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Old 27th November 2013, 18:33   #1
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Default Credit Suisse Report: The Indian Auto Sector, 2013

Report makes some valid points.

The full PDF report may be downloaded here : India 4W - MNC challenges - Summary.pdf

Quote:
India is a unique market with strong local players, and perhaps the only large market where none of the top four players globally have even a 5% share. We believe MNCs need to do well on the following parameters to succeed in India: (1) Suitable products (2) Sales & service network (3) India as an export base (4) Brand strength (5) Ownership costs, and (6) Commitment to India.
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In our analysis of all the global automakers, Hyundai, not surprisingly, fares the best on most parameters. Nissan is the one showing the highest aggression with plans to enter each segment of the market and a capacity addition plan which makes it the second largest in terms of capacity in India. But so far its execution has been patchy. Honda stands out for the strength of its brand and is now making efforts to launch the right products for the market, especially in the B segment where it plans to have six products.
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Maruti a leader working hard. On almost every parameter above, Maruti fares on top. To fix the gap in its product portfolio, it is likely to launch two new SUVs and is also working on a smaller diesel engine for its A segment cars which shall help it sustain/increase its market share. The company's cost saving and localisation efforts are already bearing fruit. A recovery in the market could further boost margins via operating leverage and discount reduction
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Old 27th November 2013, 18:54   #2
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

GTO, Thanks for sharing a nice report.

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In our analysis of all the global automakers, Hyundai, not surprisingly, fares the best on most parameters.
Hyundai is the second largest seller in india, After Maruti. Also, Hyundai is one company, which rips very few options when they launch a global product in India. So, this is acceptable.


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Nissan is the one showing the highest aggression with plans to enter each segment of the market and a capacity addition plan which makes it the second largest in terms of capacity in India. But so far its execution has been patchy.
This is ODD. I do not see any level of agression with Nissan's products. They are not bothered about customers. They are still stuck with a stupid supplier, who supplies all cars to all nissan dealers.

I am sure that they have a very good plant which can produce more than a million cars a year. But this plant is mostly dedicated for exports.

Also, I do not see any seriouness in any of their products design. They are not at all good looking. Except Duster/Terrano.

Comming to engines part. Only one Diesel engine for all types of customers. Its 1.5dCI. For me, Their product line up looks more like a China Bazar. Any item 25/- Any car Same 1.5 dCI engine.

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Honda stands out for the strength of its brand and is now making efforts to launch the right products for the market, especially in the B segment where it plans to have six products.
I agree.

Another Question.
How come the A-segment Total % exceeding 100%?
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Last edited by gemi_kk : 27th November 2013 at 19:06. Reason: Adding value.
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Old 27th November 2013, 20:18   #3
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Originally Posted by gemi_kk
How come the A-segment Total % exceeding 100%?
That's part of rounding off in excel. If you round off percentages in each category constituting 100%, the rounding off will in some cases go until 1% (+/-). Hope this is what you are looking for.

Last edited by Technocrat : 28th November 2013 at 04:30. Reason: fixed quotes
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Old 27th November 2013, 21:05   #4
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

Quote:
Originally Posted by gemi_kk View Post

Another Question.
How come the A-segment Total % exceeding 100%?
There will be some rounding off error. Do not pay attention to that, If it is 100% +/- 1% it would be ok.

Nice report and kind of summarizes what we already see in your monthly reports.

GTO - are you sure you can make this report public? Think this is meant for clients of credit suisse only.

Last edited by Saanil : 27th November 2013 at 21:07.
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Old 27th November 2013, 23:43   #5
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Post Re: Credit Suisse Report: The Indian Auto Sector, 2013

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Originally Posted by GTO View Post
only large market where none of the top four players globally have even a 5% share.
What is global market share of Hyundai? I thought it would be more than 5%. As I remember, Hyundai was 5th largest automaker globally last year.
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Old 28th November 2013, 06:23   #6
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

While Nissan is reported to have aggressive plans, but patchy in execution thus far, it is surprising that Toyota with it's much longer innings and experience of Indian conditions has not been able to, apart from the Innova, launch more successful vehicles. Maybe they are not as serious about India as Hyundai, Honda or even Nissan? With their brand strenght, they could surely give Hyundai a run for that second spot if they were to launch the right products swiftly.
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Old 28th November 2013, 08:05   #7
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

Manufacturers are learning that the India market is a different animal. You have to be agile and intuitive in this market. The Indian buyer can punish you very badly. Brand in India does not make sense unless you are able to address local peculiarities.

Indians are emotional by nature and this is where service experience is very important. If you notice, struggling Brands have very poor dealership/service experience.

