[Arjun Reddy]

Bingo. Great thread GTO.

The core strength of the Germans was engineering and luxury. They were always over engineered. There was a time when they were running fuel injection while the lesser mortals were on carburetors.
In the race for volumes and with the introduction of baby Benzs and Audis they seem to be Japanese/ Koreans in German clothing. Of course not with the same reliability any more. Today they just seem regular auto companies which also have luxury divisions. How else will explain the Mercedes A class and it's boring diesel engine. Most of the Jap and Korean cars selling at less than half the price will put it to shame. Was reading an article and it was claimed that the new C class was the 20th least reliable car in America with power steering and audio system failures.
The Germans need to stick to engineering and luxury. They need to now sell cars that are truly well engineered at the lower end and not sell perceptions.
Hyundai is another company that is beginning the enter the premium end of the spectrum. They have tried to break the VFM tag just as Maruti has tried and had failed in the past. However this is one company which might just prove this thread wrong. With current line up of the new Elantra and Tucson due to be launched in September and the pricey Creta and Santa Fe doing well, they can just break into the lower premium segments.

[wilful]

A very interesting thread.
My take on it is that I don't find this dilution of core values surprising. The complex peculiarities of the Indian market forces many a company to swerve away from their usual path in a desperate bid to gain a sliver of marketshare.
This happens in other sectors as well. Where else would you see Mac Paneer Burgers? India is the only country where the Iconic Big Mac is not offered. And until recently the only country where veg burgers were offered.
Such is the stranglehold of Maruti - and the values it stands for so deeply ingrained in the buyers' minds, that most struggling automakers feel obliged to try and copy that magic formula.

[NPV]

Superb thread!

I think Tata had a lot going for them in the early years of the new millennium but missed the bus due to quality and reliability issues. Also, around the same time there was a trend to buy made in india products and the taxi boom which saw Tata selling their Indica V2 in large numbers, but they could not sustain on the quality and reliability fronts and also could not keep up on improving the products and introducing newer products.

Maruti stuck to doing what they do best mostly - smaller, value for money cars. When they ventured outside that turf, they messed up mostly with pricing and paid the price with flops but again not too many of those and is evident from their current market share.

Ford seems to have had those flashes of brilliance with Ikon, Fiesta, Figo (Mondeo was great but not a sales chart buster) but probably suffered most due to service backup issues.

Toyota, known for their reliability have managed to pull it off with the Qualis and the Innova mostly (and the Fortuner to some extent), but then they seem to have met their targets. I don't think they intended to be the market leaders in low cost cars.

Chevrolet never had a serious market strategy for India but did do well in the Taxi market with the Tavera for some time.

I would add Daewoo - they had good products in Matiz and Cielo but could not sustain.

[jetsetgo08]

Does a joint venture among any 2 companies result in 2 core values instead of 1 ?

If so, I would love to see more and more joint ventures alike Tata-VW (Too early to predict). Although joint venture is a strategy to stay afloat in the market, it creates a healthy competition.

Imagine the plight of Maruti had Fiat not lent the national engine. Hyundai would have taken over the Indian market with ease.

[libranof1987]

This makes for an interesting discussion!

I'm thinking, should car companies have a single core value: say, quality or performance, or luxury? If so, why?

One of the basic tenants of doing business is, you need diversify your portfolio. So, a natural progression for a mass manufacturer might be to step into the premium segment (Honda, Toyota) or a manufacturer obsessed with the luxury segment to step out of it's area of expertise and try something new (Bentley with their coupe, or Jaguar with their SUV).

While I agree that a manufacturer can't completely move away from their brand equity, but they can certainly pivot!

I understand that this thread is predominantly about the Indian car scene and I mentioned the above examples because I feel this situation is more so because of how our market functions.

In the US, Honda works on two values: the Honda brand that symbolizes reliability; and Acura, for their premium offerings. Similar with Hyundai and Genesis. The market there is mature enough to take a product at face value; rather than judge it by the name.

And probably, this is where the difference lies.

Car companies, the really ambitious ones with a plan, would probably want to wait till our market matures and then start experimenting to meet the kind of success they'd want.

[dark.knight]

In my view, no company must move away from its core value, as long as that core value is a popular one to begin with.

