Showing posts with label Hyundai. Show all posts
Showing posts with label Hyundai. Show all posts

Saturday, November 10, 2012

MARUTI, HYUNDAI: COMPACT CAR STRATEGY

With new entry compacts, Hyundai & Maruti are out to prove they are ready to fight the Rs.1 lakh car

If A-segment sales are anything to go by, that assumption does not appear unfounded at all. According to SIAM, Maruti 800, the lone A-segment player, sold a dismal 5,470 units in January 2008, finding itself at a thought provoking seventh spot in terms of sales! Evidently there is an average fall of a whopping 25-28% in the monthly sales of the product and the segment is clearly not ready to sustain more new players. Hyundai’s strategy to bring in a sub-B segment product instead, could be a well though out strategy as sales in this segment are the present volume drivers. Hyundai, like Maruti, could also be concerned about eventual threats on product quality that might come associated with an ultra-cheap product playing on very low margins. “Hyundai does not believe in providing a lower price point only. Instead it seeks to offer value, reliability, latest technology and a great ownership experience., confirms Lheem.

Now that Hyundai has joined forces with Maruti Suzuki to combat the evident threat from Tata’s Nano, the field is left wide open. With it’s positioning as a valuable product, if Tata’s Nano manages to win Indian hearts, both Hyundai and Maruti could find themselves back to the drawing boards. The volumes are mind numbing and none of the three players can afford to err in market analysis. For now it is the battle of the ‘new’ entry compacts. May the best ‘strategy’ win!


Source : IIPM Editorial, 2012.

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Tuesday, July 31, 2012

Scrutiny-CAR THEFTS: PREVENTION

As of 2010, India was home to more than 40 million passenger vehicles, but has also experienced hundreds of thousands of cars getting stolen every year. Estimates show that on the whole, the stolen cars are worth more than Rs.10 billion. According to official estimates, only 10% of all stolen car are recoverable (recovery of high valued cars is next to impossible, as parts of the car are sold in the black market). Maharashtra, Delhi and Gujarat report the maximum car thefts.

Making GPS installation compulsory during manufacturing would solve the problem of recovery of cars to a large extent. GPS devices would enable the owner and search bodies to locate the movement of the car on a virtual network. Few owners voluntarily get a GPS device installed in their cars. In many countries, installation of immobilizing devices are compulsory during the manufacturing process itself. Since 1998, all cars in Germany are fitted with this device. Similarly, UK and Finland made it compulsory in 1998 while Australia and Canada made it compulsory in 2001 and 2007 respectively. Back home, companies like Maruti, Honda, Toyota, Hyundai and Ford are installing anti-theft devices in select models only.

A legislation making such anti-theft device installation compulsory – much like how insurance is compulsory – would enable security agencies to free up precious time they currently waste on recovering stolen cars. The cost of such devices – ranging around Rs.10,000 odd for GPS trackers – is too little when compared to the time, effort and investment saved.


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Monday, July 9, 2012

Second time lucky but determined not to lose first spot again

When GM went broke four years ago not many gave it a chance to spring up a fight and come back from financial rehab. Those Cassandras are now eating their words as the former lumbering auto giant strikes back with a vengeance.

A lot has changed for General Motors (GM) since it went adrift in rough seas that threatened to dash its corporate ship against dangerous waves just four years ago. In the summer of 2008, about a year before GM became a ward of the state, its chief executive Rick Wagoner was desperate to catch at straws in a futile bid to avert his company from going belly up. The financial results for the 2008 spring quarter left no one in doubt about GM’s bleak prospects: a $15.5 billion loss, its third worst in a century. GM’s revenue in North America had fallen $10 billion — a breathtaking 33% — from the year-earlier quarter. And for the first time, after donning the mantle of being the No. 1 car maker in the world from Ford in 1931, GM lost that coveted position to Toyota. In the midst of a significant downturn in the American and global economy, Toyota raced ahead of GM in global car sales, selling about 620,000 more vehicles in 2008 than GM’s 8.35 million.

