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CROSS BADGING – What are the Implications? by R Jayaraman. Is it an Intelligent move? (gmp18.atri@spjimr.org) The announcement of cross badging agreement will allow the Japanese automobile majors to manufacture vehicles for each other in Indian market. As very rightly put, cross badging in auto sector in India has been disastrous. There have been situations like, in spite of bringing a hike in the sales number, cross badging has rather tremendously bought the numbers down. Then is the cross badging move by Suzuki and Toyota an intelligent one? I defer significantly to the argument presented by the writer. India’s auto market in terms of customer expectation and satisfaction is not matured. The two auto brands have an established market segment and customer loyalty in India. While Maruti’s more than 95% of volume comes from vehicle priced at less than Rs 10 lakh, Toyota’s 75% of volume comes from vehicle priced at more than Rs. 10 lakhs. The coming together of Toyota with Suzuki, which dominates the Indian market, can be seen as a very thoughtful move when the local passenger vehicle market is expected to triple to 9.4 million units by 2026 from 3.2 million now, if we see the economy growing at the similar pace of 5.8% every year, as per government’s Auto Mission plan of 2016-26. And coming as an advantage to Suzuki, is the growing share of mature car buyers of India who are shifting to the luxury sedan sector at an accelerating rate. Cross badging is unlikely to prove fatal for the two auto majors as there is certain proportion of loyalty that has developed in the Indian consumers in auto sector for Suzuki as well as Toyota. Another important factor that accounts for success in cross badging, is the realization and visible changes arising from the not so famous strategy “Cross badging”. Indian market is rather performance and price centric than brand centric. So, when Baleno and Vitara Brezza comes into market under the brand name of Toyota, customers want to see a real picture of cross badging rather than mere cosmetic therapies and price changes. Same goes for Suzuki too, Corolla, when enters the market, customers will be highly enthusiastic for a better sedan with Maruti’s Indian touch in lowering price and better performance figures, which Maruti is known for, keeping in view the Indian customers’ expectations. So, overall, this cross badging comes with high expectations and real work of hybridization for the consumers, and stands at a greater potential to be a success rather than a failure.

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