Team-BHP > The Indian Car Scene


View Poll Results: Do you think higher localisation leads to lower quality?
Certainly not. I'm happy with my heavily localised car 28 10.18%
Absolutely. The component quality is just not the same 77 28.00%
It depends on the manufacturer 170 61.82%
Voters: 275. You may not vote on this poll

Reply
  Search this Thread
18,862 views
Old 31st October 2019, 19:10   #1
Senior - BHPian
 
coolkurt's Avatar
 
Join Date: Aug 2009
Location: New Delhi
Posts: 1,567
Thanked: 1,691 Times
Indian Cars: Does higher localisation imply poorer quality?

Owing to rising costs and depreciation of the Rupee, most manufacturers in India have stepped up their efforts to increase localisation. The Make in India campaign has also helped the cause for increasing local manufacturing. For eg, the Govt has made localisation of auto components in e-vehicles mandatory for subsidy benefits.

I remember the older 8th gen Civic had hardly any localisation when it was launched and on the contrary, the new Civic has 65% localisation. MG launched the Hector with 75% localisation. Volkswagen is looking to ramp up localisation to 95%.

Localisation has its own set of challenges. Let's take EV batteries for example.

Paucity of raw materials: For eg, it's a harsh reality that the basic components - lithium cells, that go into the manufacturing of li-ion batteries, are not yet produced in India.

Standardization issues: Almost every other manufacturer is sourcing from a different cell producer with different characteristics that require different quality check systems or machines, which are not available in India at the moment.

But besides the above argument, one thing that I feel is that higher percentage of localisation has always meant that parts and components quality has taken a hit. It's just not the same, hence not as reliable.

For eg, my 13 year old Civic's interior quality is great. Soft touch plastics, plastics built to last, no rusting of doors/ metal parts. I can't say the same when I sit in my friend's highly localised Honda City.

What's the general opinion?

Last edited by coolkurt : 31st October 2019 at 19:32.
coolkurt is offline   (16) Thanks
Old 31st October 2019, 19:26   #2
Distinguished - BHPian
 
vishy76's Avatar
 
Join Date: May 2016
Location: BDQ
Posts: 1,249
Thanked: 9,803 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Yes and no. It depends on what parts have been localised, and most importantly how it has been done and what sort of criteria has been followed for vendor allocation. Also depends on how much the OEM is willing to compromise on quality too

Taking Volkswagen's example, brake pads, struts, rotors and even the interior plastics such as the AC vents are now localised (post 2014 on all Ventos and Polos), apart from steering rack and gear linkages. Some of these have turned out to be a blessing in disguise such as the cheaper AC vents which have a better design and the gear linkages. What hasn't obviously are the cheaper rotors and the brake pads which exhibit excessive brake fade and warp quite early as well in many cases.

In comparison to these, the rotors on my Jetta and a friend's Vento (2013 IIRC) seem to be doing perfectly at 70K km and 40K km respectively.

The struts have the same story. Localised Gabriels aren't lasting long at all (less than 30K km) in some cases, while the stock struts on most of the earlier examples had no issues with oil weeping although the damping did decrease with time. The imported struts from France IIRC costed 8K a piece while the cheap Gabriels are about 6K a piece.

Ford has also done excessive localisation and I think they have done quite well frankly (apart from making child parts available). Things such as oil filters, air filters and drain plugs are dirt cheap and quality isn't visibly comprised either. Same seems to go for the brake pads too. The overall build of the car might be questionable but I think they make for a good case study on this cause.

Renault has also practiced localisation and done quite well. Parts last long enough and not many issues in terms of quality too. The budget hatchbacks and MPVs (Kwid and Triber) have heavily benefitted. Renault wouldn't have been able to price them so well without localising content.

To conclude, I would anyday prefer shelling out extra money and getting better quality rather than inferior localised content. But that doesn't mean all localised parts are bad. Some also carry design improvisations like the AC vents of the Polo and Vento and most importantly localised parts are quite cheap and you might not have to wait very long on them.

This is what matters to most of the car buying public IMO. It all depends on the manufacturers and how they are willing to compromise on the quality and balance costs. Localisation is a compulsion to keep costs competent in my opinion.

Last edited by vishy76 : 31st October 2019 at 19:33.
vishy76 is online now   (15) Thanks
Old 31st October 2019, 19:35   #3
Senior - BHPian
 
Sebring's Avatar
 
Join Date: Apr 2011
Location: Dubai/Bengaluru
Posts: 3,551
Thanked: 11,033 Times
re: Indian Cars: Does higher localisation imply poorer quality?

