Why do American Cars Fail in Indian Automobile Market?

If you are in the market searching for a new car then probably one will surely consider Hyundai, Maruti Suzuki, Tata Motors, Toyota and maybe Kia but why people don’t consider cars of Jeep, Mitsubishi, Nissan, Ford etc., The Indian Automobile Industry is one of the largest in the world and the potential it has to grow further, is what all the manufacturers in the world are aiming for. The cheap source of raw materials, cheaper labour compared to anywhere else in the world without compromising much on the quality of the products, makes India a potential Gold Mine and every manufacturer wants a piece of it. Some countries have learned to read the terrain to hold a good grip in the market and some countries have failed miserably. While we look at different manufacturers for another day, we will now take a look at the fate of the US carmakers in India.

Though the Indian Automobile Market has good potential that doesn’t mean that one can easily do anything to us and think that we will accept it. Though the market is huge also it is very competitive and for this, a company needs to understand the mindset of the Indian Consumer to achieve good sales figures.
The Japanese and Korean Automobile Manufacturer seems to understand the mindset of locals and thus they provide us with a good package and this has made Maruti Suzuki and Hyundai/Kia capture the majority automobile market. Also, there are some Indian Brands like Tata Motors and Mahindra & Mahindra which are coming up with some good products and providing the ultimate safety one needs but this will take a lot more years to make locals believe that Safety should have the priority rather than features or mileage.
In the same way, when you look at the products from American manufacturers like Chevrolet Sail U-VA, Opel Vectra, Opel Corsa, they failed to impress the Indian audience and it was further affected by poor after-sales service. Let’s find out why Indian Automobile Industry is not considering American Cars as an option.

1. Not following the Localisation Principle

Most of the manufacturers from the US either never manufactured their product locally or they ended up doing it in the later stages. Previous manufacturers like Opel brought CBU (Completely Built Units) models and sold them in India, while Chevrolet had an assembly plant and brought CKD (Complete Knocked Down) units to be assembled in India except for a few products like Chevrolet Beat and Tavera. We believe Ford is the only manufacturer to have used more localised parts. Using more localised parts in any country that the manufacturer is in, not only increases the profit(depending on the country that you are in) but also increases customer’s confidence since they play a very important role in maintenance as the cost of spare parts and servicing can be reduced drastically.

2. No Innovation in Products

  Where there is no Innovation, there is no growth. And this is true in every industry and not just in automobiles. Let’s face the truth, apart from the Ford Ecosport, there are not many innovative products that were manufactured with the Indian market in mind. Heck, even the Chevrolet Beat that was a success in India, was a copy of the Chevrolet Spark in the US. There was no attempt from the US carmakers to make more products specifically for the Indian market. They won’t even care too, because they already make enough profit in the US itself that any other outing in other countries is like a gamble investment and of minuscule importance for the top management. The investments will be low so that they can pack their bags and shut down, anytime they see a recession, loss or pandemic.

3. Not Understand the Indian Mindset

If there is one thing that the US manufacturers are bad at, then it has to be in studying the local market. By studying the local market, we mean the study of the Indian mindset and the preferences of an average Indian buyer. These are the most basic things one has to consider while thinking of launching a product in India, after all, it is the average Indian who is the consumer and the final target of the business. Unable to understand simple requirements like these the manufacturers are bound to fail and that is exactly what happened to the fate of the US carmakers in India. An average Indian’s first preference will be the cost of the vehicle and he will be looking for one while already being on a tight budget and from there the other priorities like service costs, service network, cost of spare parts all fall together and help decide the product.

4. Lack of Global Approach

When we look at the spread of US manufacturers throughout the globe then we will be able to see that, the ill fate of the US carmakers in India is shared in other countries as well. It’s not just in Asia that they have suffered but in Europe and other parts of the world as well. And, we believe that the major reason for this is the lack of a global approach by the US manufacturers. They fail to see that in many markets, a Civic\Corolla is where the segments end, while in the US, the same Civic\Corolla is where the segment starts. This creates a whole lot of difference in the approach of a consumer and an interested manufacturer would be able to make up for the difference by carefully changing the strategy of what products must be released in that market.

5. Poor Service Network

The service network and the quality of servicing can be said as the backbone of the automobile industry. It is quite obvious that the major reason why Suzuki and Hyundai enjoy a major share of the market is because of their wide range of service networks and the low-cost servicing of their products. Some of the products from the US manufacturers like the Chevrolet Cruze and Opel Corsa were brilliant but a good service centre is something hard to find for the buyers. It was hard to find in Tier-1 cities themselves, so you can forget about towns and rural areas having service centres. Even if you managed to find one, some of their products like the Chevrolet Cruze had higher servicing costs when compared to their competitors during its time.