Happy New Year!

I wish you all a very happy and prosperous New Year!

Better Place's not-so-good fate

It was a shock of sorts when I read that Better Place's CEO Dan Cohen formally announced bankruptcy.

In my seven year career as an automotive industry analyst, Better Place is the first company that I have seen from boom to bust.

It was for an electric vehicle (EV) / battery technology market sizing and monitoring study for a German luxury OEM in 2007-08 that I first came across Better Place. Conceived and started by the charismatic Shai Agassi, it was one of the most talked about new ventures. What I heard was that Shai and former Israeli prime minister Simon Perez are close friends and it was after Shai introduced Renault CEO Carlos Ghosn and Simon Perez that the whole Better Place and Renault partnership took off (with Renault investing an undisclosed amount in the now bankrupt company).

While most OEMs and utility providers were figuring out ways for the mass acceptability of EVs (which were not gaining traction due to the short driving range and long battery charging time), Shai came out with a smart alternative of replacing the battery pack altogether when an EV was low on charge. The idea seemed so appealing that Renault developed a proprietary technology called "Quick Drop" exclusively for Better Place; where Renault Fluence EV owners could drive in and replace the battery packs in around 10 minutes, the same time it takes for a conventional fossil fuel car to refill.

But Shai's solution was not well accepted by users, mostly due to the following issues.

• Better Place solely focused on battery swaps while ignoring the quintessential aspect of faster charging, which is what customers want
• Battery swaps still did not reduce range anxiety for EV owners and what really was the need of the hour was more charging infrastructure in public places and along highways
• Wrong choice of car — the markets where the Better Place - Renault "quick drop" program was launched (Denmark and Israel) prefer compact cars, mostly hatchback. Unfortunately, the pilot vehicle for the project was the Renault Fluence
• Lastly, and maybe the most crucial reason was that other EV OEMs did not follow suit. Apart from Renault, none of the other OEM bought the concept of battery swap. Even one more OEM with battery swap could have saved, or at least delayed, Better Place's fall.

A very nice article on Better Place.


UPDATE: Another very interesting article I came across today (30 May 2013)

UPDATE: Cutting import duties on European cars. Why not?

It seems like that other people within the industry hold a similar viewpoint. Came across this Business Line article, where Ford India President and Managing Director, Mr. Joginder Singh commented that the FTA between the EU and India will benefit the Indian consumer; which, essentially means the benefit of the Indian automotive sector.

Cutting import duties on European cars. Why not?

The Economic Times carried an article today on the recent "progress" on the 6-year long dialogue between the European Union (EU) and India on Free Trade Agreements (FTA) between the two economies. Among other things, one significant 'demand' by the EU is the reduction of import duties (tariff) on CBUs and engines by half to 30 percent. If this FTA were to be passed, European cars would become significantly cheaper, especially the German luxury cars, and more importantly, the Indian customer would get a far greater option of quality European hatchbacks and compacts to choose from.

Then why is the Society of Indian Automobile Manufacturers (SIAM) crying hoarse over this possible trade agreement?

Well, it seems the arguments that the SIAM puts forward are that such free trade between the two economies would reduce investments, and harm local manufacturing, local value addition and local employment.

SIAM goes on to say in a whitepaper it released just to oppose this FTA, that “Opening completely built units (CBUs) to imports/lowering import duties under the EU FTA is a retrograde step, and will have a long-term irreversible effect for the Indian economy, the auto industry and the consumer at large." (Source)

It is pretty self-explanatory that customers will not be "harmed" in any way with this FTA. In fact, no consumer is harmed by free-trade among economies. The only "harm" that I can imagine is that the Indian consumer will be spoilt for choice.

Then, what about local value addition and employment? U-mmm. Nothing. You see, this FTA, in case it comes to pass, will make it cheaper for European OEMs to bring in completely built cars (CBUs) to India. Please note, I said cheaper, not free. They still have to pay custom and import duties and in the long run manufacturing these cars in or near the market still remains a cheaper proposition for these OEMs. And most of these OEMs already have production lines running in India. The reduction in duties will only "force" the OEMs to introduce models faster in the Indian market. So, why worry.

