[AirbusCapt]

Putting up an automobile plant in India is a painful process. It requires a minimum investment of 4/5000 crores as an initial investment and constant find infusion for the next 5 years before it begins to make profits. The ROI is atrocious at best. The above doesn't include the 'cost of doing business' like government permissions, handling the babudom, trying to acquire the land, labour problems, electricity and water, establishing dealer networks, OEM ancillary works etc. Adding all of this, one looks at a ballpark 10,000 crores just to put up one greenfield plant. Even a paltry 2% return will involve making a profit of Rs 200 crore from day one. Considering a profit of Rs 1lakh per unit, we need to sell atleast 20,000 units to make up our 2 percent.
Does our overcrowded car market have the space for a new entrant to sell a minimum of 20,000 units per annum? Hatchbacks, compact utilty vehicles etc will not fetch you a 1 lakh margin per unit, so you need to sell far more of these even to break even. In a market dominated by Maruti and Hyundai this feat is almost impossible.

[Doc_nerd]

Why automakers are struggling in our country is simply because they aren't selling enough numbers. Selling just 3 million cars in the whole of the country doesn't make economic sense. Our market is just above that of the UK in terms of sales volumes, a country which is very small & sells more high end cars. In our country it is the small car that rules the roost in terms of sales where is the economic sense in that?. Even if foreign manufacturers design, make & sell (renault, nissan being a good example) small cars for our country we just buy them from 2 companies ( maruti & hyundai) thinking of the resale value. It is our economics that is at play rather than anything else. We are an IT power house no doubt in that. But, is it sufficient to create jobs for the whole country ? Fat chance. We should aim at building the manufacturing sector which has more chances of improving the general state of our economy. The government taxation, automobile policy & fuel taxation is a different ball game altogether which adds fuel to the fire.

[shancz]

Originally Posted by Eddy

The percebtages may even out slightly.

And should even out further if we compare the T1,T2, T3 and rural/remote markets separately.

Would actually be fun in the T3 and Rural areas to see how the top 4 perform.

Honda 2 wheelers strategy of classifying their dealerships into Normal, Big Wing and TopLine seems reminiscent of that fact. Since they even refuse service to a TopLine in a BigWing, much to the frustration of customers what they seem to be doing is to concentrate their offerings and responsibility to regions with different purchasing power.
As cruel/weird it may seem with some existing customers caught in between(who should be given a way out) now I do see a reasoning behind it.

Is it fair ?
I don't know but this does give Honda 2 wheelers a way to maintain separate quality, pricing and expectations in the same market.

Will it succeed ?
I don't know but not to forget they were the ones who started the gearless scooter revolution with the Activa so they know a lot more about the market than I do

Could car manufacturers do it ?
Yes but then that implies they have a good product lineup across categories with matching service network.
They sort of have that arrangement with CBU vs others but nothing clear cut.

Will this approach be better for the customers ?
I don't know again, existing customers could opine better

[tsk1979]

Originally Posted by Turbohead

Ford's departure is truly a sad thing. They are one of those companies that put in a lot of effort. TBH, their biggest mistake was to cut costs on the latest Figo and Aspire, thereby alienating their original customer base while the rest of them would've bought a Maruti anyway. But it wasn't as bad as it was made to be.

Actually Ford case is a bit different too. Ford has decided to position iteself as a "truck" maker. In countries with expensive fuel, small cards are the norm (as opposed to USA the land of 10mpg trucks and SUVs).

So India as a market does not meet Ford's focus (pun unintended).

On a broader note, any car manufacturing plant in India selling a non mass market small car kind of thing would also require the plant to compete against other countries, because nobody will setup a manufacturing unit for something which will sell max 1000 units a month. So manufacturing in India would make sense if its cheaper and more efficient than other SE Asian countries, and that is not the case today.

[landcruiser123]

Originally Posted by tsk1979

Actually Ford case is a bit different too. Ford has decided to position iteself as a "truck" maker. In countries with expensive fuel, small cards are the norm (as opposed to USA the land of 10mpg trucks and SUVs).

Actually, not the case. Unlike GM which sells rebadged Daewoo cars, Ford is actually pretty good in making small cars. The Fiesta is a favorite in Europe for a couple of decades. Also, with the Figo, Fiesta, Puma, Kuga, Focus, Fusion etc, Ford actually had a reasonable chance at success in India. How many of those cars did you see on Indian roads?

[m8002?]

I would consider Ford's exit to two main reasons and both of them are of their own making.

1. Not bringing any good small car/csuv from their global portfolio. Look at the number of small/medium cars they have in UK. What stopped them from bringing those to India? They just kept milking the one EcoSport for more than a decade. The Kuga is slightly bigger than Creta and retails for 25% more than EcoSport. It could have easily captured a good market from Creta.

2. Spending on a new plant in GJ( not an expansion which is cheaper ) when the volumes didnt demand that at all.

For those blaming the Indian consumer, govt. policies, etc etc, they are the same for all manufacturers today ( MS had a jumpstart in the 90s ). If new entrants like Kia and MG are able to make inroads, only Ford and GM are to blame for not able to make it.

[Floyd de Souza]

In all this, I find FCAs position quite intriguing. Ok, FCA is now part of Stellantis but still, with just 2 products, Stellantis is soldiering on. I feel their strategy is purely brand/margin play. Wonder whether this will work.

[fiat_tarun]

Originally Posted by Eddy

This is intriguing, but what will be better is if we get to know the market share by revenue/value . It'll be interesting to compare it with volume. The percentages may even out slightly.

