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Old 28th July 2016, 11:52   #31
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Default Re: Why car companies shouldn't move away from their core values

That's a very nice article GTO . Moving away from its core values has always become a costly affair for car companies.

When Toyota launched Etios and Etios Liva, they had taken us for granted. They thought that Toyota brand can sell any cars. I had driven my friend's Etios Liva diesel. It didn't feel so good. I was expecting everything of highest quality but handling, interiors are quite average.

Tata cars have different issue. Quality control for vendor sourced parts is non existent as far as I feel. I have personally experienced a lot of niggles and recently in a friend's Tata car. They have not learnt how to keep check on vendor provided parts. I have seen a lot of people interested in Tiago at Tata showroom last week and hope for the best. One piece of advice for Tata, spend less on advertisements and keep a tab on vendors.

Coming to Honda, my friend had a Jazz. He had driven Honda city of his colleagues and relatives and that's why he settled with Jazz. But the low mileage and cost cutting on parts made him sell the Jazz. He has settled for Celerio AMT as of now. He and me completely agree to Mobilio being overpriced and victim of ugly cost cutting.

Ford motors seems to have learnt from the failure of their Ford Ikon. My friend's brother had one and as per him the maintenance cost was lot higher. Mileage was also low. I believe Ford is trying to address Indian consumer's concern and their current products reflect that. Good design, good advertisements. Wish best of luck for them.
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Old 28th July 2016, 12:04   #32
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Default Re: Why car companies shouldn't move away from their core values

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Originally Posted by ashis89 View Post


Somehow I feel, Maruti Baleno in 2015 is the same strategy as Swift....priced at a premium
The Swift and Baleno (weren't and) aren't priced at a premium.

The Baleno undercuts it's competitors.

Back in the day when we bought the Getz, it was getting close to sedan pricing. Swift was cheaper (but not as spacious) and had a nice feature list, hence it sold well. It killed the dying Getz.

The Getz is wonderful and I swear by it. It has all the traits of a Hyundai plus good handling.

A decade down the line, Hyundai were having a undisputed reign with the i20 and elite i20 and Suzuki had to catch up. And boy have they caught up- The Baleno is clocking some incredible sales figures.

Quote:
Originally Posted by ajay_satpute View Post

Honestly, Fiat India never had anything like core value.
On a lighter note: A fiat (part) is the core of your car.

EDIT: You do own a S-Cross 1.3

I don't know whether you own a Maruti, Fiat, Tata or a Chevy, but Fiat is the core of many Indian cars.

In case you didn't get me yet, Fiat makes the 1.3 L engine which is called the national engine of India- which is the core component in many Indian cars.

Last edited by landcruiser123 : 28th July 2016 at 12:07.
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Old 28th July 2016, 12:29   #33
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Default Re: Why car companies shouldn't move away from their core values

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Originally Posted by GTO View Post
Tata = The 1st-gen Indicas & Indigos destroyed Tata Motor's brand name due to their poor reliability & durability.
My dad had the first generation Indica, and we politely tolerated it as the car was provided by his employer, and it came with a driver and a generous maintenance allowance. The driver came in handy, coz when you reach the destination for an important official meeting, you suddenly realize that you cannot lock the door, or the power window doesn't go up etc.

Ever wonder why their vehicles feel like you are driving a truck? They had this philosophy of "Put seats and it becomes a passenger vehicle, remove them, and it becomes a goods carrying vehicle."
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Old 28th July 2016, 12:39   #34
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Default Re: Why car companies shouldn't move away from their core values

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Originally Posted by landcruiser123 View Post
The Swift and Baleno (weren't and) aren't priced at a premium.

The Baleno undercuts it's competitors.

Back in the day when we bought the Getz, it was getting close to sedan pricing. Swift was cheaper (but not as spacious) and had a nice feature list, hence it sold well. It killed the dying Getz.
Baleno is a premium hatchback and commands a premium over some of the competitors and even its siblings. It is priced slightly lower than the i20 which is one of its USP.
And, Getz failed because of 2 reasons, its price and its performance (including FE). My Uncle owns one since the past 10 years and its a lovely car.

