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Old 21st March 2010, 13:16   #16
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Originally Posted by formel_eins View Post
"The chain is only as strong as its weakest link" Car manufacturing involves large amount of varied components which are being sourced from various suppliers. Each supplier forms a link in the chain, greater the number of links, higher is the probability of weakness. So I guess this explains the significant delays.

Now if car uses components which are being imported, this further adds to delays. In my line of work I have to deal with import of goods and believe me it is a painfully lengthy process. Consider this, a regular by-air consigment of goods typically takes 7 working days to arrive in India, minimum 4-5 days for clearence in customs. Transportation from cargo terminal to warehouse 2 days. The timings which I have given are the bare minimum and considering that everything goes well perfectly. So you can see that even under ideal conditions it takes minimum 15 working days but typically it is 20-25 days. This itself translates to one month delay.

In case of local supplies, you have to consider the transportation delays, electricity failures, machine failures, strikes, festivals, payment issues, and much more. So given the complexity of factors involved, delays may get reduced in future but hard to say that they would be eliminated completely
Nothing different in most of the points than anywhere else in the world.

The father of a friend of mine just bought a Fiat Panda. He wanted a non metallic colour and has got to wait at least three months.

A lot of the Fiat 500 customers had a waiting time of four to six months. Some waited even longer.

When the Mercedes managers were people with common sense, most models had a waiting time of 2 years, which was accepted then. Mercedes was the only car company in the 1974 crisis that did not have the problem to reduce output.
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Old 21st March 2010, 14:08   #17
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Originally Posted by kiku007 View Post
But seriously, I feel that we don't have enough volumes to encourage car makers to make investments on capacity addition or offer multiple engine options for eg.
+1 on that.

Also, a penalizing contract will never be one way. You need more parts, the supplier too ramps up his capacity. That costs them a lot of money too. If the demand is less tomorrow you will still be bound to buy the same quantity from the vendor. They are in business. They make sure all the possible reasons to make a loss are addressed before thinking of making a profit.

Another point I wanted to touch upon is the maintaining inventory part. Nobody wants their money to get stagnated in inventory. This is apart from invest huge money up-front in expanding the plant. Given a choice, everyone would like to do business on order.

Ever wonder why the aam aadmi only fills 1 or 2 liters of petrol in his bike though he has at least 2K in his pocket?
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Old 21st March 2010, 14:34   #18
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Originally Posted by formel_eins View Post
"The chain is only as strong as its weakest link" Car manufacturing involves large amount of varied components which are being sourced from various suppliers. Each supplier forms a link in the chain, greater the number of links, higher is the probability of weakness. So I guess this explains the significant delays.

Now if car uses components which are being imported, this further adds to delays. In my line of work I have to deal with import of goods and believe me it is a painfully lengthy process. Consider this, a regular by-air consigment of goods typically takes 7 working days to arrive in India, minimum 4-5 days for clearence in customs. Transportation from cargo terminal to warehouse 2 days. The timings which I have given are the bare minimum and considering that everything goes well perfectly. So you can see that even under ideal conditions it takes minimum 15 working days but typically it is 20-25 days. This itself translates to one month delay.

In case of local supplies, you have to consider the transportation delays, electricity failures, machine failures, strikes, festivals, payment issues, and much more. So given the complexity of factors involved, delays may get reduced in future but hard to say that they would be eliminated completely
I think this chain of reasoning is slightly flawed.
You claim that it is an intricately complex process which is why CARS cannot be delivered on time.
But
If Maruti can manufacture 70,000 cars a month, it can certainly jack it up to 80,000 given a certain demand projection.

Isn't TATA manufacturing more than 30k cars a month. Add to that the sales of the ACES & The Trucks. Still i can buy a Vista off the shelf.

Big launches are important affairs. Apple starts manufacturing its products 3 months in advance so that when a new Ipod or Iphone launches they can have sales of millions within the first few weeks.

The question is why do car companies like VW not have this foresight ? Or is it that they choose not to ?
They are well aware that the Indian car buyer is willing to wait for months on end to buy a car, so they will saddle him with such experiences.

If the market was really competitive (and its slowly getting that way with so many hatches), i am sure the Car-makers will work out of their skin to cancel out any Waiting periods !
If Maruti is scared that if i don't get the Swift in 3 days then i will buy the Figo, then they will change their game pretty fast.
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Old 21st March 2010, 15:28   #19
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Originally Posted by Silverfire View Post
I am hunting around for a decent specced hatchback and i am absolutely shocked to see that most of the cars on my list have waiting periods in MONTHS !

To put into perspective: Hero Honda sells more than 3 lakh bikes every month, Bajaj Auto 2 lakh ! They dont have an issue in pushing their vehicles out...

Cell phone companies regularly sell over 3.5 lakh handsets every month !