Secondly perception matters. If the car is perceived/positioned to be cheap, it is will take a beating, eg. Etios/Nano. Maruti on the other hand produces cars like M800, Omni, Alto which are actually cheap cars without safety features but are perceived as value for money due to legacy. These cars for a long time were the only cars in the segment and Indians got used to running these low maintenance cars.

I have been a big fan of Hyundai because this is one manufacturer who has had the hunger and commitment to succeed in India. The Koreans are very hard working and have worked at improving their Brand.

Hyundai has ticked most of the boxes in the report
Quote:
(1) Suitable products (2) Sales & service network (3) India as an export base (4) Brand strength (5) Ownership costs, and (6) Commitment to India.
Brand strength at the higher range being its weakest point.

Cheers

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Old 28th November 2013, 08:46   #8
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

In a market where the owner of a car sees the car more as a family member, rather than a use and throw piece of machine, one ought to pay more attention to reliability and service. While Honda/Toyota thrive on the brand image thanks to reliability, Maruti thrives more due to service.

Many of the big guns fail on both the above aspects and hence fare lower on that list.
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Old 28th November 2013, 10:02   #9
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

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Originally Posted by KPS View Post
Secondly perception matters. If the car is perceived/positioned to be cheap, it is will take a beating, eg. Etios/Nano. Maruti on the other hand produces cars like M800, Omni, Alto which are actually cheap cars without safety features but are perceived as value for money due to legacy. These cars for a long time were the only cars in the segment and Indians got used to running these low maintenance cars.
As you rightly pointed out, an Indian is much more emotional than a European or American.

Maruti 800s and Omnis were the symbol of wealth in the mid 80s when they were introduced. More than 90% of the car buying population till around 2010 were people who would have dreamed of owning an 800 at some point in their life. So it won't carry a cheap image in the Indian mindset.

Technically, yes they are cheap and comparatively unsafe but that's why Maruti didn't change it too much. Its more like old/cult cars but still under production if you want a new one. No one buys a 1960s Amby and complains that it lacks ABS or airbags.

To a certain extent, even the Santro, Indica and Matiz(if it still existed) enjoys a somewhat similar status, being the first group of non-Maruti car for the masses in the late 90s.

That's not the case with Nano/Etios - they are new generation cars from the perspective of Indian buyer. So the expectations are much more and the manufacturers labeling them as cheap and made specifically for India and undermining the Indian customers is not going to be taken lightly by one of the most emotional group of car buyers of the world.

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it is surprising that Toyota with it's much longer innings and experience of Indian conditions has not been able to, apart from the Innova, launch more successful vehicles.
They came, cracked open an untapped segment (trouble free UVs) with the Qualis and never really moved out of their comfort zone for a long time. They didn't have a proper competition for their pie for almost an entire decade. They focused on UVs while their arch-rivals Honda focused on cars avoiding the internal competition for years. Though they've been in India for so long, they didn't learn much about the Indian market till they ventured into segments outside of UVs. By the time they did that, most competitors had also come to India. So they don't have a big experience advantage except in UV space.
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Old 28th November 2013, 11:40   #10
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

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Originally Posted by gemi_kk View Post

This is ODD. I do not see any level of agression with Nissan's products. They are not bothered about customers. They are still stuck with a stupid supplier, who supplies all cars to all nissan dealers.
I would have agreed with you, had you said: "I do not see any level of aggression in Nissan trying to increase the sales of their products".

The problem for Nissan is not their product lineup. The department that does R&D for shortlisting the product requirements is doing just fine. Nissan have a decent hatchback, entry level sedan, entry level people mover and entry level crossover. May be that they have botched up with pricing of some products.

The bigger problem lies with the department that handles dealership network, sales and service, as you have already pointed out.

I see another Fiat story
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Old 28th November 2013, 11:57   #11
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Default Re: Credit Suisse Report: The Indian Auto Sector, 2013

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Originally Posted by zenren View Post
They came, cracked open an untapped segment (trouble free UVs) with the Qualis and never really moved out of their comfort zone for a long time. They didn't have a proper competition for their pie for almost an entire decade. They focused on UVs while their arch-rivals Honda focused on cars avoiding the internal competition for years. Though they've been in India for so long, they didn't learn much about the Indian market till they ventured into segments outside of UVs. By the time they did that, most competitors had also come to India. So they don't have a big experience advantage except in UV space.
I don't know I could buy that entirely. To a point - yes.
Toyota is the No.1 auto manufacturer in the world today. And they didn't get there letting grass grow under their feet (at least in the major markets). They have been in the sedan segment as well (albeit a higher one) courtesy the Corolla, for a while in India - prior to the Etios. Surely their technical boffins & marketing whiz-kids would have learned a great deal about Indian conditions and preferences during that time (even if the success was confined mainly to the UV segment)?
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