Fareed Zakaria in an article in Newsweek talked of some bad habits that US has developed over the past few decades, and they must kick those habits. I feel one of those habits is for keep on purchasing many things and keeping the racks full, be it food items or household accessories. However, the vehicles are the costliest item in every household. It creates the major hole in monthly expense budget. For that matter with the habit of credit cards use entrenched deep, I doubt if the couples ever seriously think of balancing the earning and expense. Money is easy, and innovative financial products are tempting. Anyone can borrow any amount of money for any purpose. Even with all the data of credit records online, the banks hardly makes any endeavour to use it at least for spendthrifts. And so even a bankrupt gets money and credit.
As I observed this time, most of the Americans have at least two cars, and at least one is big powerful utility category that burns more gas. And if one carefully observes, it is the bigger car that goes in use even for nearby pancake or grocery shop. Walking up to such destinations for such purchases that could have certainly improved physique is beyond imagination.
However, I am only talking about household cars. Americans can easily replace the car in addition to the huge one with them by a small vehicle, may be mini or fuel efficient compact. Americans don’t do that, neither lobby dominated government policy encourages for that.
As reported, “During the oil crisis of the 1970s, mini-compacts, such as the Mini Cooper – then the smallest auto available in the U.S. – achieved their highest market share in 1978, when gasoline prices were high. But mini-compacts never really caught on, and their market share declined even as gas prices rose further. The slightly larger subcompacts, such as the Volkswagen Beetle, grew market share only when prices were rising, and lost share from 1982 onward…Compact cars, however, like the Ford Escort and Honda Civic, have become widely popular over the years. And the compact class has held the single greatest market share of any segment for nearly every year since 1980.”
With American crave for power and speed, automakers and the country’s R&D experts will have to work hard to get the desired emission standard with the fuel consumption of 100miles a gallon.
Hybrid compact car such as Toyota’s Prius is another success story in US. However, US have not given Prius any concession to make up the high initial price. It’s Toyota’s unique system that has made it so popular with all commercial disadvantages. And perhaps that is the reason that other big automakers have not come out with any competitive product with success. GM is trying to come out of its mess with Volt, the plug-in electric vehicle. ‘GM executives need the Volt to become an iconic product, like Apple’s 1998 iMac’.
Unfortunately, the two Indian automakers- Tata Motors and M&M don’t have any compact car good enough to compete with the present products available in US market from Europe, Japan, and Korea. With US still retaining its top position as a market, any auto making country and its manufacturers will always wish to enter in US. Time and again, I see the news of the attempts by Indian manufacturers to enter the American market. Mahindra & Mahindra (M&M) may think of launching its new multi-utility vehicle Xylo, that has been its most ambitious project after Scorpio in US market. The Xylo, as claimed, will ‘give the ruggedness of the SUV, space of a MPV and luxury of a sedan.’ Tata Motors’ Nano though is ambitious to get into US, but Tatas are to work hard to make it acceptable to the American buyers because of their habits. Tata Motors instead can improve upon Land Rovers from its newly acquired UK plant.
Indian automakers will have to come out with some global class products that get attractive enough because of its overall cost to American consumers. For that it must get into some breakthrough innovations. The effort is on with building up of the engineering and research strength by both the companies on almost war footing through collaborations as well as acquisitions. With easy money on credit, Americans perhaps may perhaps not bother about the price for a long time to come unless the habits get changed.
Conclusion: Let Indian manufacturers work on world best compact cars and SUVs with latest technologies such as Hydrogen, battery, or any other breakthrough innovations, it they wish to enter US auto market. Chinese carmakers are already working overtime to get into this lucrative market. Will Indians put the right energy at the right place to win?