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Will Renault Kwid shake up the entry level segment

Discussion in 'Non FIAT Cars and two wheelers' started by Mabams1826, May 28, 2015.

  1. Pramod N

    Pramod N Amatore

    Messages:
    159
    Bangalore
    Got my Kwid delivered yesterday.. :) Rode it for 15 kms in city before coming to Office... :)
  2. Raj_pol

    Raj_pol Regolare

    Messages:
    495
    Bangalore
    Punto Evo 1.3
    @Pramod N Strictly in comparison with the Alto and the Nano (if you have driven either) how different is the same? I am talking city driving, features, interiors etc...
    I have seen a couple up close and as fare as looks go there is no comparison with the Alto or the Nano.
  3. Pramod N

    Pramod N Amatore

    Messages:
    159
    Bangalore
    @Raj_pol: I have driven my friend's Alto 800 for about 150 kms in Highway, but not within the city and Nano during a test drive.
    And I took the Kwid on a long drive for 250 kms, and the handling on the highway was good. Managed to touch 115-120 kms with 4 adult and 1 kid on board.
    However, the breaking was weak when compared to Punto. But on-par with Alto.
  4. Raj_pol

    Raj_pol Regolare

    Messages:
    495
    Bangalore
    Punto Evo 1.3
    http://www.rushlane.com/renault-kwid-production-increase-12177528.html

    @prabhjot So far I seem to be correct - good looks and good local marketing works. Fiat is observing I hope. They should start by changing the looks for whatever it is worth - Punto and Linea are dated. Ideally the Aegea look - alike and something new for the Punto and throw in a base priced car - slightly better than a tin can with all the gizmos. Ride quality be damned and then watch the cash registers ringing.

    You have to accept sir if Kwid does dent the Maruti stronghold then an European is making in-roads and successfully at that.
  5. prabhjot

    prabhjot Esperto

    Messages:
    2,446
    delhi ncr
    No @Raj_pol .

    It is the first-mover, like with the duster, that's all. It costs a lot to make a cut price small car: the supply chain is much more epensive and overall logistics and managerial demands are very very onerous and costly. What is needed then is not just a car that sells in thousands BUT one that achieves HUGE sustained economies of scale, only then does it prove viable. I greatly doubt the KWID will be making any money for a long long while, even if it sells at the rate of 6000 a month. Carlos ghosn keeps doing this because (a) his brands have no negative historical baggage in india like Fiat, Tata, Skoda etc. But mainly because (b) he regards India as an r&d and export base for third-world-grade very cut-price models.

    Also, you must see the KWID in the context of several other similar but disatrously money-losing attempts by Carlos Ghosn: from micra and evalia to scala to fluence to Datsun Go to the dacia mpv (?).

    So no: it does not follow that mimicking Renault nissan or even ford is advisable for FIAT. Since (a) it has NOT worked for the former, financially, they're severely in the red despite all these third-world special, discount-engineered models. The Ford Aspire and Figo is a dismal financial failure, tiny marketshare, already dipping, and will prove MAYBE viable for FORD only thanks to the massive subsidies from the gujarart government and through exports of engines and cars.

    (b) 'Good' looks and gizmo-s etc are a mere 'necessary condition' which you're mistaking for sufficient. For Fiat that neccessity must indeed be met (indeed: it ALREADY is) but the sufficiency will only be if they find a way to break the stranglehold of the indifference and hostility (not mere skepticism or risk aversion) the brand faces for historical reasons.

    I increasingly feel that it is impossible to do: they shouldn't even try. Ford's and Tata's massively expensive new efforts at competing with the japs and the korean in the mass market are already proving failures and too-arduous.

    Instead, they should move their efforts to exports and of course to Jeeps, including especially more affordable models like the renegade and one Emerging Market -special (perhaps a reworked tata smaller suv?) at 12-14 lakhs. With a much more compact and smaller, focussed-only-on-bigger-cities, dealer-body. And rely on some profits vicariously through Tata, through the jv.

    A Fiat and/or Abarth or two could be added to these JEEP dealership outlets and service centres, even merely ckd or even cbu.

