Toyota Etios launch saw an overwhelming booking response from India. So did Maruti Swift (2011), Volkswagen Vento, Tata Indica Vista (2011). Does this phenomenon hint at something big!
Yes, its the brand pull and novelty factor. These vehicles are good but so are scores of others that are their in the market and that also in the same segment. Why aren't people going for those? Gone are the days when a brand will run successfully for more than a decade and still hold its novelty factor. These days, a model / brand becomes old / jaded only after 6 months - 1 year of successful running. This is a disturbing trend indeed. Companies will then look to recover the costs in shorter period, thus hitting the price accelerator a bit hard. Old car market will revive though and contribute a lot more to the annual car sales market. Its not a fancy world as you can comfortably find 2010 models in the used car domain now in the 3rd quarter of 2011. Its good for people who need a vehicle but cannot afford a brand new vehicle. According to industry estimates, the used car market, which is currently around 18 lakh units a year, is expected to clock anywhere between 20% and 25% growth in the next five years, vrooming beyond the 40-lakh mark by 2015. Of this, the organized sector is likely to clock a 35-40% growth. This exposes one thing for the auto manufacturers - bring new models into the market as fast as possible. Else they will stay behind.
Its a situation like this that challenges the brand pull of a company. Maruti Suzuki, by virtue of a string of successful products in the past, still manages to maintain that pull in the market. New 2011 Swift, even though its not hugely different from the previous one, managed to garner some much-needed support from public. Whereas Mahindra Verito made huge waves in the market but the final response was pretty lacklustre. Technical reliability and service support are two main things that go towards building a brand. Foreign companies coming into India have high brand pull but thats entirely based on the technical reliability. Once their service support also gears up, perhaps these companies will then be a force to reckon with. Till that time, the Indian companies have opportunity to strengthen their service network and technical reliability.
So i have a feeling that the Indian Car Industry will see a new models / variant every month going forward. And the Indian companies will look to expand their network base to strengthen their foothold in this country.
Yes, its the brand pull and novelty factor. These vehicles are good but so are scores of others that are their in the market and that also in the same segment. Why aren't people going for those? Gone are the days when a brand will run successfully for more than a decade and still hold its novelty factor. These days, a model / brand becomes old / jaded only after 6 months - 1 year of successful running. This is a disturbing trend indeed. Companies will then look to recover the costs in shorter period, thus hitting the price accelerator a bit hard. Old car market will revive though and contribute a lot more to the annual car sales market. Its not a fancy world as you can comfortably find 2010 models in the used car domain now in the 3rd quarter of 2011. Its good for people who need a vehicle but cannot afford a brand new vehicle. According to industry estimates, the used car market, which is currently around 18 lakh units a year, is expected to clock anywhere between 20% and 25% growth in the next five years, vrooming beyond the 40-lakh mark by 2015. Of this, the organized sector is likely to clock a 35-40% growth. This exposes one thing for the auto manufacturers - bring new models into the market as fast as possible. Else they will stay behind.
Its a situation like this that challenges the brand pull of a company. Maruti Suzuki, by virtue of a string of successful products in the past, still manages to maintain that pull in the market. New 2011 Swift, even though its not hugely different from the previous one, managed to garner some much-needed support from public. Whereas Mahindra Verito made huge waves in the market but the final response was pretty lacklustre. Technical reliability and service support are two main things that go towards building a brand. Foreign companies coming into India have high brand pull but thats entirely based on the technical reliability. Once their service support also gears up, perhaps these companies will then be a force to reckon with. Till that time, the Indian companies have opportunity to strengthen their service network and technical reliability.
So i have a feeling that the Indian Car Industry will see a new models / variant every month going forward. And the Indian companies will look to expand their network base to strengthen their foothold in this country.
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