What’s pulling Indian Automotive companies down?

In news is the ongoing bid for Ducati in which Bajaj auto is a front runner. There are many signs of Indian Automotive companies flying high. Since the acquisition of Land Rover & Jaguar brand by Tata Motors from Ford Motors, there has been continuous takeovers or partnership with global brands. Mahindra, Bajaj, Hero, TVS and many other Indian automobile companies are on continuous global expansion through the route of Mergers & acquisitions. But there is something which is lacking. Indian companies are still struggling to compete with their global counterparts.

Good Machines but failed to make Presence

Dominar, Pulsar 200 NS from Bajaj auto, Himalayan from Royal Enfield, S Cross from Maruti Suzuki all failed to make a market presence. All these products are good in terms of technology & features. Also, it’s not that these companies are facing a downturn or losing the competition to foreign players. These companies have a long range of successful products. But however, all such products are in the category of low to medium range models in terms of Cost, engine size or performance. When it comes to quality, performance or luxury Indian automotive companies are definitely not at the top. Their high-end models are failing. The first such big flop was Kizashi from Maruti Suzuki Ltd. Although there are many reasons for these models to got flop, two specific reasons are common for all.

Tag of Low Cost & Low Quality

When a consumer pays for a premium product, what he expects is a premium product in terms of quality, performance & service. A 400 cc bike or a premium crossover at above 10 lakh price from an Indian manufacturer failed to attract Indian Consumers. There are two reasons for these both reasons being different but also related in logic. First and more important is “Brand Image”. Premium Consumers don’t want to be in the same category of regular category product. They are buying a premium product for a premium feel. They all altogether need a different brand which gets them recognition of a premium Brand owner in society. The second reason is of quality. Whenever Indian players try to make a high-end product, they tend to compromise on quality to keep the price low. Consumers in this category do not mind paying little extra money for a better quality.

One Drawback leads to other

As said above two reasons seem different but are related. Indian manufacturers know & understand their brand image. Therefore understands that a high-end product under their brand tag at a similar price to that of foreign brands will not be able to attract consumers. Thus here they make a somewhat their second mistake. By lowering the quality or service or both to achieve lower cost. This makes situation further worse & there are hardly any willing consumers under such circumstances.

What Lies Ahead

The good thing is Indian automotive companies are aware of this & they know the solution. As done by Maruti Suzuki a new Brand is a solution.  Maruti Suzuki made a new brand “Nexa” and brought their premium products under Nexa. Nexa has different service centers. And thus owners of products from Nexa will get a different service quality than a regular Maruti Suzuki service center. Though the products are from the same manufacturer they resemble different brands. Indian Companies need to develop a premium brand image for their premium products which can compete with their counterparts. A premium product is a premium in all sense – Brand image, quality, performance, and features. Once a good brand is developed the high price for a high-end product will not be an issue provided performance & quality are good.

It’s hard to make premium products harder to make a premium brand but the rewards after in terms of profit margin are also great.

Avesh Punia

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