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December 30, 1999
NEWSLINKS
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The Rediff Business Special/Kanchana Suggu'Indian companies are not capable of producing world-class cars'1999 ends, swadeshi car's race with foreign machines continues So what went wrong? Why couldn't the Indian automobile giant take on the multinational juggernaut? Can't the Indian manufacturing sector match world standards? Doesn't Indian industry have a spirit of excellence? "We are going up the learning curve. We are constantly improving. The car of tomorrow will definitely be better than the car of today because we have 24 hours of learning behind us," says Rajiv Dube, Telco's general manager (commercial), passenger car division.
Analysts say the Indica sold because of its low pricing, the Tata brand equity, Telco's cost-savings arising from minimal outsourcing (except the hardware, all systems and software were developed in-house) and, above all, the nationalistic feelings that the Tatas invoked in potential customers. "Actually, after overplaying the 'India card', Telco failed to deliver on both the product and service fronts," says an analyst.
Rajender Singh Sethi, propreitor, Popular Automobiles, Bombay, deals in all makes in the small car segment. "Initially, the staff at Telco service stations were rude. The quality of the car and after-sales service have improved of late. I wonder how such a big company could make so many mistakes. There were times when I had to lie to sell the Indica."
Agrees Telco's Dube. "The J D Power survey is a combination of actual quantitative problems and the perception of the customer, his expectations. Please note that the survey was conducted in July 1999 when we had a few months of production experience behind us. We have had tremendous improvement since then. You will be surprised to hear this, but our sales have actually gone up after the report has been published! The only explanation to this is that even our customers have realised that our quality has improved many fold." K L K Paul, general manager, Wasan Motors, Bombay, an exclusive Telco dealer, is thrilled at the surge in the Indica sales in the recent past. "In November 1999, I sold 201 cars and uptil December 24, 1999, I've sold more than 225 cars. So you see, the car has been well accepted by the customers. I totally disagree with the J D Power survey report. I think opinions of the first set of customers were taken. They should do their survey now," he asserts. "The Maruti style is no longer appealing. Its design has been there for 14 years. The 800cc engine vibrates on the road whereas the Indica is a strong and heavy vehicle. No accidents have been registered so far. I feel people are increasingly going in for the Indica -- because it saves money, and life too."
According to Telco, the Indica has achieved a market-share of 7.9 per cent of the total passenger car market in the first eight months of 1999-2000 fiscal and 18.1. per cent of small passenger car segment. Telco's month-wise market-share was at an all-time high of 10.2 per cent of the total passenger car market in October 1999. Bombay's Mahesh Tiwari, a businessman, has no complaints with his new Indica. He bought it 15 days back. "I love the sleek look of the car and its spacious interiors. For its price, it's a steal. No problems so far, touchwood," he says with a smile. Pradeep Punjani, an insurance company executive, hardly smiles while talking about his Indica. He bought the car in February 1999, when demand was peaking. He was so unhappy with its performance that he sold it off. "Thankfully, I didn't incur any losses," he says. "The engine made too much noise, the pick-up was ordinary." Once bitten, twice hopeful: Punjani is planning to buy a brand new Indica! "The new lot, I learn, is an improvement over the first version. I loved the look of the Indica. Now that the quality and service are better, I'm inclined to try it out again," he says. The winds of change, market analysts say, are blowing through Telco and its associates. The Indica is now sold through fifty dealers across the country, and serviced by 300 "efficient, customer-focussed" centres. Concorde Motors' Web site offers an online facility for booking and service registration.
"Having consultants from outside doesn't make your car less 'swadeshi'," retorts Telco's Dube. Journalist Sorabjee sums up the argument. "Today, Indian companies are not capable of producing world-class cars. That's because our industry has been protected for around 40 years. Considering the present state of the industry, you have to have collaborations from abroad." The Tatas' Indica dream took 31 months to become a reality. How long more before it gains in glory? Telco's Dube says, "The Indica has a strong pull in the market and I am sure this will continue. We once said that the customer will no longer have to suffer a small car and we delivered exactly what we promised. Our promise (slogan) 'More car per car' has been fulfilled. And as far as our future plans are concerned, we should be coming out with another Euro-II compliant model in the next few months." Post-script: On January 12, 2000, Ratan Tata said at the Auto Expo in New Delhi: "The JD Power review was not just about car sales, it was also about satisfaction. Now we fared badly in the satisfaction level because of our dealers. Our current dealers are used to selling trucks and they have not dealt with the suave Indica buyer. Hence, he is not up to the mark in performance. But we intend to solve this problem by creating a set of dealers that will exclusively deal with our passenger car buyers." EARLIER REPORTS Maruti declares open price war against Telco Daewoo's Matiz wins efficiency test for small cars Indica has been designed, not adapted, for India, says Ratan Tata Maharashtra offers two-year sales tax sop to auto sector; Indica seen as beneficiary Tata Indica priced in Rs 259,000-400,000 range Tata Indica exports after meeting domestic demand; moves afoot to make it Euro-II-fit Tata Finance clocks Rs 3.5 billion in Indica bookings Buzz about new Maruti models, Indica wakes up auto market Indica sales to be on new priority basis Indica bookings at 115,238 mark record demand for new car Craze for Telco's swadeshi small car, the Indica
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The general perception among analysts and customers is that Telco somehow made a mess of its first foray into the small car segment. "After labelling the Indica as a 'world class' car, Telco came out with dated technology of carburettors -- whereas the world has switched over to multiple point fuel injection or MPFI. Since the Tatas were setting up new production facilities from scratch, it would have been easier for them to go in for the MPFI , rather than change over from the carburettor to MPFI. This involves added cost which will be passed on to the customers," says an analyst.
'So many mistakes'? "Yes," repeats Sethi. "Initially, the fan belt made too much noise. There was a problem with pick-up on high altitudes. There was a humming noise in the engine." Sorry, why the past tense? Sethi says the Indica has since been fine-tuned. "Now the car will do well."
Does this mean that Indian manufacturers can match global standards? Are they coming of age at the dawn of the new millennium? "Too much is being made of the 'swadeshi' factor. Come to think of it, even the Indica has foreign connections. Joe Consiglio from Chrysler, the ex-head of research and development at Rover, a team from Warwick and a French auto-design firm called IDEA were involved in the making of the Indica. Also Japanese robots were used to assemble parts at Telco's Pimpri plant," says an analyst.