Just 7 Indian brands make the Global top 500 in 2010

The Brand Finance Global 500 report features just seven Indian brands. Despite India Inc's growth domestic brands are failing to make an impact on the global stage.

The top 500 most valuable brands in the world have grown in value by 26% to US$ 2,873 billion. The US continues to dominate the table, with 7 of the top ten, by comparison India provides just 7 of the 500, three of whom are new entrants.

India's strongest brands

Tata and Reliance are India's most valuable brands. Tata is valued at US$ 11.2 billion, up on US$ 9.9 billion in 2009. Reliance is worth US$ 7.2 billion (US$ 6.6 billion in 2009). While value has increased, each brand slips in the rankings, Tata fell to 64 from 51, Reliance fell to 107 from 93.

Airtel's value was up slightly to US$ 3.1 billion, yet similarly, its ranking plunged to 288, from 215 last year.

Indian winner

State Bank of India is India's big winner jumping to 186 (from 344), it's brand value reaching US$ 4.5 billion. In addition, Bharat Petroleum, Infosys and ICICI Bank make the list for the first time.

Emerging market comparison

India trails its BRIC contemporaries. China has 18 brands represented, including 7 new entrants, Brazil 9 (4 new entrants) and Russia 8 (3 new entrants).

Brand building versus acquisition

India Inc's recent acquisitions - Tetley Tea, Jaguar, Land Rover, Corus, Whyte & Mackay - prove that the value of brand (at least at the right price) is understood. But considering India's buoyant corporate environment and headline making economy, the countries brands are struggling to make their presence felt outside of India.

Domestic market focus, for now

India's brands are inward looking. Considering the potential of the domestic market it is understandable as Indian companies attempt to exploit domestic market opportunities. The danger is that India's brands become captive within their own cost-conscious market and uncompetitive on the global stage.

Once the domestic market matures and becomes more competitive, India's brand owners will be lured on to the international stage in greater numbers. At this point understanding the value of intangible assets will become paramount.

February 20, 2010 Add a comment

Reva and Tata's electric-auto fortunes head in opposite directions

India auto's green credentials are in the news. Within days of each other, Reva announced plans to introduce electric cars to India and Tata threatened to end ambitions to produce electric cars in the UK.

G-Wiz!

Banglore's Reva Electric Car Company will invest R's 300 million (US$ 6.1 million) to build the worlds largest factory for low-cost, electric cars. With capacity of 30,000 vehicles per year, production begins Q1 2010.

Tata stalls

Contrast with Tata Motors who threaten to scrap plans to build the Vista electric car in the UK if it does not receive a £10 million government loan soon. The relatively small amount - part of UK governments £2.3 billion car assistance package, that Tata qualify for through ownership of Jaguar and Land Rover marques - is still to be approved and Tata by all accounts are losing patience,

Public power points

Questions remain about Reva economics, it sells at R's 350,000 (£4,650) in India and £7,500 in the UK, under the G-Wiz brand. This makes it nearly four times the cost of R's 100,000 Nano. While cost of running is less - Reva is powered by lead acid batteries (80 KM per charge) or litium ion technology (120 KM per charge) - the price difference must be a concern, as is the number of 15 amp public charging points available to buyers.

Low carbon, low cost

With just 20% of the number of components found in a petrol driven car Reva expect to be able to make major savings as production increases.

Despite selling just 3,000 vehicles since 2001 company owner Chetan Maini has big plans, the target is to sell 8,000 vehicles in year one, once the factory opens. His long term plans are bigger, referencing President Obama's range of "green" subsidies he optimistically predicts that electric cars will outnumber conventional models in just 15 years.

With Nano, Reva and perhaps Vista India is set to take the global lead in the low-cost auto design and production race.

Image source - www.informationmadness.com

July 26, 2009 Add a comment

203,000 sales for Tata Nano but is it enough?

While the much celebrated Nano is selling in big numbers some commentators are disappointed. Given Tata's outlay on Jaguar and Land Rover, Nano sales figures are set to be scrutinised further.

With Tata's share price up 60% this year in anticipation of Nano sales performance, success of the "world's cheapest car" has considerable bearing on the financial health of the company. A US$ 2 billion loan repayment, due next month - from purchase of Jaguar and Land Rover - increases the importance of strong figures.

Big numbers, but big enough?

Despite production capacity of just 100.000 vehicles between now and July 2010, India's leading auto company received paid orders totaling 203,000, worth total of US$ 500 million. Big numbers considering decline of global auto and the credit markets. Even more remarkable considering that a ballot will decide when buyers receive their purchase. Hailing their success, Tata took the time to thank the Indian public for their support.

Yet, in some quarters there are murmurings that sales are at least 50% below expectation, Angel Broking report, "Dealers and sources monitoring the bookings had anticipated that the numbers could hit over 800,000."

