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Old 22nd September 2014, 12:44   #1
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Default Another VW brand - Seat - may roll in to target the budget segment

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Europe’s largest automotive group, the 200-billion euro Volkswagen AG, is planning to introduce the last remaining car brand from its stable — SEAT — into the Indian market to challenge the stronghold of Maruti Suzuki and Hyundai in the Rs 3-5 lakh mass small car segment, industry sources told FE. Based in Spain, SEAT currently sells mostly hatchbacks, such as the Ibiza, Leon, Mii and Altea developed from Volkswagen (VW) platforms, but with a ‘sporty’ touch.

Sources said SEAT is currently conducting a feasibility study of the Indian market for its products, with a target of entering India in the next three-four years. This is part of a global group strategy to push SEAT in emerging markets after focusing for years on Europe, where it is currently making losses.
http://www.financialexpress.com/news...n-seat/1291165

My opinion - I am sure the Germans must have heard of the expression 'Too many Cooks spoil the Broth'. I remember all the brouhaha that ensured over Skoda and VW's positioning when VW entered the Indian market years after Skoda did. Then came the 'restructing and repositioning' phase some years later when they saw that VW was not doing too well; in this phase the management intentionally tried to position Skoda under VW. Giving a plethora of engines to Polo but not to the Fabia. Discontinuation of the Fabia; but not of the Polo. And now they are doing a 'Triple' like Nissan-Renault-Datsun. It may be too soon to comment but I dont think this strategy worked for Renault and neither do i unfortunately see it working for VW.

Last edited by GTO : 23rd September 2014 at 14:27. Reason: Keeping the fair usage policy in mind, it's best to share an excerpt + link to full article. Thanks
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Old 22nd September 2014, 13:00   #2
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Default re: Another VW brand - Seat - may roll in to target the budget segment

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Sources said SEAT is currently conducting a feasibility study of the Indian market for its products, with a target of entering India in the next three-four years. [/url]

Yawn. The competition would have moved even further out of reach by then.

Fix the pathetic customer experience of VAG brand existing in the country first.
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Old 22nd September 2014, 13:53   #3
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Default re: Another VW brand - Seat - may roll in to target the budget segment

And if it again comes with the same maintenance strategy as with VW+Skoda, buy at lower prices but pay the spare-parts price at Audi rate, it will be a joke they would be playing on themselves. Imagine a car costing 5lakh to buy, and 1 lakh per service.

And if the VW group is doing spectacular with 7 brands, the 8th one would be adding just as much. Instead of selling 10k units per month (for the 7 brands) in total, the 8th one would lead to 12K during the initial few months and 9K a year down the line. People need cars - reliable and VFM - and they can't be bothered about brands
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Old 22nd September 2014, 15:09   #4
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Default re: Another VW brand - Seat - may roll in to target the budget segment

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Originally Posted by PNTLovesNano View Post
And if it again comes with the same maintenance strategy as with VW+Skoda, buy at lower prices but pay the spare-parts price at Audi rate, it will be a joke they would be playing on themselves. Imagine a car costing 5lakh to buy, and 1 lakh per service.

Can you please give us one example of that. Or if you have any such personal experience then please share it with us.
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Old 22nd September 2014, 15:19   #5
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Default re: Another VW brand - Seat - may roll in to target the budget segment

This will again be a botched strategy.

Very difficult to co-operate in a diversified market like India.
Here, perceptions are principal.

However good your products may be, if the perception is poor, it is most likely to fail.
Innumerable good products that failed for perception:

1) FIAT-Linea/Punto- Image of FIAT and high maintenance percetion
2) Ford-Fiesta- Poor ASC and high cost of maintenance
3) GM SAIL: Poor overall and no resale. Perceived to be a white elephant

More examples can be given.
VAG/Skoda horror stories are now accessible to even the less informed.

SEAT wont make a dent but yes, what it will do is dent VAGs already depleting "once deep" pockets and magnify the losses.

Anyways, 4 years is too long. For all you know, if things are what they are for VAG, will they even be around that time??
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Old 22nd September 2014, 15:54   #6
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Seat has some interesting cars. Would love to see them on our roads. It's like VW and Skoda with technically same cars having slightly different designs and features. More the merrier!
Another VW brand - Seat - may roll in to target the budget segment-seat-toledo.jpg
Another VW brand - Seat - may roll in to target the budget segment-seat-leon.jpg
But the ones in pic are not budget cars below 5 lakhs Rs.
Pics source - Netcarshow.

Last edited by ajaypjayaraj : 22nd September 2014 at 16:14.
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Old 22nd September 2014, 16:18   #7
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Default re: Another VW brand - Seat - may roll in to target the budget segment

I have driven the Seat Ibiza a few years back. It is a decent car to drive, no great shakes - I preferred the layout of the Ibiza to the rubbish plonked in the Renault Clio that I had just rented before that. But the only car they have which can compete in the Rs. 5 lakh and under segment is the Mii. I looked it up - the Mii is a rebadged Citigo / UP. So perhaps VW realizes that Skoda is a rather upmarket brand in India and wants to launch cheaper cars under the "Seat" name to prevent the brand dilution of Skoda?
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Old 22nd September 2014, 16:40   #8
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Practically, this would just be an added cost for VW group.
The products are more or less the same, and this implies two things : Either VW is charging way too much for its products under "VW" badge or VW is ready to lose money to penetrate the Indian market without making VW/Skoda less premium brands.

