The middle-class customer never had it so good when it comes to four-wheeled toys... But will the two wheeler giants give up easy?!
“I wish I had a car for just a day like this,” Ramesh Pawar fretted and fumed while running for the bus stand shade in the torrential rains. Pawar like various middle-class Indians has an aspiration to own a car but like others, he too has an income which is just about enough to cover his basic needs. Even though he has saved enough to be soon able to own a bike, Pawar still longs for a car; at least for his family. The want to own a car has never been so strong in India, especially when only 8 people out of 1,000 own a car here! The most hyped car of the season, the ultra cheap Tata Nano is also trying to persuade millions of motorcyclists to upgrade to their first car. Many have already taken the bait and are anxiously waiting for the affordable car to hit the market!
Enticed by the prospects, now Renault-Nissan, Toyota and even scooter giant Bajaj are all set to unleash their own versions. It is said that the stagnant growth in primary markets like US, Europe and Japan has forced major manufacturers to look at colossal opportunities available in the emerging markets. Here, even though lower real income (but a high aspiration value) calls for small affordable hatchbacks (which carry lower margins), anticipation of huge volumes are forcing many to rethink their strategies. According to Roland Berger Strategy Consultants, the under $10,000 vehicle market is likely to touch 18 million cars by 2010. The study also indicates that about 1.6 million motorcyclists will upgrade to a car over the next five years.
Higher standards of living might run in favour of these carmakers, but the rising fuel prices and interest rates may spoil the party in the long run. Playing on a different tune, players like Hero Honda and TVS for instance are taking the tried and tested route instead of diversifying.
“I wish I had a car for just a day like this,” Ramesh Pawar fretted and fumed while running for the bus stand shade in the torrential rains. Pawar like various middle-class Indians has an aspiration to own a car but like others, he too has an income which is just about enough to cover his basic needs. Even though he has saved enough to be soon able to own a bike, Pawar still longs for a car; at least for his family. The want to own a car has never been so strong in India, especially when only 8 people out of 1,000 own a car here! The most hyped car of the season, the ultra cheap Tata Nano is also trying to persuade millions of motorcyclists to upgrade to their first car. Many have already taken the bait and are anxiously waiting for the affordable car to hit the market!
Enticed by the prospects, now Renault-Nissan, Toyota and even scooter giant Bajaj are all set to unleash their own versions. It is said that the stagnant growth in primary markets like US, Europe and Japan has forced major manufacturers to look at colossal opportunities available in the emerging markets. Here, even though lower real income (but a high aspiration value) calls for small affordable hatchbacks (which carry lower margins), anticipation of huge volumes are forcing many to rethink their strategies. According to Roland Berger Strategy Consultants, the under $10,000 vehicle market is likely to touch 18 million cars by 2010. The study also indicates that about 1.6 million motorcyclists will upgrade to a car over the next five years.
Higher standards of living might run in favour of these carmakers, but the rising fuel prices and interest rates may spoil the party in the long run. Playing on a different tune, players like Hero Honda and TVS for instance are taking the tried and tested route instead of diversifying.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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