Marketing a brand is one of the toughest assignments possible in the business world.. engineers may feel that product design and research is the hardest stage but no, however perfect may the R&D be the brand or product will tank instantly if poorly marketed. For any product there are 3 types of buyers :

a) The Luxury Buyer - these are the kind that needs an emotional pull, luxury is anything but logical, and yet so very emotional. Sure the product must be made of the best of materials and quality but more than that the product must define itself as avant-garde, quintessentially luxurious and of much higher level than the competition in order to attract such a buyer.

b) The Average Buyer - this one is tricky, you aren't going to succeed on pushing the sale using value or quality. The trick is in finding the mix or perfect balance of value AND quality. You cant blame anything if your product loses out to better value from another product or the other product loses out to yours due to lower quality.

c) The Value Buyer - this one is the easiest.. they need value, period. Details like styling, quality or snob value are mere details and may not even be required. Make it worth their while financially and in terms of ease of ownership and they will forever be a patron (as long as they do not graduate financially and become a) or b) buyers).

Its simple, tons of companies have failed simply because their core value isn't one which chimes with popular requirement. Since we're talking cars I'll take Volvo as an example.. yes they are safe and apparently there is nothing to complain about their cars but they do not possess the "prestige" value of say a BMW or Mercedes. If their core value is modesty then its high time that they moved out of it. Fiat in India is another example.. they do not skimp on quality of engineering but they do not make it apparent, they do not market it and they take it as their only USP - flop.

Its okay, perhaps even awesome to change or "upgrade" core values, as long as it gets the buyer. All the categories of buyers wouldn't mind great quality, its just the pricing that sets them apart. How each company manages that fine line between great quality and great margins is what would distinguish a top-seller from a dud.

I'd say marketing a product spot-on is what would define it in the decades to come - BMW, Mini & Hyundai have terrific branding teams and its paid off. Hyundai made that shift in the early 90's from a basement-bargain brand to a desirable, stylish, reliable automobile giant, Mini was resurrected by the BMW group from a basic fun mini hatch to a tech-laden uber hatch at extremely high prices. BMW themselves have gone from basic tight-wheelbase fun to drive cars to softer, more spacious and refined driving experience.. much removed from that raw retro feel.

In summary, its ok to upgrade the core values as long as the foundation for a great marketing blitzkrieg is done to support the same. Also each market on earth is different - Americans want raw power and space, Indians want value and reliability, Europeans want snob appeal and styling and the South-American markets want total VFM. As long as the core requirements from a product, of each nation is respected and adhered to rather than shove a standardised product into their throats, any company should succeed reasonably well.

[honeybee]

How about also adding two wheelers in the mix?

A while ago, Rajiv Bajaj wrote off the scooter business which had given the Bajaj their identity (remember Hamara Bajaj?). The result? Honda has captured the scooter market left wide open by Bajaj.

Also do you want to factor in the emissions scandal with Tavera engines in India, then the VW group and then the FE figures fudging by Mitsubishi? Not being able to run a fair business.

[shankar.balan]

Originally Posted by dark.knight

In my view, no company must move away from its core value, as long as that core value is a popular one to begin with.
any company should succeed reasonably well.

The smartest saying I ve ever heard in a long long time, comes from an IBM ad from the early-mid 2000's - "Don't Sell what you Have. Sell what the Customer Wants."

In this simple saying, lies the essence of what makes Maruti and Hyundai super successful phenomena, in India.

[Sheel]

Not really a car company, but Honda 2 wheels appears to have stuck to its *core* value.

Got the very first gen Honda CBR 250R. Got it in 2011. Apart from regular service & consumables, nothing has gone wrong and I mean nothing. Had the very first gen R15, which was flawless apart from busted speedo & fused brake lamp, in this [Honda] nothing.

A true fill it, shut it, forget it bike.

The less said about my experience with HH Karizma R and P-180 V1 is better.

Just the reason, wish to get a Toyota.

[lapis_lazuli]

On the other extreme: Hindustan Motors; their own limitations made it sure they were "truly stuck" to their core values: primitive engineering and primitive BUT hardy cars. Despite being one of the "originals" in the game, it is such a sad story of complete decimation. Timely "change" or adaptation of your core values, is equally important!

FIAT: well, this is a different case, IMHO. Probably all Italian companies are run like this; symbiosis is what works for them. Partners, chums, pals....alone, they seem lost! I think they were selling more, when they were with TATA! After the split, and many "local" CEOs, the sales has never reached 4 digits/month!

FORD: I am disappointed with the degeneration in build quality. I can own it in any color as they wish to paint it with, as long as it is STRONG!

[landcruiser123]

I don't know where to fit Hyundai in this thread. Compare their products in the 90s and today's products to know the growth of the brand. It has surely transformed like none other.

