Premier Rio? What does it mean?

Somewhere floating around in the sea of stories on the super growing Indian auto industry is the news on Premier's re entry into the passenger car scene. For beginners Premier Automobiles Limited successfully manufactured Fiat 1100Ds of 1960s vintage in India till late 1990s. Then it ventured into ill fated tie ups with Peugeot that resulted in Peugeot bidding good bye to Premier and to India!!! And then with Fiat. Both turned out to be negative sum games for the parties involved including customers. And ultimately resulted in Premier too exiting the scene.

And now Premier is back. It is a good time to be making cars in India. It is still maturing and evolving. There are far too many niches that have not been exploited yet. Thus if a manufacturer gets the timing and the niche right, it gets a firm footing in the market, a market that can be conditioned and be hugely profitable. This perhaps explains Premier's eagerness to come back into reckoning as a manufacturer.

There are few interesting aspects about Premier's approach though. All together it is a low risk approach; most of the kit from China, a diesel engine and one that has some brief familiarity with India (TUD5 diesel Engine from Peugeot 305 and also used Zen Diesel) and a product that has no direct competition in India. This formula driven approach should definitely help Premier establish some sort of Supplier, Manufacturing and Distribution network.

But then they have a huge mountain in front to surmount. And what may weigh against and pull down Premier heavily are softer issues and not the heavyweight issues of manufacturing, distribution logistics and getting the car into a showroom or product reliability and after sales service.

Brand - Who would want to be seen in a car that has Premier on the grill? It has practically no recall value and if at all it has any is because of the cabs in Mumbai and the sudden demise it suffered. During its time the Premier Padmini had a reasonable reputation and then it vanished. This robbed it of an opportunity to develop a cult following like RE Bullet or a lingering longing in auto lovers. With none of this they ought to have debuted under a different brand name.

Market/customer Niche - A compact SUV is a very urban product. But what kind of a chance does Rio stand in tier 1 and tier 2 cities which are well penetrated by other Indian and Global majors? Who is the target customer; a first time car buyer? Unlikely. One who is upgrading from a compact hatch? Would moving from Maruti/Tata/Hyundai to a Premier count as an upgrade? Taxi operators? Nay, they have proven options in Indicas and other diesel sedans. It isn't very clear, who is that customer who would stop by the showroom to take a look at the Rio.

Price Points - In India it is the price point that decides who your competitors are and not the product segment. Price takes precedence over utility. On the wrong side of Rs 500,000, it definitely seems overpriced. At that price range customers have far too many options, including used Scorpios and Safaris.

Product Niche - This seems to be the only thing that Premier has got right. There was always this hope that Maruti would convert Gypsy into a 4 door hardtop, go anywhere vehicle with basic creature comforts. Suzuki did have it in its portfolio as Suzuki Sidekick. This never happened and the SUV aspirants in India only had the option to stretch their budgets to a Scorpio or a Safari or look up to the bigger more expensive imported SUVs.

So what next from here? The Rio may or may not sell; it is more likely that it will not sell in volumes and probably Premier knows that. For Premier too it is a low risk game, it just has to show the red flag to the SKD units coming from China. But this is going to make other manufacturers take a more serious look at this segment. The only other attempt at this segment was Ford Fusion which was positioned as a City SUV. We all now know what happened to the positioning and the attempt!!! Some of the big boys of the game like the CRV, RAV4, Outlander all started their lives as much smaller compact vehicles before growing in size with each generation upgrade to finally the grown up look they sport today. Who knows this may just be the beginning of serious SUV business in India.

One curious secessionist movement

I am not a political analyst. But that’s the best part. I can be wrong!!! And still get away with it!!! Okay the issue is LTTE and the stand that Sri Lankan government has taken, that of offensive and a wow to wipe LTTE out. And the question is will, say 25 years from now, the stand taken by the Sri Lankan government be heralded as a path breaking decision? The simple answer is to wait for 25 years. But 25 years from now I will be happier if I am able to hold a cup all by myself and less curious to know what happens in Sri Lanka. And this common human curiosity prompts me to guess. So let us guess…

First LTTE is a secessionist moment than can now only look back and say they had a noble objective, that of bringing the Sri Lankan Tamils what was due to them. But somewhere the capricious brutality took precedence over noble objectives. There is nothing that can explain the barbaric deeds and tactics that has become a part of the LTTE DNA.

