[narayan]

In case of FORD - it was a extremely FE engine that went in to the IKON and hence suited the cost/mileage conscious segment

i wonder whether a 110 BHP Verna engine in the Accent can offer that kind of FE leave alone match the price

[predatorwheelz]

Originally Posted by iraghava

According to a senior official at HMI, they currently make a sizeable loss on every Getz CRDi they sell, part of the reason they do absolutely NO promotion/publicity about the car. In his own words they simply don't want you to buy one. And the loss is indeed sizeable.

So, expecting a Verna Engine+GB combo in the Accent is faintly absurd, and expecting it at 5.5L is utter nonsense.

This further strengthens my argument about outsourcing being more cost-intensive!

[Technocrat]

Originally Posted by iraghava

According to a senior official at HMI, they currently make a sizeable loss on every Getz CRDi they sell, part of the reason they do absolutely NO promotion/publicity about the car. In his own words they simply don't want you to buy one. And the loss is indeed sizeable.

So, expecting a Verna Engine+GB combo in the Accent is faintly absurd, and expecting it at 5.5L is utter nonsense.

So why are they selling one?

[supremeBaleno]

@Ishan, what is the reason behind the loss they are making on the Getz-D ?

You are right in saying that it would be foolish to expect the Accent with Verna engine at 5.5 lakhs. Very clear that this combo is not feasible at that price.

But what the OP and others are talking about is resurrecting the old Accent-D (3-cyl engine) and selling for say 6.5L. But I agree that 5.5L for even this combo is too low a price.

I dont know where they are loosing money on the Getz-D, but think it could be the Verna engine in the hatch. If so, why not they do the following :

1) Resurrect the old 3-pot Accent engine and put it in the Accent & Viva and sell for 6.5L

2) Plonk the same Accent engine in i20 and create a D variant and sell it for 6L (dont know what is cost of i2-P, but just price this at a premium to that).

3) Stop selling Verna engine in Getz and instead plonk the same Accent engine in it and sell for 5lakhs.

2 & 3 would ensure that Swift-D faces the heat.

[iraghava]

Originally Posted by Technocrat

So why are they selling one?

Dealer pressure to have a Swift D competitor in the line up. They didn't want to do it but the dealers forced them to.

Originally Posted by supremeBaleno

@Ishan, what is the reason behind the loss they are making on the Getz-D ?

According to him, the Verna drivetrain (which I believe is imported from Korea) is quite expensive.

Originally Posted by supremeBaleno

You are right in saying that it would be foolish to expect the Accent with Verna engine at 5.5 lakhs. Very clear that this combo is not feasible at that price.

But what the OP and others are talking about is resurrecting the old Accent-D (3-cyl engine) and selling for say 6.5L. But I agree that 5.5L for even this combo is too low a price.

I dont know where they are loosing money on the Getz-D, but think it could be the Verna engine in the hatch. If so, why not they do the following :

1) Resurrect the old 3-pot Accent engine and put it in the Accent & Viva and sell for 6.5L

2) Plonk the same Accent engine in i20 and create a D variant and sell it for 6L (dont know what is cost of i2-P, but just price this at a premium to that).

3) Stop selling Verna engine in Getz and instead plonk the same Accent engine in it and sell for 5lakhs.

2 & 3 would ensure that Swift-D faces the heat.

1. The 3-pot has developed a negative reputation in the market with regards to reliability & even they now accept that the engine usually has major troubles around the 80k kms mark. So relaunching that engine again would not be a good idea IMO.

2. No chance. The i20 is being engineered to use the new 1.4 CRDi unit so re-engineering that car to fit in the old 1.5 would be a cost that would prove to be too much. Also, again the connotations of using a problem prone engine is something that I don't think they would want to do in their latest & premium offering.

3. Have we considered that maybe production for the 3-pot has been stopped completely & the tooling done away with? And for the Getz it's the same problem as the i20 in point 2. It's been engineered globally to be sold with the Verna engine (is sold in Europe) so re-engineering it with the 3-pot is going to be an expense they won't want.