Except for the i20's steering rack issues, the company's cars are competing with their Japanese rivals on reliability. Their interior fit and finish and quality are getting close to their German rivals. Some models were criticized for their nervous expressway handling, but the cars in the last 4 years have been neutral handlers. Most of the people out there are satisfied with the after-sales experience, although some people have complained that it's expensive to maintain a Hyundai after 50,000 km or 5 years. (I don't agree with the same)

With respect to Toyota, I think they are making an addition to their core-values. This addition is "Sportiness." By sportiness, I don't exactly mean great handling, but their cars today are surely not bland or boring looking.

If Skoda's core value is customer satisfaction, they must be joking.
But on a serious note, Skoda cars are of very high quality, beating their Japanese counterparts. I think that's the only factor that is responsible for sales in India. The DSG is a double-edged knife in India. 5 figure repair bills on a car is scary.

[ashis89]

Originally Posted by mustang_shelby

I think that would be a flawed strategy on many counts:
For a Ford Mondeo that was unsuccessful, there is also a Ford Ecosport that shared the same characteristics (excellent build and driving manners) and has been a great success. For a Honda Jazz that failed, there is also the Honda City (1-3rd Gen) that was a resounding success due to its quality and despite being at a premium. 4th gen City, despite all its niggles, is still reaping the rewards of that brand equity. Its wrong to assume that Indian buyers will not pay for quality.

The failure of Jazz was more because of market maturity or rather the lack of it. Jazz was ahead of its time and nobody dreamt of buying a 'hatchback' for the price of a sedan. Hyundai developed the premium hatch market by introducing the base i20 model below the top models of i10. This made people consider the car (mostly the lower models initially). With time, the market mentality changed and people are ready to spend more than a million rupees on a hatchback. This was a slow strategy which eventually is bringing in five digits sales to Hyundai and Maruti.

If we look at Mondeo, even that was ahead of its time and was not meant to be a volume seller. Secondly, it was a driver's car in a segment where the typical buyer is chauffeured around. It could have still managed sales in the lower hundreds if it was cheap to maintain (locally produced and not CBU). Until recently (before Figo was launched), Ford still had the reputation of having very expensive spares. Again, due to market maturity and increase in buying power, today a car owner is okay with a 10-15k service estimate. Back then, such a figure was atrocious.

Originally Posted by smartcat

2) Maruti has a big list of products that stick to its core values (Eg: Ciaz, Brezza). But that is not stopping them from introducing premium products (Eg: S-Cross, Baleno). And bingo, it has been a success.

Now, one would think that Hyundai does NOT have "two" faces - mass market & premium. But they have taken a different but extremely subtle approach. What they have done is bring out a zillion variants across price ranges - no other manufacturer has such a variety.
This means you can buy a Elite i20 for Rs. 6 lacs (aimed at mass market), but you can also buy an Elite i20 for Rs. 11 Lacs (aimed at premium segment). And when you see the sales thread, you will see that Hyundai has sold 10,000 copies a month - you would naturally assume that "premium" Elite i20 has so many takers.

What you are missing is that a significant number of sales could be from models that have no airbags, no ABS, no significant features to talk about and possible structural safety issues (going by Grand i10 crash fail)

Somehow I feel, Maruti Baleno in 2015 is the same strategy as Swift was in 2005. They launched a quirky designed car, fuel efficient petrol engine, good features and priced at a premium. Rather I would say the S-Cross and Ciaz were good attempts by them. Having failed in the sedan market earlier, they still tried and got a winner this time round.
EDIT: Baleno and SX4 failed because of the pricey spares and low FE, which were contradictory to the typical Maruti traits. Ciaz got it right and had a diesel too. And like I said, even if today's Marutis are not exactly cheap to maintain, people don't mind much.

Regarding the i20, I have an observation. Please correct me if I am wrong here. Like I mentioned above, when the i20 was launched, the pricing was such that some buyers were tempted to go for a low/mid big car instead of a mid/top variant small car. I say this because i used to see a lot of i20 Magna variants on the road (and a few Era too) while the Asta was rarer. Over the years, people have accepted that a premium hatch can cost a million rupees. i20 prices have also increased from the 4.5-7.5 lakh bracket to 6-11 lakhs. Despite the prices, I see a lot of Elite i20 Sportz/Asta both in petrol and diesel, but a Magna/Era is very rare. If this is true, then definitely people are buying cars having all the features, including the safety ones.

