[V.Narayan]

Market share by volume is a rather limited way of looking at things.

As an investor in a foreign market {shoes I have stood in} I would first look at the capital I invested, then the EBIT and separately profit after tax I am getting each year, then my return on investment {equity and debt} and then ease or difficulty of getting cash out of that country/market. Market share and that too by volume is one very narrow view of the subject and the decision of staying, investing or exiting any market. You could have a large share and still clock only small profits. Or a small niche share and be raking in profits for example in a monopoly situation in a niche segment. there are so many combinations to look at without even getting into future potential, exit/investment signals from competitors, Government policies and expected changes, tax rates, cost of capital, compatibility of your product line with the market, market growth etc. The list is long.

Compared to 3 to 5 years ago I'm glad members are willing to accept that if an OEM does not do well it is not the fault of the Govt of India.

The author's article is what I'd term a lazy article i.e. where you write something without adequate and complete analysis with a catchy title to capture eyeballs with least effort.

[steadfast]

Well the real worry is for those brands which do not have a solid manufacturing base here . From that perspective the VAG twins out of the remaining 8 are a safer bet and they won’t pull the plug from India operations because they are heavily invested into exports with India as the manufacturing destination

[RGK]

Not only their product line determine the success and profits.

• Some companies have difficulty dealing with their dealerships. Dealerships possess a substantial political backing and are able to exert a significant influence. (A dealer in TN did not allow appointing another new dealer for almost a decade)
• Planning of Logistics
• Apt number of dealerships

It is interesting to know how the Korean giant was able to penetrate India and make their subsidy successful as well. Companies which use India as their export base will manage to survive.

[Kln]

What the poor small global car makers have done -

Honda - launched the most globally successful sedan, SUV in its portfolio, and stopped selling them in 18 months, leaving the customers high and dry.

Nissan and Renault - will tease the Patrol, Xtrail every 12 months and go into hiding after gaining press sympathy and enthusiast love. Squander massive first mover advantages of CSUV segment. Fail to capitalise on the huge success of Duster. Fail to capitalise the success of Micra.

VW & Skoda - ignore the markets demands for crossovers and SUVs, keep selling Polos and Superbs with a new coat of paint for over 10 years with barely any innovation. Miss the boat completely on new feature additions and SUVs.

Toyota - stop selling mass movers like Etios and Liva. Keep inflating premiums for Innova and Fortuners because people will pay. The smartest thing they did is sell re badged Marutis.


I don't know guys, I'm finding it tough to shed tears for these companies.

[Anijsh]

Originally Posted by Kln

What the poor small global car makers have done ........
I don't know guys, I'm finding it tough to shed tears for these companies.

Spot on. This situation is their own making, no one else to be blamed. Our market will reward the players who really are committed to this market.

But even for the players who will survive, they need to be cautious with value proposition of the products in the long run, while maintaining the quality. If they don't, slow and steady way out will be the fate for sure.

[fastestindian]

I don't see how fewer car companies makes the Indian consumer better off. Competition almost always benefits the end user. For ex, I would feel awful if there was no one pushing the envelope for safety (like VW/Skoda) or reliability (like Honda) or segment leading features (like Hyundai/Kia).


That said, there is a certain inevitability to this. Price sensitivity coupled with harsh taxation on CBUs mean the only route for a foreign manufacturer to survive is for someone to invest heavily and create a whole new line for home grown new products like Skoda/VW did with their Kush/Sla/Vir/Taig. That is an expensive affair, even when it works out and the timelines for these are long (possibly 5+ years long).

I also don't understand the cheerleading behind certain Indian brands. An Audi Q3, without the ridiculous duty, would sit in the C2 segment and compete with Creta and Seltos (and others but stating these two names as these are market leading). Would love to understand why that would not be great for the consumers and how many would continue to vouch for Mahindra and Maruti if they could speak with their money instead.

All this duty business has done is allowed our own manufacturers to get away with producing not-world-class stuff. If they were pushed to directly compete with really good car brands, we'd all be better off.

The way I see this is, in 25 lakhs you could get one of the finest cars in the world, but what we choose to get are basically okayish cars and then we feel a certain kind of schadenfreude at the failure of brands, whose cars we all secretly want to own 😒

[Anijsh]

Well, this is where 'Make in India' option comes in. Isn't it?
If Audi decides for it, they can jump in too and avoid import duties. But they may not want to, to retain the niche/exclusivity image and not being typically interested in Volume.

And you're right, competition will help consumer. But I think the point was some brands not being competitive enough to offer range of products and services that customers desire here, and as a result, well..this therad.

[NiInJa]

Originally Posted by fastestindian

the only route for a foreign manufacturer to survive is for someone to invest heavily and create a whole new line for home grown new products like Skoda/VW did with their Kush/Sla/Vir/Taig. That is an expensive affair, even when it works out and the timelines for these are long (possibly 5+ years long).

Two things that will make car manufacturer profitable in long term:
1. Platform
2. Engine/Powertrains (including gearbox)

Keep the above changing radically every season and you are staring at losses in the longest term. Keep the above two to a minimum and keep on improving on it, and companies will have enough money later to invest in other technologies.

