Dream of owning a car from a middle class perspective; low cost car industry in India and China ~ Nichecrunch

(Source: Google, 2011)

Some years ago, owning a car was a dream for middle class families and the ones who had cars were born rich or they were used to be the top executives in any leading firm. Thus, a middleclass person only could afford a motorbike and obviously, a motorbike cannot fulfill all what one can get with a car. What all car manufactures had forgotten that time is that a middleclass person also might want a four-wheel vehicle that fulfils all the basic needs at a an affordable price even though they cannot expect that to be luxury enough. This was a common problem in all countries especially nations in such as India and China where there is a great population of middleclass people. Tata motors realized this truth and introduced an ultra cheep car just for 2500 dollars and their target market was the people who only can buy a motorbike if they are not satisfied with this model. This concept might have failed in the western context where people are much brand conscious but Indians are very price conscious as well, they look for products that can at least fulfill their basic needs.

When Tata made its vow to build a $2,500 car, many Western auto executives ridiculed the project, dubbing it a four-wheel bicycle. They aren't laughing anymore. Tata's model is a real car with four doors, a 33-horsepower engine, and a top speed of around 80 mph. The automaker claims it will even pass a crash test. In addition, while the car probably will not win any beauty contests, it's no ugly duckling either, according to the handful of industry insiders who have been given a glimpse. The rest is top secret, but Tata engineers are already testing a prototype as the clock ticks toward a late 2008 launch. The key is India's low-cost engineers and their prodigious ability to trim needless spending to the bone, a skill developed by years of selling to the bottom of the pyramid (Bloomberg Business week, 2011)

Considering this success, a small player in Chinese car industry Zotye introduced jiangnan Alto model in 2010 and it was promoted to be the cheapest car in the Chinese market. However, models such as Maruti Suzuki Alto, Hyundai and Wagon R can be considered to be the leading models in world auto industry (Zhu & Master, 2010). These models are not just promoted as the cheap cars but also as the cars that are offered with a set of functional benefits such as safety, durability, fuel consumption and of course good appearance.

However, India’s and China’s low cost models seem to best-understand the feelings of middle class families and they also have succeeded in drawing such an emotional line among their customers that they are there to fulfill the middleclass families’ dreams of owning a car. Also they do target all the middleclass families not just in Asia but also out of Asia. However, what they need to understand further is that this industry is getting bigger everyday and consumers also nowadays looking for products that add additional benefits. Therefore, they should strictly keep on holding their weapon ‘cheapest vehicles’ and should always look into the ways of adding extra benefits at the constant cost margin.

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