Wednesday, June 05, 2013

The new buzz word in Motown: Affordable luxury

The Indian automobile industry is facing one of its toughest periods in over a decade. In the period between April 2012 and February 2013, the industry registered a negative growth of -4.64% in the passenger cars segment. Sales of small and medium automobile segments are slacking off, which is in sharp contrast to the scorching pace of growth witnessed till a couple of years ago. Between FY2005-06 and FY2010-11, passenger car sales blazed at 15.2% per annum. That fell to 4.7% in FY2011-12, before languishing this past financial year.

The only silver lining has been the luxury end of the car market, which has been an exception to this anaemic trend. While the overall passenger vehicle industry has grown at a CAGR of 19.04% in the past four years, and the luxury vehicle segment has grown at a CAGR of 32.02% during the same period. Currently, of total car sales of 2.5 million, the luxury segment contributes only 1.2%. But the segment has been growing steadily over the past couple of years and is expected to contribute 4% of the total car sales in the next eight years. Experts believe that demand for luxury cars will rise to at least 50,000 vehicles by 2015, from 25,000 units sold in 2012.


Mercedes-Benz, which came to India in 1994, was the largest seller of luxury cars in India till a couple of years ago when fellow German rival, BMW, beat the company to the numero uno position in 2009. That year, Mercedes recorded 3,202 units in sales whereas BMW sold a good 3,587 units, topping the sales chart. Audi, which was then just making its presence felt in the Indian market, registered 58% of whopping yoy growth in 2009, selling 1,987 units. Since 2009, the competition has gotten more intense and scalding hot. The German players have been at each other’s throat, straining their muscles to outperform in the competitive luxury car market, which has grown thicker with the entry of newer players like Volvo and Jaguar Land Rover.

On one hand we have the entry level luxury brands like BMW, Audi, Mercedes and Volvo; on the other hand there are the mid-level luxury brands like Jaguar and Land Rover (starting from about Rs.5 million) and then there are the ultra-luxe brands, some of the biggest names in the sports car and super luxury segment, like Bentley, Lamborghini, Rolls Royce, Ferrari, Aston Martin, Maserati and Bugatti. The arrival of these big guns in the Indian market over the past two years has further redefined and segmented the luxury car market. So we now have the entry-level, mid-level, super luxury, sports cars and SUVs. Another key trend in this luxury space is the sudden upsurge in the entry level cars starting as low as Rs.2.2 million.

The trend was kicked off with BMW launching its X1 SUV model and lowering the entry level of its luxury cars to about Rs.2.2 million (ex-showroom). The idea is to generate volumes and so players like BMW are launching new products in the affordable luxury segment, where the demand actually is. In the process, the traditional luxury segment has now morphed into the premium category with most luxury car makers moving towards affordable luxury. In order to vroom ahead in this new “affordable luxury” category, BMW has introduced its sub-brand Mini Cooper, which it introduced at last year’s auto show in Delhi. It is planning to launch three models of this sub-brand in India − Mini Cooper, Mini Cooper convertible and Countryman, priced aggressively between Rs.2.49 million to Rs.3.19 million. Rivals Audi and Mercedes have also taken steps to create excitement in the entry level luxury segment. Last year saw Audi introduce its Q3 model (priced at Rs.2.67 million) while Mercedes has launched its B-class priced competitively at Rs.2.10 million, which competes with BMW X1 (priced at Rs.2.24 million).

As the churn in the luxury car market gets thicker, players are pulling out all the tricks to stay ahead in the competition by creating new segments and looking for new markets to generate demand. “As we move into the future, we are well positioned with a forward-looking strategy, progressive roadmap along with an exciting and emotional portfolio to tap the available market opportunities,” says Philipp Von Sahr, President, BMW India. So, BMW is tapping the market for commercial use of luxury cars such as premium hotels and cab owners and has gone for selling the stripped versions of its traditional luxury cars to generate incremental demand.

Likewise, Audi is contemplating to launch several initiatives on the pro\duct front this year. It plans to assemble the entry level Q3 SUV, which is giving good competition to the BMW X1, in India by the second quarter of this year. The price of Audi Q3, which starts from Rs.2.6 million, is expected to come down further once Audi starts assembling the Q3 in India. The car maker at present assembles sedan A4, A6 and SUV Q5, Q7 in India. Even, Mercedes has plans for expanding its product portfolio. “We would be launching one or two products, starting this year, with a B-class launch. And soon we would be launching an A-class product as well. Secondly, we are investing heavily on production at our factories. We want to make our CKD (complete knocked down) units because it take 2-3 years to get the CKD portfolio ready,” says Debashis Mitra, who was Director, Sales & Marketing, Mercedes India, before quitting just a few days ago.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Friday, May 31, 2013

Get real White House

Officials promoting Obama’s Drone programme continue to churn out the same old rhetoric of how grateful those in the tribal areas are every time a Drone strike is launched on Waziristan. Well I have news for the White House. Open your eyes, stop being in the denial mode and listen to the voices of Internally Displaced Persons (IDP’s) from Pakistan’s South Waziristan Agency (SWA), currently camped in front of the National Press Club in Islamabad on a hunger strike.