Meticulous planning and efficiency have made Hyundai, Suzuki successful and profitable. Any manufacturer who did not think from a long term perspective back then (20 years ago) have no one else but themselves to blame.

Heavy Investment: Not necessarily needed to get a start. Toyota cracked the market with their Qualis which didn't need the kind of investment. They focused on getting the basics right, once and for all, made reliability their USP and rest is history.

Home grown products: Absolutely needed. Getting product right with matching consumer expectations and local regulations requires lot of foresight and planning.
Bringing different technology and platform every 3-5 years means losing lot of money in the long term.

Maruti, Hyundai, Toyota, Honda: Have been using the same engine block for years, they have only improved upon their existing engines and platforms with incremental updates over the years. This helps suppliers and manufacturers achieve profitability and remove imperfections. VW and Renault have finally agreed to have India specific platforms and engines. Renault have a long way to refine their processes match it with Maruti Suzuki's level of acceptable quality and reliability for the masses.

Ford, GM: Laughably, Ford finally found the right petrol engine, the 3 liter Naturally aspirated Dragon series that was efficient, cost effective and simple in 2016-17 , just a few months later, they packed their bags after staying in Indian market for 20+ years. Ford never got a India centric platform. Their expertise always was and is big cars and trucks. Right from the days of Ford Mondeo till Ford Fiesta (Euro spec), none of them shared parts or engine components at a level necessary for achieving cost efficiency. The first Figo too was based off European model (Ford Fusion). The only car they got right at the end was the Ecosport, but by this time they had lost too much money.

GM too, tried many engines, platforms from different parts of the world (European: Opel Astra, Corsa, Vauxhall Vectra; Korean era: Optra, Aveo; Chinese Era: Sail UVA, Enjoy; Indian: Tavera with ICML engine), had to change specifications a hundred times, they even succeeded with some model but never got one petrol engine right or one platform on which they could thrive. They got the 1 liter diesel engine right in the Beat, but where were the expansion plans ? Where else could they plonk that nice little engine? They simply did not have a platform. Maruti plonked the 1.3 diesel from fiat in Swift, Ritz, Brezza, Baleno. While their ancient 1 liter petrol does duties in the Alto, Celerio, Wagon-R even today. I can keep writing about Ford's/GM's blunders

Look at Kia. They got their first product : Seltos bang on right and did not try anything new with engines and platform. They already had Hyundai who had done the ground work for them. They got all engines, diesel, petrol NA, turbocharged, and all types of gearboxes. What stopped GM, Ford and even Fiat from getting such kind of foresight?

Originally Posted by fastestindian

An Audi Q3, without the ridiculous duty, would sit in the C2 segment and compete with Creta and Seltos (and others but stating these two names as these are market leading).

Audi can manufacture the Q3 in India and sell it at lesser price if they want to. Whether they want the Q3 to lose its premium in that process is something they have to figure out.

Duty on imported cars is needed, else it will kill Indian manufacturing and supply chain and will cause massive job losses. It has been discussed enough already.

Originally Posted by fastestindian

All this duty business has done is allowed our own manufacturers to get away with producing not-world-class stuff. If they were pushed to directly compete with really good car brands, we'd all be better off.

Can you provide data that shows our own manufacturers are not producing world class stuff, objectively?
Safety was an issue few years back, but today, we have mass market cars scoring respectable crash ratings. We have cars with safety and comfort features that are provided world over.

[aniketi]

Many people say India is a price sensitive market. It's a thing of past now. You give right product, it will sell for sure. See how Mercedes and BMW growing here in India for last few years. See the numbers of cars like Fortuner, Innova, Creta, Seltos, XUV700, Scorpio, Grand Vitara, etc. and you will notice these cars are not cheap at all but still sales like hot cakes. So point here is some companies like Honda, Renault, Nissan, Jeep, etc. are making mistakes, not studying market properly and not giving right product to customers. These companies can't blame government too as rules are same for all car makers.

Hope companies like Honda, Renault, Nissan, VW, Skoda, Jeep, etc. will learn in next few years to come and survive somehow. We as a customer can't afford to lose few more brands now, fingers crossed!

[fastestindian]

Originally Posted by NiInJa

Can you provide data that shows our own manufacturers are not producing world class stuff, objectively?

My point was more about the lack of an apple-apple comparison due to the artificially appraised prices that push imported cars to two segments above their Indian counterparts.

If you'd indulge me, do a simple thought experiment - Would you choose a tata/mahindra/maruti et al if they were priced the same as say, a Volvo XC40, minus the duty? If you ask me to pick between a Grand Vitara and an XC40, my answer is XC40 any day of the week and twice on Sundays.

To clarify, I am not arguing for or against duty (that's a different argument) but that it forces consumers to "settle" for cars and allows Maruti to get away with making GV what it is today as noone is gonna evaluate it against an XC40.

[starke]

Exiting a market is much harder than entering into one. You critically lose years of resources & development with a huge sum of investment. India is a volume-driven market with mandatory localization compared to other global markets. In simple you can not bring any globally successful model into India as it requires 90% new development, investment and resources with a strong local supplier base to have consistency & reliability.