But the worst was yet to come. Finding itself at the end of financial tether, Wagoner flew into Washington D.C., cap in hand, to ask for $10-12 billion of easy loans from the Federal government to bail out his cash-strapped company. But his demeanour - flying in a private luxurious jet at the company’s expense - rubbed many in Washington the wrong way. Sensing that GM was fast on its way to go kaput, the Obama administration had the good sense to push through some painful but imperative decisions. In quick time Wagoner was booted out and the doddering company was offered a lifeline in the form of government bailout funds after being put under bankruptcy court protection. GM - which hadn’t made a profit since 2004 - declared in its filing that it had $172 billion in debt and $82 billion in assets. Its market capitalisation, having plumbed the depths of investor confidence, stood at $2.21 billion in March 2009 when Wagoner departed. The value of GM stocks had cratered to $3.62 as against the trading levels of above $70 when Wagoner had joined as CEO in June of 2000.

Wagoner’s exit did not exactly move GM away from over the hump. Through the initial months of restructuring, the company became a revolving door for a succession of CEOs who drifted in and out without leaving any mark or making an impression. It was only after Daniel Akerson - GM’s fourth CEO in just under 18 months - arrived in September 2010 that the company once again rediscovered it automotive mojo and competitive gene. Since then the automaker, which had lost about $100 billion in the years before its 2009 bankruptcy, has been consistently profitable. In the latest quarter (Sept-Dec. 2011) for which results are available, GM made about $1.7 billion in profit, besides having already repaid $24.1 billion of the $49.5 billion in federal government aid it had received. But the biggest icing on the cake was that GM’s worldwide sales rose 7.6% to 9 million vehicles in 2011, helping the auto major to once again grab pole position as the world’s No. 1 car seller (a position it had ceded to Toyota in 2008). That’s surely a remarkable achievement for a carmaker that looked completely down in the dumps until two years ago.

The uptick in sales came about on the back of the strong showing by its flagship Chevrolet brand, which sold a record 4.8 million vehicles last year (even more than total sales of brands like Nissan and Honda). European carmaker Volkswagen was the second-largest seller of vehicles worldwide whose sales rose 14.3% to 8.2 million vehicles followed by the likes of Toyota, which expects its 2011 sales to come in at around 7.9 million vehicles, down about 6% from 2010. Analysts attribute GM’s recent swell performance to its strong US and China operations. Being the two biggest markets for carmakers today, GM has done well to wedge the China market open in its favour by collaborating with its local partner (SAIC Motor Corp), a strategy that has paid off handsomely. In 2011, GM sold more than 2.5 million vehicles in China, registering an 8.3% increase from the previous year. In its North American home market, GM clocked sales of over 2.5 million vehicles at a 13% growth trajectory last year.

According to Jeremy Anwyl, Vice Chairman of Edmunds, an automobile industry information website, GM was lucky to have come out of its bankruptcy and consequential restructuring at a time when global market conditions were once again turning favourable for the automobile industry. “The bankruptcy allowed GM to cut costs and fundamentally restructure its operations from a cost and incentives perspective. GM came into a growing market with a lean inventory and, at the same time, it introduced impressive new products such as the Chevy Cruze.” What also helped GM pip Toyota to the post was the fact that the Japanese car maker could not exploit the tailwind of growth and the resurgence in the global car market as it was badly kneecapped by supply-chain and production glitches at its plants, arising due to the double whammy of the tsunami and earthquake that struck Japan early last year.

But despite making the most of the opportunities in the past year, the real test of GM’s ability will be to consolidate and expand its market share without diluting its profitability. With Japanese car makers like Toyota and Honda emerging from the shadow of last year’s contretemps and players like Volkswagen and Ford stepping up on the throttle, can GM continue its alpha dog run in the industry? Already, Toyota has come out with its sales forecast of 8.48 million units for the current year, Volkswagen is pulling out all the stops to top the industry league tables by 2018 and Ford is on track taking its One Ford strategy to the next phase that might give it a fair shot at becoming market leader. In other words, GM is up against the most competitive automobile market in its history and its ability to continue delivering stellar results is bound to come under increasing strain. “Ford, VW and Hyundai are some of the toughest players there are and they lead by dint of their product line-ups. GM has to push harder to get ahead of the curve to compete head to head with these companies in all market segments globally,” says Laurie Harbour, President, Harbour Results, an industry analyst.



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