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Old 27th April 2013, 11:54   #16
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

What happens when it goes the other way...

When I bought my GV in 2007, the ex-showroom price was 14.11L for the MT. In 2009, it was upgraded to 2.4L engine and released at 16.67L for MT. Now, the same GV costs 23.96L for MT. And I don't recall GV ever having a discount.

Does this mean the GV brand value has really gone up? Don't think so.
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Old 27th April 2013, 12:34   #17
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

This thread is very relevant and represents a completely different point of view from the eyes of 'some' percentage of car buyers. I remember when Honda City was doing well there was general perception that Honda is a premium brand and the mildly arrogant behaviour of SEs and Service guys proved it so.
But after the arrival of VAG and increase in Petrol-Diesel price gap made Honda shed their arrogance and announce a massive discount which could never be imagined sometime back and launch of facelifted versions of the City.
Now in this particular example the day when Honda allowed discounts and also added bling chrome front grill etc., it definitely diluted the 'premiumness' of City as far as I am concerned. This was echoed by few BHPians too. But the interesting part is that Honda would've done that after market research and feedback. We also know the fascination of Indian public with bling.
At the same time mixing marketing and finance offers with dilution of brand image highlights the complete ignorance of average car buyer but we have majority of those in every field.
It can be compared to the mentality of 'owning Diesel car is cheaper compared to Petrol' which is not true in all the cases.
We have innumerable examples that defy any sort of logic.
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Old 27th April 2013, 15:03   #18
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

I think a potential car buyer (non petrolhead) often looks forward to discounts and deals especially in festive seasons.
But if a company gives big discounts for long time without any occassion, the "failed car" concept creeps into the mind of the average buyer.
Take the vento with the exchange your old car + 1 rupee ad. A friend once commented " These vw guys must be finding it difficult to compete with the vernas and others and are trying all sorts of things to sell the car, just look at this ad".
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Old 29th April 2013, 02:53   #19
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

aniketi started the thread mentioning his friend's comments on big discounts and schemes given by the 'premium' car companies. He is not alone, there are others who thinks in similar line.

Quote:
Originally Posted by aniketi View Post
...He said those companies are giving big discounts, schemes like pay half now balance later, 0% interest & all others. His logic is if company is doing well & their cars are good enough, they will never give such schemes. They are giving such schemes only because their cars are not good & that's why not selling in the market.
Quote:
Originally Posted by pyrodrive View Post
...Take the vento with the exchange your old car + 1 rupee ad. A friend once commented " These vw guys must be finding it difficult to compete with the vernas and others and are trying all sorts of things to sell the car, just look at this ad".
Quote:
Originally Posted by carwatcher View Post
...the day when Honda allowed discounts and also added bling chrome front grill etc., it definitely diluted the 'premiumness' of City as far as I am concerned.
Quote:
Originally Posted by dark.knight View Post
Your friends opinion didn't surprise me all that much, infact I feel there should be more people knowing this...
Quote:
Originally Posted by ACM View Post
...if the vehicle in question is not really the main cash cow of the company like say A-Star is to Maruti vs the Swift then it will opt for not doing dropping prices as it will effect the brand...

Then there are people who thinks such discounts or schemes won't affect brand value.


Quote:
Originally Posted by mxx View Post
This is a very stupid logic. ...
Quote:
Originally Posted by dark.knight View Post
discounts do no affect brand value, brand perception and past ill-activities of a brand does...
Quote:
Originally Posted by ashphil View Post
...I dont think brand value diminishes in any way with such offers.

Saket has given the answer to this.

Quote:
Originally Posted by saket77 View Post
As they say "half knowledge is dangerous"! So, without knowing the economics of the auto market and the state it is in currently, its dangerous to deduce that the companies rolling out good offers don't have good products...
Most of the general public (non petrol-heads or hon-Tbhpians) have half knowledge and these schemes may affect the premium perception of a brand.


