Case Study

1069 words - 5 pages

Same wine in Different Bottles
Cross-badging,or selling the same car with cosmetic changes under different brand names,
has not worked so far in India. This case study looks at
In January 2012, Japanese auto major Nissan's Indian subsidiary Nissan Motor India sold
1,855 units of its compact car Micra. The same month French carmaker Renault launched its
compact car Pulse in India. In February this year, Micra sales were down to 608 units, while
Pulse sold 420 units.
Turn to sedans. In August 2012, Nissan's sedan Sunny sold 2,757 units. In September that
year Renault launched its sedan, Scala. By February this year Sunny sales had fallen to 1,191
units, while Scala sold 620 units.
...view middle of the document...

It costs at least
Rs 300 crore to develop a car for India. But cross-badging requires merely tooling changes -
an investment of less than Rs 20 crore.
It would have cost Renault India a lot more time and money to develop a compact car, or a
sedan had it chosen not to cross badge Nissan models."
Indeed, reports claim Nissan will soon fill a big gap in its product portfolio - it has no
compact sports utility vehicle (SUV) - by crossbadging the highly successful Renault Duster.
"Cross-badging offers a clear value proposition to the manufacturers and helps them expand
the market," says Nitish Tipnis, Director, Marketing and Sales, Hover Automotive - Nissan's
master franchisee in India.
But does it? In India, both attempts so far have been failures. Cross-badging did not expand
the market; on the contrary, it shrank. "The extent of failure is such that the combined
volumes of Scala and Sunny's sales in February this year was 1,811 units, which is lower than
the number Sunny alone sold - 2,757 units - before Scala was launched," says Kakade.
The same is true for the
Nissan-Renault products.
While some attribute this to the
slowdown, which is squeezing
the entire industry, a closer
look at the numbers shows that
the fall in sales of the original
brand is far higher than the
overall decline in the market.
Why has cross-badging not
worked? Examples from other
countries have established that
brand loyalty is critical to the
success of cross-badging. But
neither Nissan (nor Renault)
nor Volkswagen have been
around long enough in India to
win the fierce brand loyalty
that cross-badging banks upon.
Worse, while a fully loaded
Micra costs Rs 5.61 lakh
today, a Pulse with similar
features is priced at Rs 5.76
lakh. Few will see sense in
paying more for essentially the
same car simply to flaunt the
Renault label.
The same applies to the sedans, Scala and Sunny. Volkswagen did the opposite, pricing
Skoda's Rapid lower than Vento. But that left Vento customers feeling short changed, apart
from lowering the resale value of both cars.
There may have been some gaps in communication too. "Crossbadging offers clear value to
car manufacturers but what about the customers," says...

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