Converting interest to sales

Interest in Nano was huge. During the booking period Tata Nano website recorded 30 million hits, nearly 1 million a day and nearly 1.5 million people visited Tata showrooms. With over 600,000 applications bought - cost of R's 300 per application - final conversion rate of 30% appears low.

A complex booking system, lack of opportunity to test drive and the size of deposit required, deluxe, LX Nano required R's 140,000 booking fee - full price R 185,000 - have all been cited as reasons for low take up.

Tata figures show of total completed bookings, 70% were made using finance, the rest were cash purchases. Four thousand were cash bookings made online.

Only in India

Given speculation over success of initial sales it is easy to forget the magnitude of what Tata have achieved. For perspective, in the US, GM sold 172.000 light vehicles from their entire range in April 2009 (a 33% drop). According to industry commentators Nano orders represent 17% of all Indian passenger car sales - 1.22 million - during current fiscal year. Realistically, India is the only market in which such a sales drive could take place.

Interestingly, buyers have bought top end. Tata figures show, main entry point - 50% of all purchases - is the deluxe LX model, complete with air conditioning and electric windows. Only 20% of orders were for Nano Standard, the remaining 30% went for mid range CX model.

Financial short termism

While current market pressures make it inevitable, picking through initial sales results may be missing the point. At a time when automakers are on their knees Tata have developed a low cost highly efficient vehicle that is selling.

With big auto looking out of step in the current economic climate, Tata will hope they have developed a model for the times, with the mileage to cross borders.

May 7, 2009 Add a comment

India's automotive sector crash has global implications

With car sales in the BRICS set to pass declining US car sales for the first time, news of India's automotive sales slow down comes at a bad time for global car makers. At the same time, decline raises questions about the robustness of India's economy.

India's auto industry, a key sign of increased middle class spending power has crashed, a local problem with global implications. With Western auto markets in collapse, automakers were banking on the BRICS. The Economist reports US market saturation, 900 cars exist per 1000 people, compared to less than 10 per 1000 in India.

Sales figures provide evidence of decline

Opportunities born from huge unsatisfied demand are unlikely to be realised any time soon, latest figures reveal extent of Indian auto market decline.

Society of Indian Automotive Manufactures (SIAM) report poor November sales. Domestic vehicle sales down 17.8%, commercial vehicles down 49.5% and motorbike sales down 14.7%. SIAM Director General, Dilip Chenoy sums up the mood, "This is the worst ever total performance, all segments have never fallen so drastically before".

Tax cuts and price slashing

Fear of job losses - consequence of global recession - runs deep, recent terrorist attacks keep buyers at home in major-market Mumbai. In response, Government have cut Central Added Value Tax (CAVT) by 4%. Within hours Foreign and domestic carmakers passed on the reduction and slashed prices further. Ford, GM and other International's have dramatically cut model prices by up to R's 54,000 (US $ 1,086). Local manufacturers, Hindustan Motors, Tata Motors, Maruti Suzuki and Hyundai India have followed.

December, a slow sales month for India auto will add to the malaise. If Indian banks start to lend on the back of Governments stimulus package (worth equivalent of £40 billion), a New Year recovery is possible. Chenoy goes on to say, "The real impact of the reduction (CAVT) will be felt in January. This is a positive step coming on the heels of RBI's announcement".

Additional foreign investment on hold

Poor performance has forced industry action. Interest from international carmakers is cooling as they look to reduce capital expenditure; Nissan Motor Co. and Renault SA each postpone projects. Local manufacturers tread a fine line, Tata Motors and Mahindra & Mahindra close plants for six days in December but still prepare to spend to revive sales. Tata are committed to a US$ 4 billion range revamp, Bajaj Auto, India's second biggest motorcycle maker plans to launch a new model each month from January to June 09 to stimulate interest.

Tata hope to convince their autonomous management teams at Jaguar and Land Rover to enter India, Ravi Kant, MD of Tata Motors has been quoted as saying, "Our (Tata's) sales and marketing department has helped facilitate a visit by the senior people (Jaguar and Land Rover). They have come, they have seen and they are putting some plan in to action". Such a move may create new revenue streams for both marques - Land Rover supplying the Indian defense industry - directly helping Tata's bottom line. Spotting an opportunity to benefit during tough times, bullish Mahindra & Mahindra has been linked with the purchase of Volvo.

Can the BRICS bail-out big Auto?

With 2008 car sales in the BRICS - around 14 million - set to overtake those in the US for the first time, emerging markets are the car industry's big hope. What happens in India over coming months will reveal whether confidence has been misplaced and whether the likes of Brazil, Russia, India and China really can nurse the auto industry through tough times.