Brand PREMIUMNESS is a perception, it is what people think - how PREMIUM a brand is? Different people may assign different different premiumness to brands; there may be surveys and studies showing the 'average' or common perception. I think the following can be considered as a sample premium perception rating of cars in India.
a. Maruti, Tata, Hyundai at the lower end. (Maruti has high brand value as most people consider it as dependable, reliable and tested brand; but we are talking about premiumness).
b. Toyota and Honda comes next.
c. Maybe VW, Skoda etc can be considered at the next higher level.
d. Of course BMW, Benz at the higher end.
The perception of premiumness is achieved by factors like how people feels about a brand and how/where the companies position their brands. Companies may not be always succesful in achieving the position they would like to, where they get placed is what matters.
For example, Maruti started as a common man's car and have established their name in that segment. When they came up with higher end car like Kisashi, nobody (even Maruti) did take it seriously. Hyundai also started at the lower end with Santro, Getz and then through Accent, verna etc they got slightly ahead. Benz and BMW were always at the top and still there. The first cars from Honda and Toyota available in India were Civic, Accord, Corolla, Camry etc and were positioned at a relatively higher level. When Honda wanted to target the bigger common segment, they came up with a new lower end car, City. It didn't dilute the value of Civic or Accord, but tried to get a premium slot in the mid-market segment. This is different from what VW and Skoda are trying to do. They are making Vento and Rapid less premium by making it more affordable.


As mxx and ACM said, all car companies give discounts.

Quote:
Originally Posted by mxx View Post
...Even maruti gives discounts (not on fast selling models like swift). Toyota and honda gives discounts. So does that mean these cars are crap? Take case of honda,they struggled to sell cars when the competition heated up, so they have to give discounts. their brand value never took a hit.
... When it comes to cars again even Mercs, bmws too gives finance schemes. Above said brands also provide different finance schemes.

Quote:
Originally Posted by ACM View Post
...Honda surely had to face this when the Jazz did not take off and it was expected that Honda being Honda would not discount it but then after waiting for a couple of years it did being about an effective price drop in the Jazz - but it was too late and did not reverse fortunes.

TATA has done it in recent desperate times with the Aria, Manza and Indica - and it does not seem to have helped it much.

Even Merc, BMW and Audi offer finance schemes to tempt the buyer and that does not mean the vehicle is valued any lesser but it does mean that it is not moving out of the showrooms in the numbers expected and it does indicate a desperate step. ...
People love Maruti or Tata giving discounts. The expectation from them is affordable cars and it doesn't lower their premiumness. But that is not the case when a perceived higher level company giving discounts and schemes. People expect them to be premium which is not easily affordable. The schemes go agaisnt people's expectations.

This affects these companies in two ways.
1. General public's perception - as explained above, it will reduce the premiumness of the brands.
2. People who have bought their 'premium' cars feel less valued and cheated. (When I'm paying my EMI for Rapid which I bought last year, how will i feel good or happy seeing my friend byuing it today doesn't pay anything till next year?)

BMW, Benz had and still have their own financing and leasing schemes. It is not for the 'general public', not publicised or widely advertised in newspapers and TV, but through corporate schemes and shown as special exclusive deals for select group of people. Those get these offers feel they are special and feel good and love the brands more. VW also had such corporate schemes, but what they are doing now is different.

Closing this with another quote from aniketi.

Quote:
Originally Posted by aniketi View Post
...if he can think that way, many others can also think similar way. That will damage branding of those products only. VW ads of pay half now & pay half later certainly has created negative branding in many peoples mind for sure. Lots of people thinks that they are not being able to sell cars, so offering such schemes. Also with such schemes, people also thinks that company is cheating them. Instead of that why can't they give discounts in cash.
...
Anyways, one thing is sure that recent schemes given by these 2 companies has surely made negative impact in many peoples mind. Peoples trust has surely come down. People were seeing these as premium brands but with such ads, people are thinking about the brand, resale value of these cars.

PS: Schemes can be done to show premiumness of your brand also. Audi is running a special scheme for A6 now - downpayment of 6L and EMI of 73K per month. The huge figures actually reinforce the premiumness of Audi. You can buy a Polo with the downpayment amount, and with the EMI amount, you can buy a Vento every year. They are actually saying 1 A6 has the value of 1 Polo + 5 Ventos (I think it is 5 years EMI, could be 7 also). This is really good.
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Old 29th April 2013, 09:33   #20
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

