Mahindra, which acquired Korea’s ailing automaker SsangYong in early 2011, launched SsangYong Rexton, its first model for the Indian market, in October 2012. Surprisingly, the vehicle is positioned as a premium SUV with its price tag crossing the Rs 20 lakh mark ($36k), a shade below that of its formidable rival Toyota Fortuner. With the launch, Mahindra made its intention clear that it would position SsangYong as premium utility vehicle brand in the country. Perhaps, the Mumbai-based automaker has no other option as it’s the market leader in the lower rungs of utility vehicle segments with best sellers like Mahindra Scorpio, Xylo, XUV500 and recent Quanto in its stable. The only area where it has no presence is the high end SUV segment and SsangYong fits the bill perfectly without cannibalizing its own models. But the billion dollar question is whether SsangYong can succeed as premium brand in India. The answer is an obvious ‘no’ and here are ten reasons why the brand will not succeed in India in that slot.
Many Mahindra executives may not agree with this, but globally, SsangYong has never been positioned as premium brand. It’s a normal automotive brand which has surfaced in India as an upscale offering. How can a normal brand globally be considered as premium brand in India? I remember a senior executive of Mahindra confiding to me a year back that Indian people will accept SsangYong vehicles as premium or even luxury vehicles as they are ‘foreign’ products. “Indian people have penchant for everything foreign and so, we will bring SsangYong as premium brand to India because it’s foreign,” the executive reasoned. But I completely disagree with the executive because Indians are not as naïve as the executive considers them to be. They are well aware of which an apple is and which an orange is. A person who is ready to spend Rs 20 lakh on a vehicle isn’t innocuous in anyway and he knows the ways and means to get the best bargain for his money.
Korean vehicles, however sophisticated and luxurious they may be, have never succeeded as premium brands. Take the case of Hyundai Tuscon and Hyundai Santa Fe sports utility vehicles on which Hyundai India pinned a lot of hopes. But both the models failed miserably, forcing the automaker to discontinue Tuscon, a far better SUV with masculine stance and flamboyant looks than the several SUVs currently on sale in India. The main reason behind their failure was the price as Santa Fe was costing upwards of Rs 22 lakh with Tuscon not far behind.
Price in India
India is a price sensitive market and no one knows that better than Mahindra because most of the successes the automaker has so far notched up on the country’s automotive landscape have been on account of right pricing. It offered quality vehicles at right price and climbed to the pinnacle of utility vehicle segment in the country. But, by any stretch of imagination, SsangYong vehicles will be overpriced if the brand is positioned in the premium segment. I don’t think people in India will shell out Rs 18 lakh and above to buy a SsangYong model even if it’s owned by Mahindra.
Affordable luxury SUVs from BMW, Audi
Luxury carmakers BMW and Audi, in their quest for more and more sales, have launched low cost models such as BMW X1 and Audi Q3, which are priced within Rs 30 lakh mark. While BMW X1 rolled out in 2011 priced from Rs 22 lakh (ex showroom), its rival Audi Q3 is available from Rs 27 lakh. Then where is a space for brands like SsangYong Rexton in the premium segment when its image is nowhere near the German luxury automakers and when the luxury SUVs from Germany are available at cheaper prices.
By any stretch of imagination, SsangYong vehicles aren’t great in design department. A journo, not in automotive category though, commented at the recent launch of Rexton in Hyderabad that Renault Duster, priced between Rs 8-12 lakh would be a far better an option than the Rexton. Given a choice, I will bet my money man times on Mahindra XUV500, which is a far better option than its Korean cousin. Besides, the XUV500, though a crossover, is comparatively cheaper at Rs 11.8-14.4 lakh too.
All said and done, Mahindra’s strength is not in premium segment when it comes to automotive landscape. This is more so in India where most of its vehicles, be tractors, utility vehicles, SUVs, notch up huge volumes. That’s how it emerged as top player in tractors and utility vehicles. Therefore, customers never associate Mahindra with premium image. It’s very difficult to cultivate premium image in the market and it’s much more difficult to do so when your strength lies in mass market.
Handling of customers
When Mahindra launched Rexton in Hyderabad, I approached a senior executive from Mahindra to strike a conversation and discuss about the model as the press meet was delayed. To break the ice, I introduced myself and requested for his business card. However, he did not carry his business card. It’s not a crime as everybody tends to forget everything. But his response was curt and I was really hurt. Despite the unexpected behaviour, I offered my business card and try to elicit some answers from him about the response for the new model. “We will discuss that in the press conference,” he again responded tersely and turned his face away. I walked away from him, flabbergasted. People who buy premium vehicles expect premium service, in all aspect, from the company. I doubt Mahindra staff is trained sufficiently to handle customers for SsangYong if it’s positioned as premium brand.
Lack of exclusive outlets
Premium brands require premium services at the sales outlets. They also require premium ambience and the sales force that can handle the customers. I don’t think most of Mahindra showrooms are equipped to handle the customers who buy premium products. Selling both Mahindra and SsangYong vehicles from the same showrooms will lead to failure of SsangYong brand in the country.
Competition in Toyota
Toyota, which dominates the premium SUV segment with its Toyota Fortuner, is a formidable rival. It has image, great global lineage and proved his mettle in the country, particularly in premium SUV and MPV segments. It’s not easy for the SangYong to compete with Toyota in this space.
Lastly, the name, which is as complicated as the rocket science. I recall an incident which happened way back in 2007 at Dubai Motor Show. At that time, no one in India was even remotely aware of an automaker called SsangYong. So was also I. Some unknown person approached me when I was in the media centre and requested for my presence at the launch of SsangYong. I did not understand what the name represented, but thought it must be a Chinese company because it’s spelling looked as strange as Chinese names. I was surprised when I came to know it as a Korean automaker at the stall. The company announced its UAE foray in a grand way at the show and later another person, perhaps the UAE importer for the automaker, cajoled, pleaded and pestered me for a couple months to take one of the models for a test drive and write about it. Somehow, I could not do that. None of the automotive journalists in the UAE did that either. The SsangYong models disappeared from the country soon after. I did not see even a single vehicle of SsangYong on the UAE roads though the dealership remained in existence for several months. But it’s strange experience in India now with the same SsangYong brand being positioned as a premium vehicle. SsangYong will be a decent name if one of the two ‘s’ in the beginning is knocked off.