[predatorwheelz]

Originally Posted by Technocrat

So why are they selling one?

This will be another boring, business jargon filled explanation.

There's a company called Hyundai Mobis (formerly Hyundai Precision Industries) in Korea, which is one of the foremost parts manufacturers in Asia. In addition to manufacturing parts for most Hyundai (and Kia) cars, it also has contracts with Bosch, Siemens and many other renowned component manufacturers. Although a part of the Hyundai group, it is an independently managed company which also supplies to Chrysler corp.

Now auto component manufacturing works on a yearly budgeting. The manufacturer has to make a very accurate budget of the number of cars it will make in the year (how many of each model, how many of what colour etc) and the entire parts sourcing for the year happens based on the first budget made.

So once HMIL has made its yearly budget, it sends across parts requirements to different component manufacturers across the world. The one for the 1.5 ltr Bosch Engine obviously goes to Mobis, who then source the same and send across the required number to HMIL. Unless there is a technical problem, HMIL cannot return these to MOBIS or Bosch. In other words, HMIL is now pregnant with them! Again, next year, the budget will be an enhancement of the existing budget, and (unless the Verna is stopped altogether) more or less the same number of engines will come in.

If HMIL reserves all the engines solely for one car in one segment (Verna in Upper C segment), what happens if sales in that particular segment take a dip? They cannot even return the engine, for reasons already explained. So they do what Maruti India has been doing for ages. Introduce the engine in another car in another segment. (Remember when the Gypsy King was launched shortly after the Esteem rolled out in India? At that time maruti was having to import the Esteem engine from Japan. They figured they could spread out the risk - in case the Esteem flopped - by selling out the sourced engines in another totally different segment. Now that the Esteem is gone, the Gypsy is made available only against orders - do your math).

The bean-counters at Hyundai know very well that plonking the Bosch engine in the Getz will not make profits for them. But they also realize that the loss they'll make on selling every Getz CRDi is less than the inventory cost (and subsequent write-off cost) that they will have to face by retaining the engine. So they keep the Getz CRDi in their portfolio, yet dont advertise it. Trust me, if sedan sales in India ever take a hit, you'll see plenty of advertising for the Getz CRDi!

Second Obvious Question

After reading the above, the question that obviously comes to mind is - if selling off the engine is the primary target, why not plonk the engine in the Accent itself and sell it off?

When a car is made, it has a certain assumed product life cycle (PLC), and all the capital expenses (R&D costs, cost of dyes etc) are written off over that life cycle. Lets presume for the Accent (worldwide), the assumed PLC was 5 years.

Now once the PLC got over, HMIL brought in the new Accent they had launched in the international market and called it the Verna. However, a characteristic of a developing market like India is that cars continue to sell way way beyond their PLC. So HMIL are having a field day with the old Accent. The fixed costs had all been written off, so they could launch it at a much cheaper price than before. Again, Maruti has been doing this for years with the M800 and Alto, as has Ford with the Ikon..etc etc.

Plonking the Bosch engine in the Accent's bay would mean again putting the fixed cost burden on an old model. In addition, the obvious costs of safety tests and homologating the model. This is contrary to the strategy of reaping the maximum benefits from a product beyond its intended PLC. Rest assured, they'll never sell the accent with a Verna engine!

[Technocrat]

Thanks Ishaan, I never knew Dealers have so much power(in thi way that is)

@predatorwheelz- Whoa never looked at that aspect but may be thats true btw Gypsy King came much after the Esteem.

[diabloo]

@predatorwheelz, thats brilliant reasoning.
I guess its no point in further speculation.

Originally Posted by predatorwheelz

Rest assured, they'll never sell the accent with a Verna engine!

