Wednesday, July 21, 2010

TEMPTATION OF BEING SMALL

Traffic jam is not known but the frustration of each day in traffic jam is always new. As Indian infrastructure made a massive make over in the past couple of years the Indian transportation system also made a turn around. Host of flyovers and broad road structures have been introduced and modified to increase the speed of Indian corporate growth. Long Distance is no longer a concerning factor was ruled out earlier by Information technology but small distance always remained a matter of concern. By one click communication was easy for long distance but short distance physical communication was poor due to the road structures of India. Now where ever you look around you will find host of new polished shinning flyovers making the short distance a comfortable one. More than the roads and avenues of journey the automobile have made the journey not only comfortable but very cheap journey. Cheap not in the context oil prices ,but the vechiel of travelling. The small car space is the new mode of cheap journey.

In early 90’s small car replaced the concept that cars only belongs to rich people. They created a mind sight where cars were being dreamt by common people travelling each day by Bus and other troublesome modes. Maruti was the name of the company at that point of time which created and changed the consumer mindset. Changing the mindset was the big game which changed the fortune of Indian consumers who got the privilege option of dreaming and converting dreams of having their own car. A decade later the same theory again got recognized but by the world car manufactures across the world and identified India as the hub of small car consumer market.

Today the competition is fierce and in the coming days it will be very hard to say by gazing at the crystal ball about the future of the domestic car companies in India. Small is the only concept being produced in factories and companies are just feeling impossible to increase their market share at a rocket speed. We posted slogans of oil price hike and couple Bandhs rattled the normal life of the citizens across India but where is the real affect of the oil price hike. Cars are being sold just like pancakes consumed by school going children’s.

But if we completely ignore that big cars and luxury cars are out of the street race, then it would be quite rude matter. Big cars and luxury cars are finding innovative ways of selling their brands. If we take the entry-level of C Class Benz, it includes a 0 per cent interest rate for a 3-year loan or a low EMI of Rs 29,299 for a five-year period. Though the on-road prices of these cars are well over Rs 35 lakh, schemes like these do bring the vehicles within the reach. BMW has its own finance arm and that gives us more flexibility to alter the terms of the car loans. Small cars are a challenge but Big cars are not going to easily accept the defeat. Each day we find new small car concepts are flushing the Indian markets. Very recently Mahindra and Mahindra is set to launch its mini Xylo to grab market space in this segment. Fiat India is gearing up to make a splash of its own in the country’s burgeoning small car market by launching an India-specific car in 2012. If we look at the Industry growth numbers of automobile space we will find the real affect of oil price hike.

CAR SHOPPING.
Car sales rose nearly 31% to 141,184 vehicles last month, while commercial vehicles jumped more than 44 percent to 52,211 vehicles, according to data released by the Society of Indian Automobile Manufacturers. One of the prime reason for such a growth of the sector despite of fuel price hike is that family income is rising rapidly, putting a car within reach of millions of new consumers in India.
• If we look at the investment mindset of car makers in Indian market we find Audi, the premium brand of Germany's Volkswagen group, has earmarked 30 million euros to invest in India till 2015 for technology and product upgradation.
• GM India is arming itself with a whole new battle-plan for investment in Indian market with an investment of around USD 100 million.
• Investments by French companies in India are expected to touch Euro 10 billion (around Rs 60,000 crore) by 2012, and would be focused on automobile, energy and environment sectors among others.

So its well clear than India will be a pool of funds in the automobile sector and the competition in the coming days will not bring smile on the face of the companies. Domestic companies have to find and compete with innovative ideas and concept to deal with the overseas competition.

One thing is granted that Indian consumers will have new tastes and new demands as they have an never ending income generating force. In other words India possess the highest number of young generation of income holders whose taste and preference are enough to be tempted. What the automobile companies needs to understand is the way of luring that temptation. Just imagine Maruti the company which enjoyed the premium by simply changing the mindset of the consumers and asking them to dream and convert the dream of having a Car in front of their house.
The company which will be able to bring such changes and temptation will enjoy the tough ride with less effort.

1 comments:

Mahesh

Wonderfull Analysis Sir.

I really liked your thought process put in to simple words.

:)

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