Last edited by ashis89 : 28th July 2016 at 13:01.
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Old 28th July 2016, 12:46   #35
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Default Re: Why car companies shouldn't move away from their core values

Quality (both of the vehicle and service) is THE aspect which is to be maintained at any cost. One may sell cars initially, but in long run, this matters the most. Looks can be compromised on, driving pleasure, ride & handling etc are alien terms to the general public. One buys a car for a trouble free driving experience and, should need arise, a trouble free service experience.

Price IS the differentiator - which can be manipulated. Eg Hyundai. They sell over-priced cars and load it with "not so essential" goodies to justify the price tag. And people lap it up. Premiumization of product offerings is a very profitable strategy, if executed well.

Consistent strategy is another must have. Look at Tata. They created almost all segments, only to pave way for others to dominate each one of them (Diesel hatch, SUV, MUV, Compact Sedan). Tata is certainly innovative, but I guess they do not push relentlessly on their own innovations.

Lastly, perceptions are created overtime. Customers do give every company a fair chance to establish themselves. They are even willing to forget their past mistakes and are generally enthusiastic about new launches by all companies. But when they find that nothing has changed apart form the model, they give up.

Nothing beats scale, but scale is not achieved through cheap offerings. There is pretty thick line between being cheap and being value for money. VFM is benchmarked against current leader and try to beat it up through giving similar or better product in same price range. Cheap is imitating the leader. Difference is innovation vs copy paste.
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Old 28th July 2016, 12:50   #36
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Default Re: Why car companies shouldn't move away from their core values

I used to work in one of the big four consulting firms, one of their big shots (a senior Director from USA ) was giving a lecture on how businesses work. It was a closed room session so it was kind of filled with verbal expletives. What he said was true : 'No company cares about what others have to say, be it the expert reviewers or half baked opinions, all that matters is your bottom line and how you achieve it. You have to be ruthless to make that bottom line look sexy'

In that sense lets see how Car Industry works :
Maruti Suzuki: Value for money, but as long as people are lapping it up and the cash registers keep ringing, wont bring in safer cars for the masses. Do note that India is a major contributor to Suzuki's revenues, internationally Suzuki is not doing that great. Their core value of 'value for money' does not work for me as I dont feel they do the right thing selling poor safety rating cars for India only.

Hyundai: Quality keeping manufacturing costs in mind. Many features start disappearing after initial hoopla. Be it six airbags or simple features like 12V DC sockets. Again, as long as people buy it, doesn't matter. Personally, their core value does not work for me (same issue as Maruti plus the absence of VFM).

Honda: Costs again. Build quality might have dropped but the Honda City still sells. Other products are not doing considerably bad given they are market specific (BR-V, Brio etc : cheaper to build). Why didnt the launch the Honda Vezel to compete against Hyundai Creta ? Despite having a great international portfolio, they don't bring in those engines or the cars (Civic and Accord discontinued due to poor sales, will be relaunched, but waiting for market to improve instead of them taking the first step)

Ford, GM, Nissan: They have good foothold in other markets (e.g. GM: China, Ford: UK, US) so not their 'priority' as far as domestic sales is concerned. What matters is the RoI. Hence some are focusing more on exports and others launching some India specific cars going forward. They made mistakes earlier but slowly learning from them (Ok, GM learning a little too late).

Toyota and VW: Globally they are doing great. Even in India, some of their products sell like hot cakes : Innova and Fortuner. VW group too manages to sell great deal of Audi SUVs and Skoda Superbs (relatively). So why waste money investing further ? I just read Toyota has put on hold its investment plans in India. Toyota's core value of quality and safety is seen in Etios and Liva as well but they lack desirability factor. But is Toyota really bothered ?

Fiat: As long as their multijet engines keep selling, dont have to worry about cars. But a small victory for consumers here that whatever products they have in India, their DNA does not change. We still get those safe, sturdy and excellent handlers since Fiat Palio days.

Mahindra: Makes enough money from their simple Boleros and Commander jeeps, tractors and trucks (dont know their names , also note that these vehicles have the same platform for more than 15 years, so new investment is not needed here), so they have the money to throw things at the wall and see what sticks.

