[Aditya]

American car manufacturers General Motors and Ford are struggling in India. The two companies together have accumulated losses of more than Rs. 4,500 crores in the country.

General Motors and Ford have been present in India for almost two decades now. However, they have struggled to compete effectively with the likes of players like Maruti Suzuki, Mahindra and Hyundai.

General Motors, which was for many years the world's largest car maker in the world, has recorded losses of Rs. 746 crore for FY 12 and Rs. 1,142 crore for FY 13, taking its accumulated losses till date to Rs. 2,740 crore. The company claims that the reason for the dismal showing is the unavailability of its bread-and-butter model, the Tavera MUV in the first quarter of 2013. Additionally, General Motors also phased out its ageing Aveo and U-VA models.

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. In FY 13, automobile sales dipped by 6% compared to the previous fiscal.

While General Motors, Ford and Honda are struggling, Korean manufacturer Hyundai is seeing its profits grow. The company reported a net profit of Rs. 1,025 crore for the FY 13, a jump of 23% from the Rs. 836 crore profit of FY 12. Market leader Maruti Suzuki and Mahindra have reported profits of Rs. 2,300 crore and Rs. 3,353 crore, respectively. Maruti, Hyundai and Mahindra have a share of 65% of the Indian automobile market, which is considered to be the sixth-largest in the world at the moment.

Link to Team-BHP News Article

[CliffHanger]

Ford launches the Ecosport in India but doesn't want to give it to Indians.

Chevrolet thinks India is China and launches all the Chinese cars such as Enjoy, Sail, etc in India.

I sense a glimmer of hope for Ford seeing their future cars in New Endeavor, Figo sedan, etc. But for Chevrolet, with the way they have perceived India at the moment, I don't think they are going to recover in near future.

[drmohitg]

Originally Posted by CliffHanger

Ford launches the Ecosport in India but doesn't want to give it to Indians.

Chevrolet thinks India is China and launches all the Chinese cars such as Enjoy, Sail, etc in India.

Excellently put. I doubt that Ford atleast is much worried about its losses here as in total its much more profitable to it in exporting all those Ecosports rather than delivering them here.

Chevrolet looks really down and defeated and there is not a single car apart from the ageing Cruze now that reminds you of the brand's presence in our market. Even in Autoexpo I do not recall any new exciting news from there stables.

As far as Honda is concerned they will surely post a profit starting now. There main worry of not having a diesel car has now been addressed and with upcoming launches of Jazz and Mobilio they are rather going to face a production headache.

[Shiv_1984]

I don't understand Ford's strategy. You have a huge gap in demand and supply of one of your best selling models, and are still talking about losses. We all know that so many customers move away from EcoSport because of the waiting times. I too agree it doesn't matter to ford. Period.

[CliffHanger]

@ Shiv_1984,

I read somewhere that foreign manufacturers have to pay tax for goods they produce and sell in India, whereas the same goods if exported they don't have to pay any tax. So Ford makes more profit selling Ecosport abroad than in India. Actually it's a win-win game for Ford at least in shorter context, the car is making profit elsewhere and in India the brand is being talked about for creating a product that is too good and elusive.

Also, one has to take all these Manufacturer' Losses press releases with a pinch of salt. A lot of times they do it to evade taxes knowing how well Indian bureaucracies function.

[JLS]

Originally Posted by drmohitg

Excellently put. I doubt that Ford atleast is much worried about its losses here as in total its much more profitable to it in exporting all those Ecosports rather than delivering them here.

Chevrolet looks really down and defeated and there is not a single car apart from the ageing Cruze now that reminds you of the brand's presence in our market. Even in Autoexpo I do not recall any new exciting news from there stables.

As far as Honda is concerned they will surely post a profit starting now. There main worry of not having a diesel car has now been addressed and with upcoming launches of Jazz and Mobilio they are rather going to face a production headache.

Agree.