You may have also noticed that these European OEMs mostly sell luxury vehicles in India apart from one or two odd hatchback or compact models. Luxury car buyers are relatively less price sensitive. And if I were a car maker, I would like to test-run a slightly more expensive hatchback in the highly price-sensitive Indian market before I go out all guns selling it. A reduction in import duties will exactly offer this flexibilty to European OEMs to experiment with a wider variety of mass-market passenger cars.

And as far as the issue about job-generation goes, I personally feel that job creation via trade-protection is a short-term fix.

As far as SIAM's arguments go, the only issues I foresee are, well, Mahindra having to slog out a tad harder in terms of the quality they offer, or Tata fixing up its aftersales service department...

If opening trade with the EU will affect the Indian automotive sector, it will only increase competition for domestic OEMs and suppliers, encourage consumer spending in the sector and offer world-class products to Indian consumers at competitive prices.

UPDATE: First voice in correcting the Indian aftermarket?

In my article First voice in correcting the Indian aftermarket? I had discussed how the anti-competitive practice of many OEMs (in selling spare parts only through authorised dealership at a higher price) is affecting the Indian spare parts market.

Well, the Competition Commission of India (CCI) — a body of the Government of India responsible for enforcing The Competition Act, 2002 throughout India and to prevent activities that have an adverse effect on competition in India (source) — served notice to 17 undisclosed carmakers in India for indulging in such anti-competitive practices (source).

If the CCI ruling holds, all OEMs will be forced to sell spare parts in the open market, which in turn would make products and services more competitive and cheaper.

Nissan NSC-2015

Nissan recently showcased its "auto-parking" car - the NSC-2015. This modified Leaf, with the help of electronic sensors, cameras, robotics and smartphone enabled commands, can drive and park "itself" after the driver has left the car.

Although nothing groundbreaking (others have been developing driverless prototypes too, for example Google driverless car, Volvo) the NSC-2015 yet again demonstrates that we are very close to having, not "driverless," but at least remotely controlled vehicles in, may be, 5 years from now. The car uses remote monitoring system that recognizes the surrounding environment through use of an all-around view camera and 4th generation (4G) mobile communications. After the driver leaves the car, it starts to park itself automatically , following the instructions given by smartphone. The vehicle looks for a vacant parking space while identifying its surroundings; once it detects an open parking space automated parking begins. The driver can also use smartphone commands to make the NSC-2015 vehicle leave the parking space and return to the place where he or she is. While parked, the car's security camera system automatically works with a camera installed in the vehicle. If the system detects suspicious behavior, the driver is alerted automatically by a report to his or her smartphone.

Imagine how convenient it would be to stand by the curb and parallel park you car in a tight spot using your smartphone, or instructing your phone to park the car in your garage everynight at 11 PM....

First voice in correcting the Indian aftermarket?

I just came across an article in the Economic Times about Mr. Jagdish Khattar, ex-MD for Maruti Suzuki, expressing his opinions about the anticompetitive practices prevalent in the Indian automotive aftermarket.

A short background — in India it is very expensive to buy automotive spare parts, because OEMs and dealers run a monopoly business in which OEM-approved spares are only available through dealers at a price premium and not freely available in the open market.

Hopefully, the voice raised by Mr. Khattar will have an impact and open up the Indian aftersales market, or at least start a drive at doing away with unhealthy trade practices. It is time that such anticompetitive practices are done away with because it is not only about the price premium, but also the unhealthy practices such as refusal of service / sharing of technology that need to go for the market to become a truly global competitive market.

Urban mobility concepts - Daimler betting big...

I have been closely following the developments in the "field" of urban mobility, or as many say, mobility concepts, and one thing is clear, Daimler AG is betting big on it.

They first made headlines with their car2go program somewhere around 2009 (?) through which you could walk up to a smart fortwo for rent, swipe your smart card, drive to wherever you want within the city and just leave it there.

