Auto firms fall back on old brand names for new models
New Delhi: When Delhi-based engineer Shyama Mahajan bought the relaunched Baleno hatchback from the stable of Maruti Suzuki India Ltd, she was aware it was an old brand that had not done well in an earlier avatar, but chose to go ahead because of the value proposition—improved product quality and premium features introduced—created by Maruti Suzuki.
Mahajan is among at least 3 million people whose choices have helped car makers see value in re-launching old brands with new features, especially given the prohibitive cost of new launches.
According to a report by Jefferies Equity Research & Strategy, only one out of 26 new model launches in the two-wheeler segment has been successful between FY14 and 17. The success rate in the four-wheeler segment is eight out of 35.
Among two-wheelers, the top 10 brands account for 66% of the volumes and have a median age of 14 years. In passenger vehicles, the top 10 models account for 49% of volume and have a median age of nine years. The minimum age among the top five sellers is 12 years for two-wheelers and nine years for PVs.
“In other words, successful brands can continue to gain market share over many years,” Jefferies said in its report.
Among those reviving old brands is India’s iconic bike maker Royal Enfield with its sixty-year-old brand, the Interceptor. The move comes after two new brands that the company launched—Continental GT and Himalayan—received lukewarm response.
In order to reignite its prospects in the entry-level car segment, Hyundai Motor India Pvt. Ltd is expected to bring back the Santro in 2018, even as the automaker’s move to bring back the Accent as Xcent did not do well, and now caters largely to the fleet market.
Maruti Suzuki also has a legendary brand in Zen, one of the most successful brands launched by the company. It stopped producing the Zen in 2006 to launch its hatchback Zen Estilo, which did not meet expectations.
Outliers have been Maruti’s Baleno and Vitara Brezza (earlier the Grand Vitara); Honda Cars India’s Jazz—premium hatchback—launched by the firm again in 2015, after it failed to create any impact it its previous avatar.
Experts say the strategy of reviving old yet popular brands helps automakers save costs, since expenses for establishing a brand are huge and spread over years, while reviving old brands offers an instant connect with buyers.
A Maruti Suzuki spokesperson did not respond to emails.
“We are trying to capture the essence of those bikes—the image, lifestyle and freedom. Interceptor was designed for a period of the end of the 1960s. It was designed for the American markets; it was fun and aimed at young Americans with money. We are a little anti-social and that is kind of cool and we like that,” said Mark Wells, head (global product strategy and industrial design), Royal Enfield.
According to Kumar Kandaswamy, senior director, Deloitte India, reviving legacy brands has been a global phenomenon that has now come to India.
“Certain brands have a well established space in the minds of the customers though they don’t exist anymore. By reviving these brands along with a good product, the car makers can ensure there will be excitement in the minds of the potential customers,” Kandaswamy said. Brand experts, though, have a different view.
“From a puritanical point, it is not a great thing to revive old brands. It is against brand progressiveness. Brands, especially in automobiles, are associated with a particular era, driving experience and model. Customers also like see new brands get created by manufacturers. Financially, though it makes sense since so much money is spent in establishing a new brand,” said Harish Bijoor, brand strategy expert and founder of Harish Bijoor Consults Inc.
From a strategy perspective, at times, the product becomes as huge as the mother brand and they help define the mother brand as well, said Aveek Chattopadhyay, founder of Experial, a brand consultancy firm. Hence it is beneficial for firms to revive these brands at a convenient time, he added.
“Successful brands are built over the years or decades. As result, Toyota has retained Corolla for the last 40 years and the same goes for the City or Civic for Honda,” Chattopadhyay said.
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