GM could not innovate for the Indian market, say branding experts

The companyhad been performing poorly in India and held less than one percent share of India’s car market

e4m by Venkata Susmita Biswas
Updated: May 29, 2017 7:39 AM
GM could not innovate for the Indian market, say branding experts

Earlier this month, automobile manufacturer General Motors announced that it will cease domestic sales by the end of 2017 and following that only export products from India. The company had been performing poorly in India and held less than one percent share of India’s car market. 

Reviewing the automobile manufacturer’s Indian debacle, branding and strategy experts felt that GM greatly lacked nuanced customisation for the Indian market. “‘Made in India’ has two key elements and GM got one part of that right: manufacturing. However, it failed in the other element‘brand in India’. For a foreign company to succeed in India, it has to adapt the product and its positioning to the needs and desires of Indian customers,” said JagdeepKapoor, brand guru and MD,Samsika Marketing Consultants.

Most international car manufacturers have been introducing internationally launched models with basic customisations for Indian roads barring companies like Hyundai and Maruti, which collaborated with Suzuki to create India-specific models.

Echoing Kapoor’s sentiments, Saurabh Uboweja, brand guru and CEO, Brands of Desire said, “The models that were launched in India were introduced because the global market wanted to push a particular mandate and not because India needed these models. If as a multinational you want to succeed in India, it does not matter which industry you are in, you have innovate for the Indian market.” He added that it is not easy to introduce models for the Indian market. “The company never had a stable line of products for the last 20 years. It has always been a start and re-start kind of a scenario. Opel Astra was a big hit, but it was not a volume driver. It was a premium car in a market that was largely driven by small cars,” he said.

According to Uboweja, GM did not have a robust brand strategy unlike say a Toyota that placed itself in the premium segment and decided not to compete in other segments. “If a company tries to compete with only Maruti in the Indian car market, that’s suicide.” He also felt that GM did not focus on upgrading its models. Although Chevrolet Beat was introduced with some modifications, he said those were simply cosmetic changes; in comparison, the new Innova is nothing like the old Innova.”

GM, one of the early entrants into the car market in India, entered the sector in 1995 and in these 20 years launched several car models under the memorable brands Chevrolet and Opel. Being one of the largest car manufacturing companies in the world, for GM to pull out of India is a valiant move. “It is a very brave thing for a brand to exit a country, but this is also acceptance of defeat; not many brands can do that, especially not a car manufacturing company that has a huge factory in India,” said N Chandramouli, brand guru and CEO of TRA. Comparing GM’s exit with that of Nokia’s, he said, “At least Nokia sold the entire brand to Microsoft, this is a complete pull out; it is brave but also shows failure.”

Elaborating on one of the core aspects that led to GM’s failure, Chandramouli said, “Every leader of the organisation was in the company for only about 18–20 months. Therefore, there was no consistency in strategy in the organisation. It also did not look like the company had a long-term strategy in India. They seemed to be looking for short-term gains.”

Uboweja also felt that the internal struggles impacted the car maker’s India operations. “In particular, GM did not have stable partnerships. First there was Opel, then Chevrolet, and most recently its Gujarat plant was bought over by the Chinese company SAIC. When a company is constantly handing internal issues, it is hard to focus on the market you are selling to,” he said.

The Way Forward

As GM wraps up in India, it will be important for the company to maintain its relationship with those who have already invested in the brand. “GM will have to continue to invest in India in terms of servicing that particular brand. And that should be under the Opel brand, not outsourced to a third party. Service is a very important part of the brand value and the brand trust that people will maintain in GM. If they outsource it, they lose 50% of the brand trust. The brand might make a comeback after some years, and they would not want to come back to an environment where they left a poor flavour of themselves.”

Experts are hoping this is not a final goodbye. “If the company can take another look at customising the cars for the Indian market maybe they can return to the market. In my opinion, GM should not vacate the Indian market. If they vacate, they remove themselves from the hearts and minds of Indian consumers. Instead of a ‘vacate’ strategy, GM should look at a ‘vacation’ strategy,” said Kapoor.

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