Here comes competitor to Tata's ACE

Piaggio, Italy just announced its plans to invest Rs. 350-400 Crores in the next 2-3 years to add new facility in Pune to make 4-wheelers.

Piaggio is already a hit in the market with their 3-Wheelers in the Cargo segment. Their Ape is successful since its launch as Piaggio was able to create a clear segment in the Indian auto industry.

However, lately Tata's have dented its market with its state-of-the-art designed ACE four wheeler. ACE offered better tonnage for the hub and spoke model and higher esteem to the owner who now sees himself as the truck owner not a 3-wheeler owner.

But Piaggio's new plans of entering this segment will certainly make this segment highly competitive. Though many others like Mahindras, Force Motors, Bajaj's have announced their plans for this me-too type product, but none is able to dent the market of Tata's.

Piaggio is different from others. It is the well-entrenched player of this segment and hence Tata's should fear them most.

New Indian Avtaar...

Hero Honda new advertising campaign says it all.

Naye Indian ki Nayi Deluxe Bike.

This positioning of CD Dawn Deluxe does the psycho graphic segmentation of the market. The ad catches the growth boom of Indian Market and highlights:-

Stronger Foundation
Better Opportunities
Wider Horizons
New Wave of Prosperity
New India

Once again this shows that today all the fun is not in leaving the country and settling abroad for the sake of all this. When all the above is experienced by our country, then why to leave it at this time.

Nice way of attaching the product with the emotions....

Why Tata Cars Are Lagging in Quality

Every month Tata Cars are making news by zooming past the last months sales figures. However, where is the quality in their products like Indica or Indigo. Sales figures of Indigo are struggling.

Why is this happening to Tata. Are their customers satisfied. The buyers of Indigo are facing problems from the very first day. Trouble in starting, noisy engine, poor quality of accessories and so..on..

Tata team is hardly convinced about the deficiencies. They have the whole world's reasons to justify. The users opinion is that this is not a finished vehicle. It has been launched mid-way.

Or this could be because of the obsession of Tata Motors with the cost of components. (Please read my earlier article on this).

Whatever is the reason, if customer's voice is not listened the product may not survive long in the market.

If GM Chevy Spark will suffer from Zen Estilo

Maruti made a master stroke by launching Zen Estilo.

Estilo seems to be the blend of Matiz and WagonR. Matiz is still regarded as technologically advanced vehicle and WagonR has proven its performance in the market.

Further Maruti capitalized on the looks of Matiz and highjacked the same .

Now when GM will launch Spark, shape wise it won't be much different from Matiz. Hence, it will fail to come up to the expectations of the customers since the looks would have already been associated with Estilo.

This can be a big setback to GM, who took years in launching the once most successful brand in the Indian Market.

Further, Maruti is always having the advantage, to improve the competitiveness of its brands, of launching the Diesel versions, once the engine is out in the market.

It seems that GM will be struggling to create a position in the market with its Chevy Spark when it will be launched in the market in Apr-07.

This is a classical case of marketing in which Speed is another important Marketing Mix element, which can be ignored only on the expense of losing competitiveness of the brand in the market.

Vrooo..ooming Car Sales in Feb-07

It is really great to note the growth figures witnessed by automobile players in Feb-2007. Maruti sales grew by 60%+, Hyundai grew by 70%+, GM growth was 80%+, Ford statistics was 60%+.....and so on..

This is the time our Finance Minister should have done something to add party to the figures. Industry has been demanding since long uniform excise duty of 16%. Current scenario is 16% in A and B-class segments only. For C, D and above classes this figure is 32%.

If we want Industry to grow more and exports to rise substantially I feel, this duty should be dropped to 16%. Let us see a simple logic. If the prices will be reduced, demand will increase, leading to more production, leading to more players getting attracted to produce the vehicles in the country, giving more job opportunities, leading to the country becoming a base for manufacturing, bringing in new technologies and thus the country gaining edge in the global scenario to make vehicles at competitive prices.

Whether it is because of scale of economies or it is because of the learning curve, we need to have strong domestic base before we can target overseas business. We are now producing substantial numbers in B-segment. Similarly we should produce substantial numbers in C and D class also.

Maruti's Competitive Moves against Tata Small Car

I am pleased to receive some erudite comments from one of the readers. For the benefit of all, I am giving below the comments:-

Some one told me tatas venture is nt going to b successful as
1 lac car is nt viable.. even MARUTI claimed it.. as the auto components part are a bit expensive..

y you said so that car is good for ladies nd girls.. even ladies nd girls
look for expensive cars these days..

Tata's venture will always be criticized by Maruti as for Maruti it is going to be a big forthcoming competition. They will take every step to thwart the success of Tata's small car.

Tata's are working in an unconventional manner by bringing a car around 1.0 lac rupees. To break the cost barriers, it require a real "Green Hat Thinking". They may not be successful immediately. However over a couple of years they will be able to sort out the problems (technical mainly) of the small car and then this car will be loved by everyone.

I remember once reading an interview of Mr. R.C.Bhargava (MD of Maruti). This was published in The Business Week in 1994 (when I was preparing for MBA enterance). He was asked by the interviewer what is the biggest threat to Maruti Suzuki. Mr Bhargava said it is Tata.

I was not able to digest his statement as in 1994, Tata was mainly in to Commercial Vehicles. But after 4 years in 1998, I realized the significance of his statement, when Tata introduced Indica.

Tata's have legacy of launching products which are rarely successful immediately (ACE is an exception). But after 2-3 years of struggle, they tweak their product and then it catches the market expectations. Alternatively we can say that PLC (Product Life Cycle) behaves like this only. At introduction stage, the growth is slow and then it catches with market expectations getting met.

Regarding the target segment of Tata's, I don't have any gender bias. Girls & Ladies also will go for expensive vehicles. However, since theirs will be second or third car in the family, men will compromise on their vehicle cost (sounds selfish on their part, but this is how Indian families behave).