    IF they are going keep trying with the FIAT brand, and so it seems, they should really then commit to (a) a new model cadence of one new car launch every 6 months (b) start with at least 1 12/13 lakh plus model, a CUV like the 500L or 500X or an Aegea cross-hatch (c) then the new avventura, new punto, new grand sienna/aegea (d) and maybe the KWID segment in between (the Brazilian new entry level tall hatch, the X1H).

    i.e., at least 4 if not 5 new models coming thick and fast, with massive marketing, starting in mid 2017.

    Will require HUGE highly risky investments of, who knows, but something like tata's 3000 crores (for their brand relaunch and their ne models campaign currently underway)? Well, they've just invested $250million (1650 odd crores) into the Indian operations, they'll need to add another 200 million$ at least?

    Destined to fail, am afraid, given the brand distrust and indifference if not hostility prevalent. Unless they have exports assured for such models, which i don't see anywhere. Unlike Nissan and Ford: such models are offered in Fiats stronger markets in LatAm and North Africa etc, FIAT does not have any large markets for such cut-price rhd cars in Asia-Pac or the middle east.

    We'll know soon: in jan Marchionne's going to announce and discuss the updated product launch plan for all brands , globally. Plus: the autoexpo in feb 2016.

    'Cracking' the conundrum of the indian car market has proven too hard for anyone, from VW to Ford to Chevy to Nissan, and even Tata.

    It may well be that the only way to do so is to do a major merger/equity-swap-type 'deal' with one of the 2-3 dominant dada-s of the market: namely, Maruti Suzuki, as speculated for the last 2 years in the japanese and american automotive-business press? If even possible anymore, given Suzuki's rising potency and singularly-stratospheric marketcap etc in india?
  6. acechip

    acechip Superiore

    Commenting on 2 points. 1) I dont think the Kwid has any first mover advantage. The segment is decades old and has been the virtual monopoly of MSIL, to be occasionally targetted by Hyundai Eon and the Nano. Both these products have not dented it for their respective failings. The Kwid is also attempting a slice of that very market. The USP is the look and overall interior space esp. Boot space. It will end up denting a few thousand from Alto, Eon and Nano, esp if Renault brings in the 1 litre, ABS +2 Airbag version with AMT. Perhaps even grab a bit of the Wagon R market. So I would say, smart strategy to target people who may be fed up with the usual Maruti/Hyundai. It will certainly not topple the Alto, but sustained sales of 6-7000 per month will keep Renault's business in India running, end-to-end.
    2) And that could be a way to crack the conundrum of the Indian car market. All those who have failed so far esp Chevy, VW, Ford have not latched on to that crucial volume product that would guarantee end-to-end business. VW tried to brow-beat its way with so-called premium German-ness, which reeked of arrogance to many, esp in terms of their after sales service. GM India depended too much on the Beat and shockingly launched products like Enjoy, Aveo (new model) which were utterly devoid of character. Nissan committed a strategic error in tying up with a company for fronting sales and service (Hover ). Ford is completely under-marketing its competent Figo/Aspire range (14in wheels notwithstanding) . Tata was actually the first one to really crack the segment with its Indica V2. Too bad they did not have Horizonext at that time. They stuck with the Indica theme for too long, and Maruti launched the much better quality Swift in 2005. Of all the other players, Tata must be commended for trying to re-look within themselves and attempt to improve. But the competition from the Orient is also quite strong.
    Last edited: Dec 23, 2015
    asimpleson, prabhjot and Raj_pol like this.
  7. prabhjot

    prabhjot Esperto

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    2,446
    delhi ncr
    @acechip

    I believe the Crossover look and stance and GC (although the Nano has as much GC if not more, and rides and handles pretty swell because of its rwd charcater with rear engine and much bigger rear tyres) is indeed what makes the kwid a first-mover.

    So Raj_pol's generalizing thesis is wrong, in the sense of circular reasoning. It does not follow that because the kwid has seen good demand therefore the easy-recipe is 'good looks, gizmos, tinny car and skinny tyres' and you have a hit. It works for the KWID, like it did for the Duster and Ecosport, because of FIRST-MOVER design-advantge.