“The IDPs from Mehsud tribe have demanded an immediate halt to US Drone strikes and prolonged military operations in SWA which was launched in 2009 against the Tehreek-e-Taliban Pakistan (TTP). Protestors are vowing to continue their protest until the halt of military operations, which has resulted in the mass displacement of many (civilians ) from the region,” Saleem Mehsud, a Waziristan-based journalist said.

Last week, Farzarna Bari, Human Right Activists, Pakistan, Tehreek-e-Insaaf leader from SWA, Doost Mohammad Khan and elders of the Mehsud tribe participated in the protest camp. The IDPs stated that the Pakistan government should also take the matter seriously because “the coming generation of the Mehsud tribe are facing immense problems and are being deprived of basic facilities as a result of military operations”.

Advocate, Sherpao Khan Mehsud said the sit-in would continue until their demands were met. He said that drone attacks were not only killing innocents but were also violating the sovereignty of Pakistan. Mehsud Youth President, Jamal Shah stressed that “the military operation should be stopped immediately in which houses, markets, schools and colleges had been destroyed.” He also said the military operation “Rah-e-Nijaat” was started in 2009 in Waziristan and now hundreds have been forced into slums and living in terrible conditions.

The Mehsuds are not alone in calling for an end to drone strikes. I spoke to two members of the Wazir tribe. Arman Khan Wazir told me, “I am from Waziristan and because of drones, people are turning against the Pakistan Army and America. Children are joining Taliban because they have no facilities and they are becoming destructive minded. I can’t explain the destruction there in words.”

Imran Khan has long condemned drone attacks calling them a violation of international laws which also violate Pakistan’s sovereignty and is calling for America to identify the victims of drone strikes. He also criticised the government saying it had turned the country into a “Banana Republic” and that US authorities “were allowed to hit and kill any civilian at will inside Pakistani territory”.

Always quick to be on the scene for peaceful protestors, a tweet from Imran Khan read, “my full support for our FATA youth protesting drone attacks in front of Islamabad Press Club. Will try to go personally to join their protest.”

Says activist Raheem Ullah Wazir, “if we start doling out justice from the skies than we should get rid of the courts from the world. If someone is a culprit, he should be brought out into the open so that truth and reality is known to the world. Secondly, where is the sanctity of international borders? This is going to set a very wrong precedent. The money that is invested in drone technology could have been used to seal the Pakistan-Afghanistan border to keep out insurgents, if any.”

In an email, Hanif Ullaha, a Peshawar-based journalist, highlighted his arguments against the use of drones in an email to me, laying out the following points: it is illegal, induces collateral damage, abuses international law and norms for strike, is counterproductive and there is rampant extrajudicial killing... if Nazis could be brought to trial and prosecuted, why are the killers being allowed to get away scot free here.

I asked several people whether drones radicalized young people in the tribal areas and the answer was an unanimous “yes”. A man (name withheld) told me, “They take their revenge on the Pakistan army and get closer to Al Qaeda”. He admitted that he himself had considered joining the Taliban after the drone strikes but decided to stick to his studies.

It is important to note that a recent bombing of an army checkpoint which killed 35 people was claimed by Taliban to be in retaliation for the killing of two of its commanders by drone strikes. I argue that these “secondary” drone victims should also be added to the death figures to present a true picture of the impact of warfare. The Taliban also attacked the Pakistan government for what it called its “complicity” in drone strikes.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Saturday, May 25, 2013

Fairs can spell money!

