Badge Engineering: what's it about!

Most people will not know this about me that I am also a avid car buff! I feel I am able to offer some useful advice on which car is good to buy depending on your requirement or I am just able to talk critical, positive or just hold a chat on what's new and what's good to learn or unlearn about the car you drive. The scope of what can be done is vast. So, in today's story I am just going to talk about the hottest partnership that's doing the rounds in the car market today in India and how effective is it truly for YOU as a buyer! I am talking about, 'Badge Engineering'. A rather relatively new concept that's hit the car market in India and it's effectively created a divide and conquer kind of environment.

So before we get into the details let's first get a brief background about our main contenders of this conversation: Maruti Suzuki & Toyota Motor Corporation

Maruti Suzuki (collaboration between Maruti & Suzuki Motor Corporation) has been one of India's prime car manufacturers and sellers for over 4 decades now. They helped pioneer car motoring in India unlike anyone before or even now. It's been over 4 decades for Maruti Suzuki in India and their hold in the market has been nothing short of phenomenal and every year they just seem to scale bigger than their previous year.

Maruti Suzuki, today continues to enjoy a 42% market share which is clearly the largest for any car manufacturer in India till date despite today the market seeing a good crop of competitors who are all putting out successful products.

Some popular cars by Maruti Suzuki: Swift, Baleno, Dzire, Ertiga to name a few.

Next Up...is Toyota Motor Corporation.

Toyota Motor Corporation entered the India markets back in 1996 in co-partnership with Kirloskar Group. It's been a healthy fight in the Indian car market for the past 26 years. The brand sits a healthy 6.1% market share. Toyota has rather had a small but, handful of successful models like: Innova Crysta and Fortuner to name a few.

Back to Badge Engineering. What is Badge Engineering?

For the un-informed badge engineering is when 2 car makers share their product with each other. Ideally a particular car say for example the Maruti Suzuki Baleno, is now shared through this partnership with Toyota and it's called the Glanza. Toyota's taken the product from Maruti and tweaked on some cosmetic changes and relaunched it under the name Glanza. Does performance or overall car product feel any different? No! Ideally, the car is a Maruti only and drives also like one the only difference the badge.

Did this change the outcome of Toyota in terms of sales, market reach and overall customer acceptance? This is what we will get to know a bit more in detail in this story. And how overall all of this has made an impact in the brand building process for both brands.

Market Sales:

The initial seeds of this partnership first began in 2016. The promise was to at some point in time to launch electric cars. Slowly but surely the results of their negotiations started to bare results and in 2019 their first JV car was the Baleno called under Toyota as the Glanza. Soon thereafter a few more launches have happened between the two and now we have a healthy mix of both brands badge engineering themselves towards happy customers.

Maruti Suzuki's sales number as of April 2024 are as follows:

• Baleno: 14,049 units
• Ertiga: 13,544 units
• Breeza: 17,113 units
• Fronx: 14,286 units
• Grand Vitara: 7,651 units

(all units are Pan India)

It clearly can be seen that badge engineering or not Maruti Suzuki is clearly the king of the road when it comes to drive-mobility solutions. But, since we are on the topic let's see how many cars between the two brands are under badge engineering.

It can be easily seen from the above chart even here Maruti Suzuki is leading the pack with 5 cars making it's crossover to Toyota. Is this good and healthy for the market and especially for both Maruti & Toyota in the long run?

Frankly, both are trying many things to try and dominate the market and Toyota's approach was clear before even getting into this space. They knew their hatchbacks or compact SUV market segment was a failed story. Hence, they decided to go full head into this partnership knowing fully well what perhaps would be still the result.

But, one thing is for sure this JV does open the doors wider for new audiences to come in and soak in the Toyota customer experience which truly enjoys one of the best experiences a car owner can look forward for.

Quickly, now let's see Toyota's market sales as of April 2024:

• Innova HyCross: 7,103 units
• Glanza: 4,380 units
• Hyryder: 3,252 units

(Currently, data isn't still available for the Rumion, Taisor or Invicto since these are cars that have just recently launched.)

Market Reach:

It's no surprise on this point that Maruti truly has the market right in it's grasp and there is no chance of them losing out on this hold anytime soon. That's the sort of value and impact the brand has been able to consistently delivery year after year despite the barrage of solid competition. The closet rival to Maruti even today is Hyundai.