[brandon]

Hey, anyone here working for Hyundai. Pls suggest this

[Rigid Rotor]

@Predatorwheelz & @Iraghava - brilliant reasoning there - it helps explain why Hyundai is obviously shy of advertising the Getz CRDI and also explains as to why Hyundai does not offer the Getz CRDI model through the CSD (at least in the Noida Auto site- which is a big sales point) for the Armed Forces Officers- it would appear that they do not want to sell too many CRDI engines in the Getz - perhaps just enough to keep their 'other-than-sold-in-Verna' CRDI engine inventories moving!!

[Silver Knight]

@predatorwheelz
buddy your post cleared a lots of doubts I had deciding between the Swift VDi and the Getz Crdi. My heart always went for the Getz but head for the Swift Vdi.

[loving_alaap]

with reliability of Hyundai & success of accent, I am sure it will be an instant hit.

I am a big fan of Accent, especially after they have reduced the price.

Ford & Tata are famous with niggling issues and horrified service bills.

Logan looks a bit ugly for me, & Dzire is the famous rattle snake of India.

So, the proven & inexpensive to maintain accent will definitely a perfect choice for a smart buyer.

[Rigid Rotor]

@Loving Alaap - some cool rhymes there -
and why should the D'zire remind us of the "famous rattle snake of India"??
I suppose you're implying that the D'zire develops enough rattles to make any self-respecting Rattle-Snake go silent or perhaps dumbfounded with envy?

-And by the way Alaap Ole' Bean, as far as Rattle Snakes are concerned, I'm not so sure there are any in Mera Bharat (Mahan) - need perhaps to hop across to the good ole' USof A to find one and check them rattles with those in the D'zire ??

[Mpower]

Its a great idea and Ford is showing how to make it work. The old 3 pot is the best bet, fix whatever was wrong with it , indegenise it and relaunch it at a cut price. Oh, by the way stick it the Getz as well.

Originally Posted by predatorwheelz

The one for the 1.5 ltr Bosch Engine obviously goes to Mobis,

Plonking the Bosch engine in the Accent's bay would mean again putting the fixed cost burden on an old model. In addition, the obvious costs of safety tests and !

what bosch engine are you talking about. Bosch does not make engines, just the injectors.

Originally Posted by predatorwheelz

, who then source the same and send across the required number to HMIL. Unless there is a technical problem, HMIL cannot return these to MOBIS or Bosch. In other words, HMIL is now pregnant with them!
They cannot even return the engine, for reasons already explained. So they do what Maruti India has been doing for ages. Introduce the engine in another car in another segment.

This is contrary to the strategy of reaping the maximum benefits from a product beyond its intended PLC. Rest assured, they'll never sell the accent with a Verna engine!

No such thing. There is an estimate for yearly forecast and that can go up and down based on demand. Orders are placed on a weekly basis for parts. If car sales go down the supplier goes down with them.

PLC!!! so how do you think Ford is selling Ikons with Fiesta engines.

[Steeroid]

Originally Posted by predatorwheelz

Ford manufactures its own engines. When the engine is being built from ground up, the manufacturer incurs a huge R&D cost, which it capitalizes and writes off on yearly basis. Nowadays, this is usually for a period of 5 years. Once R&D cost is written off, the total fixed cost per unit of the engine reduces massively. The manufacturer is then in a position to place the engine in lower-priced cars.

Great writeup there, but the Fiesta's engine was actually developed by Peugeot in France. Their engines are made either in France (most of them) or in the UK as per the JV agreement between Ford Europe and PSA.

Originally Posted by predatorwheelz

On the other hand, Hyundai India outsources its diesels. The first Accent DLE/DLS came with a Peugeot engine, the subsequent Accent CRDi came with a 3 cylinder sourced from Detroit Diesel. The Verna comes with a Bosch CRDi engine.

This however is not a fact.

Hyundai is today one of the world's leading diesel engine manufacturers (for passenger cars), a position they have achieved in a very short time.

While the old 3-pot Accent engine was sourced from DD, all other engines for Hyundai are from their Namyang research centre, including the new R Series CRDis - a range of diesels that will soon span the capacities from 1.1 litre to 3.8 litre.

Bosch does not make engines - they only make the common rail delivery system for engines built by others.