This One's for the Common Log-an

If the Logan's initial (tepid) sales figures are any indication, Mahindra Renault might have misread the magnificently peculiar Indian car market with their super-sedan.

The Logan's raging success in other developing markets might have caused Mahindra Renault to believe that an identical strategy would hit jackpot in India as well. Alas, ET reports quite the contrary.

My take is that the Logan's challenges are three-fold:

First, in the markets where the Logan has been hugely successful, it has been positioned at an out-an-out budget sedan. In India, however, we define 'Budget' price-points very differently. Anything in excess of Rs 5 lac does not qualify for that classification. Between Rs 4.75 lac and Rs 6.44 lac, the Logan, then, is the budget sedan at a non-budget price. (Sure, there is the base-model 1.4 petrol that goes for Rs 4.28 lac, but its got no power steering - we can comfortably rule that out of most people's consideration set.) India's pecularity, then, erodes the Logan's only real USP - price.

What is worse, is that it is a very obvious low-cost vehicle. Of more significance is the fact that the styling of the car has taken a massive hit in an effort to cut costs. So all the door handles are identical, the car is boxy-shaped and defined by straight lines, the windshields have no curvature to cut costs further. Indians don't seem to like that kind of obvious, in-your-face cost-cutting. Especially not the sedan buyer. The three-box is a thing of some prestige here. Correspondingly, a sedan-buyer expects some jazz. Maybe not spectacular bling, but surely not heartless 'frugal engineering' either.

Second, the competition. I'm sure Mahindra Renault would have had a keen eye on a very formidable opponent - the Tata Indigo. The Indigo is a good-looking (well, against the Logan…), economical, comfortable piece of machinery. Sure, there are quality issues and the panel gaps are sometimes embarrassing. But at the end of the day, it's still not an 'obviously cheap' three-box. And yet, is fairly cheap. The Indigo shares a lot of components with the Indica and the Marina, and that only pulls down the cost of manufacturing a new car a wee bit further. Inherently, Tata Motors is extremely price-competitive, and this only adds to their strength. Numbers say that the top-of-the-line Indigo costs Rs 5.44 lac (Rs 5.96 lac for the DICOR). The bottomline is that the Logan looks like a cheap sedan that is not so cheap, and the Indigo looks like a not-so-cheap sedan that's fairly cheap. It's a little bit like potato cheaps and banana cheaps, but never mind…

Lastly, the Logan's biggest battles, however, are with itself ("The greatest battles lie within!"). Even before the Logan was launched, there were many tales about its spectacular success flying around. It was a fairly well known (even powerful) brand in India even before the first car rolled off the assembly line. However, the powerful brand associations had to do with 'budget', 'stripped-out', 'basics' and 'bare bones'. All that has stuck on - in fact, it has only strengthened further after the press exposure the car has received in the recent past. Unfortunately, all those adjectives don't go very well with a price tag in the high-five, low-six lac range.

Mahindra Renault is trying hard to shake that tag off. That possibly explains the Logan's strange positioning - it is now 'India's first wide-bodied sedan'. I'm not sure if anyone wants a wide-bodied sedan, really.

It is, perhaps, too early to write the car off and crucify Renault Mahindra. Sholay started off slowly too, for starters.

The Logan might just end up discovering something about itself that it never knew existed. India does that to people… :)

Limitless Limited Editions

Yes, it is a competitive market, margins are thin, customers are hard to come by, a few players dominate ruthlessly and all that jazz. But what exactly tells GM that 'Limited Editions' are the way to go?

GM and Ford are the manufacturers most guilty of churning out unlimited limited editions for their (perhaps slow-moving) models. At various points during its lifecycle, I recollect having seen the Optra in its various avatars - Royale, Elite, Max, Platinum. At one point of time, if my memory does not fail me, there were two limited edition Optras on sale at the same time :)

Ford is equally guilty of burdening customers with an endless array of 'Anniversary Editions'. The story goes back to the good ole days of the Ford Escort. I was still a teenager in shorts and an 'Anniversary Edition' with plasticky wood on the dash instead of cheap plastic baffled me even then. More so now. Fresh in my mind is the thoroughly tacky job that they did with the Fiesta 1.6 - the go-faster 'Le Mans Stripes' across the length of the car, et al. Ha-ah!

The charm (and efficacy) of a 'Limited Edition' (lets just call them LEs for convenience sake) is derived directly out of its exclusivity and desirability. In that case, LEs must ideally be born out of events of some significance, rather than at the whims of over-worked (and overtly desperate) marketing professional. Obviously, a little too much is a little too bad. Which means that a little more thought must go into designing an LE.

