Detailed variant-wise pricing, benefits of price-cut and possible long-term negatives of such price-cuts are some of the things covered in this post-mortem analysis of the recent price-cut of the Ford Aspire and Figo.
While Maruti Suzuki and Hyundai have hiked the prices of their models, Ford India went against the tide, announcing a price-cut of upto Rs 91,000 on the Aspire compact sedan and Figo hatchback. Both the models have been unable to spark consumer excitement to the tune of the the company’s expectation. However, Ford India isn’t the only one facing challenges in the compact sedan segment. The entire segment has shrunk by 17% in the January-June, 2017 period, with some models de-growing by close to 50%.
All said and done, the customer can now buy a Figo or Aspire for much lesser money without losing on any features. Hence, we bring to you a detailed break-up of variant-wise costing of the Aspire and Figo after the price-cut. In addition, we tell you why such price-cuts might not be good for Ford in the long-run and how were they made possible.
At the new prices, the higher variants of the Figo and the Aspire now offer better value to the consumer as the price-reduction hasn’t resulted in any features being removed. In some cases, the Titanium version is at par with the top-end variants of some competitors, making the cars a bargain at this moment. If you love driving, there couldn’t be a better deal out there in the market today, considering Ford’s offering at lower prices.
Why such a huge price reduction?
We all love price-cuts! After all, a penny saved is a penny earned so all’s well on that front with this price-cut. However, what about those who bought the car a few days back only? Wouldn’t such customers feel cheated? Wouldn’t these customers not want to buy a Ford vehicle again?
These are some of the many questions we’ve received from the readers of Express Drives as Ford India hasn’t announced any compensation for such customers. The reality is that most customers won’t feel cheated because the Aspire and Figo were already being sold at discounted prices, the difference being the dealer was the one offering the discount. Since the two segments in discussion are over-crowded, most sales were discount-driven and Ford India like any other company followed suit. The only difference now is that the discount is being offered directly by Ford India and not the dealer.
Now let me answer what brought about such a huge price-cut. First and foremost, every business tries to maintain some extra margin on new products to enhance future competitiveness. The car industry is no different so it’s possible that Ford India has given up some of its margin in favour of a lower-price tag but the company has made no official comment regarding this. What we do know is that the company has benefitted from economies of scale due to exports to Europe, which has helped the price-reduction. The company expects that along with lower-prices, afeter-sales service initiatives such as Ford Service Price Promise will not only boost sales but also help increase the trust factor for customers.
WATCH:Â Ford Announces Price-Cut Of Upto Rs 91,000
The possible fallout of such price-cuts
Every coin has two sides. Yes, it’s a cliched saying but holds true nevertheless and while the Figo and Aspire price-cuts have positives, there are some negatives too. That is despite being them being one of the best cars to drive in their respective segments. A few months back, just after the launch of the Maruti Suzuki Vitara Brezza, Ford India slashed the prices of EcoSport by up to Rs 1.12 lakh in order to maintain the competitiveness of the compact SUV. The result so far has been good for the company as the EcoSport since then has been consistently selling between 4,000 and 5,000 units a month. Now while this may seem like a win-win strategy replicated for the Figo and Aspire, things are very different in case of both vehicles. The EcoSport benefitted from the massive order backlog of Vitara Brezza, which in some cases went up to 9 months. With so long waiting periods and lack of options, the EcoSport with a price-cut immediately struck a chord with potential customers.
For the Aspire and Figo though, things aren’t similar, at all, that is unfortunately. There are simply too many options in both segments and with the exception the Baleno, no model commands a long-waiting period. Baleno’s waiting period too will come down shortly as Maruti Suzuki is ramping up production. Also, historical data clearly suggests that price-cuts alone cannot revive the fortunes of a non-successful model. Temporary spikes work well for e-commerce firms such as Amazon and Flipkart but not necessarily for car companies, which maintain one of the longest relations with the consumers.
The other psychological barrier is what I explained above – a sudden price cut but no compensation for earlier customers. While Ford has been offering discounts indirectly earlier, I do not see the company yet telling the same to the consumer. It’s almost impossible for an average customer who hasn’t bought a Ford earlier to understand the discount isn’t as sudden as it sounds. If not educated, word-of-mouth could lead to people considering such huge price-cuts on a consistent basis as desperate measures, although they aren’t actually.
Another risk Ford faces, although it might not be a risk necessarily, is the increased interest by cab operators after the price-cuts. If this happens, the company might gain volumes for now but the brand-popularity among private consumers might get affected adversely.
All these are things that Ford officials might have contemplated earlier but these are thoughts that I picked up from discussions with colleagues and friends who aren’t associated with the automotive industry. For such people, who make up the bulk of consumers, Ford India should focus more on explaining the reasons and background for the price-cuts. Unless this can be done effectively, consumers might remain skeptical in trusting the brand and that too for wrong reasons possibly as explained above. Ford India is still trying to recover from trust issues in the past and in a brand-building stage, taking extra care of the things listed above could go a long way in achieving the desired growth.