I think its our mindset. Localization doesn't mean a compromise on quality, since dies, design, materials etc all remain the same. In fact the car manufacturer is extra hard on local suppliers and is watching with a hawk's eye. Pricing is cheaper only because of a cut in import duties. I recall the first breakthrough was made by Lucas TVS in the 90s - they started to supply to GM in US, and my cousin who worked there would say these parts are exactly the same at a fraction of the cost.

Last edited by Sebring : 31st October 2019 at 19:37.
Sebring is online now   (8) Thanks
Old 31st October 2019, 20:36   #4
Senior - BHPian
 
Join Date: Nov 2007
Location: Bangalore
Posts: 3,999
Thanked: 4,181 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Quote:
Originally Posted by Sebring View Post
I think its our mindset. Localization doesn't mean a compromise on quality, since dies, design, materials etc all remain the same. In fact the car manufacturer is extra hard on local suppliers and is watching with a hawk's eye. Pricing is cheaper only because of a cut in import duties. I recall the first breakthrough was made by Lucas TVS in the 90s - they started to supply to GM in US, and my cousin who worked there would say these parts are exactly the same at a fraction of the cost.
I have heard that the original Maruti 800 (1984) and the first batch of Hyundai Santro (1999) were so good in terms of build quality, they commanded special price in the used car market.
Problem with the localisation is, how closely the manufacturer wants to control the quality and specifications of the parts which are sourced from local suppliers probably depends on the manufacture. Some manufacturers seem to be more 'flexible' than others. (Flexibility is not necessarily a virtue here)
BTW I don't think the car manufacturers supply 'dies'. If a parts supplier is manufacturing 'tail lamp covers', he would be doing it for multiple cars and the 'dies' would be made according to the specifications supplied by the car makers. There are too many other factors involved like the process, material, quality control, finishing, packing and transporting etc which can make difference in the final 'quality of the part received'
Guna is offline   (4) Thanks
Old 31st October 2019, 22:22   #5
BHPian
 
Join Date: Oct 2007
Location: Chennai
Posts: 300
Thanked: 218 Times
re: Indian Cars: Does higher localisation imply poorer quality?

It definitely depends on the car manufacturers. They give the specifics including materials to be used and finish details to the parts manufacturer. If the car manufacturers demand higher quality parts, they can get it even if the cost increases to an extent that they still profit without dropping off the burden to the customers. Majority of us, the customers over a period of time are made to believe and seem to accept a lower quality product at higher price as a premium product.
jayguar is offline   (2) Thanks
Old 31st October 2019, 22:33   #6
BHPian
 
Join Date: Dec 2014
Location: Pickering, ON
Posts: 31
Thanked: 41 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Quote:
Originally Posted by jayguar View Post
It definitely depends on the car manufacturers. They give the specifics including materials to be used and finish details to the parts manufacturer. If the car manufacturers demand higher quality parts, they can get it even if the cost increases to an extent that they still profit without dropping off the burden to the customers. Majority of us, the customers over a period of time are made to believe and seem to accept a lower quality product at higher price as a premium product.
Like in all consumer driven industries, the products available for sale are the ones for which there is sufficient demand - here "sufficient demand" implies enough quantity which allows the product manufacturer to generate a profit.

If consumers start patronizing those manufacturers products which are higher in quality and safety, even though they may be higher in price, then the industry's overall level of quality and safety will automatically increase.

We have examples of how far behind companies like GM, Ford and Chrysler have been left behind by the likes of Toyota.
kashif_baig is offline   (1) Thanks
Old 31st October 2019, 23:03   #7
Senior - BHPian
 
Join Date: Jul 2006
Location: Bombay
Posts: 1,410
Thanked: 2,172 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Quote:
Originally Posted by coolkurt View Post
For eg, my 13 year old Civic's interior quality is great. Soft touch plastics, plastics built to last, no rusting of doors/ metal parts. I can't say the same when I sit in my friend's highly localised Honda City.

What's the general opinion?
Isn't that a flawed comparision?

Shouldn't you be comparing your Civic with another Civic, perhaps the newer localized one to arrive at a more logical answer to your question?

My general response to your question:
Does localization have to mean inferior quality? NO
Does localization generally result in inferior quality? YES

Why? Cos the bean counters have to reduce costs and increase profit margins, and they can and do put more pressure on local suppliers, who then cut corners.

The biggest proof that localization doesn't have to mean lower quality is the fact that the same manufacturers have different standards for the cars they produce in India for India versus cars produced in India for the Rest of the world.
Lalvaz is offline   (8) Thanks
Old 1st November 2019, 00:19   #8
Senior - BHPian
 
coolkurt's Avatar
 
Join Date: Aug 2009
Location: New Delhi
Posts: 1,567
Thanked: 1,691 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Quote:
Originally Posted by Lalvaz View Post
Shouldn't you be comparing your Civic with another Civic, perhaps the newer localized one to arrive at a more logical answer to your question?
I compared it to the City as its available at a similar price point as the 8th gen was, with a marked higher percentage of localisation. Even if I compare it to the new Civic, the interior quality on the new one is good, but not the best. The Octavia is superior. And this I'm quoting from Team Bhp's official review. During the 8th gen era, it was the benchmark. So I could say quality levels have dipped due to localisation.

