Watch-and-wait new strategy for car makers

Written by Roudra Bhattacharya | New Delhi | Updated: Nov 17 2013, 15:57pm hrs
Car Makers'Car maker hopes to make the customer wait and not make any decision in a hurry.' (AP)
The sales are slow and competition is tough. For car makers right now, only strategy sells. From product innovation to massive discounts and numerous schemes, the aim is oneto get the customer hooked.

One such move is to pique the customers curiosity much before the car is actually available, so that buyers know what to expect and companies also get time to gauge the market reaction to new cars much before the actual launch.

And, it has worked, at least for cars like Maruti Suzuki Ertiga, Ford EcoSport, Tata Safari Storme, Datsun Go and Chevrolet Enjoy, which were showcased much before hitting the road, sometimes even two years earlier.

Market leader Maruti Suzuki did this way back in 2010 with the RIII concept to gauge the public perception of a compact seven-seater MPV the car was launched over two years later in April 2012 as Ertiga and was a huge success both in India and Indonesia. Maruti did it again with the XA Alpha compact SUV concept displayed at the Delhi Auto Expo 2012 this car is expected to be launched in 2015-16. Ford did it with EcoSport. The compact SUV was first shown at the Delhi Auto Expo 2012 and launched a year and a half later in June this year. Other products to have followed the strategy are Datsun Go, Chevrolet Enjoy and Tata Safari Storme even Hondas Mobilio MPV is likely to be showcased at the Auto Expo early next year, but is expected to be launched only a year later.

Gaurav Vangaal, automotive analyst for light vehicle forecasting at IHS, told FE that showing a new product much before its launch helps a company in right pricing of the product and in further deciding what features may be deemed necessary in the segment. Companies are leaving no stone unturned to gain market share. By showing the product before launch, companies can judge the market response, take feedback and read the customer expectations from the product. That helps them minimise risk and reap maximum benefits, he said.

The initial market response on this kind of strategy has been successful; the success of the Ford EcoSport is one example. Buying a car is an emotional factor for an Indian family; a consumer has to stay with the same car for a long period. So, the car maker hopes to make the customer wait and not make any decision in a hurry, said Vangaal.

Added a senior marketing executive from one of the top five car makers, Different companies have different strategies. Sometimes you want a customer to wait for your product, but I feel the main idea behind showcasing a future model would be to get a sense of primary competition, styling and price range. Majority of Indian buyers for mass products are conservative and they want to see the product first.

However, some companies like Hyundai, M&M and Volkswagen have chosen not to follow this strategy. In order to keep the surprise element and not to let the competition be aware of its new models, these companies prefer showing their new cars only at the time of launch. Industry analysts feel that not showing the model may lead to the loss of potential buyers, but, on the other hand, companies may be able to guard its current range from any impact.

Between April and September this fiscal, passenger vehicle volumes have been down 5.15% at 12 lakh units, with no significant improvement seen from even the festive period of October-November.