Test for India's economy

At the same time this period will provide evidence of how robust India's economy really is and how susceptible it is to global forces.

The car is the most desired product in emerging markets, a sign of prosperity and advancement making Indian auto sales figures hugely symbolic. A decline in sales is the most visible evidence of a weakening in demand across Indian corporate and retail segments.

Indian recovery or further decline will provide an indication of the depth of the global economic problem. Recovery provides much needed relief to US auto and restores faith in India's potential, decline heaps more pressure on Detroit and damages the outlook for India Inc.

Source - Charts taken from "A global love affair", published by the Economist, 15/11/08

December 13, 2008 Add a comment

India auto sales grow but slow down in evidence

Contrary to world trends, India auto sales sped on. 100% Foreign Direct Investment attracted international marques and expectations. But, global problems now park on India's driveway. Add Government complications, say heavy fuel subsidies, and will India's growth tank run dry?

India is Asia's third biggest car market. Society of Indian Automobile Manufacturers (SIAM) report June 2008 private car sales of 99,738, up 6.1% on June '07. Impressive, but down on April's 17% , and May's 14%, growth.

Korean growth leader

SIAM year-on-year figures show Hyundai India, June growth leader, up 34% with with 21,877 sales. Volume market leader Maruti Suzuki India reported mere 2.4% growth to sales of 48,935.

Tata look to bottom and top end of auto market

Despite the international hype of the '1lakh' (£1,277) Tata Nano launch, domestic Tata Motors sales fell 5.8%. High-end, Tata reposition their non-Nano Jaguar and Range Rover marques into the mega-lakh £100,000 bracket.

Luxury Maybach, and overtly flash Lamborghini show off at Delhi's Auto Expo 2008. And, reports suggest the resurrected Daimler brand - owned by Tata - may go head-to-head with Bentley and Rolls Royce.

Global breakdown - Indian pickup?

Scotiabank's Global Auto Report, 2008, says economic troughs and turbo-charged oil prices stalled global vehicle sales to just 1.5% growth first half of 2008.

The US pickup truck and SUV market crashed with sales down 30% same period 2007. GM Corp's global vehicle sales slipped 5% the second quarter of 2008. Even Toyota this year lowered its sights from forecast 9.85 million to 9.5 million sales.

India becomes a production hub

Globally the auto industry hoped emerging market growth would repair broken North American/Western European performance.

But India's government aims to develop its automotive sector not only in sales, but as a production centre, to create not only local jobs but exports. See its Automotive Mission Plan 2006-2016.

India auto's local problems

Its subsidies sell auto-fuels below cost. Now, state energy companies, like Indian Oil, unable to pass-on higher global prices take bigger hits - in June a barrel of oil cost around US$124, due to subsidies the equivalent cost in India was US$48. With national elections afoot, who wants raised fuel prices and voter backlash, but is there choice? With interest rate hikes, and steel prices squeezing manufacturer discounts, the sales market may gridlock late 2008.

If car sales thermometer India's economic health, Detroit and Delhi watch the mercury.

August 3, 2008 Add a comment

"Brand India" - modernising a nation, securing its identity

Brand India has respositioned itself in the minds of the international business community. As India modernises the country needs to guard against becoming just another developing country. Brand India's identity needs to be guarded.

Brand India has repositioned itself in the mind of the the international business community.

Improving infrastructure, international hotels, upgraded airports and familiar global brands make visiting India increasingly easy. Brand India is modernising and fast.

Commonwealth coverage

As we get closer to the 2010 Commonwealth Games, Delhi will have opportunity to show tourists how the country has evolved.

Municipal Corporation of Delhi has already started its preparations by ridding Delhi streets of 400,000 rickshaw-wallahs. Street food, cows and monkeys are also to been banned from the streets.

Rapid modernisation is a difficult balancing act, the danger is that authentic brand associations that provide differentiation are lost and segments of society are left behind.

Retail modernisation

The retail sector in its rush to modernise provides a salutary lesson. Ironically due to the success of Brand India attracting foreign direct investment the sector lacks an Indian identity.

With many of the large international retailers and fast food outlets already ensconced, malls look and feel like international air-conditioned bubbles, if you removed the people you could be anywhere in the world.

The commercial and residential property sectors face similar problems with hybrid architectural styles being combined to create mixed up, mixed-use developments that lack any kind of distinctiveness.

India brand differentiation

India is unique and complexed, with a real sense of authenticity. It has a clear positioning on the global map, providing real equity for the national brand.

As the country looks to the future, the challenge is to articulate its uniqueness and find a visual narrative for modern India. Mumbai should not try to be Shanghai or Dubai or anyone else, it needs to differentiate itself and jealously guard its sense of self.

July 6, 2008 Add a comment