Quote:
Originally Posted by Sebring View Post
I think its our mindset. Localization doesn't mean a compromise on quality, since dies, design, materials etc all remain the same.
But if we look back and speak from experience, that's exactly what localisation leads to, eventually. Cutting corners for the sake of increasing the topline, squeezing the suppliers to the brink till they're forced to skimp on some essential bits.

Just a simple observation. The door lock knobs on my car, even though they're plastic, feel solid. I went to check out the Kia Seltos, the lock knobs are flimsy bits of plastic. Even my 1998 Maruti Zen has better lock knobs. These are the places that they indulge in cost cutting. Not everyone will notice, but corners are being cut.
coolkurt is offline   (2) Thanks
Old 1st November 2019, 01:03   #9
AYP
Senior - BHPian
 
AYP's Avatar
 
Join Date: Nov 2015
Location: Mumbai
Posts: 1,218
Thanked: 3,773 Times
re: Indian Cars: Does higher localisation imply poorer quality?

To be honest, I believe that there is little doubt that higher localisation implies poorer quality. Technically speaking though, I agree that we can't generalise this.

My opinion is based on these factors-

1. The perception that 'Made in India' is cheap. This is not too different from the 'Made in China' tag though we all know that even iPhones are made in China. Market runs on sentiments and perceptions.

2. The stalk indicator of my Fiesta(2007 model) had gone kaput and was replaced. When I was checking the functioning of the new stalk, I was appalled to see the difference in quality between the previous talk and the new one. The original stalk had excellent quality whereas the new one felt cheap and crude. The new stalk was perhaps a fit from the old Figo/Classic.

I don't have a lot of experience to give a definite judgement on this, but based on the above 2 factors, plus all the news we keep on hearing about dip in build quality with higher localisation, has lead me to vote for the option- B.
AYP is online now   (1) Thanks
Old 1st November 2019, 01:18   #10
Team-BHP Support
 
CrAzY dRiVeR's Avatar
 
Join Date: Jun 2006
Location: Bangalore / TVM
Posts: 17,127
Thanked: 73,299 Times
re: Indian Cars: Does higher localisation imply poorer quality?

IMHO -

Does higher localisation imply poorer quality? No! Manufacturers can produce equally good products with localized components - and some companies prove that very well, at least on some of their products.

Does higher localisation imply poorer quality? Yes! Because the very reason for localisation is cost-cutting. Manufacturers localize not to help the make-in-India campaign - but only to increase their profits margins while remaining competitive with their respective segments.

Quote:
Originally Posted by coolkurt View Post
I compared it to the City as its available at a similar price point as the 8th gen was, with a marked higher percentage of localisation.

So I could say quality levels have dipped due to localisation.
But why would you blame localisation and not the company? Aren't there cheaper cars being produced in India with better build quality? How is it that the Hyundai Grand i10 Nios is having excellent quality with a 98% level of localization? Kia Seltos with around 80%? TATA Nexon? There are many such examples.

The real issue is cost-cutting and profit margins on each product. If a product is priced at the top of its segment, falls in a similar tax structure and bracket and is not delivering on quality as on the competition - then obviously the company is laughing all the way to the bank.

Quote:
Originally Posted by Lalvaz View Post
The biggest proof that localization doesn't have to mean lower quality is the fact that the same manufacturers have different standards for the cars they produce in India for India versus cars produced in India for the Rest of the world.
+1. Well said, and that too, for products exported from India and manufactured here. Ford, Hyundai, Renault have all shown this trend earlier - and they may not be wrong in this either - the international markets pay for quality products - our market just doesn't pay for parameters like safety, build quality, etc! Too late to reverse trends now - unless of course, it happens by legislation.
CrAzY dRiVeR is offline   (15) Thanks
Old 1st November 2019, 07:20   #11
Senior - BHPian
 
coolkurt's Avatar
 
Join Date: Aug 2009
Location: New Delhi
Posts: 1,567
Thanked: 1,691 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Quote:
Originally Posted by CrAzY dRiVeR View Post
.
But why would you blame localisation and not the company? Aren't there cheaper cars being produced in India with better build quality? How is it that the Hyundai Grand i10 Nios is having excellent quality with a 98% level of localization? Kia Seltos with around 80%? TATA Nexon? There are many such examples.

the international markets pay for quality products - our market just doesn't pay for parameters like safety, build quality, etc! Too late to reverse trends now - unless of course, it happens by legislation.
Isn't it one and the same thing? Localisation implies cost savings which in turn, more often than not, lead to cutting corners. It's perfectly possible to make something in India with great build quality, but that seldom happens.