What is the problem with car companies that they haven't built the capability to push out a few thousand vehicles ?

Isn't it cash left lying on the table, if a potential customers walk away because he wants to buy a car NOW ?

Is it a distribution challenge ?
or Are car companies lacking in operational excellence?

For Maruti why not set up additional factories ?
For VW: A brand new launch and 3 months waiting period ? Couldn't you guys have created some inventory pre-launch ? They don't even have test drive cars in showrooms.

Look at an automated system like Dell's where you can configure your own computer and it is delivered within a week.
Here with 3 standard variants car companies still cannot deliver , forget customizing your car !

I fail to understand this apathy and complete laxity on the part of auto-makers ? And the fact that customers are ready to wait for 6 month till there swift dzire is delivered !
Some reasons i would like to list below

1. The commodities which you have quoted above like bikes and handsets does not need large inventory space and hence they can afford.
2. Companies do not want to build too much of inventory and also capacities because of the fluctuating economic scenarios.
3. Also automobile commodities have less future visibility compared to other commodities and hence always build to order concept
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Old 21st March 2010, 17:40   #20
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Why do car's have waiting periods? Because people are willing to wait. The moment people walk away from the dealer who dosen't sell the cars off the shelf and walk into one that does, things will change. If you don't get a Swift off the shelf, just buy a Vista.
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Old 21st March 2010, 18:03   #21
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Originally Posted by Silverfire View Post
I think this chain of reasoning is slightly flawed.
You claim that it is an intricately complex process which is why CARS cannot be delivered on time.
But
If Maruti can manufacture 70,000 cars a month, it can certainly jack it up to 80,000 given a certain demand projection.

Isn't TATA manufacturing more than 30k cars a month. Add to that the sales of the ACES & The Trucks. Still i can buy a Vista off the shelf.

Big launches are important affairs. Apple starts manufacturing its products 3 months in advance so that when a new Ipod or Iphone launches they can have sales of millions within the first few weeks.

The question is why do car companies like VW not have this foresight ? Or is it that they choose not to ?
They are well aware that the Indian car buyer is willing to wait for months on end to buy a car, so they will saddle him with such experiences.

If the market was really competitive (and its slowly getting that way with so many hatches), i am sure the Car-makers will work out of their skin to cancel out any Waiting periods !
If Maruti is scared that if i don't get the Swift in 3 days then i will buy the Figo, then they will change their game pretty fast.
ya Maruti or other manufacturers can jack up the volumes, but cars are more of a luxury rather than a necessity. If only there was a foolproof way to determine projections things would have been different. In case some crisis happens, change in interest rates, change in policies of Government, in rates of fuel, economy bubble burst, etc have a direct impact on car sales.

Regarding TATA, as far as I know, they prefer to have vendors in vicinity. With 100% localization, interchangeable parts, highest bang for buck, they are in a relative safer position to mass produce and in better position to take the risk.

Apples and cars cannot be considered in same way Till today I have never heard of any electronic product which is launched and there is long waiting period for it.

VW is entering the mass Indian market for the first time, so it is but natural that they are taking a safer approach.

So there are n number of reasons for waiting period. Every manufacture should be having its own strategy, some may be doing it out of will. An example of this could be VW (just my opinion). Now they have a relatively small dealer network, they are entering in this segment for first time, they have only 50% localization, good service and quality for their customers could be on top of their agenda, may some of these could contribute the wait periods.

whereas in case of Maruti, it could be happening due to its own constraints, owing to a large demand. Now even though it is producing a vehicle every 16secs still there is a waiting period !!!! one can imagine the stress levels the plant is working. Yes you are right, probably they need to ramp up their production, and with various competitors jumping in the market, Maruti would be already thinking of it, lets hope so.

I remember my father telling me that in 80s-90s, booking a car and later selling it at higher price was business of some people there was this concept of "ON" I guess even today this practice is prevalent albeit at a much smaller scale.

So the car market has come a long way and I guess in couple of years or more we could be getting away with this "waiting period" but thats just a guess.
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Old 21st March 2010, 18:31   #22
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Originally Posted by kiku007 View Post
May be still a lot of people have the herd mentality and believe that the largest selling car/the car with the waiting period is the one to go for and car makers take good advantage of this
Quote:
Originally Posted by Live To Jive View Post
Why do car's have waiting periods? Because people are willing to wait. The moment people walk away from the dealer who dosen't sell the cars off the shelf and walk into one that does, things will change. If you don't get a Swift off the shelf, just buy a Vista.
Quote:
Originally Posted by akshaymahajan View Post
So that they dont have to give you any discounts or freebies. ( "Saar 4 hafte ki waitibg hai. Discount kaise dein??")
And probably the dealers add to the delay as the expect to make some quick money by selling the cars they have to the people who can pay a premium.
Very well said.

