Wednesday, April 27, 2005

Logan, logout?

India is the land of "entry level cars". These are those cars which are essentially small cars and offer either a great price, great value for money and sell for a fraction of say a Corolla or an Accord. First it was the Maruti 800 (which itself was a luxury in the days of the Amby and the Padmini), until Tatas Indica swamped the market, redefined it and the M800 is now more entry level than the Indica. Indica is positioned more as a value for money workhorse car.

The trouble with the Indian buyer is that the moment something is labelled "entry level", his fascination with it goes for a toss. The M800 basic model now sells well only in rural areas with the aspirational urban buyer preferring to wait a year or two and move onto an Indica or a Santro or buy a secondhand Zen, Santro or Wagon R. My guess is the M800 cannot be milked beyond a point ( and that point is coming soon) and Maruti Suzuki realises this. It is bracing for the launch of its Swift.

Besides sedans, unlike entry level small cars are aspirational. A person buys a sedan as a status symbol, not because he wants to be transported from point A to point B. The Tatas proved they got their fundamentals right when they launched Indigo, not as an entry level sedan, but as an aspirational brand.

It is into this space that Mahindra plans to launch its Logan in colloboration with Renault. Businessline here has some observations

...Renault, it is expected, will make no bones about the Logan being an entry-level, compact sedan.

Renault and Dacia developed the Logan specially to cater to emerging automotive markets such as India. The car's focus is expected to be affordable pricing, reliability, low running costs and durability. Many of these and other attributes of the Logan, such as a sufficiently tall ride height, easy entry and exit, fuel-efficient engine and extra-large boot volume (all of 510 litres), will be appealing to Indian car buyers in the entry-level sedan category.

If M&M can pull it off and bring the Logan with quality and pricing comparable to the car's versions currently available in Europe (prices average at about Euro 7,000), then budget sedan buyers here are in for a treat. But with two years to go before the Logan hits the roads, the dynamics of the market may witness a lot more changes...

Perhaps Businessline is being very charitable when they say this. I also read somewhere (couldn't locate the piece despite a long search) that in the basic model, the rear windows cannot be rolled down fully (remember the Padmini) due to "design". With such an entry level tag, the only market I see for the Logan is perhaps in the taxi segment, if at all.

Mahindra had salvaged its reputation after building vintage jeeps with the launch of its Scorpio. With Logan, it may well drive itself into a cul de sac.

For Mahindra, doesnt it make sense to continue to make headway in the SUV segment and introduce fuel efficient variants, better designs so as to take on the International SUV's? A car doesnt fit in with Mahindras image, unless they work like the Tatas to reposition themselves.

2 comments:

Venks said...

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Abi said...

Hi,

I admit that Maruti 800 is selling less and less these days. That is *not* because it is "entry" level, but because its producers decided to sell a seriously stripped down Alto at a price just above that of M-800. Since the Alto is a little bit more stylish, it is no surprise that the urbanites prefer it over M-800.

However, here is an interesting dynamic that you might want to address, perhaps in a future post: the so called B-segment (Zen + Wagon R + Santro + Indica) now sells more than the "entry" level, A-segment (Alto + M-800).