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.
