How To Crack The Indian Car Market?

70,000 cars booked in just two months!

10,600 sold within the launch of two months!

Production capacity to be increased by 50%, yet the waiting period will last 6 to 10 months! Impressive figure in highly competitive Indian car market, isn’t it? Any guess about the car manufacturer? If you are thinking about Maruti or Hyundai, you will be surprised! It’s none other than Renault, who pioneered the compact SUV segment in India with Duster and its latest offering Kwid has taken the entry level car segment by storm.

(Image Source)

What are the reasons behind runaway success of Renault Kwid? To find the answer we will need to go back in 2010.

It was April month of 2010, when Renault and Mahindra agreed to end their five year old joint venture Mahindra Renault Pvt. Ltd. The joint venture incurred huge losses and the product Logan was unable to deliver desired number. It was lose-lose situation for both the partners.

Reasons for Logan failure

Logan failed due to numerous reasons.

• Starting from brand positioning to pricing all went wrong.
• Factors like foreign exchange (2005 1 Euro = 55 Rs, 2007 1 Euro = 67 Rs) and differential duty structure just before the launch (less than 4 meter and more than 4 meter) were out of the reach,
• Not so effective marketing campaign, outdated looks, brand positioning (low cost entry midsized car) and localization of parts could have better handled by both the partners to avoid Logan’s failure in the Indian car market.

The failure of Logan taught much-needed lessons to Renault.

1. The product should cater young Indians need.
2. Young Indians need aspirational brands.
3. There is a price gap between what young Indians need and what is currently offered in the Indian car market.
4. The product components should be heavily localized in order to have lower maintenance cost.
5. To succeed for longer duration a wide-spread service network requires in Indian market.
6. A volume driver product requires at the gap of two to three years for sustaining demand.

It was a mammoth task for Renault to deliver all the above parameters in a short time. The task was tougher as it did not have favorable brand equity due to Logan failure.

Creating Positive Brand Equity

First task was to create positive brand equity. Renault made its second entry by launching Fluence (Luxury Sedan). Soon it launched Koloes (Luxury SUV). These products were launched to enhance the image of company.

Latent Demand Strategy

Second task was to have a volume driver product. It was a difficult task to develop an entire new product specific to Indian market needs as it requires a lot of time. So Renault chose the latent demand strategy. (Product or service for which demand exists but it is either not available or information about the same is not available, for example gear-less scooter “Kinetic” in India.)

Gap Analysis

It found price gap and need gap in the SUV segment. Most of the SUV in India were priced either higher bracket (more than 20 lakhs) or lower bracket (less than 10 lakhs) There was a gap between this price. Moreover these SUVs did not have maneuverability and fuel efficiency of Sedan car (the need gap). Fortunately, Renault had a readily available answer for these gaps ‘Dacia Duster’. (Dacia is a Romanian subsidiary of Renault)

Customizing Duster for Indian Situation

The company tuned Duster’s engine for higher fuel efficiency and fuel grade available in India. Made changes to interior and exterior as per the feedback received from the market survey. Positioned the product rightly which is visible from duster ad campaign (The unstoppable Indian).

Renault had its First Volume Driver Product Duster

Duster was launched in July 2012 and it became an instant hit. In fact it created a new category of Compact SUV in the Indian car market. Renault sold more than 1 lakh duster in span of two years. It helped Renault to expand its dealer and service network, a much needed factor to have long term sustainable demand.

Falling Duster Sales

However, Duster sales started falling drastically as established players entered into the compact SUV segment. Renault had an idea that the advantage would not last long. So it was readying itself for another volume driver product ‘Kwid’.

To be continued…………