Now I read that they have acquired a minority stake in a Munich-based company called tiramizoo. Last year, tiramizoo launched a fully automated online booking platform for local courier - meaning you just fill in an online form stating what, where, when and your packet will be delivered! Daimler plans to capitalize tiramizoo's expertise in optimizing flow of goods (efficient use of urban road communication) to add more innovation to services already offered in its car2go program.

Earlier, Daimler also acquired stakes in MyTaxi (an online taxi booking platform) and carpooling.com. car2go already has 150,000 registered users. It seems like Daimler is betting big on the concept of urban mobility and is playing its cards right and has managed to stay ahead of it competitors, especially BMW and Peugeot.

I think Daimler is going to make the concept of urban mobility popular and mainstream.

Watch out for Daimler! 

Renault...Focus!

I just read that Renault launched the Scala yesterday. Logical move, but not in India. Here is why. Renault (Renault-Nissan) launched the Micra, and it did not help the Nissan badge; sales were not sustainable. Couple of years later, Renault broke-off the Renault-Mahindra tie-up and went full-steam with popularizing the Renault brand and launched the Duster (a very intelligent move - something that hit the sweet spot) and (to my horror) the Pulse!

The Pulse is a badge-engineered Micra. I felt repulsed! Does Renault not respect the intelligence of the Indian consumer (to not read through this brand engineering gimmick)!?

The Pulse did no better than the Micra and now Renault launches the three-box version of the Pulse / Micra...the Scala!!!

Why!?

Everyone has been crying horse, "Renault-Nissan get your after-sales network up and running; your cars are good and we will buy them...provided we have the safety net of the knowledge that there is a service network to support the products."

Mr. Ghosn, the fact that a strong aftersales network is the magic to an automotive brand's success is no rocket science...

Rest in peace Carroll Shelby

A great loss for the automotive world.

Force ForceOne a little too late for the Indian market

A body-on-ladder frame boxy SUV from an Indian commercial vehicle maker Force Motors, the ForceOne was launched in October 2011. It was a product aimed at the conspicuous gap in the Indian SUV market, between the  INR 800,000 (US$ 16,000) Mahindra Scorpio and the INR 1,800,000 (US$ 36,000) Ford Endeavour. Priced at INR 1,100,000 (US$ 22,000), the ForceOne should have been an instant winner in the fastest growing passenger vehicle segment in India - SUVs (Business Standard Motoring - ForceOne review). The SUV also boasts of the Daimler OM651 diesel engine which once powered the Mercedes-Benz C 220 CDI and E 220 CDI. Force Motors planned to sell ~4,000 units of the ForceOne between its October 2011 launch and September 2012. It has sold only 1,200 units until March 2012 and I have seen exactly ONE ForceOne on the road since its launch.

So what went wrong for this SUV?

Timing.

Before the ForceOne was launched, Tata Motors already had the Aria, a multi-utility vehicle (MUV), in the offering at the same price point. The Aria is fully loaded with safety and creature-comfort features, such as ABS, traction control, rain sensing wipers, touch screen infotainment console - everything. It still did not do well because of its price and well, because it was neither a car nor an SUV. Moreover, a couple of months after the ForceOne's launch, Mahindra came up with its XUV-5oo SUV - again at the same price point as the ForceOne's. The XUV-5oo scored over the ForceOne mainly in terms of looks - the XUV-5oo's looks are far more contemporary than the ForceOne's; and ride quality and handling, primarily because the XUV-5oo has a monocoque chassis (Business Standard Motoring - ForceOne and XUV-5oo comparo).

All the 'drawbacks' that the ForceOne has in comparison to the other products available in the market are just functions of timing. Indian consumers have accepted uglier cars, for example, the Mahindra Xylo and inferior quality cars, the Tata Sumo. However, in the present market scenario, the Indian consumer has much better choices for INR 1,100,000. If the ForceOne would have been launched, say, 5 years earlier and INR 400,000 cheaper, it had the potential of redefining the Indian SUV market. However, with the announched launches of the Renault Duster and the Ford EcoSport by end-2012, the fate of the ForceOne seems to have been sealed.

Although, I will definitely look out for the 2013 Gurkha!

The Fiat 500 is not a chick car!