Ford and GM are (for now, at least) making it look like a simple job. Slap a commemorative (commemorating the first anniversary of the CEO's wife, for instance) plate and add a dash of jazz (tacky will do just as well, thank you). That's 'Slapdash', just in case.

I wonder why Honda is not doing LE Accords with cream leather instead of black and shiny alloy wheels instead of the factory-equipped ones. Perhaps because they sell enough units without resorting to these tactics?

So why does GM launch an LE Optra every month? Perhaps because it can't sell enough Optras otherwise? Essentially then, GM is trying to be pushy with a product that is not as good as its competition.

Most of those men who are spending Rs 8 lac on a brand new car are smarter than you and I would like to believe, Mr General Sir. Get that fact stamped in your mind, and we'd be doing far bigger numbers without changing the colour of the trim from 'Ebony Black' to 'Mahogany Brown'.

Mid-sizers slow down

Mid-life Crisis

India is a big hatchback market. But India has never been a ‘big’ hatchback market. Big hatchbacks that mustered up enough courage to tread into territory dominated by three-boxes have never had it easy. The Getz, for instance, has found the going extremely tough because it is priced very close to the Ford Ikon and the Hyundai Accent. Because no one buys a ‘small’ car for more than five lac rupees when one can buy a ‘big’ car with a ‘big’ boot.

Big boots, of course, translate into ‘prestige’, ‘position’ and ‘oh-he’s-got-somewhere-in-life’ (I wear size 13 boots, but it does not seem to help). Anyway, big hatchbacks translate into ‘oh-look-the-fool-went-and-bought-a-small-car-for-six-lac-rupees’.

A recent story in the Economic Times, however, points out that the mid-size segment is bearing the brunt of changing consumer preferences.

In this new segment are the likes of Swift and Getz, plus the relaunched versions of Indica, Wagon R Duo, Alto and the new Zen Estillo. These are now serious alternatives for buyers of the A3, or mid-size cars who appear to find greater value in the top-end compact cars than the bottom-end mid-size cars like Indigo, Esteem and Accent.

Well yes, the mid-size segment has moved slower than both the A+ and the C- (if I may) segment this year. But I’d rather attribute it to two major reasons, rather than shifting buyer preferences.

One, one segment either side of the mid-size segment has witnessed a flurry of activity in the past year, while the mid-size segment models struggle with technology and styling a generation old. There are fully-loaded variants of contemporary hatches like the Swift and the Getz priced very close to the entry-level mid-size segment. And there are stripped-out, bare-basic variants of the Fiesta and the Aveo waiting to nibble into the Accent’s and Esteem’s market.

Two, last year’s budget was kind to small cars (hatchbacks, for all practical purposes). Import duties slashed on small cars meant that there was a mild rush amongst manufacturers to hatch their hatchback plans earlier than they had initially planned. Mid-sizers seem to be the ones to bear the brunt. The segment is on auto-pilot; it has seen almost no activity in the last year or so. The Esteem, Accent, Indigo and Ikon dog along. To live one more day.

Will things change? It depends on what the FM does this year in the budget, really. If the differential duty regime in favour of small cars is abolished, we’ll see a dash of contemporariness added to the mid-size segment, and us Indians will be back to our old love affair with cars with boots.

Rollover Airbags

Rollover and Sleep

It’s the old ‘strategic’ decision that needs to be taken – build rollover test facilities, or invest in technology to prevent rollovers in the first place.

GM seems to be doing the former. Millions of dollars have just been pumped into a new state-of-the-art rollover crash testing facility at Milford, Michigan. By 2012, GM intends to have rollover-enabled airbags standard on every vehicle sold at its dealerships. Not ever model, mind you. Every single vehicle.

DaimlerChrysler, on the other hand, is going all out to get to the root of the problem. It is investing heavily in technology that will make sure that silicon chips are buzzing away under the hood, ensuring that you don’t crash in the first place. In come Night Vision (started off as standard on the S-Class, and now standard on the E-Class as well), and a peculiar device that will help drivers combat something called ‘microsleep’. (Obviously, Mercedes’ marketing department is taking its job beyond giving fancy names to future-spec technology – now they have human sleep patterns on their radar)

On the one hand, then, a cash-strapped GM is pumping millions into devising technology that will get to work once a crash has occurred. On the other hand, a somewhat crisis-facing DaimlerChrysler is pumping millions into fine-tuning silicon wizardry that won’t let crashes happen in the first place.

Make no mistake, though: GM most definitely also has concurrent programs under which its R&D scientists pore over reams of data to ensure that your car does not crash, and DaimlerChrysler’s R&D ‘Herr’s are doing their bit to put air balloons everywhere in your car. It is just that on a broad level, the approaches that both manufacturers are following with respect to developing gadgets related to safety are very different from each other.