What worked for Hyundai then and still has been able to keep them second in line is perhaps the ability deliver on the expectations of what our customers have been demanding for years: Fuel Efficient vehicles, Value for Money cars, Easy on the pocket after sales services. Some other elements are also there like: localisation of spares and other components, a vast service network across a vast nation like ours to name a few.

Has a brand like Toyota managed to deliver on this? Well, to some extent yes and to a larger extent no. Let's briefly see this.

Toyota as a brand and it's product from launch into country has been about large people moving vehicles - MPVs. This segment of car was a Toyota creation in India and from the days of the highly successful Qualis to the Innova, this segment is rightfully owned by them. Even till date the Innova MPVs (older Innova, Crysta to Hycross) continues to still dominate the market in the people mover segment. No doubt Maruti has the successful Ertiga but, where the ertiga ends the Innvoa has ruled and done it quiet effectively and thereby leaving no room for any complaints from customers from across.

Customer Acceptance:

There's no denying that when we talk off value for money Maruti Suzuki is like no other brand in the market. This is a brand that perhaps until now has stayed away from this crazy ask for 'Sunroofs'. Why suddenly India has such a rage for sunroofs...is a topic for another discussion another day.

Maruti, the name itself signifies happiness, satisfaction, value for money, and great resale value when you plan to sell it. They understood the pulse of this market over the years. Along the way sometimes there has been some small issues that even Maruti has committed like with brands like: Zen Classic, Zen Estilo, Versa, Suzuki Kizashi, Grand Vitara, Baleno Altura. These cars were largely misses in the market but, even in those losses they still sold better than the next competitor out there.

Even the iconic Zen was a runaway hit with the audience for it's fats, peppy engine and for it's compactness but, even then when the Zen came out with future versions of their main car it felt the heat and backlash thereby slowly but, surely ensuring they are discontinued.

The thing about our audience is that the market we are at the bone very price sensitive. We want what's best for us at the price at which we can afford it. No doubt, that today the car buyer in India has evolved a lot and that's clearly seen in the kind of cars on the roads and the features they are all coming loaded with but, the market still yearns for what Maruti has to offer. It's just that perfect balance that they have managed to achieve over the years which no other car manufacturer will never be able to achieve. Once a Maruti customer...always will be a Maruti customer. Even if we evolve with time and end up adding another car to our garage we will will have a Maruti Suzuki.

In Conclusion:

This JV though is strategic for both Maruti and Toyota especially for Toyota to try and make some impact in what is today a super busy hatchback, compact SUV market space with brands like Maruti, Hyundai, KIA, Tata, Mahindra, Skoda, VW, Nissan, Renault, MG and Citroen all having cars to meet every purse strength of car buyer. What also, needs to be learnt and appreciated is how our car buyer mindset has evolved in the past decade.

This sort of market makeover wasn't seen for a long time. It all just suddenly changed in the last decade given the derth of opportunity for people to spend more. More infusion of doors opening wherein MNCs and foreign brands found themselves coming more towards India. And what topped it all was the level of 'Brand Awareness' in the average customers mind.

India, today has the one of the world's youngest population and this population is travelling, interacting with different people, working across borders and out of their comfort zones, better income levels amounting to more spending avenues opening up. India truly today is a testament to how 'Brand Awareness', 'Brand Perception' can be built and run into a successful campaign.

Today, the landscape is alive with so many brands all aiming and trying to get your attention. With a massive population over 2 Billion...it's not even a joke that the scope of being recognised and finding your next influencer, buyer, critic or just plain user is not too far fetched or a distant reality. It's also, seen that when majority of India today still dwells in large smaller town pockets many are trying and fighting tooth and nail to be recognised and grab a share of this massive market pie. Such is the case for even automotive makers like Maruti and Toyota. They already have a positive impact and impression in their audiences mindsets and that's only making their next calls and transition to the next stages far more easier than the others. But, even in these easy state of minds...the struggles, uphill challenges or risks are still real.

To seek and achieve ultimate happiness and domination will never be able to be achieved overnight in our market. We need to keep working and engaging our audience to find that mark of success. So to all my delightful and patient readers here...this story today was to only bring out what 'Badge Engineering' was all about and through it what are the different implications the market is seeing.

From the Purple Desk