It is funny how at times celebrity endorsements have the opposite impact on product popularity. Recently, I stumbled upon the Jennifer Lopez Fiat 500 campaign in the US (Official Fiat 500 video - Youtube). While there is nothing wrong in J Lo trying to bring back an iconic car to life, that too in a market where it never had any presence to start with, I still could not help but wonder why the Fiat guys could not get hold of a better brand ambassador for the cute little car.

As I started reading and looking for consumer responses to this particular campaign, I was not surprised. Most of the people, especially the ones aware of the Fiat brand and the 500, were not at all entertained. Simply because there is no relation between J Lo and the 500. Also the fact that J Lo is not a certified auto freak did not help either. For the purists, the whole campaign was 'tasteless.' Further, it is rumored that J Lo used a body double for the scene in the commercial when she zips around her 'block' in the Bronx and that she fumbled as she tried to open the car’s door in a live television appearance during the American Music Awards (NY Times). These 'misadventures' did not go too well with the audience. Neither, could J Lo convince the auto enthusiasts, nor could she convey the message that she still is 'Jenny from the block' and she loves driving the cute and maneuverable 500. In fact, Laura Soave, the Head of the Fiat brand in North America, lost her 20-month-old job especially due to the J Lo-500 campaign.

However, the ad campaign cannot be totally brushed aside. It did attract attention, although not from the intended target, but from teenagers and younger consumers who have no idea about the past antecedents of the 500. The campaign went a long way in branding the 500 as an essentially women's car. As a damage control mode, Fiat has now roped in Charlie Sheen for the 500 Abarth (the souped up version of 500) campaign (Youtube). I am still not sure whether an aging womanizer saying "Not all bad boys are created equal" will woo the potential 500 buyers.

Finally, Fiat seems to be getting it right with the Let your Italian out campaign. In fact, current Fiat owners and Fiat enthusiasts seem to have given the thumbs up to this advertisement (Fiat500owners.com). Hopefully, Fiat should be able to reach its ~5,000 a month sales figure for the 500 now.

Moving on to my home market, India, Fiat chose the former miss-Universe Lara Dutta as a brand ambassador for the 500. Now, I do respect this lady for her beauty and intellect, but somehow she just does not seem to be the right representative for the car. Earlier, the Palio was endorsed by cricketing legend Sachin Tendulkar. And Sachin autographed bright yellow Palios were quite common in the market - meaning the campaign was a success. However, I cannot say the same for the 500, which was introduced in the Indian market in 2008. There have not been much buzz about the 500 in the Indian market (mostly due to its ostentatious pricing) and I seriously doubt that the 500 will be branded as the rich lady's toy car with the present brand ambassador. Could not have Fiat roped in auto enthusiast Sanjay Dutt to be the brand ambassador instead?

Happy 2012!

Warm New Year wishes to you all! I hope that this year brings a lot of peace and happiness in your lives and sees your dreams come true.

Also, let us hope that we see a lot of action in the automotive industry this year in terms of new technology, models, better fuel efficiency and safer cars.

Electric vehicles in India

Any topic on electric vehicles (EVs) in India would invariably veer (at least for now) toward the Reva, by the Mahindra and Mahindra and Maini group joint-venture (Mahindra Reva Electric Vehicles Private Limited). Founded in 1994 by Sudarshan Maini and based in Bangalore, the Reva Electric Car Company, is involved in designing and manufacturing of compact EVs. In fact, the Reva (the present generation called the REVAi) is the largest selling EV in the world, not because of its range (80 kilometer) or its looks, but simply because of its price. The Reva (priced at approximately US$7,000) is five to 142 times cheaper than the Nissan Leaf and the Tesla Roadster, respectively!

Anyway, this write-up is not about the Reva, but to take the Reva as an example and try and discuss the ‘plight’ of EVs in India.

I have stayed in Bangalore for about four years before moving up north to the Delhi NCR. During my stay in Bangalore, the Reva was a pretty common sight, and I would see at least one of those EVs on my way to office or back. However, in the national capital region, I have failed to spot a single Reva in the one and a half years that I have been here. This made me ponder about this disparity, because Delhi and its satellite townships are a fair representation on the automotive scene in India.

