[kiku007]

Losses pile up for GM, Ford & Honda? YES.

But does that tell the Fulll story? NO.

There's a key differentiating factor between each one of them.

Honda - They've got a great brand, right products, increased production capacity and should be on the path to achieve sustained profitability in the long term.

Ford - First 10 years were snail paced (Ridiculously slow in comparison to Hyundai). The last 10 years, they have successfully built the brand as makers of Fun To Drive, VFM (Own & Maintain) cars. There's a good (If not great) current & future product line-up, additional production capacity in Gujarat and TamilNadu ! Hence even if they don't turn green at Honda's pace they will eventually do with the right plan.

GM - IMHO Fiat India takes more effort (even if they consistently fail) in putting a plan than these guys do. Forget about a plan, they seem to be clueless. The brand has no USP whatsoever. Even if they shut shop, no one (except for the customers worried about service, which in any case is majority of Tavera Taxis) none will bother or feel bad about.

So in a nutshell, I see Ford and Honda's recent losses as the investment phase red numbers and hopefully should turn green soon. However no such thing for GM. Looking at what they did in the US, they'd just hope for the Government to bail them out as if it's the Govt's job.

[rlvl]

I doubt the bosses at Ford and Honda are really worried as they know that with their upcoming and present cars, they will turn a profit sooner than later. With Chevy , it's a real head scratcher. They have cars in all the segments , yet none of them work. I thought the Chevy Beat was really great ... when it was launched back 3 YEARS ago. So when they pulled the wraps off the 2014 version , I was left wondering whether adding a new fog lamp really needed 3 years.
They need to seriously step up their game if they want to turn profitable.

[Contrapunto]

Originally Posted by Aditya

Ford has recorded losses of Rs. 140 crore for FY 12 and Rs. 420 crore for FY 13, which takes its accumulated losses till date to Rs. 1,740 crore.

It is not just the Americans whose losses are piling up. Japanese auto major, Honda recorded losses of Rs. 604 crore for FY 12 and Rs. 1,110 for FY 13. The company's accumulated losses stand at Rs. 1,369 crore.

Most manufacturers have invested heavily in capacity and have not yet started benefiting from the investments. Additionally, the economic slowdown has played its part in increasing the losses.
Link to Team-BHP News Article

I don't think its as much as an issue with not being able to recoup the fixed costs of large capacity, but rather not having the right level of strategic and translating that to the right product choices. If you can't produce what people want and are making stuff that has no buyers, you will be in trouble not matter what your level of fixed overheads are.

Interestingly Maruti seems to be at the forefront of innovation. They got the compact MUV trend right with Ertiga, they seem to have sweetly timed the move to AT with the Celerio. So it can be done, for sure.

Toyota is at the other extreme. They have kept capacity (and fixed overheads low) at around 310,000 units a year, which I presume, includes the export runs for the Etios. So even relatively lower volumes does not have too negative an effect on their bottomline.

Corporate strategy sure is interesting !!

[honeybee]

Talking of compact SUVs, there is the Premier Rio. But then again it's not a Maruti, which is reflected in it being virtually non existent. So I wouldn't call Maruti at the forefront of innovation.

[VinodDevil81]

Honda has already taken corrective steps and will be back to profitability if everything goes according to the current plan.If they are able to launch the new jazz and mobilio with class-leading features at competitive prices, then I don't think they have too much to worry.

But Ford's case is not exactly the same.It seems like they are not very much keen on selling their car to Indians. Atleast that is what one feels from the Ecosport production-supply figures.Month after month, the number of Ecosports actually delivered to our showrooms, keeps on diminishing. When already there is a huge waiting period for the product, how does this make sense?

Is it that these companies just want to make our country a production hub with cheap supply of labour, power etc and then export the finished products to other countries and make huge profits? In the end, they get the sympathy from us too,that they are making huge losses in our country.Its quite natural.When you don't sell here, you don't make profit here.Simple.

GM is in a league of its own. Totally confused and hopelessly lost. The brand image has reached an all-time low.Same is happening with resale-value too. If they don't come up with class-leading and innovative products (ofcourse, needs to be good-looking too.), it won't be long before we see them shutting shop in India. I hope that they stop the Chinese-car launch festival here and come up with some serious international models suitable for our country.

[lionell]

I am a GM customer myself. I was surprised to see the dealership here in Ahmedabad grow. Am seeing dime a dozen Enjoy's on the roads. With everyone from old women to young lads driving them.

I recently was out for an event and overheard the drivers in the carpark compare the Evalia and Enjoy, most of them giving a huge thumbs up to the Enjoy.

Surprised that it seems to be doing good numbers here in Gujarat, yet that doesn't reflect in the sales numbers.

