Luxury goes for the premium plunge

After tasting initial success, the three top players in the luxury car market are getting even more aggressive on price. Is the effort really worth it? By Deepanshu Taumar

Things were quite straightforward way back in 1994, when German luxury car maker Mercedes entered India to enjoy the first mover advantage and tap the small, but growing, affluent class in the country. It enjoyed a decade of monopoly in the luxury car segment till the time Audi (the luxury arm of Volkswagen) decided to make an entry in 2004. In 2006, markets dynamics were shaken further when another German player BMW eyed the growing market. From thereon, the trio has been locked in an intense competition, which saw Mercedes lose its position to BMW in 2009. Subsequently, catching up has been rather hard for the pioneer.

On initial impressions, all the three players seem to have a very similar kind of positioning – they are high-end luxury car makers whose customers are driven by the aspirational values of their products as opposed to functional values. But a closer look reveals significant differences. First of all, BMW changed the game by addressing a younger population – in the 30-40 years age group – as opposed to Mercedes, which was targeting individuals above the age of 40. Secondly, the company introduced the concept of affordable luxury. It tapped commercial users of luxury cars such as premium hotels and cab owners by selling stripped down versions of traditional models to them. Later, BMW introduced these versions to retail customers, which led to an unprecedented momentum in sales figures. The BMW 3 series came first, and next year in 2010, the company launched the BMW X1, which was their lowest priced car. The 3 series, which was a runaway success, was redefined in July 2012. BMW is positioned as a youthful brand that symbolises aggression and speed. Audi, on the other hand, is positioned as a stylish car backed by a great passion for engineering with the tagline 'Vorsprung durch Technik' in German, which means 'Lead by Technology'.

How is the erstwhile leader looking at this transformation in fortunes? “In the traditional luxury market i. e. above the Rs.30 lakh bracket, Mercedes is way ahead of the competition. But there are no volumes or numbers that we can share,” proclaims Debashis Mitra, Director, Sales & Marketing, Mercedes India. But even Mercedes is changing its positioning after around 16 years from a chauffeur-driven car, which was favored mostly by senior executives; to a more youth oriented brand that is associated with the Formula One. Last year, Mercedes launched the AMG driving academy, which has top drivers from the world teaching those who enroll for its course. The experience is aimed at building a strong association for Mercedes with sportiness. Further, to counter the advances of these two players, Mercedes has launched its B-class at a competitive price of Rs.21.04 lakh as compared to BMW X1 (Rs.22.40 lakh) and Audi Q3 (Rs.26.71 lakh), which were launched this year in June.

The traditional luxury car market is defined as cars that are priced above Rs.30 lakh. Cars like the B-Class, BMW X1 and Audi Q3 have defined a completely new segment in the luxury car market (Rs.25-30 lakh), as they are closer to the premium segment in terms of pricing. Companies are deliberately pursuing a downmarket stretch to generate volumes. That was the reason why the BMW introduced its sub-brand Mini Cooper in this Auto Expo with three different models - Mini Cooper, Mini Cooper convertible and Countryman - priced aggressively between Rs.24.90 lakh & Rs.31.99 lakh.

In addition, the war for market share now will depend quite significantly on how these three players leverage markets beyond the metros. Recently, BMW took up the initiative of introducing mobile showrooms to tap its new target markets like Karnal, Agra, Dehradun, Jamshedpur, Patna, Bhopal and Nashik. BMW believes that a lot of potential lies in these places for their entry level vehicles. Presently, the company has 25 dealerships in 18 cities and aims to open 40 more by the end of 2012, with 80% of cars financed by its financing arm. Mercedes is not far behind when it comes to tapping the potential of Tier II cities and is expected to open more dealerships in Ranchi, Bhubaneswar, Patna, Karnal and Raipur. It already has 60 dealerships in 29 cities. Audi, which also enjoys economies of scale with parent brand Volkswagen and with sibling Skoda in terms of manufacturing, has only 15 dealers in 15 cities.

However, Audi now intends to take the volume game to a new level by 2015, when it will be launching the Audi A3, which is expected to be priced at Rs.20 lakh. On the other hand, BMW is increasing its capacity to 11,000 units per year by investing Rs.1.8 billion in India, which also includes the facility at Tamil Nadu. Currently, the BMW group also sells Mini and Rolls-Royce apart from the core brand. By 2020, Mercedes aims to regain its crown, which it had lost to BMW in 2009. The former will launch cars that would be priced at less than Rs.25 lakh, starting from the A-class next year. Mitra admits that the company is waiting for the market to get more mature before going for an aggressive spree of model launches.