As the products are similar, the pricing wont change much unless VW is having majestic margins. Else, if they bring down the quality for SEAT, it wont help as others, mainly Hyundai, Maruti and now even Tata ( in Zest they have really evolved ) have improved a lot without a hefty ( or should we call it "premium" ) price tag. All the players are putting in real efforts to improve, making it tough for International players, mainly European one. If we ignore Duster, which in the first place is for poor EU nations, Renault in India failed, so did all EU manufacturers under Rs. 15 lakh segment.
VW lacks understanding of Indian market which is apparent in the collective reaction and rather poor ROI. Agreed, it makes probably the best built cars in the respective segments, but as an entire package the products do not hold a significant advantage as compared to others.

VFM, predictable and responsive A.S & S. are the things which can make or break a brand/product in the segment VW is planning to target via SEAT.
On the other hand, there was an article in ACI on how VW is hell bent on quality in its products. VW rejected some plastic or interior components as it could not clear some chemical radiation test ( Benzene ? ). This is not a tangible input, but VW's efforts to provide better quality ( whether tangible or intangible ) is to be appreciated. Only thing is VW should now be open enough to understand what Indian market dynamics are. Even Toyota, famed for its superlative research, could not taste success with Etios Twins.

Last edited by aaggoswami : 22nd September 2014 at 16:43.
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Old 22nd September 2014, 16:54   #9
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Default re: Another VW brand - Seat - may roll in to target the budget segment

VW couldn't match other players in the Indian market, so it got one of its poor cousins, which had earned a decent name for itself by then, to bend down and do its bidding. Still not satisfied, they are getting another poor cousin to do the same!! Poor Seat!!
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Old 22nd September 2014, 18:54   #10
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Nobody knows what strategy is involved in bringing Seat brand in India. What we have seen with Datsun is that if you target a brand to make cheap cars for the masses, the idea doesn't go well here. Datsun Go never got going as much as it wanted to.

Now for the sake of giving competition to i10/Wagon-R, they could have launched the Up here. It is not that their product line up starts from Jetta or so such that getting the Up here would lower their brand value. If they can sale Polo/Vento and Passat together then I don't think that Up would cause serious damage to their brand image. Bringing in a whole new brand and then popularize it in a tough market like India just for a couple of models is a dangerous idea. I don't see it happening even after 4 years from now.
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Old 22nd September 2014, 19:26   #11
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Default re: Another VW brand - Seat - may roll in to target the budget segment

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Originally Posted by Carpainter View Post
Can you please give us one example of that. Or if you have any such personal experience then please share it with us.
The example, may be a bit of exaggeration, is not far off from some of the maintenance costs and spare part prices as quoted in some threads here on the VW/Skoda cars. There have been many instances, on top of my mind, where Audi has been cited claiming nearly 70K for removing a stuck CD, VW/Skoda about 40K for a OVRM, etc. The problem is VW/Skoda/Audi have a lot of parts sharing among them and in a bid to avoid sales of same configuration of VW/Skoda for the benefit of an Audi user, the VW group have made the parts very expensive. In this case though the Audi car costs the group lesser money to manufacture, it is the lower VW/Skoda user who suffer as a consequence. Now, if this Rs.4 lakh car shares parts with Polo, they will be very expensive to maintain. This has been my main intent of the previous post. I admit that 1lakh per service has been too much of an exaggeration though the intent was saying some service. Thanks.
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Old 22nd September 2014, 19:38   #12
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Yes you see spare parts pricing and service charges are two completely different things. And it is not always true that they are charging their spare parts at Audi rates not atleast for cars in Polo/Vento bracket. Yes for some parts in Jetta/Octavia you can say that.

Personally I believe that VW/Skoda are not doing well in India not because of high service cost which is not and also not because of costly spares. Their problems are at their dealer level where they don't give importance to the customer problems/grievances and don't show enough intent to solve the issues then and there. Most of the customer dissatisfaction is because of their dealers upper handed behavior rather than service cost. Correct me if I'm wrong.
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Old 22nd September 2014, 19:44   #13
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Yes, I completely agree with you. Sometimes these dealers are way too pathetic. Take Honda for example. A year back, before the diesel Amaze, the Honda dealers would be on their knees to sell a Honda car. Now come to their two-wheelers and ask for a Activa test ride. Honda two-wheeler dealers are a serious pain to deal with. However, the companies can reign in the dealers and in this aspect i find Honda as guilty as the VW group.

Unfortunately, the damage done by the dealers is too severe and highly difficult to overcome. And VW won't be doing any good by adding one more brand and handing out the dealership to more or less sister concerns of the existing dealer network.
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Old 23rd September 2014, 00:14   #14
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Default re: Another VW brand - Seat - may roll in to target the budget segment

Cmon VW! Do NOT make us laugh, again! You have competent products and brands and you can NOT even make enough sales and talking about another brand; that too in an extremely price sensitive segment. Instead save your energies and revamp yours & Skoda's existing line up and prove your worth please.
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Old 23rd September 2014, 08:27   #15
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Default re: Another VW brand - Seat - may roll in to target the budget segment

I welcome this move, especially when there were rumours that VW want to cull Skoda (in India) to reduce internal competition. If this is true, they are bringing in more competition.
Unlike the Datsun effort from Renault-Nissan, Seat offer quality products at a price range slightly lower than VW. And more brands, options are always good for the customer.
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