|Getting Big, the SMALL Way|
Browsing for an article on Mid-scale industries, I came across a new book “Getting to Big the Small Way” by Oracle veteran Frank Prestipino. What left me after the read was the question - Can small changes create big results? As usual I digress off the point and wandered from the topic, this time though to a deeper destination. SMALL … The word reminded me of the new, metaphorically speaking - not so tiny sensation, Tata NANO.
Nano, as I am sure everyone is aware, has received overwhelming response from both the country and abroad; not to mention the infamous domestic controversies. Small Cars have always been the source of profit and base identity for the Indian Automobile Industry. Despite the entrance of luxury SUV and Sedan manufacturers like Rolls Royce, Mercedes and BMW, small cars have ruled the Indian Auto Industry. The Maruti 800 being the hallmark for the industry shall always be remembered as the father of small cars in India.
Globalization has brought about many an Indian Automobile Manufacturers under the world’s scrutiny. These lone warriors, standing tall have caused ripples worldwide and made their presence felt. The quid pro quo of the global phenomenon outside the confines of the booming Indian Auto Industry undoubtedly is Hyundai. This family run, government backed, ‘chaebol’ (Chaebols literally refer to family owned conglomerates in Korea) has caused industrial chaos in almost all major industries globally. Defying all international expansion theories the Hyundai Corporation stands today second only to Suzuki. The aggressive Hyundai ruled the Indian roads with its immensely successful Santro. Small car trend pervading worldwide, Hyundai posted record sales in the U.S. last year. It became clear that the world has accepted the present and future in Small cars, despite heavy odds no less.
More on Hyundai later, coming back to India, the small car segment has also captured the attention of already existing brands like Ford, Chevrolet, and Toyota. Take Skoda for instance, the Czech brand which enjoys only a mid tier image in Europe came to India aiming at the luxury segment (an image it managed to create mind you) launched ‘Fabia’, a small car with semi-premium prices to get a piece of the pie that is the Indian small car segment. Suddenly the unheard of, semi-premium segment started to gain momentum with the launch of the Honda Jazz, Volkswagen decided to launch its iconic ‘Beetle’ in India, this time aiming at the premium segment. Lo and behold! There stood a small car disintegration for all price segments. By the way the VW also launched its Polo recently, very shrewd - Parallel launches of the exorbitantly expensive Beetle for the rich and the humbler Polo for the masses.
That said, in the end with options cometh confusion. What to choose and what not to, has become the unanimous question for the Indian populous. The first thing the average Indian considers is the price factor. The makers have to take into consideration a generic impact of the make on the demographic and Viz-a-viz, the forthcoming economies of scale that they can operate under.
Small certainly does not mean cheap and what needs to be taken into account thus is also the after sales services and the maintenance costs. Rising oil prices is a problem for the average consumer. Cheap cars like the Tata Nano and the Bajaj’s upcoming venture bragging the one lakh tag would need to take into consideration the input and distribution costs, not to mention the safety standards and the competition from other brands. Being big players, Tata Motors and Bajaj Auto have an edge over others owing to their lush financing arms and wide distribution networks. The uber-cheap could bring yet another success and like the scooter could reach deep into the Indian interiors.
Although India has seen tremendous rise in living standards and disposable incomes, it is highly probable that small cars shall be the mainstay of the Indian Automotive Industry for a substantial amount of time. For the ambitious automakers, tis the season of spring and it’s time to enter the swarm. The race is to capture as much of the market as it can which shall essentially, in the end benefit the common man.
As for the Indian Consumer, some call today’s scenario confusion of sorts, I like to call it sheer invigoration.
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