I was fairly surprised and began thinking about why there is this divide in accepting an EV across different cities. And also on the fact that if there were to be more EVs in India, would there be a difference in mass acceptance, based on demographics, customer taste and infrastructure availability, or rather the lack of it.

Here is what I figured out:

• Infrastructure: In Delhi, people fight for parking space. They get physically violent and at times your car is parked more than 300 meters from where you stay. In Bangalore, people usually have verbal altercations and generally mange to park their cars where they can see it. In some places in Delhi, the lanes are so narrow that it is almost impossible to park your car next to your house without causing an impediment to traffic. So, keeping an EV in Delhi can be quite a task, because recharging it would be a nightmare. Even office parking slots do not provide charging points for EVs. Essentially, it is much more practical to own and operate an EV in Bangalore, compared to Delhi.

Also, after sales and service for the Reva is negligible, if not altogether absent. As a consumer, everybody expects their car to be taken care of in an authorised service station for at least three years post-purchase. Mahindra and Reva need to increase the number of after sales service centers for people to feel comfortable buying their product. In fact, both Mahindra and Reva need to leverage the Mahindra service network and consciously draw consumers’ attention to the fact that the Mahindra network is there to support Reva consumers.

• Power scenario: In the satellite townships of Delhi, such as Gurgaon, power supply is very erratic. Power-cuts last up to eight hours at a stretch, and eight-hour-long power-cuts are not one-off incidents, they happen on a weekly basis. So, if you are in Gurgaon, even if you could park your EV in your living room, you still would not be able to recharge its batteries. Comparatively, Bangalore has fewer power-cuts and they generally do not last more than an hour. Also, electricity is far dearer in the NCR region – it could go up to INR7 per unit at places.
• Customer taste and requirement: This is a very subjective factor and it holds true not only for EVs, but all automobiles in general. For instance, you will see more white cars up north and more black cars down south. Indian consumers have different preferences for different colors in different regions. Coming back to EVs, no doubt the Reva back-up as the second car in all households in Bangalore, but in Delhi, the second car would be a Chevrolet Beat, or even a Tata Nano, but never a Reva. Quite possibly, because of the other factors I mentioned that go against the Reva, but also possibly because the Reva, is not up to the taste of consumers in the North. Bigger cars still hold an appeal up North. (You might want to argue about the Nano in the previous sentence; but the Nano is much roomier and has a sense of pride in ownership due to all the news it generated and because it is from Tata)
• Government initiative: It is a known fact that new technology cannot find mass-acceptance without government support. True that the Indian government has started, or at least given thought, to providing subsidies for EV and alternate powertrain suppliers and manufacturers. That is the first step and not sufficient enough to drive EV acceptance in India. Consumers should also benefit for choosing lesser polluting vehicles. Also, state governments should do away with taxes and levies on selling EVs. This will bring a price uniformity for EVs across states.

Therefore, I think that for EVs to be successful in India, we need to consider different markets (read cities) as unique and offer different solutions for the mass acceptance of the EV. A solution for the success of EVs in Pune, will not work in Chennai. India needs to be segregated on the basis of the different parameters mentioned above. However, on a national level, the issues of power and infrastructure shortage, state government encouragement, and the likes will still act against the interest of EVs. For that matter, pure-play EVs might not be the solution to clean transportation in India at all. Maybe, we need to replicate the success of CNG buses in the passenger vehicle domain, or maybe, we need to think of more indigenous alternate fuels, such as biogas. In fact, cheaper, cleaner and efficient last-mile connectivity could become a panacea for traffic congestion and vehicle pollution in India. We could, in theory, bypass the trials of alternate powertrain and be an example in efficient public transportation solutions, just like we bypassed the muscle car era and hopped straight on to compact cars, which are only beginning to make their mark in older and more mature automotive markets.

About time Honda India pulls up it socks

The other day I was thinking about Honda India's strategy, or rather the lack of it. Today I read in the Wall Street Journal and the Times of India that Honda has cut the price of its entry level sedan, the City by 4-8 percent. This will bring down the price of the City by at least INR44,000 from the present price of INR749,000 (ex-showroom price for the base model in New Delhi). A rather delayed reaction to present automotive market dynamics in India, but a very welcome one, nonetheless.

