Technology will matter

The new entrants in the small car segment have unleashed a technology war. Its technology, more than the price, that will determine the f...

The new entrants in the small car segment have unleashed a technology war. Its technology, more than the price, that will determine the fate of all the new small cars.

In India, so far, technology has never been state-of-the-art. Moreover, the consumer was not exposed to so much information. There was little and often no choice in the market for the consumer. But today, there are plenty of car magazines and programmes on television that educate people about the latest in the automotive world.

Today, the consumer knows that the resale value of old technology will go down tremendously once technology starts getting upgraded periodically. Something the country has already seen in the information technology sector.And every rational consumer would like to protect the resale value of the vehicle he or she buys. Once the resale value of Maruti vehicles begins to drop, this could lead to discontent amongst customers.

Here, the market leader is in a very odd situation. The company is selling decade-oldtechnology. On the one hand, Maruti Udyog Limited will have to raise the technology level to sustain demand. On the other, it will have to do something to check the drastic fall in the resale value of its vehicles as the new, technologically-advanced vehicles hit the roads.

With the launch of new cars, substantial share-grabbing will take place. Though it is difficult to predict the exact growth rate, the small car segment is definitely poised to grow. The dominant player in the market may not just lose its market share, but also volumes.

Players in the small car market have a radically different approach, as compared to manufacturers of mid-luxury cars. There will always be demand for small cars. There will always be people upgrading themselves from a scooter to a car. And from a second-hand car to cars like the Maruti Zen, Hyundai Santro, Daewoo Matiz or the Tata Indica.

There are a limited number of two or three car families in India. Unlike in the West, where people keep one car for work, anotherone for playing golf and a third one for the evenings, the Indian buyer expects a vehicle that can fulfill a variety of needs. The buyer not just wants space, but also stylish looks and safety features. Comfort and cost also figure high on the buyer8217;s priority list. Manufacturers will have to compete on all these scores.

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Maintenance is another aspect where the small car buyer would not like to compromise. The modern engines, that new entrants are bringing in, require lesser maintenance. In the case of the multi-point fuel injection MPFi system 8212; offered by companies like Hyundai Motor India and Daewoo Motors India Limited 8212; the customer needs to take the car for service at larger intervals as compared to the cars that run on carburetors.

Besides this, the spare parts will have to be cheap and the manufacturers will have to offer help even in remote areas. Most car companies have displayed ample confidence in component manufacturers of the country.

Barring certain steering components, bearings andhoses and the MPFi system, the component manufacturers are able to manufacture most parts that are of reasonably good quality. But there is always scope for improvement.But the industry will get a real impetus only once there is substantial overall economic growth that can ensure consistent growth of all markets. The government must now focus on creating overall economic growth.

The author is Director, Marketing and Sales, Hyundai Motor India