Largely un-even market share holder MSIL runs with its affordable offering with reliable name-plate among the mass customer spectrum and importantly, Suzuki's bread-winner is India, so almost similar to M&M or TATA, they have to make sure no mistake is done and full investment is focussed here itself.

The second evenly shared market holders TATA, M&M & Hyundai- Except Hyundai, both TATA & M&M is a domestic manufacturers with only the India market as their bread-winner, even though both went sluggish for many years, finally they took the dire decision to put in their final investment as do or die and both almost getting back on its feet(A small mistake in the sales will topple both of them as there is no backup left in their reserve)
Hyundai on the other hand, they played very well & strategically moved from the A segment (Santro, i10 ..) to SUV/B Segment with a premium nameplate which also brings triple margin than A segment. They risked their investment in India rather than other markets, lost almost every market, India paid back their investment, put that money in other market, and caught the market back. Well played Hyundai.

Then the single-digit market holders,

Kia - Let's not just call them as a separate OEM, its just Hyundai with a much more precise leader-follower management, where they refine the existing Hyundai segment leader to more of a plush offering with a huge added advantage of almost miniscule investment risk & established suppliers.

Toyota - Nothing much to say, Apart from the old Cow Innova & Fortuner, just hoping the ride with MSIL by providing technological advancement in return.

Everyone else, <1 share-holders

Honda - Struggling with their international market, no money to spend on new car development just for India.

Nissan & Renault - After the Ghosn incident, fully invested in US market to bring back sales, it worked, but forgot about Indian market and now focussing to convert their lost sales in China to India with Renault, who lost the Russia market due to war, now investing heavily in India, hoping to be their second priority after EU.

All others like Citreon, GM... Their investment in India is considerably less, so easy to pull out at any time if they want to.

[Mortis]

I wonder how Citroen fits into this. They are doing low volumes but claim that even with their limited sales they have been profitable from the start.
Maybe the slow and steady method could work for them if they step up their game and offer better packaged products.

[Kosfactor]

Originally Posted by aniketi

Many people say India is a price sensitive market. It's a thing of past now. You give right product, it will sell for sure. See how Mercedes and BMW growing here in India for last few years. See the numbers of cars like Fortuner, Innova, Creta, Seltos, XUV700, Scorpio, Grand Vitara, etc. and you will notice these cars are not cheap at all but still sales like hot cakes. So point here is some companies like Honda, Renault, Nissan, Jeep, etc. are making mistakes, not studying market properly and not giving right product to customers. These companies can't blame government too as rules are same for all car makers.

Yes right product will sell - at the right price, does not have to be cheap at all or even cheaper than the competition either. One reason I think the case of Jimny is not primarily the price.

Price sensitivity is high at lower priced entry level segments, Parle G biscuit is a good example of it where its important to keep the price in check. The ones who purchase a large box of Karachi biscuit may not even look at the price sticker.

[WhiteWolf]

Well that depends on judgement being based on number of vehicles sold by each brand or the profit earned by them on each unit sold. An easy example for that is analyzing two brands VW and Hyundai group, the Virtus is a success for the VW group looking at there production capacity and touchpoint areas mainly being in tier 1 cities while on the other hand the verna might not be a hit for the Hyundai group considering it is not massively out selling the other even with a very superior reach all over India and the profit earned by each group on each unit sold also varies largely for both of them.
Mainly the brand that need to worry is the Stellantis group (jeep and Citroen) in order to survive.
Honda also has done fairly well recently after the launch of Elevate considering no one thinks that any CSUV segment car can dethrone the Hyundai Creta and Kia Seltos but create a niche market of their own to keep the sales profitable for the brand.
Also about Maruti and Hyundai group they need to be recognized for tackling the Indian market the way they do making sure to have a car in each segment for each set of customer to have the highest market share, which the other manufactures fail to do so i.e to have a wide range of cars.

[true_sedan]

I strongly disagree with a lot of posts bashing the VW group. Their 2.0 strategy ticked all the right boxes:
1) A good looking CSUV and a sedan.
2) Segment first 1.5 litre turbo petrol engine.
3) Good ground clearance.
4) 5 star rated GNCAP for both adult and child protection in India.
5) Electric seats, subwoofer and amplifier setup(introduced a few months back).

This proves VW group is listening. Bringing in ADAS tech by 2024 will make the package complete and competitive. I have no doubts in my mind as to why they might have skipped ADAS in the initial launch.(Ahem! Road condition and road discipline.)

Honda have themselves to blame. From being an aspirational brand for many to losing that title in a short span of few years must've been a bitter pill to swallow and a wake up call. They have taken a step in the right direction by launching the Elevate.

Finally, to all brands still thinking that Indians don't have the spending power. Just look at the sales sheet of Mahindra, Tata and Toyota and their 30 lakh rupee cars selling like hot cakes. 10 years back people dared to venture beyond the 15 lakh rupee mark for a car. But now the bar is at 30 lakhs. Based on this I'm extrapolating the aspirational club to be ready to spend 40-50 lakhs in the next 5 to 10 years.