Although not as big as its Japanese brethren -- Toyota and Nissan -- Honda enjoyed a first-movers advantage in the Indian automotive market during the mid-90s, and has since then earned an enviable brand recall as a maker of quality and reliable cars. During the same time, other global OEMs such as GM, Ford, Hyundai and Renault too were trying to grab a share of the gradually growing Indian passenger vehicle market pie. The Americans and the French failed mostly due to outdated products and wrong calculations of the market pulse. The Koreans, due to the right product -- a feature rich hatchback, the Santro -- not only made a successful entry, but went on to become the number 2 in the 3.5 million strong current market.

Honda, on the other hand ignored the 75 percent share of the auto market -- hatchbacks, and focused on sedans (globally, the small car segment, or the sub-C segment), and launched the City. At the time of the City's introduction, the sedan segment in India was dominated by the Maruti-Suzuki Esteem and followed by the Ford Escort, the Opel Astra and the Daewoo Cielo. The American cars were based on outdated platforms and never made it big in India. The Esteem and the Cielo were popular models because they were affordable and comparatively more reliable. However, the quality and performance aspects were totally missing. It was this large gap that the Honda City filled along with the Mitsubishi Lancer (the Lancer was the only other sedan in its class that provided competition to the City).

Since then, the City has been bread and butter for Honda India. Honda asked a premium for the City as there were no other products to compete with it and rich Indians complied. Some defied and bought the Lancer instead. Honda's India operations were profitable. However, the party was spoiled as the average salaried Indian started earning more and other OEMs started looking at the Indian market in earnest and launched competitive models. Honda's sales volumes took a hit.

And its been down for a while. Honda plans to boost sales of the City by this price cut. However there are deeper problems within Honda India and it products.

Here is my take on Honda India's issues:

• Pricing - The Indian automotive market is highly competitive now. At three-fourths of the City's cost Hyundai and Maruti-Suzuki offers sedans with more features and creature comfort. Honda's lone hatchback, the Jazz, is priced around INR650,000. At the same price point most OEMs offer sedans. This is an important factor as the car is still an aspirational object for majority of buyers in India -- bigger is still better.
• Local sourcing - Honda sources ~60 percent of the components for it cars (the Jazz, the City, the CR-V and the Accord) locally in India. Its competitors source 80-90 percent components locally and are aiming for 100 percent local sourcing. Local sourcing reduces input costs for automakers and is reflected in the bottom line of the company's books. It also helps reduce custom duties in many essential components, such as engines.
• Diesel powertrains - With petrol prices nearly touching INR70 per liter, new car buyers are seriously considering diesel vehicles. Even if petrol and diesel prices were to be equal, ~35 percent Indian car buyers (personal estimate) would still prefer diesel powerplants. So, literally Honda could add 35 percent more sales volume. Anyway, with diesel engines becoming more efficient and less polluting, it is a very bad strategy to not have diesel powertrains, not only in India, but globally. Honda and Mitsubishi are the only OEMs in India that do not have a diesel option.

Three basic points, and Honda could once again dominate the entry-level sedan market in India.

The Chinese are here!

Beijing Automotive Industry Holding Co., better known as BAIC plans to sell commercial vehicles in India. Good news, bad news? I say premature news.


Well, you see, China and India are the poster children of the global economy at present, especially in the automotive industry and these two countries are trying to make their mark felt in the industry. They drive substantial global sales, but do not have domestic companies that contribute much, yet, to those sales figure. China and India are core competitors in the automotive industry, like everything else. When it comes to these two countries, it is not about the companies, but about the countries. These two countries are growing at an incredible pace and they will be the architects of the present and future world economy. 


So, a rapidly growing Chinese company trying to sell its wheels in India, or rather, to quote Bloomberg, "start its overseas expansion by entering the Indian market", is bad news for India's rapidly growing automotive companies (talking in terms of the global automotive scenario) like Tata Motors, Mahindra&Mahindra, Ashok Leyland and also for the smaller International Cars & Motors Ltd. (that is Sonalika - the Toyota Qualis look alike - for people unfamiliar with the name of the real company).