Honda will turn around in short to medium term with diesel vehicles in their portfolio, but surely it will be tough fight with well entranched players - Maruti and Hyundai.

Ford dealers show their true colors every time with a new hit in their showroom - not going to help them in long term in Indian market.

GM can surely improve if they match their service/spare part costs with the good sales schemes (e.g. no service cost for three years and so on). Current problem is that their cars' value in second hand market is very poor due to perceived/real poor reliablity and stops large customer base from going to GM.

Regards,

JLS

[octane_100]

Originally Posted by CliffHanger

Also, one has to take all these Manufacturer' Losses press releases with a pinch of salt. A lot of times they do it to evade taxes knowing how well Indian bureaucracies function.

100% agree. Can't jump to conclusion unless you read the fineprint. They might be repatriating out of operating profits to their parent companies as royalties and similar heads and reporting a net loss here to avoid taxes.

As a matter of fact, Suzuki's royalty payment from MSIL is more than its profits from entire Japanese operations and almost half the profits of MSIL!!

[Zinda]

One basic difference between Profitable and Losing Auto Manufacturers in India is understanding the pulse of Customer.

Hondas no doubt are reliable, refined and efficient. But no diesel. M&M Bolero alone used to outsell all models of Honda, combined!

Ford - Personally I feel its Top Management and Marketing Team is on sabbatical since a decade IMO Ford just did not learn anything from the success of Figo/Classic. They just sank the brilliant Fiesta. And only God knows what is EcoSport heading towards.

Chevrolet, started doing too many things without making a Brand Image.In India it is not the Flagship SUV or Sedan which would do that for you - rather it is done by well priced, jack of all trades Hatchbacks! And SOME of them, not just one. It is because of Well Engineered Products backed by Excellent Marketing and superb Brand Image that Maruti Celerio and Hyundai Grand i10 became Hot Hits like SRK Movies in Bollywood

Afterall why do not Hyundai ,Maruti, M&M etc need a price hike every second month after its launch. I seriously hope these Iconic Players get their priorities corrected and become profitable again - but long way to go before that, no doubt!

[drmohitg]

Originally Posted by JLS

GM can surely improve if they match their service/spare part costs with the good sales schemes (e.g. no service cost for three years and so on). Current problem is that their cars' value in second hand market is very poor due to perceived/real poor reliablity and stops large customer base from going to GM.

I don't feel that will help much since the primary problem lies elsewhere. The servicing part was never a major issue with them including both the quality of work and the cost which were in line with the competition. Used car market is again very biased towards Maruti and few products of Hyundai, Toyota and Honda. Barring these all other players find it very tough to hold any significant resale value. The real problem with GM is total lack of excitement in there products and even bigger issue of complete lack of marketing. Even a car like Cruze can only sell so much. They need to bring in fresher models and start advertising them so that people atleast visit them.

[chncar]

I suspect that companies like Ford, Nissan etc are here mainly for the low-cost manufacturing at the moment and their margins in the local market are not a priority for them.

GM, of course is in the dumps.

It's great to see that Mahindra is topping on margins. Must be doing something right, and Tata should try and learn from them.

[honeybee]

All of these manufacturers have got some of their models wrong. Ford has the Ecosport which they can't produce fast enough and by the time they catch up the market will be flooded with choices.
GM has struggled with the Tavera and the engine and regulatory issues which hit their production.
Honda has pulled out the hybrid/ normal Civic and the Jazz. The Brio isn't exactly a mass seller and wouldn't earn Honda the same margins as the pricier models. Plus the investment in the diesel mill for Amaze will have to be written off over the next few years. (I mean to say adjusted against any profits they earn)
Maruti and Hyundai have been playing the market much better as they already have several running models and can experiment with one or two of them at a time. Examples are Kizashi or the Estilo which didn't do well, Santa Fe, Terrae on and Tucson or the Accent which is now being replaced by Xcent. So they can explore newer avenues such as a fluidic design or a manual auto tranny on select models while still making profits.
The others still aren't sure if they do want to get mass market or remain niche players.