[sasi405]

Originally Posted by VinodDevil81

GM is in a league of its own. Totally confused and hopelessly lost. The brand image has reached an all-time low.Same is happening with resale-value too. If they don't come up with class-leading and innovative products (ofcourse, needs to be good-looking too.), it won't be long before we see them shutting shop in India. I hope that they stop the Chinese-car launch festival here and come up with some serious international models suitable for our country.

GM is a good example of how top down decision making works. Some high powered commitee sitting in Detroit or wherever rely on data without actually looking at ground realities and push strategies that don't work. They probably think anything cheap (read Chinese) will sell in India just because we buy made-in-china Ganeshjis during Diwali. It's high time such manufacturers look at India independently and not as part of some 'third-world' trend study.
I myself had an Aveo for a good trouble-free 6 years and I am sorry to say that the new Sail feels like a cheap toy in comparison. So does the Enjoy.

[sparsh]

As long as companies can come out with innovative products, price them right, focus on increased localization, increased service network will help car manufacturers. I do see most of the population looking to buy cars which have a better build quality, driving experience and overall cost of ownership.

[Joe M]

It's not without reason these brands faced losses here in India. IMHO, part of the reason is their 'ego' - especially in case of Ford. Maybe they thought people would buy cars just because it's a 'Ford' or 'Chevrolet' or 'Honda'.

I've never felt Ford has given Indian market the attention it deserves. They had some very good cars starting from the Escort, the Ikon and the brilliant Figo. Then maintenance and service cost had been on the higher side, from what I heard. Local garages were providing better service than authorised service centres.

For Honda, the only reason was lack of a Diesel engine, which they realised after a very very long time. The service also, was not up to the mark in many cities. But with the i-DTec, I guess it won't take long for them to catch up.

Hyundai, on the other hand, came humble, considered India as one of their most important markets(which happened to be so, eventually), provided value for money products and good service and started making profits consistently. It's now time for other manufacturers to look up at Hyundai and learn some lessons.

[speedsatya]

What is it that MUL or Hyundai do different from Honda or Ford ?I am leaving out GM here , as they just dont anything to impress Indian customers .

If you look at only products per se , Honda and Ford definitely make far more superior products than MUL or HMIL .I can say this based on our experience of having owned MUL , Honda , HMIL and Ford vehicles in the family .

But its the service and the A.S.S that makes the difference .
Take Karnataka for example , Honda has dealers in just 4 cities ( Bangalore , Mysore , Mangalore and Hubli ) while I can see atleast 4 MUL dealers just on the 350 kms drive from Bangalore to Mangalore.

Imagine owning these cars and driving 200 kms one way just to service the car .

The fact thatHonda and Ford sell decent numbers inspite of such poor dealer network is enough to speak about the product quality . If only these manufacturers increased their dealer/service network to Tier2/3 cities as well ...we might see a different story .

[amtak]

GM has it's reputation tarnished after the BS-IV issue. Lack of interesting products and SAIC's control of GM in India makes things worse for them. They are in Modiland and should have made use of the port for exporting cars; doubt if they are doing anything. They developed MJD along with Fiat and both (Fiat and GM) were the last to introduce it. Heck, GM even had issues with the engine. Their cars are comfortable but not feature rich. I like the sail sedan but, apart the insteresting alloys, there is nothing else that'll pull me towards it. Now imagine Hyunday Xcent with more features than, a Sail. Where would you park your money?

Ford has had an interesting run in India. From the Escort days to the Ecosport. They are just busy producing the Eco-sport and exporting it and making the best of the higher dollar prices. Slowly, the Duster and Terrano cousins will sell more than Ecosport again. M&M, MSIL and Hyundai will be ready with their 4 meter SUV's next year and Eco sport will loose it's crown.

Honda is doing a fabulous job year on year. They had issues earlier due to absence of a diesel engine but this has been covered up in Amaze and City. Soon, Mobilio and Jazz will bve out as well with this modern diesel unit.

[Mad Max]

The Indian consumer base in itself is an enigma. We'll cry hoarse about "Chinese makes" and "cheap cars" and then stand in line to get an Alto delivered. We'll skip airbags to put more chrome. We'll run towards a diesel car even it makes absolutely NO sense to buy one just because we don't want to pay the cost of petrol. We'll crib about no safety features but ignore cars that are built like tanks to ones that are built with chocolate foil.

No wonder these American giants are completely confused. When they introduce a small car, we ask "what the hell is this? Are you trying to shove a cheap Chinese make on us? How dare you?" and then walk right next door and buy a Hyundai. If they bring an expensive sedan, we'll listen to all the great features and then ask "hehe.. kitna dethi hei?" or "This is too expensive by 2 Lakhs.. I'd rather get a Maruti and save the money".

I am not blaming the consumer here but you guys definitely don't think that this is an easy market to figure out, right? As one of our friends mentioned above, we think too much about service centers even though cars nowadays don't need servicing every 3000 kms. But that's who we are. Cautious. Opportunistic. Thrifty. Slightly disgruntled. Yet Happy.