    By definition later-movers, do NOT have ANY advantage, since everyone's new model cars (e.g., say Chevy and Fiat in 2017/2018, the new Maruti-s etc) will have the same 'recipe'. i.e., It is a 'recipe' BUT not, as raj_pol and you are suggesting, of any relevance to the success and failure of later-moving competitors, such as Fiat.'Necessary but not sufficient' for a later mover.

    i.e., FIAT will need OTHER usp-s, not just the common, commoditized, universal 'recipe'. The Universal 'recipe' car that wins in every segment will necessarily tend strongly to be the one from the dominant brands with the purported advantages with dealers, ass, resale, trust etc.

    Which is why Carlos Ghosn's approach of giving no care for his brands' usp-s and offering 'third-world recipe, commoditised fare' is destined to fail, as it indeed has expensively for him (Logan, Micra, Sunny, Evalia, Lodgy, Pulse, Scala) with the only exceptions being the Duster and the KWID which have been great only because of being first-movers.

    The Duster has sunk in sales and sees bigger discounts/lower prices etc the moment the big brands struck with competitor models (Creta, SCross, new Scorpio, XUV500). The KWID will see the same fate. Though Renault-Nissan in India is HUGELY loss-making because of this branding-indifferent, 3rd-world-recipe-car approach of Carlos Ghosn in India, AT LEAST he has succeeded in (a) making India a huge export-base for these models and also, to his credit, (b) seeding by moving-first, new popular sub-segments (B-'suv'=Duster, A-'cuv'=KWID).

    My prediction is that the Duster story will be repeated exactly with the Kwid. Once the big guys (say maruti with the Ignis by end 2016) also start offering these utterly-pseudo dinky-car "Suv"-s the KWID will sink 70+% in sales. Meanwhile Renault-Nissan has a wide open 2-year window, unless we also see a Nano Cross or a Wagon R Butch-Cross, in the interim! When that window closes, well that's fine, because by then the KWID will be exporting way more than it sells in india, and likely finally making some money via the KWID project.

    Maybe FIAT can launch the bigger and more-sophisticated small tall-hatch/pseudo- high-riding-small cuv, the Brazilian X1H, launching there in early 2016? Priced say at or just above the Maruti Celerio? Or even the Swift (b1 segment)? That would involve 'doing a KWID' i.e., first-moving 'SUV'-look but at b1 price points? Sure, it looks pretty butch and distinctive too, why not? Except that: maruti already has the Ignis coming i guess?

    BUT that would be a fine attempt, one worth making PROVIDED FCA do not repeat Renault-Nissan's original sin in India, responsible for their long list of dismal loss making sales duds: being completely oblivious to BRAND-identity and -trust building.

    They are marketing brand-DNA-centric (rather than product-centric) messages more and more under Kevin Flynn, so they get this basic requirement for smaller, weaker brands in India. If they then launch an early mover model like the X1H, and give it brand-DNA (rather than just a generic recipe approach), THEN yes, what @Raj_pol says holds good.

    BUT brand-identity+dna+usp+trust has to come first or be done intensively and strongly (their considerable efforts over the last 2 years have borne NO fruit in this regard), ONLY then can product features like gizmos and flashy-new style/new car-format etc work for a small, weak brand like Fiat is in India. THAT is the real lesson from the '2 hits and many misses, net net=huge losses and some disrepute, the misadventures of Carlos Ghosn/Renault-Nissan in India'.
    acechip likes this.
  8. acechip

    acechip Superiore

    I have to be honest here. As much as I love Fiat cars , I think other manufacturers look and act a bit more committed to the Indian market , product quality notwithstanding. Whatever eventual fate the Duster and Kwid may end up with, each product will add to the brand presence in a positive manner. As usual, I am keeping the economics aside in the discussion. Fiat India may be a profitable entity, but seeing an average of 100 Lineas sold per month on an all India basis does not give confidence to a prospective C-segment sedan shopper. Therefore, I would reserve my judgement about the exact path Fiat India chooses here on, either building a DNA centric approach , which is far too refined for Indian tastes- sample the fact that potential buyers query about the mileage of the Punto Abarth OR a product centric approach , which, IMO is easier and a more acceptable proposition for Fiat circa 2012. We are already closing 2015 , and the company has given us just 2-and-a-half products over the past 6 years.
    Last edited: Dec 25, 2015
    prabhjot likes this.
  9. Raj_pol

    Raj_pol Regolare

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    495
    Bangalore
    Punto Evo 1.3
    @prabhjot I would like to see some actual figures (numbers) or any study done on what is the cost of developing a cut price car and the profits expected out of the same. As I have said before till I see that I would hold on to my view that a manufacturer would not develop products to sell at a loss.