And things are just getting started. More potential entrants are expected to put their cards on the table. Volvo is restructuring its plan to be number 3 in the Indian luxury car market by 2020 with competitive launches in the entry level premium segment.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

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A man with two faces

Despite his liberal facade, Anwar Ibrahim’s connections suggest a hidden agenda

Malaysia, a  vital member of ASEAN, has been facing a huge turmoil in the last couple of years with hard-core Islamist fundamentalists hell bent on  turning the nation into an Islamist state based on the Shariat . There are many provinces in Malaysia which follow the Shariat like Selangor, Penang  and others. It is also an accepted reality that Malaysia turned Islamic way back in the 1960s, when Islam became the state religion with 60 per cent of the country’s population following one or the other form of Islam. However, the constitution of Malaysia guarantees equal freedom of religion to all.

But matters might not stay rosy for too long. Malaysia does have a brutal history of ethnic violence and witnessed severe riots against the Chinese minority in 1960’s and ‘70s and more recently against Indians two years ago. The dangers loom large with Anwar Ibrahim,  leader of the main Opposition People’s Alliance, a rainbow collation of many parties including the hard core Islamist Party, openly supporting it. Anwar tries to project a liberal democratic Western educated face for himself but the reality is totally different. The kind of connections he keeps portrays a different picture of Anwar, a potrait different from his public persona.

At first glance, people unfamilar with Anwar’s brand of politics would be seriously impressed with his political thoughts which he preaches openly and candidly in public, a staunch advocate of liberalism on many issues with freedom of expression and religion in Malaysian society as the centrepiece of his  pro-West approach.

At the same time, the kind of friendly equation which he maintains with powerful American Liberals like Paul Wolfowitz and other influential democrats as well as former US Vice President Al Gore, would make him the darling of the developed world. With elections looming large in Malaysia and the gap between the ruling party and the Opposition narrowing down with every passing day, the recent activities of Anwar Ibrahim have raised many eyebrows.

His recent travel in early 2012 to Arab countries like Turkey, Saudi Arabia and Qatar and meeting leading Muslim figures there like Sheikh Yusuf Qaradawi, a leading Islamic theologian, has raised eyebrows. Qaradawi is the unofficial leader of the Islamic world and he supports suicide bombings against Israel as well as female circumcisions. At Qaradawi’s house Anwar Ibrahim also met Khalid Mashaal, as per unofficial reports. Mashaal has claimed responsibility for numerous suicide bombings, killing and wounding innocent civilians, including helpless women and children. The trip, as many have claimed could be a part of damage control on part of Anwar Ibrahim after his open support to Israel’s defense of national security, a comment which did not go down too well in his own Malaysia.

Not just this. Many well placed sources believe that Anwar Ibrahim has close and personal contacts with key leaders of the Specially Designated Global Terrorists (SDGT). He is reported to have personal connections with  Youssef Al Nada until at least 2011. Reports claim Nada personally visited Anwar when the latter was on a visit to the USA in 2011.

Nada is an Egyptian banker who has been designated by the US, the UN and Switzerland as having financed terrorism through an extensive financial network and providing support for terrorist-related activities, including those undertaken by Osama bin Laden and Al-Qaida. Nada founded Bank Al Taqwa, a financial institution known to have provided cash transfers and investment advice to Al Qaida in preparation for 9/11.

Other close friends of Anwar include Hisham Al-Talib, former director of one of Al Nada’s companies and now with Ibrahim’s International Institute for Islamic Thought (IIIT) in the US as well as Dr Mohammed Manzoor Alam,  co-founder of the Al Taqwa Bank in union with Nada. Anwar has also served on the board of the Al-Baraka Bank which the US claims to be one of the main conduits for funding Al Qaida and other terror outfits. Anwar is also one of the founding members of  the IIIT which is currently under investigation by US Federal law enforcement agencies since the late 1990s, for the suspected financing of mega terror outfits like Al Qaida.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Subhash Chandra Bose- Man, Myth & Mystery

He had the audacity to swim against the tide and the guts to chase impossible dreams. Over 67 years after his purported death in a plane crash, subhash chandra bose retains his unending enigma, writes Sutanu Guru with Dhrutikam Mohanty

Everything changes, and then it looks as if nothing has changed in an ancient land like India. Just a few kilometers away, people have been vehemently protesting the scheduled arrival of the Pakistani women cricket team to practice and play a World Cup match. Just about a month and a half ago, thousands gathered nearby in the shadows of a majestic fort to celebrate what is called the Bali Yatra. This festival goes back at least two thousand years when brave traders ventured into the Bay  of Bengal to travel to lands called Bali, Java and Sumatra (modern day Indonesia).