The same EcoSport that got us outraged by its waiting time still is getting bookings. So is the Amaze. So is the City. So is the Maruti.

[katchkamalesh]

Originally Posted by desdemona

what do the following general traits of the median indian car buyer have to do with this peculiar insistence of the 'free' market to lead to this degree of market concentration, with 3 players dominating to this degree:

I am not sure if you are blaming the brands for not establishing themselves in the market or blaming the public.

My take on your points.

One cannot blame the brands for not marketing themselves as a lifestyle brand or marketing their "Distinctive USP" here, because these will not work in India. India is not a mature market, where cars are seen as a utility, even today car is a luxury to a majority of the Indians.

Compared to the Purchasing power in developed countries, Indians are far behind and cars here are expensive to buy than in developed countries.

Again most of the Indians do not enjoy a 5 day a week job. And they do not want to spend money a car which requires frequent visit to service centre. I guess from this forum you will realise that even people with 5 day week jobs do not prefer to frequent the service centre. BTW These are the guys (with higher disposable income) whom lifestyle brands target and even these
folks do not care about "distinct USP" of a particular car brand.

"herding biases of Indian car buyers are extreme, without doubt not witnessed in any other car market, developed or developing"

Word of mouth is a powerful tool across the world. No person will bad mouth a brand without any reason and even if the person does, credible evidence is needed to support that fact to spread. Bias is based on experience and everyone wants to stick to a tried and tested one rather than take the risk.

We do not have laws which pertain to selling lemons and in the end it stays as a bitter experience for others to learn from.

These points that I mentioned here are not to justify our attitude.

No brand can blame the consumers, its the brand's duty to deliver what the consumer needs. If you try to force a product which is not required by us, I am sorry to say this, you will have to shut your shop sooner or later.

With respect to the first post, Ford and Honda have made investments to expand their capacity and have huge depreciation on plant and machinery to account for at the same time they also have a good line up which will boost its sales.

Ford in order to make more profits is concentrating on exporting ecosport at the cost of the local market. A bad sign.

However GM is hopelessly lost in controversies and has to work double time to understand the market and to launch a product that suits the Indians needs.

Every single brand has to invest and build a very good after sales service so that the customers are delighted or at least happy with the experience. This will take the brand a long way.

[veyron_head]

GM earned it, I would say. They have launched one drab looking car after the other. Except the beat, not a single car looks or feels good or offers anything unique for its class. Well, it doesn't even offer what others do, let alone being unique. THe designs of their car sounds like GM wanted to sell all their cars only to the taxi market.

Beat was their only opportunity to create the right noise in the market, but then again, they took years to launch the beat diesel and lost that opportunity (though beat is a partial success).

[arnabchak]

GM made all the wrong entry choices right from the start.

First, the Daewoo story.

Post which, Opel came to the country.

Then came a series of duds along with shabby afer sales support and high cost of maintenance.

Opal Astra was a high cost, high maintenance car.
Corsa was perceived as a small sedan but the introductory prices were steep.

Also, the gear orientation was different to start off with. The reverse occupied the place of the conventional 1st gear and somehow, initial response was not too encouraging for this sort of orientation.

If we look closely, what does GM offer?

1) Spark(Matiz re-christened Daewoo offering).
2) Sail U-Va. Another market dud right from the start and discontinued
3) Aveo. High cost and low mileage. Discontinued
4) A capable Optra suffering from poor brand image of the parent company.
5) Tavera- the only success story which gets entangled in pollution norms.
6) Captiva- Where did I last see it??
7) Sail NB/HB- New offerings but nothing fresh about them.

Road ahead- END of THE ROAD

If GM does not understand the market pulse even after two decades, its high time to close shop and move out than amounting any more losses.

FORD:

Some capable cars yet the losses mount.

Fault- Their own doing.

-Why do you need to price a Ford Fiesta at the price point it was launched?
-Was Ford looking at a runaway success and maximising profits at the launch? COmplete lack of market planning and failure on the market intelligence.

You launch a desirable Ford Ecosport at an affordable price tag and then keep on revising the prices upwards on every full moon.

Prospective customers are shunned and mistreated.
Waiting periods are fabricated to ensure that the wait is "not worth the wait".

Fiesta Classic. Same car, same bottle, new price. Hardly any takers. Do a complete interior upgrade and it may still sell in 4 digits.

Figo. Great car yet not performance driven like "Ford cars" .

So, whats the way ahead.

We have something to look forward to.

-The new Fiesta, inspired from Aston looks promising and if priced correctly, can help recover some lost ground.

- The Figo sedan also looks good.

Pricing and sprucing up the A.S.S should be on Ford's priority and they can turn around the tide.

Also, the labour cost should be made reasonable for a pleasureable aftersales experience.

Nothing sells like word of mouth publicity. Ford should capitalise on that and can do well.