I'm sure the Grand i10 Nios has good build quality. Maybe it's in a price bracket that has that leeway. But, imagine the i10 interiors in a segment above?

For example, the baleno has got good build quality for it's price slot. But the S Cross shares almost the same interior setup, but also some pretty iffy plastic bits from a couple of segments below. Doesn't that make you feel shortchanged?

Yes. The international market pays for quality products, but so do we. If you compare the prices of cars sold here with their counterparts abroad, sometimes the difference is 60-70%. Even if we account for the higher tax rate prevailing here, there is still a huge difference in the price at times. We get less kit, lower build quality at a higher price. No wonder the manufacturers are making a killing. With the kind of discounts on offer now, imagine the margins they had on each product.

The MG Hector has 75% localisation and it's interiors are decent. Nothing to write about. In almost the same price bracket, the same brand is introducing the ZS EV. Its going to be imported as kits from China and assembled in India, and also shares a lot of parts with Volkswagen. The build quality looks to be stellar. Made in China and build quality. Usually the perception is the opposite. A few years down the line, when EV's sell in bigger numbers and localisation is initiated, I doubt we'll get the same build quality.
coolkurt is offline   (1) Thanks
Old 1st November 2019, 07:47   #12
Senior - BHPian
 
Sebring's Avatar
 
Join Date: Apr 2011
Location: Dubai/Bengaluru
Posts: 3,551
Thanked: 11,033 Times
re: Indian Cars: Does higher localisation imply poorer quality?

Ok, lets tackle the topic from another angle. If Kia were to source that lock knobs from Korea, would that feel more solid? It wont right? Because that's the specification and vendors have to adhere to it. If not, that vendor will see the door.
Quote:
Originally Posted by coolkurt View Post
The door lock knobs on my car, even though they're plastic, feel solid. I went to check out the Kia Seltos, the lock knobs are flimsy bits of plastic. Even my 1998 Maruti Zen has better lock knobs. These are the places that they indulge in cost cutting. Not everyone will notice, but corners are being cut.
Sebring is online now  
Old 1st November 2019, 08:52   #13
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 70,340
Thanked: 298,739 Times
Re: Indian Cars: Does higher localisation imply poorer quality?

Voted for "Depends on the manufacturer", although the first brand that comes to mind is Hyundai. Hyundai has proven that you can get a top-quality car even in entry-level segments (e.g. Santro) with almost 100% localisation levels. Unfortunately though, for most other manufacturers, higher localisation does imply a lower quality level.

The Indian supply chain is vast and you get everything here - from "Rolex" level of quality to the really cheap stuff. End of the day, the manufacturer gets what he pays for. Some brands are just way too focused on driving costs down and will bargain with suppliers for 25 paise / piece.
GTO is offline   (13) Thanks
Old 1st November 2019, 10:29   #14
BHPian
 
dksv's Avatar
 
Join Date: Jul 2019
Location: Bangalore
Posts: 143
Thanked: 528 Times
Re: Indian Cars: Does higher localisation imply poorer quality?

A shift has happened over the last 10-15 years in almost every B2C sector towards "planned obsolescence". Things are designed to fail and get out-dated within a short-lasting shelf life. Manufacturers want consumers to keep updating/upgrading to newer versions of their products and keep their ball rolling.

For cars, this shelf-life is now around 5-6 years / 1.2-1.5 lac kms. Localisation is one of the ways they can realise such obsolescence. Consider 2 local suppliers - one who could produce grade A parts for 15% less costs than their international counterparts and another who produces grade B parts, with 80% quality levels but for 30% cost difference, it's easy for the OEM to choose in the name of providing cheaper maintenance to end customers. In a market like ours, this looks like a win-win, but in reality they are hitting two birds in one stone - cost cutting/higher margins and planned obsolescence.
dksv is offline   (6) Thanks
Old 1st November 2019, 10:33   #15
Senior - BHPian
 
Maky's Avatar
 
Join Date: Feb 2013
Location: Bombay
Posts: 1,289
Thanked: 1,665 Times
Re: Indian Cars: Does higher localisation imply poorer quality?

I think it's fairly simple.

It comes down to a manufacturers quality target for the vendor and then the QA followed up on said target(s) by the manufacturer.
If you are experiencing sub-par quality from an earlier model to a later higher localised model then it's either/or of the above points to blame.
Maky is offline   (1) Thanks
Reply

Most Viewed
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Copyright ©2000 - 2024, Team-BHP.com
Proudly powered by E2E Networks