What works in the good old world then? A little bit of both, I’d say. Till we come to a point where DC’s technology is suitably affordable, and rollovers (and crashes) are a thing of the past, we’ll have to make do with what is churned out of GM’s labs. Short term bets on GM, long term ones on DC.

Then, of course, there are the ‘fringe’ issues. Will GM be selling any cars all in 2012? Will DC have recovered from its quality nightmares then? Will there be any cars at all? Will they be traveling fast enough to rollover? Then again, when cynicism starts to creep in, it knows no heights (or depths, rather).

Satellite Radio - In-car Entertainment

Satellite at the End of the Tunnel

In the hoo-ha about in-car entertainment systems (that sometimes cost as much as the car itself) are we forgetting a cheap, reliable and effective entertainment medium? Radio? Think ‘Satellite Radio’ and it will start to make some sense.

WorldSpace Satellite Radio set up shop in India a couple of years back. Their start was dull, and customer response was cold, to say the least. Since then, of course, they’ve pulled up their socks, understood the way the Indian market works, put their product/service package through a couple of price corrections. Bingo! WorldSpace is flying off the shelves. A basic receiver costs about Rs 1500, and subscription to the service is pegged at a reasonable Rs 135 per month – for a bouquet of 40 channels.

The catch is that WorldSpace in its current form can’t be used in your car. Even if you decide to carry the receiver around with you – not the best idea then, but for penny pinchers, everything goes. The problem is that the receiver needs to be in the ‘line-of-sight’ of one of three WorldSpace broadcast satellites up there in the sky. Which means that as the car moves, the antenna would need continuous reorientation to ‘see’ the satellites. Perhaps someone could design a little motor-driven system that would reorient the antenna as your car swooshes through the city. I am not sure that that is feasible, though.

The other alternative is to tweak the transmission-reception technology itself. Which is what XM Satellite Radio in the US has done. And that makes it very popular amongst the car-set (a younger kin of the jet-set)! No wonder then, that this year American Honda will now be bolting in XM Satellite Radios into over 650,000 Model 2007 Hondas.

American Honda and General Motors had pumped in funds into XM when it was just starting off. For good reason too. Today, Honda and GM own significant stakes in XM Satellite Radio (which itself was owned by WorldSpace till a few years back). That gives them access to XM’s latest technology as well as the option of blocking use of XM’s latest technology in competitor’s cars. Bear in mind that GM and Honda together sell command a market share of close to 38% of the US market. Moreover, XM is one of just two satellite radio service providers in the US. The numbers start to make some sense now (this has been my traditional ‘grey’ area).

The Satellite-Radio-Trend has just about started catching on here in India. WorldSpace is managing to keep its head above the water, while tweaking its strategies to penetrate the market more effectively. They have plans for an automobile receiver, which they say is under development. Our manufacturers would do well to look at pumping the spare cash they are sitting on WorldSpace Satellite Radio.

Manufacturers would want to assist WorldSpace with the R&D of the automobile receiver, bringing their own domain-specific know-how to the table. The benefits as I see them are manifold. Exclusive access to cutting-edge satellite technology, to start off with – manufacturers with a stake in WorldSpace could start off maintaining the exclusivity of the product/service bundle, turning it into a significant point of difference in a market that is turning hyper-competitive by the passing minute.

The second step in the evolution would be to make the receiver available (under license, perhaps) to other manufacturers as well. This would give WorldSpace the required numbers to drive down costs – the stakeholding manufacturers continue to source the receivers at a mighty discount, mind you.

Eventually, of course, prices (of the receiver, and more importantly, the service) will be driven down by volumes to a point where it will become feasible to let customers buy the receiver off the shelf (at their local Reliance Retail Megastore).

Effectively, this little differentiator will, in a few years after launch, turn into a feature that might become indispensable in an automobile – allow me a bout of conceited jargon-brandishing – a ‘Point-of-Parity’.

That would mean that the time is ripe for our original stakeholding heroes to roll out the next evolution of the satellite radio application – a satellite based navigation-cum-rescue system (which they had been developing with WorldSpace through these past few years). And then follow the same cycle with this one as well – maintain exclusivity, license to other manufacturers, drive costs down, sell it off-the-shelf. The possibilities, like the evolution, can be endless.

Satellite applications for cars are big money in the US and Europe (primarily radio and navigation-cum-rescue systems). India, like in most other aspects, holds immense potential for something of this nature. But like almost everything else that sells well in India, these applications have to be simple, elegant and most important of all, phenomenal value.

Those who have their finger on India’s pulse invariably make it big. Let’s see Indian manufacturers put their money where their finger is!

PS: One man who would know whether the Indian satellite industry’s evolution is at a stage where it can support the kind of explosive growth that is waiting to happen, is here.