    The first mover part I do not understand - we already have the alto and the eon so how is Kwid a first mover?

    However, the biggest change that will happen and that no one has mentioned is as follows.
    Assume Kwid is able to sell around 60K to 70K cars a year and they are able to sustain and grow on those numbers. This leads to the brand percolating in India and more people knowing about the brand. In a few years when people move to the next segment they will look at options within Renault because of the trust, brand recall or emotional value they hold. This is what happens with Maruti. Hyundai broke into India primarily with the Santro and people still have fond memories of the car.

    This is where the actual benefits will start pouring in and within 5 years Renault will start doing far better than it is doing now. Hyundai may have been selling the Santro for cheap but they charge a bomb for the i20. Fiat is a brand for the middle class - as such they will need a volume brand and need to start with a clean slate from the bottom. It will take time but that is how it must be.

    I would again hinge my bet on a good looking car which looks a segment above the price it sells for like the Kwid and then develop the same.
    --- Double Post Merged, Jan 10, 2016, Original Post Date: Jan 10, 2016 ---


    See this video carefully - specifically the points about Toyota and Hyundai. He is one of the greatest thinkers on disruptive innovation.
    Sujit508, prabhjot and gpunto75 like this.
  10. prabhjot

    prabhjot Esperto

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    2,446
    delhi ncr
    @Raj_pol

    I agree fully. WE are not arguing. I am only stating the inapplicability of the KWID example to FIAT.

    Unless FCA is willing like Carlos Ghosn to wager, on very long odds, many thousands of crores. Which, under Marchionne, it is NOT!

    However: i will insist the KWID like the duster is a first mover, because of the 'cuv/suv' look and stance, and that, rather than the brand, is the only reason it is attractive to many in the market. Until Maruti and Hyundai launch their micro pseudo-cuv-s too, at which point it will sink. Fiat had its kwid opportunity with the UNO 15-20 years ago: and they fluffed it big. No second chances, sir, in INDIA: once stigmatised, doomed forever!

    The chief engineer of the kwid project in an interview i read, i think on autocar professional, stated clearly that it is not a profitable project in any proximate sense. But as you say: it is a 'make space for your brand for the sake on the long run' project. If they were any good with their investment and product planning decisions they would not be hatching nothing but humunguous losses so far, despite launching so many 'ideal for India' models, from the logan to the micra to evalia to lodgy!

    So no: no reason to be surprised that car companies lose money on good-bet-seeming projects. There IS a reason after all, all firms barring suzuki, hy and mahindra, lose money, even the new-model-active ones like Chevy and Honda as well as Ford! Ford, who knows, but every informed guess is that the Figo+Aspire have bombed expensively for Ford, in India. But that's not SO bad for these firms: since their downside investment and new-model risks are covered by exports.

    Which IS what Fiat must learn from Renault-Nissan. Cover your ass, via exports, yeh hai India, a brutal, non-level-playing-field of a car market, and an unforgiving one too, with a very or rather too-long memory of who has f-ed-up here before.

    And the KWID is a low-cost frugal engineering project (low development costs) which will, am sure, be very profitable albeit with ultra-thin margins over the necessarily very large numbers it needs to sell at these ultra-cut prices, NOT at all obviously in India, but via exports and via also being manufactured in other low-cost, dinky-car friendly markets like FIAT's backyard: Brazil, where its production will begin sometime this year apparently.

    Having said that: FIAT could try doing a KWID but one segment or two higher with the x1h/MOBI, an 'a-suv' say at 4.xx/5.xx lakhs? They won't be allowed by the market to succeed (stigma!) but they could, as you've been advocating, try, i suppose. Esp if a euro-spec one can also be exported to parts of europe as a cuv, roomier Panda-type entry-level but solidly engineered and made small car/cuv?
    Raj_pol likes this.

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