But for the motley crowd gathered in a neighborhood called Odia Bazaar in Cuttack (Odisha) on January 23, 2012 – the sense of history is neither as recent, nor as ancient. They have gathered to celebrate the birth anniversary of one of the most loved, most mysterious, most talked about and perhaps most tragically flawed heroes of 20th century India. Yes, we are talking about Netaji Subhash Chandra Bose, who was born in this very locality in 1897. Typical of how the state works in India, the government of Odisha has declared January 23 as a public holiday. And the sprawling L-shaped house in Odia Bazaar is now a museum that commemorates and celebrates Subhash Bose and his legacy. You can tread gently and gape at the bed in which he slept when he was a student of Stewart School. You can watch the uniform he wore as the Commander of the Indian National Army. You also look at sepia tinted impressions of women soldiers of the Rani of Jhansi Regiment of the INA. A self appointed guide points out how the swords carried by the women soldiers were smaller than those carried by the males. "You see, it was already difficult for the women to carry the heavy .303 Enfield rifles," he says. The people running the museum have identified five surviving soldiers of the INA belonging to Odisha who actually fought along with the likes of Subhash Bose and Captain Lakhsmi Sehgal in Burma, which is now Myanmar. All are in their nineties and all five will be felicitated during a special function that will be held some days after the birth anniversary.


These men have grown frail and their memories are failing. But some still have the fire smoldering in their eyes when they recall those 'heroic' days of battle against the British forces. Just a short distance away from the now sprawling capital city of Bhubaneswar, with its malls and Infosys offices is a village called Chimpello. This village is known in local folklore as the village of INA soldiers. Hear it from Bramhachari Uttaray, who says he is about 90 years old, "Due to poverty, a group of youths from our village had gone to Rangoon to work as labourers. At Rangoon, we came to know that Netaji had given a call to all Indians to join INA to fight against the British. Under the leadership of Biswanath Samant, 23 of us from the same village joined the INA at Rangoon. We all signed on a paper with our own blood in front of  Netaji in a meeting at Mangla in Rangoon to fight for the country. Netaji also put 'blood tilak' on our foreheads and told us that it is impossible to get freedom without blood. We all joined the war and fought against the British between 1943 and 1945... my memory fails me now but I can never forget the fiery speeches of Netaji till I die." These facts become folklore and then mythology with a hop, skip and jump of our collective imaginations!


If nostalgia were a currency, you could be running a mint near this museum. The men and the women appear suitably awestruck, and some men whisper about how Netaji has always been given a raw deal by the Congress. Some of the louder ones talk of Rahul Gandhi being anointed the heir apparent ready to rule India. They talk of how the Nehru-Gandhi dynasty has always been insecure about the power and influence of Subhash Bose and his so called ability to mesmerise people. Wild conspiracy theories, as is wont with anything to do with Subhash Bose, fly thick and fast as nods and murmurs of encouragement lead to further criticism of dynastic politics practiced by the Nehru- Gandhi family. Incidentally, but for a five year spell when the Congress had won a surprise victory, the father-son duo of the late Biju Patnaik and Naveen Patnaik have ruled Odisha as chief ministers since 1990.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Last throw of the dice?

The crisis-ridden Congress leadership expects the direct cash transfer scheme, launched on January 1, to be a game-changer come 2014. But the situation on the ground is no longer as simple as it might seem to the UPA's spin doctors, writes KS Narayanan

Battered by a spate of scams and hobbled by policy paralysis, the UPA government is in desperate need of a lifeline. Its already sullied image was further dented when India erupted against the December 16 gangrape of a 23-year-old paramedic in south Delhi and the subsequent slothful response of the authorities to the heinous crime.

