8.4: Telco-The HomeGrown Challenger
Telco did not boast a great reputation for developing even world-class commercial vehicles, forget passenger cars. When the Indica hit the market, the consensus opinion was that Telco had goofed up again.. The Indica was riddled with quality problems. A year down the line, almost everyone grudgingly admits that the Indica has been a success. The Telco formula of pushing the biggest small car with a rugged diesel engine has been a major hit in the semi-urban and rural markets.
The Indica cost $400 million from start to finish whereas the Hyundai Accent is said to have cost $1.6 billion to develop. But the flip side is that all global giants can amortise the costs of development by selling the same car across different world markets, Telco can't afford to capture.At the moment though, the Telco strategy is to tap the niches first. The Indica, with the diesel engines being pushed hard, was clearly aimed at a segment none of the rivals was addressing. Similarly, the new car Magna it is planning to launch is again expected to be a niche car addressing a particular need in the Rs 12-16 lakh car segment. And in the SUV market, Telco has already introduced the premium Safari, which again focuses on a small niche.
It is a smart strategy as it avoids taking any of the big guns head on. But in the long run, Telco knows it has to take on its rivals in the mainstream markets as well. It is ramping up capacity to 160,000 from the current 120,000 cars anticipating that it will get the demand. But Telco is also the weakest player in the small car market -- and unless it keeps springing surprises, it could be the first casualty in this round of the car battles.
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