Over the last few months, there has been a lot written on the dip in automobile sales in our country. Just a handful of companies hold fast while the rest flounder and gasp. Every month, the story remains more or less the same. It’s the same brands like Maruti Suzuki, Hyundai, Mahindra and Tata that carry the flag. Global powerhouses like Volkswagen (VW), Ford, General Motors, Renault and Nissan have bitten the dust, in spite of their muscle and money. Some have had the temerity of justifying their non-performance as either “the Indian market is too complex” or “the Indian customer is not mature and only looks at price”.
The numbers are the result, and not the reason. Having observed the fortunes (or lack of them) of all passenger vehicle brands operating in India for at least five years, as a consumer and a consultant, I can confidently state five clear reasons for this failure of the big global brands.
First, what is your story? They take the Indian customer for granted and fuss over merely the product and the sticker price without bothering to build the brand. Building the brand is not just putting up showroom signage, releasing full-page newspaper ads on product launches and taking journalists for test drives. The customer needs to not just know of you but more importantly about you. Only when you share your story will someone bother to understand you, align with your personality and then build an association. How many customers know about brands like VW or Renault or Nissan? A minuscule minority. They have just not bothered telling their stories.
Second, who is your customer? I am amazed when the top executives of many of these companies make boastful statements like “becoming a 10% market share player in five years” or “taking Maruti head-on”. Even before understanding the market and its complexities, you go ahead and act like an action-movie hero. I have observed a potent mix of impatience and a sense of bravado that leads to such empty talk. A deep lack of understanding about customer needs leads to inadequate product portfolios. Most of the laggards suffer from what I term the “single-horse syndrome”—basically, just one horse in the stable at a point of time trying to go out and make a huge splash. Ford, Renault, VW, Nissan, Fiat and quite a few more brands have fallen prey to this syndrome. If you see India as a large and sustainable market, you need to serve it better in terms of products and services.
Third, what are you offering the customer that is new? Nothing. All that is being offered is a rehash of what has been done in Brazil or Thailand or Russia or Mexico. Or worse, what the market leaders like Maruti or Hyundai or Mahindra or Tata do. That is typically the quickest way forward. One of the first things discussed in a market entry forum is the number of dealerships to be appointed, how many dealers from the competition can be drawn into your camp and how discounts have to be offered during the festive season.
Basically, the same strategy paper, written a decade ago, being recoloured and reformatted into “new” strategies. You have pushed yourself into this whirlpool as you have not worked on a strategy based on understanding your customer’s mind and insights. The research undertaken ends up being the same, with the tomes providing both the comfort of “expert recommendation” and a shield against failure.
Fourth, what are you obsessed with? Numbers, numbers and more numbers. I can state with definite confidence that if the top management of these companies spent 25% of the time they spend justifying non-performance to headquarters to actual customer issues, the next quarter’s report might look different.
The first week of every month is spent on creating PowerPoint documents heavy on data, pie charts, bar graphs and trend lines with the single objective of living for yet another month without getting sacked. It is banal and utterly mentally tiring. The reasons given are rehashed every few months while cyclical factors like Shradhdh or “Bad period” come regularly to the rescue. Throw in some “India is highly unpredictable and complex” bits and you are good to go for another month.
And lastly, who is your leader? I may sound harsh, but the fifth and possibly the most important reason for the ailment lies in having people from the sales function head the country operations. While the function is integral and crucial to any organization, it has its limitations. The salesperson is focused on shifting metal, day after day, come what may, through the pipeline, keeping the network’s nose above the water. The performance metrics used are mostly numerical: numbers, shares, percentages of the vehicles. The passenger vehicle is bought more with emotion than pure rational reasoning. A lot of intangibles come into play, making a customer finally decide on the brand. Intangibles that the salesperson thinks are puffery. I was once told by an industry stalwart that I would never grow in my career unless I did a sales stint. Such is the obsession.
There has to be patience, empathy and a high level of customer-centricity to help tell your story to the customer. These are qualities that I am yet to come across in any sales head, more so the ones that survive on artificial respiration.