[ajay_satpute]

I am not sure about VW's core values now. They have done the biggest blunder of the millennium. Just because they accepted their fault openly and have agreed to fix it, but IMO their credibility is down the drain.

I know more than 10 cases recently, who were out to buy a new car and had stricken off VW before even entering into the showrooms. VW need to pull off a magic to get back on track. I personally like their products for build quality and overall mechanics, but now I am also skeptical when someone asks whether they should buy VW or not.

Honestly, Fiat India never had anything like core value. They just launched 2-3 products and waited for customers to buy them and hoping that their products will be hit. But, zero marketing, poor CRM, and in some cases, poor availability of parts, made people stay away from the brand.

I completely agree with Hyundai. They have just produced superhit products one after another and they are just unstoppable. However, I have had very poor experience at Hyundai dealerships. Probably, the super success of the brand, has got into the heads of some of the dealers. "Take it or leave it" is their motto.

[Aaron:)]

Awesome thread, rated 5 stars

I completely agree that car makers shouldn't move away from their core values. History has proved that whenever they have, they have failed.

Hyundai has stuck to their core values - quality interiors and equipment, and great diesel engines. If I remember correctly, the Santro and Accent had best in class interiors. In fact, the Accent had better plastic quality than the more expensive Citys and Lancers. The Accent was the first mass market Indian car to have CRDi, and till date, Hyundais have some of the best diesel engines in their respective segments.

Over the years, they've also added good looks (gawky Santro to sexy Elantra). They've really come a long long way.


Maruti has often failed in the premium segment, but that's because of the product. For example, the Kizashi was too small and overpriced to compete with the Accord, the Grand Vitara had low rent interiors as compared to the CR-V.

Their more recent attempt, the Ciaz has been successful because of its competence and value proposition. Had it been priced at City levels, it wouldn't have been the success that it has been. Even the Baleno undercuts the i20 and Jazz.


Toyota has never been bothered with volumes. Other than the Qualis, their cars were never meant to be volume sellers. But they had supreme reliability and great quality.

The Etios/Liva are too overpriced and and have too much cost cutting, and are surviving purely due to the taxi segment.

There's no better testament to the fact that companies should'nt move away from their core values - the 24 lakh Innova sells more than the 6 lakh Etios.


Honda - Now I'm a Honda fan, having owned a City. But their Indian strategy seems confused. Initially, they launched the City, Accord and CR-V which gave them a premium image. Honda cars were associated with great engines, space, quality, reliability while falling a bit short on the features and price front. They were pioneers in terms of technology. The City, Civic, CR-V and Accord were segment leaders. The 3rd gen City in particular killed all of its competitors despite being pricey and under equipped. Why? Because quality.

Fast forward to 2016 and the only cars that feel like they belong to the same company are the City, Jazz and CR-V. The Accord and Civic are non existent and the less said about the Brio family the better. The City is still the backbone, but it no longer commands a premium. Today, they're just playing catch up and match the price.

Honda needs to go back to what they do best - fast and fun premium cars. Discontinue the Brio, Mobilio and bring the Civic, Accord and HR-V. Just like the Toyota Innova, these cars can sell more than their entire mass market range.

GM has had flashes of success with the Optra, Tavera, Cruze and Beat but they failed to capitalize on that. The Optra in particular was an aspirational car for many.

Ford failed to realize that customers flocked to the Figo because of its traditional core attributes of solid build and great handling. If they wanted a lighter build and soft handling, they would've gone for a Hyundai. Just as they are now.

[theredliner]

Originally Posted by dark.knight

In my view, no company must move away from its core value, as long as that core value is a popular one to begin with.

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 only reason why the old Figo succeeded was the availability of diesel engine and VFM pricing when Swift Diesel had 1 year waiting period (old petrol Figo is quite unpopular and people bought Hyundai i10/Honda Brio instead). Also, there was no other sensible choice back then (only diesel alternatives being Vista, Pulse, Micra, Polo. i20 was a niche offering back then).
Currently, with the customers being ready to pay more for a hatchback and numerous options from established brands being available, i.e Grand i10, Swift, Baleno, i20 and Jazz and with the demand being low for Diesel, Figo was bound to fail.

The current gen Fiesta is a true Ford in every drop of its blood, we all saw what happened to it. All the Fords which have clicked are because of the positioning and the market scenario (old Fiesta, EcoSport etc), not because of their core values at all IMO (and that is because their core value does not matter to most people buying them).