One exception I would say is Tata Motors: They dont have any other major market except India, so really cant focus elsewhere. Good thing is they get 3/4th of total money from JLR so can focus on this aggressive strategy of launching new platforms and cars for the next few years in India. I can only imagine what would have been the case if they had not bought JLR.

I feel that although core values are important only if you see them from a buyer's perspective, the boffins in boardroom think it only as weapon to achieve profitability and nothing else (Maruti, Hyundai), and if that weapon does not work, they can quickly switch to some other (Ford, Renault-Nissan-Datsun). For some it is pure math (VW, Toyota) and some others don't have to do anything at all (Fiat).

Excellent thread
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Old 28th July 2016, 12:58   #37
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Default Re: Why car companies shouldn't move away from their core values

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Originally Posted by theredliner View Post
This is the key.

The Figo twins would have tanked even if they handled like old Fords and had solid build. Most people in India do not care about build/handling. Yes, they may appreciate it, but that does not form the decisive factor.

The current gen Fiesta is a true Ford in every drop of its blood, we all saw what happened to it.
As far as I remember, the Figo diesel wasn't priced too far away from the Swift. Also, there were similarly priced diesel alternatives like the Ritz (which was fairly new back then). It sold because it had a USP.
Although I agree that Ford moved the Figo half a level higher in terms of pricing, without a corresponding increase in interior quality.

The old Fiesta with its 68bhp diesel engine sold because it had great build quality and handling, otherwise customers would've gone for the 110bhp boat that is the Verna.

The new Fiesta flopped because it was overpriced. It was great to drive, but the 1.5l petrol engine was rather dull as compared to the 1.6 in the previous gen. It was lacking on space and interior quality was poor. It was priced higher than the City which was a superior package.

Quote:
Originally Posted by landcruiser123 View Post
Back in the day when we bought the Getz, it was getting close to sedan pricing. Swift was cheaper (but not as spacious) and had a nice feature list, hence it sold well. It killed the dying Getz.

The Getz is wonderful and I swear by it. It has all the traits of a Hyundai plus good handling.
The Getz was a great car, but IMHO it wasn't the best example of Hyundai sticking to its core values. It's interiors were rather boring and plasticky and it wasn't very feature loaded either. The Swift sold well because it looked hot, handled well, had a great feature list and was priced aggressively. No doubt Hyundai started the premium hatch segment, but Maruti made it popular.

In fact, the Swift is a great example of sticking to your core values, and adding more to it. In true Maruti sense, it was priced well, had a peppy engine and was fuel efficient. But it also added great handling, equipment and style to the mix.

Last edited by Aaron:) : 28th July 2016 at 12:59.
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Old 28th July 2016, 14:15   #38
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Default Re: Why car companies shouldn't move away from their core values

My heart was broken when I checked out the "new" Figo. Doors are thin, single layer of rubber beading, and drives like a Suzuki.

Dear Ford, If I wanted a Suzuki, I'd buy a Suzuki and even they'll give me double beading around the doors.
Just put the new diesel engine in the old Figo and it'll be a hit among enthusiasts, who value driving pleasure above everything else.

The market for entry level corner carvers is now up for grabs.
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Old 28th July 2016, 14:58   #39
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Default Re: Why car companies shouldn't move away from their core values

Quote:
Originally Posted by Aaron:) View Post
As far as I remember, the Figo diesel wasn't priced too far away from the Swift. Also, there were similarly priced diesel alternatives like the Ritz (which was fairly new back then). It sold because it had a USP.
Although I agree that Ford moved the Figo half a level higher in terms of pricing, without a corresponding increase in interior quality.

The old Fiesta with its 68bhp diesel engine sold because it had great build quality and handling, otherwise customers would've gone for the 110bhp boat that is the Verna.

The new Fiesta flopped because it was overpriced. It was great to drive, but the 1.5l petrol engine was rather dull as compared to the 1.6 in the previous gen. It was lacking on space and interior quality was poor. It was priced higher than the City which was a superior package.
Figo was priced much lower than Swift. Titanium was available for a little less than VXI/VDI. Link (Maruti Swift : Test Drive & Review)

Ritz was again considerably more expensive than the Figo. It did sell well if we go my non Maruti standards. The ugly rear was a deal breaker for many.