Okay, enough of cryptic clues. The crux of the matter is, both Chinese and Indian auto makers are trying to go global in a big way - they have the same goals, so it does not make sense for them to mutually compete in each other's domestic markets. India has a maximum of 10 auto makers, both passenger and commercial (yes, including Hindustan Motors and Premier), China has around 130 indigenous automakers!


Both these markets need to break even and their domestic auto makers need to win a decent pie of the global automotive market before they can start competing with each other. They are already struggling hard enough to make their presence felt among the Detroit and Germany big 6.


Here is the piece of news that got me started in the first place.

M&M acquires Ssangyong - Can we say that finally?

Okay, we have been hearing about the Mahindra & Mahindra acquisition of Ssangyong for a while now and no further developments have been heard of; however, there is definitive news that M&M will buy a majority stake in the smallest of the Korean car makers, Ssangyong, by end-2010 or early 2011. At this stage there are no details of the amount involved in the acquisition. M&M mentioned that it will go through the final due diligence of Ssangyong sometime in September 2010 and then fix the deal.

Not many people have seen Ssangyong cars, rather SUVs - that is what this Korean car maker specializes in - low-priced, robust SUVs. The Korean SUV maker has vehicles like Rexton, Kyron, Rodius and one sedan in its entire line-up - the Chairman.

M&M, through this deal, can expand its line-up of SUVs; but when it comes to sedans - the basic ingredient for any versatile car maker - I can only hope that M&M does not have another sour experience like the Logan. Ssangyong, on the other hand, will not go bankrupt and have access to more markets and M&M's technology. With this deal, M&M is giving out all the signals that it intends to focus on SUVs - at a time when people are selling off their gas guzzlers and shifting to more fuel-efficient vehicles. Lets hope that M&M becomes the phoenix of the SUV market , and brings out SUVs that suit the taste and needs of the present and future markets - vehicles with more high-end torque, yet thrifty on fuel consumption.

Here is a ball-park SWOT analysis of M&M:

Strengths: Well established as an utility and farm equipment manufacturer. Has dealer networks in the US, South Africa, Latin America and other key markets. Diversified business and hence the group has financial stability. Few model line-up in the passenger vehicle segment, hence less complexity. Has the advantage to design a new global vehicle platform and bring out different products. Has been making vehicles since the 1940s and has a lineage of sorts.

Weaknesses: Does not yet have a mass-market sedan or hatchback - and hence missing out on the major passenger vehicle market share. Has not yet reached the levels of international collaboration needed to bring out world-class petrol/diesel engines in the 1.3 to 1.6 liter displacement range, to be globally viable. Vehicle platforms are dated and the company is still perceived as essentially commercial vehicle manufacturers. Cannot really go global with just utility vehicles and SUVs. The Scorpio cannot sustain M&M for long.

Opportunities: Emerging markets in South Asia, like Vietnam, Thailand and Indonesia, markets in Eastern Europe, like Russia, Turkey, et al and Latin American markets. M&M needs to develop a small/mid-segment sedan or hatchback to shares in these markets. The acquisition of Reva holds lot of potential. M&M should aggressively pursue electric vehicle development at this moment, and if done properly, the company will have a headstart over many smaller but global players. M&M should invest its research rupees in developing a global small SUV - which is the fad and demand of the day. It already has the expertise and just needs to tweak the engine and platform a little bit.

Threats: The biggest threat for M&M is Tata Motors and the Chinese companies. Other OEMs comparable to M&M are increasingly entering into technology sharing partnerships and thus have access to better technology. Consumers in India and other potential markets have more options to choose from and if M&M does not diversify its product portfolio it will lose out to competition.

For those who have not seen Ssangyong vehicles:

                                                                           Rexton

Mandatory fuel economy standard for India

The biggest irony for a country obsessed with fuel economy is the fact that India does not yet have an official fuel economy standard set by the government. Efforts to set up a standard have been made in the past; however, like everything else in this country, those efforts yielded no outcome as everything got lost in the mire of bureaucracy and organisational power play.

