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India tough market for foreign automakers

India continues to remain a tough market for global automakers. A lot of them have not been able to crack the Great Indian Code.

This theme has taken centre stage after Times of India reported that Volkswagen may be looking to sell stake and find a local JV partner in India.

This situation for foreign automakers is one of many in the recent times. The previous incident was that of MG Motor selling its 35% stake to JSW.

In this post we analyse few of those bittersweet exits that have happened in the Indian automotive industry.

1. Ford:

Ford entered India in 1995, and exited in 2021, citing accumulated loss of $2B over two decades. Ford’s version of the story is that it was stung by high cost structure, very low market share and strained exports.

Over these years, Ford had only a handful of products that appealed to the mysterious Indian car buyers. Only four Ford models can be considered successful in India-Ford Ikon, Ford Figo, Ford Ecosport and Ford Endeavour.

Ford Ecosport

Of these, Ford Ecosport was a game changer which created the sub 4M SUV segment and was the leader in that segment for a long time. Ford Endeavour remained a second option for anyone buying in the large SUV segment, where Fortuner remains the undisputed leader.

2. General Motors: GM operated in India for almost 17 years, but had to exit in 2017. The India plant was set up primarily to manufacture small cars and cater to an export market.

Its small car ‘Spark’ was a success, but no other products made their mark on the mysterious Indian car buyer. Chevrolet Cruze (Diesel Rocket) was probably the last car that made an impression on the Indian market.

The GM brand later got diluted when it launched itself as Chevrolet and brought in low quality products, such as Chevrolet Sail. That was the time when India’s office cab market was booming. Toyota Qualis was the king and every other automaker was just doing catch-up, GM included. GM had launched Tavera, which was a weak competition to Qualis.

In 2013, GM also got mired in a an emission related controversy and lost its brand reputation among the Indian car buyers.

3. Harley Davidson: HD started its Indian operations in 2009 and within a decade it had to exit from India, citing low sales and a very price sensitive customer segment. However, in 2020, HD re-entered India by reaching a pact with Hero Motorcycles to sell X440, its affordable bike.

4. UM Motorcycles:

This American motorcycle brand had aspirations to take on the Royal Enfield in India. It entered the Indian market in 2016, through a JV with Lohia Motors. However, after UM failed to upgrade its products in line with new emission regulations, the JV fell apart and UM wrapped up its operations in India.

5. MAN Trucks:

This Volkswagen (VW) group owned truck brand had made its entry in to India in 2003 and after 15 years pulled out of India in 2018, citing no improvement in sales and aspirations to focus on premium segments.

So, what does it say about the automakers and what does it say about India?

What does it mean for the foreign (read Western) automakers:

1. Please don’t adapt global products for India.

2. Do your own market and customer research.

3. If possible, look out for a partner and honour the terms of partnership, in letter and spirit.

4. Do not underestimate the local competition. They have grown much bigger, better and are aggressive in gauging the pulse of the Indian market.

What it means for domestic automakers:

1. Thank you for offering high quality products at an appropriate price for the extremely price-sensitive Indian customers.

2. Domestic automakers are able to take up operations of global automakers in India. That instills commendable confidence in Indian leadership.

3. India is a growing market, so we hope the domestic automakers will continue and elevate their dominance.

4. Overcoming the next phase of technology can be a bumpy ride, especially with debate of electric, hybrid, hydrogen vehicles not yet settled.

Thank you for reading!!

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