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GM to launch Corsa at attractive price - Views on News from Equitymaster
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  • Sep 17, 1999

    GM to launch Corsa at attractive price

    News reports reveal that, General Motors, India (GM) plans to launch the 'Opel Corsa' in the Rs 550,000 bracket. The 'Corsa' is GM's mid-sized car.

    GM India, fully-owned subsidiary of General Motors Corporation, USA has been operating in the mid-car segment, through its flagship model, Opel Astra. Its parent, GM Corporation, is the largest automobile manufacturer in the world.

    Although GM's Opel Astra has been very successful in other markets, it has met with limited success in India. The main reason why Indian consumers have kept away from the Astra, has been due to its steep price (in excess of Rs 650,000). Like other manufacturers in the mid-car segment, it has found it a struggle to compete with Maruti Esteem. Moreover, there is intense competition in this segment and demand growth is negligible. Companies are only competing for Maruti's share, instead of expanding the market.

    Companies have realised that the Indian mid-car segment hasn't matured enough for the consumer to pay Rs 600,000-Rs 700,000 for a car, regardless of its brand. Some companies are planning future launches in the niche, sub-premium segment (below Rs 600,000) to attract higher volumes.

    This is the main reason why GM plans to launch the Corsa in the Rs 550,000 bracket. It has decided to shed its premium brand and evoke buying interest based on the attractiveness of the price. This will be one definite way for the company to post higher volumes. Other measures that the company will have to undertake, will be superior after sales service and an extensive distribution system. Regardless of the price, it will not find the going easy, as competitors like TELCO have also been eyeing the Rs 550,000-Rs 600,000 category. In fact, TELCO has already firmed up plans to launch the 'Tata Midi' in a similar price range, by April 2001.

    News reports further reveal that GM, India is chalking out a strategy to make forays in the small car segment with the 973 cc 'Corsa'. The Corsa will be a mass sale vehicle, with added focus on small towns and semi-urban cities. With this it wants to ensure the car has a presence across the country. GM's plan to boost sales in every nook and corner of the country seem ambitious and it will have to spruce up its marketing network considerably, more so in the rural areas.

    The small car segment has witnessed healthy demand growth in FY2000. As a result, more companies will want to break into the segment. Moreover, companies currently operating in this segment will launch new models, to leverage on the popularity of their existing brands. The increased competition will witness price reduction and innovation with superior design and quality. Moreover, companies will not merely be vying for Maruti's share, but will expand the market.



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