Monday, May 21, 2007

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… :)

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