Maruti seems to understand the average customer's mentality so well that they take undue advantage of it.

- Most customers automatically assume that a car must be really good if it has a long waiting period.

- Most customers would be willing to wait for their car just because others are also waiting.

- Sales people get the upper hand for selling models with long waiting period. No discounts/freebies are offered for these models.

Its a win-win situation for Maruti. They don't need to step up their production to meet the market demand. They can continue with their long waiting periods as long as people continue to have blind faith in the brand and continue to buy their feature-less products with long waiting periods with no discounts/freebies offered.

Rohan

Last edited by rohan_iitr : 21st March 2010 at 18:32.
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Old 21st March 2010, 18:43   #23
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The surprising aspect is the polo production had started months back,it was splashed all over the newspapers.So in essence VW must have atleast 10000 polos ready by march over a 3 month period.
But it still has a such a long waiting period.Have they sold more than 10000 already?
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Old 21st March 2010, 18:59   #24
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There are fairly complex operational & management reasons for having waiting periods.
1. Production is a steady flow, demand is cyclical
2. Factories in India manufacture for several export markets as well - production planning in this situation is a nightmare.

And, want the icing on the cake for waiting periods? Check out the old archived threads on Honest John (backroom section) on the Hyundai i10 waiting period. Yes, my dear friends, Brits wait 6 months for an i10 - made in India!!
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Old 21st March 2010, 19:43   #25
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Originally Posted by avishar View Post
The surprising aspect is the polo production had started months back,it was splashed all over the newspapers.So in essence VW must have atleast 10000 polos ready by march over a 3 month period.
But it still has a such a long waiting period.Have they sold more than 10000 already?
yes thats a disturbing fact and difficult to digest. When asked the SP in Kolhapur about the delays, he said on the day Polo was announced, 2000 bookings were done on a single day it didnt sound convincing though. Maybe it is a blunder from VW or a strategic decision. But given the experience and size of VW group, blunder theory holds less ground.

Even though there are many factors which contribute to these waiting periods, the think tanks of these companies surely have their own strategies which they wont reveal it to us, so lets keep coming up with theories
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Old 21st March 2010, 19:48   #26
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Originally Posted by avishar View Post
The surprising aspect is the polo production had started months back,it was splashed all over the newspapers.So in essence VW must have atleast 10000 polos ready by march over a 3 month period.
But it still has a such a long waiting period.Have they sold more than 10000 already?
When manufacturers start producing a new model or a model on a new production line they usually make what we call in Germany the 'Zero run'. After the first few hundred cars they get the niggles out, which might mean several weeks of no or nearly no production. Te model can be seen and advertising starts.
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Old 21st March 2010, 20:15   #27
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We should thank the Car manufactures! They are trying to teach us the virtues of patience, which we seem to have forgotten in today's fast paced life.
Jokes apart,I feel that the companies,having realised the 'Herd' Indian mentality, are shrewd enough to use it for their benefit.Hence it has become the strategy of these companies to manufacture as per the demand.This reduces their risk, and secondly dealers stand to benefit by not requiring to offer discounts.Thus both the aspects, i.e. manufacturing and marketing get benefited.What more do they want?
Some companies Like TATA,however realise that such strategies may in fact result in losing its customers.
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Old 21st March 2010, 21:44   #28
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I agree that for a newly launched model,there will be waiting periods because it takes time for the actual sales to settle down and match production after the initial hipe dies down.
But what about established bestsellers,manufacturers have an idea about approximate sales,so they can easily add an extra shift to match production.

Last edited by avishar : 21st March 2010 at 21:49.
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Old 22nd March 2010, 11:39   #29
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Originally Posted by Silverfire View Post
I think this chain of reasoning is slightly flawed.
You claim that it is an intricately complex process which is why CARS cannot be delivered on time.
But
If Maruti can manufacture 70,000 cars a month, it can certainly jack it up to 80,000 given a certain demand projection.

Isn't TATA manufacturing more than 30k cars a month. Add to that the sales of the ACES & The Trucks. Still i can buy a Vista off the shelf.

Big launches are important affairs. Apple starts manufacturing its products 3 months in advance so that when a new Ipod or Iphone launches they can have sales of millions within the first few weeks.

The question is why do car companies like VW not have this foresight ? Or is it that they choose not to ?
They are well aware that the Indian car buyer is willing to wait for months on end to buy a car, so they will saddle him with such experiences.

If the market was really competitive (and its slowly getting that way with so many hatches), i am sure the Car-makers will work out of their skin to cancel out any Waiting periods !
If Maruti is scared that if i don't get the Swift in 3 days then i will buy the Figo, then they will change their game pretty fast.
Quote:
Originally Posted by formel_eins View Post
ya Maruti or other manufacturers can jack up the volumes, but cars are more of a luxury rather than a necessity. If only there was a foolproof way to determine projections things would have been different. In case some crisis happens, change in interest rates, change in policies of Government, in rates of fuel, economy bubble burst, etc have a direct impact on car sales.

