista, Manza and Aria but have way to go. They wanted to move from the cheap and taxi image to a more premium positioning.

What they didn't factor in is it's takes long time to change the how people perceive brand.
Thats a very valid viewpoint. Just like the way Toyota has priced the LC at an obscene 80L or somewhere near it right? They don't intend to sell too many of those but it sure creates that brand value and hence contributes to profits indirectly. May be the same is also happening with Tata atleast. They need a huge miracle to get out of the Taxi image. Now with the Aria launched at 15L, they would be able to project themselves as a premium car maker. This will indirectly rub on to all its product range specially on the Safari and Merlin and Manza.

Also sometimes I feel you cannot predict how the market will react to a product. I would have never thought that a hatchback will sell at 7-8L and be successful but I20 proved me wrong. So may be with the Aria luck was not on its side.
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Old 1st November 2011, 22:59   #84
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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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!!

That's a huge misreading of my post which if you read is not about ppp but just one more point, it was about comparing prices across markets and we are using the US as the benchmark here. The CRV is $25k or 12.5 lakhs in the US and 28 lakhs here, there is no ppp involved there, is there? Now compare the cost of business in the US to the cost of business here it simply does not make sense.

Where ppp comes in is in things like labour costs, A honda manager or worker in the US would make multiples of the same Honda worker here, so the costs for Honda is less as is the purchasing power of the Honda manager or worker in India and hence the reference to ppp. So why shouldn't it reflect in the prices?

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Old 1st November 2011, 23:25   #85
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Originally Posted by raul
Where ppp comes in is in things like labour costs, A honda manager or worker in the US would make multiples of the same Honda worker here, so the costs for Honda is less as is the purchasing power of the Honda manager or worker in India and hence the reference to ppp. So why shouldn't it reflect in the prices?
Right point, wrong example.

The CR-V sold here is a CBU import made in Japan (if not a CKD assembled locally).

So we should compare a made-in-India make and model vs. a made-in-USA of the same, after adjusting for regulatory and fuel/driving/road/weather condition differences (LHD vs. RHD, tuning for fuel quality, suspension setup differences etc.). That is where you will see the advantage you are talking about.

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Old 2nd November 2011, 00:01   #86
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Right point, wrong example.

The CR-V sold here is a CBU import made in Japan (if not a CKD assembled locally).

So we should compare a made-in-India make and model vs. a made-in-USA of the same, after adjusting for regulatory and fuel/driving/road/weather condition differences (LHD vs. RHD, tuning for fuel quality, suspension setup differences etc.). That is where you will see the advantage you are talking about.

Regards,
spadix
The 2 paras make 2 different points which it self is referencing an earlier post. PPP was not related to the CRV in specific or Honda India

Like you said it will apply to scenarios where both are manufactured or assembled here and there are plenty of examples of that. Let's take the Accord for instance 20 lakhs in India, and $21k or 10 lakhs in the US. I am sure there are more examples.
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Old 2nd November 2011, 00:32   #87
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Over the years I have really not been able to understand why cars are priced so cheaply in the US and not so in India.

I feel manufacturers here don't want to play a volumes game but rather a margin game. Thats the India mindset of who cares for the customer.

Car companies in India pretty much pay a pittance to their workers here, have full room to cut as much corners as possible with the kind of regulatory environment we have, have lots of loopholes to save on taxes and still can't manage to touch US prices.

Its a shame that such a low per capita country that we are, cars are priced more than developed countries.

Just look at the example of Nissan Sunny which starts ex showroom 11K USD in the US, that is around 5.5 Lakhs (taking 50Rs per dollar - check the difference at 45rs per dollar) and the same here in India at 6.8 Lakhs.
This is purely nothing but price gouging happening and this is across the board.

This really need to change and thats why we need second hand car imports opened up for the customer to be king.

Cheers
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Old 2nd November 2011, 06:53   #88
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Talking Re: Big Money + Big Talent = The overpriced market dud. How?

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The 2 paras make 2 different points which it self is referencing an earlier post. PPP was not related to the CRV in specific or Honda India

Like you said it will apply to scenarios where both are manufactured or assembled here and there are plenty of examples of that. Let's take the Accord for instance 20 lakhs in India, and $21k or 10 lakhs in the US. I am sure there are more examples.
Raul,

Like I said - you first painted a very broad rhetorical brush and now when pointed out, you are talking only of CBUs/CKDs. If you want to talk of the "Indian" market, talk of cars assembled here. Then it is a relevant comparison.

CKD/CBUs which attract high tax (and thank god for that because high duties on imports keep auto jobs in India) will of course be costlier. Its a no-brainer.

so maybeearlier u just said "taxes" you didn't mean excise and sales tax, but meant duties on CBUs/CKDs. subtle difference. and considering it brings in investment and jobs, maybe we should thank the govt than rant about it?

PS: of course i want cheaper superbikes/imports but i respect the bigger picture of government import duty regime too!
PS2: Mind clarifying what specific thought u had on ppp?
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Old 2nd November 2011, 07:19   #89
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Lightbulb Re: Big Money + Big Talent = The overpriced market dud. How?

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There is no denying the talent either; large auto manufacturers have some truly bright brains at the top, and usually hire the smartest out there.
I think you're half wrong here.

In any company, there are those who love the business and do their job with passion. Maybe the automotive sector has far more of such individuals - and which itself is understandable.

BUT - the general pay scales of the automotive sector are quite behind the rest of the market, so what you've said in bold really does not apply.

I personally know 10+ friends from the auto sector who left that sector simply because of the money - whether at the starting level, mid level, or at the director level. Of course, the examples are limited to GM, Ford, Fiat's vendors and Maruti.
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Old 2nd November 2011, 07:34   #90
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by Guna View Post
I don't know if someone has already brought this point:
Not everything is designed to sell in large numbers and help to make money. Some products are designed to change the brand image or provide well-roundedness to the portfolio.
For example, something like Aria could have been designed to stretch/spread the brand to higher segments. Premium pricing means it may remain out of reach for many but soon it may become aspirational brand and may help in the sales of the lesser siblings. Of course to make it happen several things have to be well synchronised.
I am not saying that this is the case with Aria or any other product but it is a possibility that the product could have more strategic role.
This can be said to be very true in cases like the kizashi where the company just launched an already available product in India.There wasnt much extra expenses.
But Aria,do you really think they wont be serious about its numbers after having invested a lot in its development???
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