Easy to bring global cars to India but challenges remain

New Delhi | Updated: May 24 2014, 20:17pm hrs
Few years before Sid Makkar (the face in the new EcoSport TV ad) had this wild idea to go to Brazil for his next profile picture, Ford was already ready with its plans to launch theEcoSport in India. Previously, the EcoSport was only available in the Brazilian market and this was the first time that Ford decided to produce its urban SUV in another part of the globe as part of its One Ford strategy.

The evolution of the EcoSport for the Indian market is not a new story for any auto enthusiast at home. At under four metres in length, it could avail of the lower excise duty benefit of Indian regulations but the product had to undergo changes specifically for the Indian market such as right set of engines, features and variants. Keeping in mind the fast changing consumer trends, the product also had to have the capability to add more features, like a sunroof, in the future.

Theres also the Renault Duster, a product that just two years after proving itself in the European market was introduced in India. The Duster received massive response in its introductory year and also helped the Renault brand garner significant recall value in the market.

What is common between both these cars They are global models that have found their way into India in a very short time after their global launches. Gone are the times when the Indian car market was treated as second fiddle with either outdated models or specifically-designed cheaper versions being launched here; as the competition gets aggressive, companies are launching global products here in a bid to showcase the best in their portfolio.

But there are challenges for new players in a market where a few like Maruti Suzuki and Hyundai have cornered a lions share. It is far easier to bring global products, but in a market with low risk appetite it is tough to convince the buyer of their value. Even though both the EcoSport and the Duster received massive media coverage and the Indian youth is seen to be passionate for competitively-priced SUVs and crossovers, they faced production constraints in the beginning due to high demand, both cars had along waiting period due to high bookings, and finally it resulted in many customers shifting to rival models. The focus on exports by both Ford and Renault to benefit from the depreciating exchange rate also hurt the sentiments of the Indian consumer.

What adds to the problem is the perception of high maintenance costs for untested brands (especially European and American) in the mass segment.The Indian consumerevaluates the vehicle on the basis of its resale value and maintenance cost before deciding to buy one. Buyers are not aware of the levels of localisation and they think new brands come with high maintenance cost and non-availability of components after a few years of purchase, which is not exactly true.

Car manufacturers have a major role to play if they want to remove these fears. Manufacturers work hard to improve their services but they have to earn consumer confidence. Word of mouth plays a significant role in Indian auto industry and net-savvy consumers are generally passionate talking about pros and cons of owning the car of a particular brand. Many manufacturers have started offering comprehensive maintenance packages along with a new car, while working on keeping the component price low. Still, they need to work a lot more on customer delight if they want the Indian buyer to walk into their showroom.

- Gaurav Vangaal

(The author is senior analyst, Indian Subcontinent & Australia, LV Production Forecasts, IHS)