^^^ agree with most points from Johnyboy, but Merc, BMW & Audi all do place advts. in general newspapers for their fianance / leasing schemes infact they do go so aggressive as to show that the cost of owning their vehicle is not as high as the market perceives (actually the advts have at times been quite misleading and made people who would only consider a vehicle from a lower segment take a look a the entry level offerings of the 3 Germans)- Quite a few TBHP threads have past details of such schemes.
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Old 29th April 2013, 10:40   #21
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

Quote:
Originally Posted by JohnyBoy View Post
This affects these companies in two ways.
1. General public's perception - as explained above, it will reduce the premiumness of the brands.
2. People who have bought their 'premium' cars feel less valued and cheated. (When I'm paying my EMI for Rapid which I bought last year, how will i feel good or happy seeing my friend byuing it today doesn't pay anything till next year?)
Thanks JohnyBoy. I completely agree with you. The two points you mentioned are absolutely correct. People who has bought the car already feel like they have been cheated by the company. Now a days people are very careful. Whenever people sees any schemes like something free, 50% discount, 0% interest, mega sale, clearance sale etc in the ads, they get careful. They dont want to get fooled by someone. Many people run away from such schemes as they think it must be some gimmick or trick by the company for cheating. Now i am also very careful & takes care whenever somebody tells me such schemes. First thing comes to mind is, i am not going to fall for this, they are trying to cheat me in a some way or two. Else why will they give something for free or at such huge discounts. I guess many clever people are like me only, better be careful initially than be sorry later

Slightly off topic, we have common joke in our company. We always say jokingly - "Ek Baar Hume Lelo, Fir Jindagibhar Hum Tumhari Lenge". Similarly VW / Skoda must be thinking on same lines - "Ek Baar Humari Gaadi Lelo, Fir Jindagi Bhar Hum Tumhari Le Lenge (BY A.S.S.)" Just joking, please dont mind it.

Mod Note: Please quote ONLY the relevant bits of a post. Quoting a full, long post inconveniences our mobile readers.

Last edited by Rudra Sen : 30th April 2013 at 09:34.
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Old 29th April 2013, 11:11   #22
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

If discounts give the company increased sales, then discounts are a way to go. Also if the car is launched at a false premium price (too high price for too few features) and then the price is dropped, its not a discount per se, its mere price correction. Example The Vespa scooter.

Common reasons for companies providing discounts
1) price correction
2) Product lifecycle end, pushing sales before closure of the product.
3) Lower cost of manufacturing, example fully built versus CBU
4) Clearance sale before launch of new/replacement model
5) Stock clearance sale, before the company winds up operation

Brand value per se, for a car model is not so important as the brand values of car companies, which are more lasting. Example its BMW brand which is pushing the X1 and its the Tata brand which is pulling back the Aria or the Storme. Only sometimes a car model has higher value than the brand on account of it being a great product, I can think of the XUV selling inspite of coming from Mahindra, or the Mahindra brand being pushed up market due the XUV.
So discounts or price cuts may not have much effect in dilution of brand if the parent brand is strong. People will not call BMW a cheap brand if they drop prices of a few models, however if Force drops prices of the Force One, they will be precieved as doing so, because it is a cheap product.
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Old 29th April 2013, 11:23   #23
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

Which brand never comes up with special offers? (OK, but Hindustan Motors does not count )

every company tries to clear inventories by the end of a financial year, and not everyone has the luxury of having advance booking running over months!!
This holds not only for cars but any product.

As for brand image, I think in the case of cars the social image is build on numerous factors, and such seasonal offers do not affect judgements much.
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Old 29th April 2013, 13:02   #24
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

When a product does not sell, for whatever reason, then discounts are offered, some times the reason for poor sales could be that the product is a dud, for example, Tata Aria, Indigo, Indica etc...

Sometimes the poor sales could be due to changed market conditions such as Honda City, Honda Jazz, Vespa, etc...

Sometimes the discounts might be due to a new launch, for example XUV 500

So one needs to look at things in perspective and decide each discounting case on its merits. Some people were quick to buy the Honda City at huge discounts as they felt it was value for money at the lower price, and I think they got a great deal.