I disagree that build and handling were the USP for Figo. Most Figo owners I have interacted with bought the Figo for the exact reason I mentioned - VFM pricing and little waiting period. Most of them dislike the Figo's steering for being heavy, don't care much about the build even though they like it(are rather happy with lighter cars if they are fuel efficient), brake to slow speeds before taking a corner (don't care about the handling) . Most would be happier with the new 1.5 TDCI's performance than the old one's handling. Also most of them wouldn't want to buy another Ford because of the service disappointment. Only the enthusiasts among the owners appreciate the car.

When the old Fiesta was originally launched, it was a well rounded product. That was the reason for it selling and not the build and handling. Also, the Ford brand was not ruined to this extent and had some snob value. It established itself as a sensible Honda City alternative. Most people in our market don't know what a good handling car is. If we come out of the enthusiast circle, we won't hear any word about handling when talking about Ford. If there were really so many people in our market valuing build and handling so much, we would have seen Punto and Linea flying out of shelves and cars like Baleno/Kwid would be running 1 lakh + discount instead of 6+ months waiting.

Also, if the Indian people really liked the handling and build of Fords that much, they'd have queued up to buy the new Fiesta even though it was overpriced (like what we see with products like Creta). It just shows that build and handling parameter of Ford can be related to what darkknight said - "core value that is not a popular one to begin with". ie., something that most common people don't care about.

Last edited by theredliner : 28th July 2016 at 15:10.
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Old 28th July 2016, 15:27   #40
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Default Re: Why car companies shouldn't move away from their core values

That's a very good analysis. I feel the success formula as:

Reliability + Cheap maintenance costs (cheap spares) + better FE + lot's of service centers + longevity in the market = Good resale value = Word of mouth = Wide acceptance

Here Wide acceptance is the key for a product success. New car buyers and conservatives go with the wide acceptance formula. This is where Maruti wins hands down and Huyndai does with some juggling around (multiple products that fits every price band). This is where other fail miserably.

The well informed crowd is less in our country, thats why we still see Fiat's lugging along.

BTW, off late I also see a lot of people looking at safety aspects when buying a car, which is good. Even if 50% of the people starts to buy cars that are good and safe then Maruti's share in the market will definitely come down.
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Old 28th July 2016, 15:42   #41
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Default Re: Why car companies shouldn't move away from their core values

Excellent thread sir! Makes for an interesting discussion.

Hyundai I feel is one company which started off on a different path as compared to what their core value are these days.

They started with a Santro. It was an immediate success. Was VFM and spacious as compared to a Zen. Matiz had a short run and Indica soon became the diesel owners choice. Santro gave a neck to neck run to the Wagon R.

Also came in the Accent. Was VFM as compared to the Honda City, Lancer and Baleno. The car had a decent run.

Then came the Getz. Had hydraulic steering and contrary to earlier Hyundais, it had a much sorted driving dynamics. BUT the car floped. The car wasn't stylish, didn't look good, wasn't striking to look at from any angle. Looked simple. But the segment leader Swift was stylish, had a sporty look. Similar thing can be attributed for the failure of Ritz too which happened few years later.
Similar was the case for Tuccson and Sonata. They too floped.

Lesson learnt for Hyundai. The car MUST look good and stylish if the sales numbers are what they are looking for.

Then came the i10. Even though by driving standards, it fared poor compared to their own Santro but the car was an instant hit. Had good amount of features, the car felt good inside and out. Steering feel and ride quality be damned.

Then they took a gamble and launched the i20. The car had segment first features, was stylish to look at. Had interiors that spoke quality. Was truly a premium car inside out. Steering feel and ride quality be damned. Even though the diesel was good to drive but the petrol motor was a dud to drive. But still even the petrol sold well. And the i20 too was an instant hit.

Now they got the market grip. And there was no looking back since then. The Verna, Eon, Grand i10, Elite i20, Creta all are having a good run. What do they have in common? I'd say stylish looks, feature list and premium quality interiors to lure the customers in.
And hence Hyundai is one company whose core value these days is to make some products which immediately catches the buyer's attention. It must look good. Inside and out. It must feel good to touch. Inside and out. Must be feature rich. No matter what segment it belongs to but it must feel premium. And hey, if the market complains we'll work on the driving dynamics and steering feel too. This is what their products and core values are all about these days IMO.

