I often think that there is so much in common between cars and cellular phones. There was a time when phones were simply used for making calls. Next came the age of SMS and MMS, which led to the integration of cameras into phones. Consumers demanded music on the go and so cell phones became music players too. As consumers continued to demand utility and convenience, add-ons to mobile phones kept increasing to the point that, today, a ‘smart’ phone functions as a laptop, music player, camera, scanner – often even a torch light. I believe that cars are on the verge of undergoing a similar fast paced technological development where each car will allow its owners to stay ‘connected’ with their friends, colleagues and other car owners.
A recent Automotive Industry report by Wipro pretty much sums up what changes can be expected to current generation of cars and why these changes will be implemented. While the changes may be many, the reason is only one – product differentiation. If I take a look at the design of a car, I will probably be torn between two to three models. However, after that, my final choice will be based on the quality of the features being offered for the price. While most high end cars today have capitalized on technological advances to include features such as link up with your cell phone, mid-tier cars that are generally bought by the large Indian middle class do have such features.
I think what the common man looks for is not the ability to access Facebook when driving, but how far the car will go on a litre of fuel, how much will its spare parts costs, how many years of free service can be availed, is it easy to locate and access service centres, does the car rate high on reliability and economy in maintenance, and other such aspects. As Wipro’s report highlights, the growth of using embedded software among cars in India has grown in step with demand for utility based on pricing, unlike the US, where cars simply evolved with every new technology launched. While the inclusion of such high-end technology makes sense to differentiate luxury cars, differentiation of lower end cars would be better directed towards servicing, dealerships, promotions, bundle packages and pricing.
Indian OEMs should keep these factors in mind when planning on how to differentiate their cars from competitors. I do not believe the mass market is ready to purchase expensive cars with hi-tech features unless they provide value for money.
What are the other ways through which Indian automotive players can differentiate?