Cultural and religious festivals in India are of immense importance

Truly, religious festivals have not been confined to religious activities. Their contributions extend to economic development, employment creation and tourism. Among all, Kumbh Mela is one of its kind, claiming to be the world’s largest religious festival. The mela, which occurs once in three years in four different places including Allahabad, Haridwar, Ujjain and Nashik alternatively, is happening currently in Allahabad. Around 100 million people are expected to join this 55-day festival. However, the economic contribution too is as gigantic as its crowd. A report by the Associated Chambers of Commerce and Industry of India estimated that the mela will generate about $2.2 billion of income for the city and create thousands of jobs. However, it is not the only religious festival generating revenue and employments for Indians; there are other melas including Sonepur Mela and Onam in the southern state of Kerala. The Sonepur mela brings good business to the local people. There were over 600 shops where sale of around 3,000 heads of cattle has been recorded. Onam, a festival of Kerala, has taken the international route, being celebrated in different places of the Middle-East including Dubai and Qatar.

Still, there are many lessons to learn from the way many countries have modified their festivals and marketed them at an international level. The Rio de Janeiro carnival has positioned itself as an international event, attracting an estimated 1.1 million visitors to the city in 2012 and with 5.3 million people taking part in street parties, an increase from 4.9 million people in 2011. Similarly, the Venice carnival attracts over three million tourists. Another classic example is that of the Mardi Gras carnival in the United States which generates a direct revenue of $ 144 million (more than $ 500 million by some other estimates) attracting more than five million visitors in New Orleans every year.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Saturday, May 11, 2013

“Market size is growing”

B&E: Luxury car makers are moving towards affordable luxury. Wll this trend affect the core luxury car segment?
Kumar Kandaswami (KK):The luxury car market will more or less stay on track in terms of numbers and figures. I don’t think anything big is going to happen in the traditional luxury car segment. Yes, the market has slowed down and replacement of luxury cars will take a little more time. Corporate houses and businesses are big consumers of luxury cars and they get tax benefits on such purchases. But when profits are low there is no need to hide tax. So businesses are not buying as much as they used to in the high growth years. Affordable luxury product lines are new categories that players are trying to create to grow and expand the market. We need to see how these segments will evolve. But they would not replace the conventional luxury sedans.  
B&E: Apart from players like Mercedes, Audi, BMW, other players are also entering the luxury auto market. Do you think India is ready for such action in this segment?
KK: It will take some time for market to develop. India is a small market for everybody to jump in. Players are waiting for the market size to increase by 60,000 to 70,000 units, but that will take 3-4 years .Newer players like Volvo are doing fairly well and want to expand but developing the network and infrastructure will prove to be time consuming.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Friday, May 10, 2013

“The best medium to deliver broadband Internet – fiber optics”

Sachin Deshpande, Chief Operating Officer, Radius Infratel, on the challenges and opportunities associated with Fibre-Optic-To-The-Home (FTTH) technology

B&E: How important is Fibre-Optic-To-The-Home (FTTH) for attaining better broadband penetration in the country?
Sachin Deshpande (SD):
From a dial-up connection speed of about 256 kbps to now a slightly respectable figure of 2 Mbps or more, the Indian consumer’s need for Internet speed has been growing fast. And so is the case with their dependence on broadband due to high usage of social networking and video streaming. Given the technology, today, broadband connections can be given only by wireless service providers. The best medium that can deliver these broadband-based services is fiber optical network. That is why the concept of providing fiber-optic-to-the-home came in. There have been some attempts by incumbents to provide optical fiber connectivity to homes but they have really not worked well. On the other hand, we have countries like China, South Korea and Japan, where people have been using 100+ Mbps broadband speed for the last 5-6 years. About 3 years back, we saw the opportunity. While the service providers have been making attempts to set up optical fiber infrastructure, we thought that an infrastructure service provider like us should chip in to provide optical-fiber-to-the-home. We are putting in place optical fiber based last mile connectivity that can be utilised by various service providers to reach out to their customers.

B&E: What are the challenges with FTTH?
SD: It is a new concept in the country because traditionally, telecom infrastructure has been laid out by service providers in India. Today, we install this network independently and then convince telecom operators to use it. Convincing them is the first challenge. We also have to engage various builders and developers who are coming up with new residential and commercial projects. They are a very important part of our ecosystem. Most of the leading operators have liked the idea of embedding the last mile connectivity into their project through FTTH technology.

B&E: Could you elaborate on the technical part of FTTH?
SD:
The concept of optical fiber to the home comes from GPON (Gigabit Passive Optical Network) technology. This technology came in existence about a decade ago. Apart from this, Radius Infratel holds the patent for NANO ( Neutral Access Network Operation) technology in more than 25 countries. This solution allows us to integrate multiple service providers that provide a variety of services. We are a company that lives on innovation. India’s first smart pre-paid electricity meter was brought to market by Radius. We have our research labs in Noida and Delhi. These labs work on both innovation as well as localisation of already existing technologies.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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