The girl's tragic death could not be dismissed as a mere crime statistic as the protest turned into a widespread anti-government agitation in Delhi and across the country. This is a sign that the urban wave that brought UPA II back to power in 2009 may now be turning against it.

With the mother of all battles – the General Elections – slated for 2014, the Congress leadership and the government have turned their energies towards a slew of welfare measures for the rural masses in the hope of offsetting the impact of the growing urban disenchantment with UPA-II. One such scheme is the Direct Cash Transfer that was kicked off by Prime Minister Manmohan Singh, UPA chairperson Sonia Gandhi and several Union cabinet ministers and chief ministers to woo rural voters in the face of urban discontent.

In the 2009 Lok Sabha polls, the Congress won 115 seats in major metros and towns except in Bangalore. More than 377 million Indians live in cities and metros and the number of urban and semi urban seats has increased from 70 to 200 due to rapid urbanisation and a delimitation exercise.

With anti-corruption crusaders like Anna Hazare, Baba Ramdev and Arvind Kejriwal and his recently formed Aam Admi Party keeping up pressure on a defensive government, the Congress has embarked on an ambitious policy of Direct Cash Transfer (DCT). The party expects it to be a game-changer, a move that could help it reap electoral dividends the way farm loan waiver scheme and National Rural Employment Guarantee Act (NREGA) did in 2004 and 2009 respectively.

DCT, much implemented in Latin America, has now become possible in India through the innovative use of technology and the spread of modern banking systems across the country. On paper, it is aimed at eliminating waste, cutting down leakages and targeting the beneficiaries better.

Rolling out DCT, Prime Minister Manmohan Singh noted: “Apart from these direct benefits, the government also provides an amount of over Rs 300,000 crore in subsidies which too must reach the right people.” A World Bank study recently reported that there is a direct link between cash transfers and voting behaviour and beneficiaries express a stronger preference for the ruling party that implements and expands cash transfers.

No wonder it has caught the fancy of Rahul Gandhi, the AICC General Secretary who wants party workers to take the catchy slogan ‘Aapka paisa, aapke haath’ (Your money, directly into your hands) to the people.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

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Weathering heights

Has the concept of weather weapons evolved from being a matter of sci-fi fantasy to reality? Has US stolen the march over us through HAARP?

Conventionally, the concept of weather weapons look more like a plot of a Hollywood sci-fi movie or a hypothesis derived from some fictional tale of Michael Crichton. Clearly, the hypothesis seems to be finding growing empirical support.

Weather warfare technology is not a very recent technology. An American scientist John Von Neumann, (from the US Department of Defense) was found undertaking similar researches back in 1940s for the American military. Similarly, a report by a BBC investigation team (dated August 30, 2001) revealed that the destruction caused by 90 million tonnes of water that literally washed away Lynmouth in August, 1952, was a result of a military experiment.

Today, the concept of weather weapons apparently is a reality being tested and engineered in ultra-sophisticated military control rooms – but of course, in complete secrecy. You see, most nations have to still contend with a three-decade old United Nations treaty prohibiting weather weapons development, which came into force on October 5, 1978, after the Convention on the prohibition of military or any other hostile use of environmental modification techniques.

The convention perhaps got momentum due to the Vietnam War, during which the US used various hostile weather influencing methods, including cloud seeding – a method that hastens rainfall by seeding clouds with catalyzing agents – to block enemy’s reinforcement channels; a fact revealed by the Weather Modification Hearings before the Subcommittee on Oceans and International Environment of the Committee on Foreign Relations, held during 1973-74.

Despite the UN Convention treaty, weather modification weapons are becoming a reality. In a conference on ‘Terrorism, Weapons of Mass Destruction, and US Strategy’ (April 28, 1997, University of Georgia), the then US Secretary of Defence, William Cohen fantastically revealed, “Others are engaging even in an eco-type of terrorism whereby they can alter the climate, set off earthquakes, volcanoes remotely through the use of electromagnetic waves.” For decades, Russia and even China have reportedly used this technology to get rid of untimely and unwanted rainfall, or to hasten rainfall on parched regions. In 2011, Iran’s President Ahmadinejad was found asking the US and Europe “to stop causing droughts [in Iran]” by forcing the clouds to rain before they reach Iran. Back home, the 2010 cloudburst in Leh was alleged to have been engineered by China.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

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