Set to play catch-up...

Europe’s biggest carmaker, Volkswagen, post the decline of US auto giants and in the midst of a restructuring of the European automobile industry has ambitions to become the world’s largest automaker. Their first move has come in one of the world’s largest auto markets India. The plan is to cash in on their 19.9% stake (worth $2.5 billion dollars) in Suzuki, Japan’s 3rd largest automaker. VW, which is China’s largest automaker and world’s second largest is hoping for both organic and in-organic growth in the Indian market. According to Vaishali Jajoo, auto analyst at Angel Trade, “In partnership with Suzuki, the VW Group can take a big step forward in the compact car segment, particularly in emerging markets. In turn, Suzuki can benefit from VW’s experience with efficient and environmentally-friendly drive train and vehicle technologies.”

Anchal Gupta

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Just months after ratan tata showcased the nano, rajiv Bajaj is ready with his prototype of the small car in alliance with Renault. However, the small car plans of the Bajaj-Renault JV haven’t really been able to match the pace of the former so far. In fact, the prototype that was showcased in 2008 carried a Bajaj logo, but during his last visit, Carlos Ghosn, CEO, Renault, said that there were some branding issues and Bajaj Auto may not get a place for its logo on the car. But then, one should not forget that Renault has not yet tasted success on the Indian turf. While its JV with M&M is riding through choppy waters (with the falling sales of Logan, its tie-up with Ashok Leyland too is on the rough lane. This makes it all the more imperative for the French automaker to get its small car strategy right in India. “Keeping in mind the size and potential of the Indian small car market, getting the small car right will be vital for both Bajaj and Renault,” explains auto expert Tutu Dhawan. Moreover, there will be millions of Tata Nano running on the road by the time the duo launches its product in 2013. So, before thinking of giving competition to Nano, Renault should re-consider putting Bajaj’s logo on the small car as despite being new to the four-wheeler industry, the small car may benefit from Bajaj’s existing brand equity in the country.

Pawan Chabra

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The top guns of Indian automotive industry are hurrying up to make a mark in the pre-owned car segment,

but has the Indian consumer moved beyond conventional local second-hand car dealers? By Pawan Chabra

It was always there in the mind of Aryan Oberoi, 29, (working as an Area Sales Manager with a MNC bank) to buy a car for his beloved wife. But then that was before the slowdown blues hit the market. However, now that he genuinely feels that the economy is out of the woods, his plans are back on track again. But hey, not exactly how he thought earlier. After losing a sizable amount of money in the stock market and still waiting for this years increment, he is now considering options of buying a pre-owned vehicle instead of his original plan to buy a brand new A2 segment car (entry-level hatchback). Not to mention the long-waiting lists in this particular segment too has contributed to Oberoi’s change in decision.

However, deciding to buy a pre-owned car, now he is face to face with a new dilemma. As per him, “Buying a pre-owned car makes more sense for me at the moment. But I am still confused between the company certified pre-owned showrooms and the local car dealers.” But he is not the only one, there are many like Aryan who are facing the same dilemma of choosing between the certified and the local car dealers, showing that the neighborhood second-hand car dealers still play a vital role in Indian consumers’ minds. On the other hand, the big wigs of the Indian automotive industry are jumping in to the pre-owned cars arena with all guns blazing, behaving as if the Indian consumers are just waiting for them. With the two ends responding differently, has the Indian consumer started to move beyond the conventional local second hand car dealer, remains the biggest question to be asked?

The concept of certified pre-owned cars is not new to the country as Maruti’s True Value was launched as early as 2001. And without any doubt, the market leader of the Indian automotive industry, Maruti Suzuki, also holds the same position in the pre-owned segment. In fact, Maruti’s True Value has the largest network in the industry holding a mind-boggling 318 outlets in 186 cities. The other big names operating in the industry are M&M’s First Choice, Honda’s Auto Terrace, Toyota’s U Trust Toyota and GM’s Chevrolet OK, who are super active currently in their efforts to make pre-owned cars a significant contributor to the top-line of their company. Moreover, the tussle between BMW and Mercedes Benz is now all set to enter the pre-owned segment. BMW, which has no presence in the used car segment so far, will be launching its second hand car arm by next year in competition to Mercedes’ already existing pre-owned car arm.