Regarding TATA, as far as I know, they prefer to have vendors in vicinity. With 100% localization, interchangeable parts, highest bang for buck, they are in a relative safer position to mass produce and in better position to take the risk.

Apples and cars cannot be considered in same way Till today I have never heard of any electronic product which is launched and there is long waiting period for it.

VW is entering the mass Indian market for the first time, so it is but natural that they are taking a safer approach.

So there are n number of reasons for waiting period. Every manufacture should be having its own strategy, some may be doing it out of will. An example of this could be VW (just my opinion). Now they have a relatively small dealer network, they are entering in this segment for first time, they have only 50% localization, good service and quality for their customers could be on top of their agenda, may some of these could contribute the wait periods.

whereas in case of Maruti, it could be happening due to its own constraints, owing to a large demand. Now even though it is producing a vehicle every 16secs still there is a waiting period !!!! one can imagine the stress levels the plant is working. Yes you are right, probably they need to ramp up their production, and with various competitors jumping in the market, Maruti would be already thinking of it, lets hope so.

I remember my father telling me that in 80s-90s, booking a car and later selling it at higher price was business of some people there was this concept of "ON" I guess even today this practice is prevalent albeit at a much smaller scale.

So the car market has come a long way and I guess in couple of years or more we could be getting away with this "waiting period" but thats just a guess.
Quote:
Originally Posted by rohan_iitr View Post
Very well said.

Maruti seems to understand the average customer's mentality so well that they take undue advantage of it.

- Most customers automatically assume that a car must be really good if it has a long waiting period.

- Most customers would be willing to wait for their car just because others are also waiting.

- Sales people get the upper hand for selling models with long waiting period. No discounts/freebies are offered for these models.

Its a win-win situation for Maruti. They don't need to step up their production to meet the market demand. They can continue with their long waiting periods as long as people continue to have blind faith in the brand and continue to buy their feature-less products with long waiting periods with no discounts/freebies offered.

Rohan
All this when Maruti proudly claims that their plants are running at better than 100% capacity due to their productivity improvements or shop floor Kaizens over the years.

Lets add up. Gurgaon - 700,000 cars
Manesar - 300,000 cars
= 1,000,000 cars
Is MSIL's total sales for all manufactured products > 1,000,000 cars per year? According to their website, their total sales including exports and CBUs lke GV is 96,650 for February 2010.
Source: Maruti Suzuki sales in February 2010

Do the diesel models together sell more than 300,000 cars a year?

I doubt MSIL has a problem with production capacity but still the waitlist? Looks like something is not right

Source: MSIL's website Maruti car plants | Diesel Engine Plan
Quote:
Maruti Suzuki has two state-of-the-art manufacturing facilities in India. The first facility is at Gurgaon spread over 300 acres and the other facility is at Manesar, spread over 600 acres in North India.

The Gurgaon facility
Maruti Suzuki's facility in Gurgoan houses three fully integrated plants. While the three plants have a total installed capacity of 350,000 cars per year, several productivity improvements or shop floor Kaizens over the years have enabled the company to manufacture nearly 700,000 cars/ annum at the Gurgaon facilities.

The Manesar facility
Our Manesar facility has been made to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India Limited's (MSIL) global ambitions. The plant was inaugurated in February 2007. At present the plant rolls out World Strategic Models Swift , A-star & SX4 and DZire.The plant has several in-built systems and mechanisms.

The plant at Manesar is the company's fourth car assembly plant and started with an initial capacity of 100,000 cars per year. This will be scaled up to 300,000 cars per year by October 2008.

Diesel Engine Plant- Suzuki Powertrain India Limited
Suzuki Powertrain India Limited the diesel engine plant at Manesar is SMC's & Maruti's first and perhaps the only plant designed to produce world class diesel engine and transmissions for cars.

The plant is under a joint venture company, called Suzuki Powertrain India Limited (SPIL) in which SMC holds 70 per cent equity the rest is held by MSIL.

This facility has an initial capacity to manufacture 100,000 diesel engines a year. This will be scaled up to 300,000 engines/annum by 2010
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Old 26th March 2010, 02:26   #30
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Only one reason: Competition. If the manufacturer is confident the buyer won't walk away to the competition he won't bother the wait times.

Inventory is also a reason to some extent. More inventory at the dealer, bigger discounts.

Other reasons discussed here:

No of parts: In this age of IT that cannot be a excuse.

Not big enough market: We are a 2 million market. That should be enough demand. May we are in the top 10 markets in the world.
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