However, things are set to change as the Environment and Forest Minister of State Mr. Jairam Ramesh, formally announced on August 2010, that there will be a mandatory fuel efficiency standard for auto makers. What worries me however, is the fact that the minister did not specify a timeline. He just said that a standard will be enforced “soon”. Now, from what little I know of these auto-related policies, there always is a time frame set for the enforcement of policies and future regulations. It would be a welcome change if this time the ball is really set rolling and we have a fuel economy standard by end-2012.

The automotive industry is gradually becoming very uniform across the globe. What I mean to say is that the regional differences of types of engines and cars are lessening as the world strives for smaller and more fuel-efficient cars. Auto makers are already collaborating with one another in terms of technology sharing so that they can bring out cleaner cars. This is partly due to the price of fossil fuel, growing awareness among people for the environment, the US suddenly waking up to the need to have fuel-efficient cars and lastly, but by far the most important reason, the very strict CO2 regulations imposed by the EU 27 states. The point, however, is that OEMs already have the technology, so an Indian fuel-efficiency standard set at par with global standards will not be impossible for auto makers to achieve, and this in a way will contribute to the much talked about harmonization of standards in the automotive industry.

Lets hope this time we really show we are concerned and join the global race to cut emission, reduce fossil fuel dependence and participate in a greener tomorrow.

Renault-Nissan teams up with Daimler

Renault-Nissan enters into a strategic partnership with Daimler. All the three automakers will have around 3% stake in one another through equity exchange. The near-future aim of this alliance is to collaborate on the next generation Smart Fortwo and the Renault Twingo, including electric versions of the cars.

The overall objective of this alliance is to share and develop engines and powertrains for future passenger cars and light commercial vehicles for all three automakers.

In a nutshell, Daimler will get to use Renault-Nissan's latest generation small 3/4-cylinder small petrol and diesel engines for new Smart vehicles and also use these engines to introduce entry-level vehicles in the future. Daimler also gets to use Renault-Nissan diesel powertrains for it van, the Vito. Moreover, Mercedes-Benz Vans will get to include Renault-Nissan entry level models in its Light Commercial Vehicle portfolio from 2012 onwards.

In return, Daimler commits to lend its 4/6-cylinder petrol and diesel engines to Nissan's luxury car brand, Infiniti.

The deal clearly states that the brand and product identities of the three car-makers will remain intact.

There is also talks about Daimler and Renault-Nissan using one another's plants in the US to manufacture vehicles.

This looks like an interesting alliance provided Daimler keeps its end of the promise and not provide dated engines and powertain to Nissan like it did to Chrysler.

Whichever way the alliance swings, but one thing is for sure, the new age of automotive industry has arrived and many more consolidations are in the cards.

Recalling the Toyota recalls

During my stint with erstwhile Chrysler, I learnt one important thing about the average American car drivers - they are a quirky and very paranoid bunch of people when it comes to the quality and the safety of the vehicles. No wonder they have the safest and the most technologically advanced vehicles; but at the same time over-dependence on technology has diluted the driver's intuition in the average American.


The recent Toyota recall story is not new. It is a deja vu of the Audi 5000 recalls in the mid-1980's. Anyway, we all know the story of unintended acceleration of certain Toyota and Lexus models and the number of recalls made, etc. In my opinion, Toyota did a commendable job in managing the negative publicity, but just a couple of months after the hue and cry is over, everybody seems to forget to find out what really happened. Were the Prius' really faulty, as alleged? What about the outcome of the investigation?


I stumbled upon Drew Winter's commentary in Wards Auto and I think it is a must-read. Drew gives very nice details on what really happened as the initial Federal investigation results showed up and further investigations are made. To read Drew's article click here.


Addendum - The NHTSA slammed a fine of USD 16.4 mn on Toyota stating that Toyota was aware of the faulty electronic throttle, but chose to remain silent. Food for thought - Toyota being fined means the Big 3 sales increase, two of which are owned by the US government.