Daewoo Motors India: Life After Death

sunandaC

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Daewoo Motors India: Life After Death

Daewoo should have been dead in the Indian market a long time ago. Shortly after it invested over $1 billion to build up a fully integrated plant with a capacity to roll out 1.20 lakh vehicles per annum, its parent went bankrupt.

In India, Daewoo started out on a disastrous note by introducing the Cielo at a high price, then slashing its price to gain volumes; and then introducing a higher-priced Cielo-clone, the Nexia.

Even in the small car segment, its entry was ill planned. It launched the Matiz in a single variant and at the highest price in its class. The Matiz was introduced with a sticker price of Rs 3.67 lakh while the bigger Hyundai Santro was selling its base model at Rs 2.98 lakh. Given that the car was considerably smaller than the Zen, the Santro and the Indica, the Daewoo Matiz almost sank.

Two things have helped Daewoo bounce back though. First, in the case of the Matiz, it moved fast to introduce lower-priced, stripped-down variants that got the price-value-technology equation correct.

In May, 1999, it introduced new variants, including the stripped-down, non-AC Matiz SS, and saw its volumes rise 165% to 1,996 from the previous month's 754. It touched a peak volume of 5,853 in March, 2000, before slipping to 3,500 in July, 2000.

More importantly, the announcement of the Euro-II norms helped it grab the image of being the small car with the best technology since all its variants met the norms, unlike its rivals.

And now that the Matiz has been voted the best small car in the world by several prestigious motoring magazines worldwide, Daewoo image has got a further boost.

But these problems could vanish overnight if Ford takes over Daewoo. The Ford-Daewoo combine could be the strongest challenger to Maruti here. Despite the success of the Ikon, Ford's share in the total passenger car market will still be less than 5% this year.

With no small car in its portfolio, Ford can never dream of playing the numbers game. Daewoo and Matiz, Ford could become the number two player in Indian market.
 
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