[JLS]

Originally Posted by drmohitg

I don't feel that will help much since the primary problem lies elsewhere. The servicing part was never a major issue with them including both the quality of work and the cost which were in line with the competition. Used car market is again very biased towards Maruti and few products of Hyundai, Toyota and Honda. Barring these all other players find it very tough to hold any significant resale value. The real problem with GM is total lack of excitement in there products and even bigger issue of complete lack of marketing. Even a car like Cruze can only sell so much. They need to bring in fresher models and start advertising them so that people atleast visit them.

I think GM has good cars, Spark and Beat can give run for money to Wagon R and Ritz respectively. But they sell in small qualtity as public do not percive them as long term realiable products with good resale value.

maruti is successfully selling same wagon r(with cosmetic changes and some more - actually they replaced 1.1 L engine with 1.0 L engine!) since almost 20 years. On the other hand, so many t-bhpians have expressed good opinion about spark, also Beat is a futuristic looking car with a good specs - However GM is not able to beat Maruti and Hyundai in creating good perception. One more issue which holds them back is that ther GM dealer network is much sparsely spread. Where maruti, Hyundai, even Tata have 2 to 3 dealers in all major cities, GM has hardly one. This basically creates dealer monopoly and poor attitude towards service and customer satisfaction.

So in my opinion, rather than exiting cars in their portfolio GM's dealer network and perceived image about their car's reliability is holding them back.

Regards,

JLS

[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:

(a) complete absence of the idea of a car brand as an experience, a narrative, an imagined lifestyle and stylized life shared with millions in the core, old car publics of europe, america,and japan. how are chevrolet (which was in india as early as the forties, even before independence) and ford and renault and fiat to market themselves as distinctive carbrands when most people here do not know or care to what makes them distinctive globally (ford: ride and handling, age old euroamerican pedigree; renault: french design and sporting heritage etc)?

(b) the tendency of this median car buyer to treat cars like appliances albeit glamorous that are mutually substitutable once their 'strengths and weaknesses' are totaled up. these strengths and weaknesses rarely include brand heritage/global image or things like ride-handling-steering or indeed any familiarity with historic design languages beyond the sense that they are 'futuristic', or 'macho' etc.

(c) extreme risk aversion about reliability and ASS, as if we do not care a jot for DIY, for informing ourselves about the engineering character of the car, and as if the three dominant brands are devas while the others are asuras. this risk aversion, of course, goes together with cavalier risk seeking in the way many of us drive, in the way many of us fail to learn and understand the safety and handling/braking traits of our machines and the brands they embody.

(d) the 'paisa vasool' attitude:ostensibly the sign that we are hard-headed, practical no-nonsense types, even in our desires and lusts, but in actuality the very cause of considerable gullibility, naivete and unreasoning. give us good mileage, good resale, ostensibly good aftersales, throw in 'good' looks, and gizmos and we take the car home, happily congratulating ourselves on our worldly wisdom. dare i suggest that analogous phenomena are to be found in other spheres of life as well, notably religion and politics.

(e) herding biases of indian car buyers are extreme, without doubt not witnessed in any other car market, developed or developing. like in all other spheres of life, we generally do not think and decide 'for ourselves', at least trying to be autonomous but instead do what this or that member of our social network reccommends/insists. when enough of a herd starts in favour of or against a car brand/model there is almost never any coming back.

[HyperRetard]

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[mints21]

@ HyperRetard

These cars are recent launches. The company started making losses when there was a huge gap of petrol and diesel prices. There was a time when the customer preference had taken a turn towards diesel cars and they had none to offer.

They have been carrying those losses which with the success of the new City and Amaze they will be able to reverse in a short term.

You can say it was the lack of a Diesel engine in the past which led to losses.