A bhpian has done this already ! - Link (Revenue calculation of cars sold in India - How many $$$ each model brings to its maker)

MSIL + Hyundai/Kia account for 60% of the revenue pie (March 2021 data). The biggest gainer here is Toyota with higher priced vehicles selling in good volume.

[Piyush_DT]

I think it has more to do with how you adapt and change your strategy to be on top. If you are not adapting according to the requirements/expectations you are bound to struggle and eventually quit. That's what happened with Ford, GM, HD and others.

The best example is Tata and Mahindra, they understood the requirements and changed their strategy and we are seeing the results. Else, it was near to impossible for them to survive because they were competing with global brands who were much ahead in terms of R&D and resources.

Tesla has to fall in line and cannot dictate terms. Apple tried to do the same thing but eventually accepted the terms and are also seeing the results. It is very difficult for companies to ignore India because of the customer base we have and thanks to 1.3 billon population for that.

This how India's market is and I don't see any problem with it. If handful of companies can survive and grow then everybody can.

[drjaygoyal]

Mercedes, BMW, Audi and other luxury manufacturers are setting new records every year. Cars are sold out for almost a year !!

They must be doing something right that Ford, GM couldn’t do.

Also Honda is digging it’s own grave. No innovation. No new launches. Just milking the same old cow. They are a perfect example of a company taking its customers for granted.

[The Rationalist]

It all comes down to the vision and will to take risks in a market like ours. Ford could have done what Hyundai and Kia did, because there was no competition once they introduced the Ecosport. They didn't move an inch after that and were sitting duck. Where was the Creta challenger?

Ford was not willing to take the risk and paid the price. The ones who wait for miracles to happen, can look into pages of history and see Kodak, Polaroid, Nokia there. Fiat and GM both were hoping for similar miracles. We lost 3 manufacturers, but got two new ones. Hopefully we will get to see another couple. Let's see if they have the will to take risks and create a disruption.

[Steer-safe]

I disagree about market being tough. You cannot sell what you make, but what is wanted by customer. Cars have to be aspirational in India. Drive feel , steering feedback etc doesn't matter if over all package is not good. Look at Kushaq and den XUV 700. One is struggling another is booked for two years. You know which one is a better product. Parts failing, bad service make the matters worse. Nissan is not selling only cause magnite is good. You will not find a person recently complaining about their service. Who left they deserved and kudos to Tata, Mahindra , maruti and Hyundai for acting as per market demand.

[JReacher13]

I can't speak for other companies but I'll share my POV on Ford. In the very recent past, I went with made up mind that I'm buying nothing but a Ford. Instead I brought a Tata.

In a market that is growing at 26%, if Ford has failed, it doesn't have any locus to blame external factors. While Tata and Mahindra are selling cars upward of 20 lakhs and Ford was clueless or uninterested all along. Besides, every market has its own characteristics. Manufacturers has do their own due diligence and growth predictions before entering and keep reading markets through out. So it's largely comes down to lack of commitment and laziness from the companies that left.

[FASTLIFE]

IMHO , no one is struggling, everyone think we(Indians) are fools , which we were ,but now thankfully things are changing due to Jio and cheaper internet +YouTube knowledge. In terms of technology, we are 15-30 years behind in each and every sector because sadly we don't give enough credit to our scientist/inventors, either we say they are mad, or they never get the investors to run a company. Look what Pratap Bose did to Tata, it turned frog like looking cars (Bolt,Zest) into European esque cars (Altroz, Harrier). Indian Rolls Royce comfort was the Ambassador, what happened to them?? Ambassador required all 4 disc brakes, powerful headlamps, better steering , fatter tyres and BSIV engine, but they didn't upgrade, and now they are dead, entire company sold for 50 -80 crores. Look at the Figo and i20-Altroz , Figo looks like its already a 100 years old. Given the statistics, how is Royal Enfield able to sell in UK? Mahindra Roxor (Thar) in USA?? there hold basically nothing in terms of market share, are a third world manufacturer yet doing good. Consumer is King, You take care of consumer, consumer takes care of you. Everything is business. Politics also play a part (Daewoo transportation hijack lead to a dead factory and brand)
https://www.team-bhp.com/forum/india...-pictures.html (Visit to Daewoo Motors (Argentum) plant, Surajpur, UP: a Chronicle in Pictures)

[Akki272]

Originally Posted by sreejithkk

If you see Renault has a great product called Triber, which decently sell. From the launch time itself, all media and some owners mentions that only major negative point of Triber is 1 liter NA engine. I always feel that, if Renault has introduced their turbocharged petrol engine and CVT combo in triber, the sales will increase by atleast 50%. But they still not launched this engine/transmission. And eventually if triber sales declines, whom should we blame? Renault or the consumers? Ford internationally has lots of SUVs above ecosport and below Endeavour, but they did not launch any. (SUV craze was already there in the international market way before it started in India, and they still missed the opportunity). Currently the MPV market is in good demand (Just look at the sales of Ertiga/XL6). Kia understood this and introducer carens. Honda already have an updated BRV, which looks way better than earlier BRV in Indonesia,

Very well written and perfectly put. I would also like to point out the presence of Nissan and VW here. I sometimes wonder what their planning and strategy teams are upto, last few years. VW has managed to live on the Polo' success for all these years and it took 12 years for them to finally cease production of the VW Polo. Nissan too nothing over the moon, just one model launch (Magnite) which seems to be doing not that great as well.
Having lived abroad, i am well aware that the markets of both Nissan as well as VW are huge, but i think this fear of not introducing new products to India, considering the masses expectation could lead to them eventually shutting shop one day just like others.