Secessionist movements are brainchilds of a limited few and do not represent the views of the masses. Secessionist movements tend to be violent too. In India we have our own example of the Khalistan moment. Movements built around a thirst for power by few individuals does not address larger goals of a society and fades away or gets wiped out at some point in time.    

Secondly, what has 25 years of Elam yielded? I am not educated enough on this subject. The little knowledge that I have suggests that good things have happened; LTTE has been munificent in humanitarian activities. But everything still happened under the gory shadow of tactless brutalism. And a social network built on a tainted fabric would not have outlasted its propagators, and would not have taken it into the next 25 years.

I am not sure of the effort taken by the Sri Lankan government to ensure safety and other concerns of the un-affiliated civilians. But Sri Lanka still is a progressive state and not one that is torn down by internal violence. And LTTE has had its time, moments and may disintegrate into mere words when the Sri Lankan government finishes. Will Sri Lankan Tamils face more ostracization, will they continue to face discrimination, and will they have a hero standing up for their noble cause the noble way? No definite answers, one yearns for optimism. Still in a way what is happening today holds a lot of promises for tomorrow.      

Could all of this been avoided through a more peaceful way? There have been negotiations in plenty, ceasefires in plenty, none of which worked. My heart goes out to the thousands of innocent civilians getting caught in the crossfire. They too had dreams, ambitions, all of which lies in shambles.  . But if a different sun dawns 25 years from now they may have something to cheer about.

 

Communism vs. Capitalism

Few days back I was talking to a Russian friend of mine and inadvertently the conversation turned to a Communism vs. Capitalism examination. I think that is a natural topic in these times where bailout packages and layoffs dominate headlines. But what stayed in mind was her last statement, that 10 years from now America will be a socialist state! And so the conversation ended and I went back to my office, but somewhere the thought lingered. Well protectionism is already here. But how much do I know about Capitalism and how much do I know about Socialism/Communism? Perhaps very little.

For a Keralite with some education in Bengal Communism would look like an easy frog to dissect, though not with me. But there is something about both Kerala and Bengal that is disturbing and baffling. That this thought occurs to me only when I am in a revolutionary mood is not to be mentioned here!!! Both the states for the kind of natural resources and intelligent population have not made commensurate amount of progress. While this is not a finger pointing exercise it has to be said that it is a legacy left behind by successive rulers and their policies. I used to wonder is it the influence of socialistic thoughts that caused this.

So this thought was there somewhere in my mind. But as fate would have it I was destined to live in a different place, Maharashtra, industrially and economically more developed than Kerala and Bengal. This was pure destiny and had nothing to do with my preference or non preference for socialism. I observe that while the same socialistic influences are still there, Maharashtra is more capitalistic, the state has a lot more entrepreneurial spirit and this has led to more development, job creation and ultimately more progress. Capitalism is based on the assumption that individuals operate based on self interest and this endeavor promotes the betterment of the society. Let me borrow from Adam Smith to make my point…. "by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Somewhere an idea was crystallizing that Socialism/Communism does not work and that Capitalism is the way to go. It is something that can ensure quality of life and well rounded development. My theory had enough support from the collapse of Russia and China capitalistic overture.

Not sure when the plane took off and when I landed in the capitalist capital of the world, United States of America. The year was 2008. There was the customary excitement about gleaming lights, fast cars, tall buildings and express highways. All of it slowly waned away as I got used to the lifestyle here. I think time flies faster here, it is almost a year now and it is 2009 now. Bush is now a part of history and so are some of the giants like Lehman Brothers with few like AIG knocking on the doors. This is not a good time to be in the US as a migrant worker. Some days are scary with news of unemployment, collapsing stock market hogging the headlines. There are big debates about bailout packages. There are talks about containing migrant workers, removing tax breaks. The government is having to step in as a regulator and the market is not being the regulator. And I begin to wonder, is this not socialism, is this not protectionism? May be my Russian friend is right!

I come back to my original thought, questioning myself....was I right in my earlier belief that Capitalism is the way to go? Is this a degenerated scenario or is this the future of Capitalism? I realize what I saw in India was Capitalism in its infancy. Would I have asked myself this question if the economy was booming? Perhaps no....but I am sure this question would have popped up some time; the downturn is just a trigger.