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

Mahindra Xylo

Finally the much awaited Xylo has been launched. I saw the pictures and I must say I was horrified! Ugly is an euphemism for this mutation of a Scorpio and a Sumo Grande. The headlights in particular make me pukish. I do not understand what fascination (or fetish) these Indian designers have for the upwardly curved grotesque angular head lamp assembly (and I thought A-Star was ugly)!

It could have been some what acceptable if the international automotive design trend is going in that direction; but it is not. Xylo's looks, unlike the Maruti Zen's, is NOT something you will grow in to (liking). Mahindra is keen on going the Detroit way by not learning from the "big 3"s design failures.

But like they say beauty is in the eye of the beholder. Apparently, many people are going gaga over the Xylo's looks! And why not, if we 'like' the TVS Victor, Yamaha Frazer/Gladiator looks, this is a piece of aesthetic wonder!

The interiors are pathetic. Cheap platic feel all over. I wonder what they were thinking when they decided to include purple/lavender cup-holders and under-seat storage, glove-box lining in an all black/dark grey set up.

Well, the Xylo does have some good features too. First, it is spacious and lives up to the name of an utility vehicle (or an MPV). It can easily take a family of 6 to a picnic 200 kilometers from home. Also, little considerations like lockable storage space under the seat, food tray make it very utilitarian.

A maximun power of 112 bhp @ 3,800 rpm and a maximum torque of 240 Nm @ 1,800 rpm gives the Xylo enough power for all activities an MPV is expected to do (C'mon we do not need to tow a trailer or a boat in India! We do not do such things). What I heard is that the M-Eagle engine that the Xylo uses is a toned down version of the 2.6L M-Hawk engine that the Scorpio uses.

I have a strong premonition that I will be encountering a lot of white Xylo's on my way to work three months from now. No doubt (like everyone has predicted), the Xylo will provide a stiff competition to the Toyota Innova, in terms of fleet vehicles; but I seriously doubt if the Xylo can match up to Toyota's quality and attention for details.

BASIC SPECIFICATIONS -

Engine Specifications
Displacement: 2498cc, CRDe, M-Eagle
Engine Type: Diesel
Maximum Power: 112 Bhp @ 3800 rpm
Maximum Torque: 240 Nm @ 1800 rpm

Dimension
Length: 4520 mm
Width: 1850 mm
Height: 1895 mm

General Specification
Seating Capacity: 8
Tyre Size: 215/75 R15
Suspension: Independent Coil Springs, Multi Link Coil Springs
Turning Circle: 5.40 m
Steering: Power
Brakes: Front Disk, Rear Drum
Gears: 5 Manual
Ground Clearance: 186.00 mm
Kerb Weight: 1830.00 kg
Fuel Tank: 55.00 L