Ashwin Udyog is not exploiting the power of scale, reach, and equity it has built up over the years. The threat to its market leadership comes not from external factors such as the move forward towards customisation but from its own mindset of a monopoly. Two questions are relevant. How much of the loss of marketshare is because of migration of customers towards progressively higher ends of the market? And how much of it is because of factors related to product quality, features, and service? In the answers lies a clue to developing and positioning the next generation of Ashwin's offerings. The launch would take two to three years.

Meanwhile, Ashwin should focus its efforts on consolidation. The company, in my view, should not let go of its hold on the low end. VFM is an attractive plank. The popular segment of the market can never flatten out in a huge country like ours. A surefire way for Ashwin to consolidate its hold is to recognise that revenues come from many sources, not from the sale of the car alone.

• Look at the spare parts market in the country. It is unorganised. If Ashwin were to step in, the payoffs would be enormous. The process could begin with a campaign aimed at educating the customer about the imperative of using genuine spares. Given the right support system, no customer minds buying a genuine part at a higher price. It enhances dealer revenues and provides an incentive for the dealer to move the main product. Servicing is another source of revenue. Customer relationship management would be the key driver in this initiative.

• Ashwin could also consider trading in second-hand vehicles. The mission here is to tap customers looking for opportunities to migrate to their first four-wheeler. This, again, is an area where Ashwin could leverage its volumes and enter a segment waiting to be tapped.

• The car rental business may also provide an ideal diversification option for Ashwin. I think this is a segment which is under-rated. With a fleet of its own cars, Ashwin is in a commendable position to exploit niches like these. At a higher level, logistics could be a good source of revenue. How about providing, for instance, inward and outward supply for its own vendors at a price, to start with?

• Given the fact that its assets are fully depreciated, and Ashwin can afford to sell cars at a price slightly above its variable costs, I think exports are worth a look. Africa, North America, and even parts of Asia are good target markets.

• How about getting into multi-utility vehicles? There is a market for these in India. Can Ashwin develop them with incremental investments and by tweaking the existing facilities just that bit?

Technology is not a major issue at Ashwin. Bringing a strong brand mindset into its operations is. Ashwin should stop being a hostage to its past and start thinking out of the box. It is only then that it will be able to regain lost ground.

Consider a general who is ensconced within a fortification in a corner of his kingdom. As the kingdom grows in different directions, the general does not straddle the expanding space. He merely defends his original turf. Inevitably, he leaves large patches of his kingdom open to invasion-and occupation-by the enemies. And gets reduced, over a period of time, to a non-entity. Ashwin Udyog is in a similar predicament.

Its entry strategy was no doubt sensible: offer VFM cars at the entry-level. But it ignored the high priced segments-till competition set in. Even there, it decided that the VFM personality would suffice. It did not recognise that there were many other marketing planks available.

Another mistake was that even in the small car category it focussed on the single-car owner. It missed out the second and third car owner whose needs and aspirations are different from what Ashwin's basic models offer.

The benefits expected from a car are both tangible and intangible. Ashwin's models are excellent in terms of tangibles. But they are weak on intangibles. Today, a car is a statement of the owner's status. In sophisticated car markets like the US, research has established a clear correlation between the model and colour of car, and the owner's socio-economic status, sex, and age. The car market there has several multi-dimensional sub-segments. Automobile manufacturers plug in models in the relevant ones with brand personality positions which are compatible. If you do not have a model to offer, you finally lose the segment.

A decade-and-half after Ashwin Udyog's entry, the Indian consumer is more sophisticated, has more disposable income, and access to numerous car finance schemes that help him reach out to premium products. In fact, the Indian car market can no more be segmented purely on price.

Ashwin has evolved all right, but far too slowly. The management has wrongly positioned the whole company as one that provides VFM products for the market, whereas the Indian market has several consumers who do not want to be seen as VFM seekers when it come to products like clothing, shoes, and cars. Competitors have plugged in offerings that meet the aspirations of these consumers.

Since the Indian market is too small to allow a big player like Ashwin to grow on a single platform, it must get rid of corporate brand personality of VFM. And create individual personalities for its numerous models. It must attack the market aggressively to occupy new turf in certain strategic non-VFM segments, while it continues to defend the VFM fortification with existing models. This is a major change for Ashwin. But it must be done before it becomes financially difficult for the company to pursue this aggressive strategy.

As retail consumer durable markets mature and become competitive, it becomes difficult for a leader to maintain its marketshare. Competition increases the choice at the customer level, not only of products but also of terms and conditions of purchase. Simultaneously, at the dealer level, different dealers develop their own brand affinities, which limit the access of the non-aligned brands to the clientele of such dealerships. What are the options before Ashwin?

It is true that the market for mid-size cars is growing. But the conclusion that the market is ''drifting'' away from small cars is misleading. It is a very different process of creation of a 'replacement' segment of people who, when they come into the market second time round, want a better product than they bought the first time.

Targeting the replacement segment created by the collective efforts of previous marketers is a proven entry technique in consumer durables market. It is hardly surprising that the competitors spotted the opportunity of replacing the huge number of old Ashwin cars much before Ashwin did. Ideally, Ashwin should have taken the lead in replacing its own old cars. Even now, it can do four things:

• Since Ashwin's products have performed well, and its after sales network is good, there is an opportunity for conducting direct contact programmes to convince existing customers to trade in their old cars for new products from Ashwin.

• In fact, its wide dealer and service network will give Ashwin a tremendous edge in sponsoring the trade-in cars: buying back old cars, reconditioning them, and then reselling them.

• Ashwin could launch a special limited edition model, which is available only to its existing customers under a buy-back offer. This will set the market on fire.

• A scheme for existing customers to give referrals and get benefits in the process of recommending their existing brand to their friends and relatives, would be effective.

The real winner in the car market is still the small cars segment. Although the rate of growth of the mid-size cars segment was 160 per cent, we cannot ignore that the small cars one grew at 25 per cent-a respectable growth by any standard. There may be some temporary problems in this segment, but I do not believe that the market is migrating away from this position.

I believe there may actually be an opportunity to rejuvenate the sale of small cars, but it cannot be tapped through the traditional 'economy' position based on low fuel/maintenance. The small car now needs to be positioned as the main car for small cities and as the second car for main cities. Ashwin should launch a sub-brand to make it exciting to own an economy model.

But this move will succeed only if two things are done. The product should be re-designed to become young and exciting. And, in small towns in particular, Ashwin must focus on multi-brand dealers. This, of course, involves changing the very mindset of the sales force and the very paradigm of the car market.

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