However, of late, the point of attraction has been Hyundai Motors India Limited (HMIL). The company which launched Hyundai Advantage in 2006 with the aim to cater to the needs of the customers, with 6 dealers across 6 prominent locations in India is today accessible to around 69 operational dealers across 49 locations in India. Add to it the fact that the company now aims to take the number up to 108 dealers across 59 cities by the end of 2009 itself and then to 200 in another 12 months. “We want to aggressively focus on Hyundai Advantage, as it will not only help us retain our old customers through exchange and upgrade schemes, but will also make an interesting business proposition given the phenomenal market for used cars in India,” explains Arvind Saxena, Senior-VP – Marketing & Sales, HMIL. Saxena further added that there are around 1.3 lakh vehicles being sold in the organised pre-owned segment every year and the number is expected to grow by many folds going forward. But HMIL is not alone which is expecting a surge in demand in the pre-owned car market. GM India, which launched the Chevrolet OK programme in April this year, has already surpassed its targeted figure of 500 vehicles in the current calendar year by selling around 620 vehicles by the end of October. “We launched our pre-owned car business in April 2009 with five outlets. The company now has 22 outlets and by December 2009, we propose to have 30 Chevy OK outlets across the country. The Indian consumer is evolving with the time and the popularity of certified pre-owned car showrooms in the country is increasing very fast,” avers P. Balendran, VP-Sales, GM India.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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CAN YOU SELL IT FOR ME?

It was just two years back when Hero Honda started engaging villagers to sell its two-wheelers, and that’s when the turnaround began for it

What happens when you engage someone from your target audience to sell your product to the rest of the group? A super sale! And that’s what exactly came about when the country’s largest two-wheeler maker, Hero Honda, decided to try out this novel idea and that too at a time when it had just started feeling the competition heat.

The company initiated its Har Gaon, Har Aangan campaign in December 2007 wherein it adopted a three-pronged strategy. First, the company referred to its Usage & Attitude study conducted by its in-house research agency and identified the potential customers in villages across the country. In the second stage, it charted out events (like festivals, marriages, harvests, et al) in the villages so that it can take advantage of the cash holding capacity of the villagers. And lastly, Hero Honda entered into numerous vehicle finance tie ups with NBFCs, cooperative banks and regional rural banks to supply enough cash to the consumers.

However, the most important decision which it took while implementing its rural strategy was that it trained around 500 rural sales executives to sell its bikes to the villagers. It even conducted meetings with village sarpanchs, headmasters and anganwadi workers in villages across the country to enhance its reach. They also visited the potential customers at their homes and invited them to drop in at the company’s dealerships, located a few kms away. In fact, the occurrence of these visits increased many fold during the times of festivals. As Anil Dua, Sr. VP (Marketing & Sales), Hero Honda avers, “The study captured every aspect of the potential customers’ lives. It tracked aspects like the level of awareness of brand Hero Honda, the current modes of transportation and their purchase behaviour, et al.” So, it’s no wonders that Hero Honda generated 45-50% of its total sales from semi-urban and rural areas in FY’ 09. Further, Har Gaon, Har Aangan campaign has not only helped the company to develop a new relationship with its rural consumers, but also gave it an opportunity to increase the two-wheelers penetration level in rural India, which still stands at just over 8%.

What’s more? Encouraged by the success of the campaign, Hero Honda is now all set to roll out its on-ground activation for rural consumers. Further, it has also doubled its touch-points in rural areas from 2,000 in 2006 to nearly 4,000 in 2009. So, now you know what it takes to sell your product in the hinterland!

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
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What’s the magic word?

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“We can’t comment on the stock price as it largely depends on the volatility of the market,” says the Jet Airways’ spokesperson. Even Prakash Mirpuri, the spokesperson of Kingfisher Airlines refrains himself from commenting, quoting similar reasons. No doubt, after going through their worst financial phase, a sense of self doubt and susceptibility is ought to linger among these airlines.

But, with the economy finally showing some green shoots, it’s the increase in air traffic (which registered a 27% yoy growth in August 2009) over the last few months that perhaps seem responsible for the return of the investors’ confidence on these stocks. “The airline industry has been through the worst and the outlook is now more positive. Traffic is returning. And with the overall economic outlook strengthening we see an increase in the demand for air travel,” agrees Binit Somaia, Regional Director, Centre for Asia Pacific Aviation (CAPA). But the real question is – what are airlines doing to win back their investors’ faith and what is it that has really encouraged investors to invest in their stocks?

Certainly, after being battered and bruised for almost two years by one of the worst turmoils in the sector which almost grounded many of them, the players have learnt their lessons. In fact, they are now working on more

financially feasible and sustainable strategies, not only for themselves but for their stakeholders as well. “These revival strategies adopted by the airlines would definitely give a boost to the confidence of the investors,” avers Hatim Broachwala, Aviation analyst, Khandwala Securities.

Further, the big daddies of the sector – the full service carriers (FSCs) like Air India, Kingfisher Airlines and Jet Airways – rightly understanding the demand supply mismatch, have not only curved their invariable fleets and destination expansion spree, but have also implemented capacity cut and route rationalisation strategies. Keeping in mind the cost conscious Indian audience and the success of the low cost carriers, FSCs have also adopted the low-fare-no-frills model in a big way to boost, both their toplines and bottomlines. Moreover, they have even adopted various cost cutting measures – from reducing the free in-flight services, issuance of pink slips to forming cost sharing alliances – to make their business more financially viable.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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