Can the Brio, Liva capitalise on Swift’s stumble?
Thanks to Maruti’s persistent problems with its workforce at the manesar factory, the outstanding bookings of the new Swift has risen to 1.08 lakh units. Just to give a perspective to this, Swift’s numbers are bigger than what General Motors, Ford, Skoda and even its direct competitors like Toyota and Honda sell individually as a company across models.
So while Maruti struggles to get its act together and keep its workers happy (to me, their restarting production at the plant in a bid to normalise the situation is still a half baked solution), is there, finally, a chance for competitors to snipe away?
The Liva conundrum
The entry of Toyota in the mass market segment has been much publicised and eargerly awaited. But the car was launched in June, it flattered to deceive. The Liva as well as its bigger cousin Etios, cannot boast of styling and looks as their strong point. At the same time, they are disadvantaged vis a vis Maruti on after sales service and cost of ownership parameters. What works for them is the Toyota heritage, which is a big draw in India, and a capable engine in the Etios. In the Liva though, they do not have that advantage either. It is not as compelling a performer over the Swift as the Etios maybe over the Dzire.
What did not work well for them also, was the fact that they got the pricing wrong. The Liva range starts with an entry level price tag of Rs 3.99 lakh all right, but this variant is so shorn of equipment– no power steering, music system, fog lamps– that it is appalling. I have always maintained that if one has to compete with a market leader in India, one has to give something extra to the consumer at the same price, or maybe even at a lower price. The Liva on the other hand, goes absolutely the other way. The quality of plastic and poor ergonomics do not help its cause either.
The numbers tell the story too. Liva has so far got a much tepid response compared to the Etios and on its own (petrol engine), it is sure to be one of Toyota’s biggest debacles in India.
What works to Liva’s advantage however, is Swift’s lack of availability and the timely launch of the diesel variant of the car last month. The diesel Liva is better configured with a powerful 1.4 litre engine that also does duty in bigger cars like Etios and even the Corolla. It is also easy on pocket and a great car to have some fun with. The increasing obsession with diesel in India is such, that this car will surely be a bigger draw.
However, some usual problems remain. The car is not a big draw in terms of fit and finish and looks. Neither is it equipped adequately. Though the entry level diesel Liva at Rs 5.54 lakh (ex showroom), mercifully has power steering, there is no music system or such other comforts. The engine is powerful but is also coarse and a lot less refined that Swift’s 1.3 litre diesel engine.
But with this car, Toyota has a chance. The huge backlog for the Swift tells us two things.
a) Consumers see no value in competition and are willing to still go ahead and book the Swift, notwithstanding the ridiculous waiting period.
b) Provided the rivals can sweeten the deal on existing products, I reckon a significant part of those waiting for a new Swift would be tempted to shift. Bookings of over 1 lakh would scare some consumers coming into the market in the festive season, and could be easily lured in by others.
What is needed is for Toyota to sweeten the deal with the diesel Liva. While it would not be easy to re-configure the interiors of the car so early after the launch, equipment levels can easily be topped up along with a subtle price revision. Even if Toyota manages to get a fourth of the bookings Swift has received, its hands will be more than full.
The Honda Brio
Which brings us to the curious case of the Honda Brio. Launched two days back, this is a big acid test for the Japanese car maker and on the face of it they are making the right noises and doing the right thing. The car is priced way less than other Honda cars (62% less than the Brio in Thailand as well) and for once, there is a Honda car that costs less than rivals in a segment.
It is not the most spacious car in its segment, but it has its heart in the right place. Suitably equipped and having the best in class fit and finish, Brio is an appropriate car for the city. The problem though is that it is available only in petrol which is now so expensive over diesel that it has ceased to make sense for most.
In this segment, which is relatively less price sensitive to the Wagon R/Santro and Alto segment, petrol cars now account for almost half of overall sales. I expect that percentage to continually go down. However, between the Liva diesel and Brio petrol, and in a background of unrelenting problems with Swift’s production, there is a good chance for these cars to make their presence felt.