One can't therefore generalize and say that it destroys brand value, its all part of the product life cycle, company's targets, financials, market conditions, competitor products, government policies, etc...
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Old 29th April 2013, 14:29   #25
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

I guess some people are assuming that i am talking about discounts. (Actually title has been changed by Mods) What i am talking here is the unique schemes launched by VW & Skoda people like exchange you old car & drive new one for Rs 1, pay half now & pay half later, 0% interest rates, buy Rapid get Fabia free after 5 years etc. Discounts and freebies are given by all the manufacturers. Its a normal practice to boost the sales & attract more customers. Nothing wrong in it. But here schemes given by these companies create scene like they are very desperate to sale there cars. It creates impression that their cars are not selling & they want to clear their inventories. For that reason only i am saying that they themselves are destroying their own brand name. People will think it as a non premium brand & will worry about resale of the their cars. Instead they should offer some attractive discounts, free service package, freebies etc to attract customers. That will make sure that their "Premium" stamp will remain.
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Old 29th April 2013, 15:06   #26
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

Quote:
Originally Posted by aniketi View Post
What i am talking here is the unique schemes launched by VW & Skoda

But here schemes given by these companies create scene like they are very desperate to sale there cars.

That will make sure that their "Premium" stamp will remain.
I think you have not seen the recent BMW's 50% offer - http://www.team-bhp.com/forum/indian...ml#post3107612 (The "NEW" Car Price Check Thread - Track Price Changes, Discounts, Offers & Deals)

If you are trying to single out VW/Skoda as I get a sense from your posts, then I believe your logic is quite skewed. By your definition even BMW will loose its premiumness. Though some mods have deemed fit to agree with you, I feel these schemes are brought out by the biggest and smallest of manufacturers in these troubled times because the bottomline is... sales. Therefore such schemes should be taken in their stride and enjoyed rather than objected/debated.

I say for us consumers, more the merrier...
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Old 30th April 2013, 09:44   #27
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Default Re: Big Discounts, Cheap finance schemes : Do they destroy Brand Value?

All car companies give discounts and offers. Some may create a negative impact while others gives a better image and sales for the company. My personal opinion of recent schemes. I'm not saying this would be the general opinion, it's my opinion.

1. VW Vento - exchange you old car & drive new one for Rs 1 ==> this looks cheap. Like an ad for a pressure cooker. The exchange offer indirectly gives a message that VW is like any other car. And the 1 Rupee gives a perception that the difference between any old car and new VW is not much. I know this is not right, but that's what the first impression I got.

It would have been better if they were saying "buy a VW now and pay after 1 year", without mentioning any other car (exchange) and the 1 Rupee.

2. Buy a Rapid now and pay EMI after 1 year - This is good. The company is helping the customers by giving a good finance option. No discounts, exchange gimmicks, just focusing on their product and giving customer more time to pay. Good.

3. Schemes like "Pay half now & Pay half later", 0% interest - same as above.

4. Buy Rapid get Fabia free after 5 years - sounds like a Ponzi scheme. This is worst offer anyone can come up with, in my opinion. I think this was not done by VW, but by some of their dealers.

5. BMW - 50% offer. This is not 50% discount offer, it may look like that at first glance. What they are saying is pay 50% in 3 years through EMI and then you decide to pay the remaining and get the car or leave the car. It works like a 3 year lease deal with the option of buying it at the and of the lease period. This is a quite misleading and complicated ad/offer. May be their intention was to confuse potential customers . But it doesn't devalue the car or the company. Good.

6. Audi A6 offer. Absolute brilliant. Down payment of 6L and EMI of 74K. This gives a message that even the offer/discounted price for A6 is high. Reinforces the premiumness of the car.


This may not be the opinion of everyone. Different people will see this different ways. The original idea of the thread was that at least few people get the impression that these companies are not doing good or their cars are not good and hence giving the huge offers. There will be people who think this is good idea and companies are helping customers buy their car. There will be people on both sides. We don't know what percentage of people are on the two sides. The company's image or premiumness goes up and down based on these numbers. We can only speculate and debate. I'm sure VW and Audi would have done their research before coming up with these offers. Let them worry about this and review whether the offers did good or bad to them.

Quote:
Originally Posted by dkaile View Post
...such schemes should be taken in their stride and enjoyed rather than objected/debated.
I say for us consumers, more the merrier...
I'm going to follow dkaile and get the best out of these deals. I want the Audi. Anyone ready to buy my 2009 Punto (odometer 48K) for 6Lacs - this will be my down payment for the A6. I will find a night job to save extra money for the EMI.
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