Last edited by Sherlocked : 28th July 2016 at 15:45.
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Old 28th July 2016, 15:54   #42
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Default Re: Why car companies shouldn't move away from their core values

The point: "companies should not move away from its core values" has a 2-way effect.

Case 1: Consider a seasoned customer who is aware of what each company stands for. He will evaluate the current products against his understanding. The above point holds good for him.

Case 2: Consider a novice and young customer who has not much knowledge about the manufacturers and their earlier core values, but is seeing the currently available models from them. He will not check whether a Honda is a Honda in essence or not, but will check whether he finds value in that car. The generation gap plays its role here.

Case in point: Maruti Gypsy.

Is it fuel efficient? No.
Is it value for money for a normal urban customer? No.

So, it is a car far away from Maruti's core values.

But, for someone (whether individuals or armed forces) looking for a light-weight 4WD go-anywhere vehicle, it is the best choice in India. And a per-month sales of 500 numbers is not a bad figure.

Last edited by romeomidhun : 28th July 2016 at 16:21.
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Old 28th July 2016, 16:12   #43
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Default Re: Why car companies shouldn't move away from their core values

Its getting hard for the manufacturers to hold on their core values. Everyone desperately wants a share of the cake, which in turn is getting larger with every passing year. So, some brand which had grown expertise in hatch backs are trying their luck in MUVs and sedans and vice versa. In order to hold their core values, some brands seems to be content with their tiny market share (Fiat) while some are getting defeated like Honda or Ford.

Its been a relatively easier path for brands like Maruti or Hyundai to hold their core values and move into upper segments. Honda, whose presence was marked by classics like City, Civic, Accord and CR-V are offering now Brio, Amaze, Mobilio, BR-V. This shifting of focus is challenging to them because people have known the brand for their previous offerings and now are getting disappointed.

Instead of trying your hand in every segment, its important to retain core values and innovate based on the current and future trends. That keeps the brand name and respect with time.
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Old 28th July 2016, 16:15   #44
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Default Re: Why car companies shouldn't move away from their core values

It's good to be stuck to core values but companies should take inspiration from Apple. What has Apple done? It made it's brand aspirational. It's brand value is so much that people who don't need an iPhone / iPad, actually buy it anyway because that way it gives them a better status.

Now, if you see Apple, they make the most beautiful gadgets which even though may not have the most functions (quantity) , it still has quality. Every app works, every app is stable. And if they see a feature is good, they don't hesitate to copy / incorporate it to their products.

So,what car companies should do is, stick to their core values while innovating at the same time. Be the best at what you do. Sales will follow sooner or later.

Now you might say Fiat still sticks to it's core values. Why hasn't it succeeded? That's because Fiat while making good cars, isn't expanding its service (a major value in buying cars), nor is it bringing new products (hence no innovation).
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Old 28th July 2016, 17:20   #45
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Default Re: Why car companies shouldn't move away from their core values

Excellent Thread there Rush!!
One of the most pertinent problems most of the automobile manufacturers face is profitability and reach.Lets look at some of the most established brands in the market:
1) Toyota
Completely agree with GTO here. Perceived value and quality. You give us the under featured Qualis. Indian public laps it up. Innova- over priced yet featureless. Its a hit. Corolla. 1.4 lt engine in a 20 lac car!!! Still a hit!!
Why?. Quality and perceived indestructibility.Welcome home the made fir India Etios twins. Quality goes for a toss. All aspects that India dont love are in the car. Eventual result.A big blob on Toyota. Budget plans goes for a toss.
2) Fiat
Core traits: Well built(built like a Tank), fun to drive
Perceived Values: Expensive to maintain, difficulty in spared availability, Poor ASC support, Low Mileage
Result: All cars failed. But flashback to 1996. Uno launch still has the highest
numbers as far as the car launch in concerned. Fiat never capitalised that.1.6 Palio is still a much sought after Hot hatch. It never got its dues.
They transgressed from Core values and not are left just as engine manufacturers!!
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