In fact, Maruti's biggest competition could be itself, say analysts, if, caught in a government scrap, it fails to recognise the writing on the wall and modernise and expand capacities in time. Already there is talk of the company planning diesel lines for the Zen and the Gypsy King, a smart value-for-money move at a time when diesel is expected to be a definite draw given the higher costs of petrol, longer commuting times because of traffic, and shrinking budgets.

What companies, especially the newer ones, are trying to do is to correct what they got wrong, especially the market size. Only in the past year-and-a-half has research started proving this, especially in the mid-size segment. For instance, costs were too high for a purchase that is definitely not impulsive, says K. Mahesh, president of Automotive Components Manufacturers Association (ACMA), stressing that India still churns out 50,000 bicycles a day and 20 lakh motorbikes, scooters and mopeds a year -- a far more dynamic market. "The market is still essentially looking for a car in the Rs 2 lakh to Rs 3 lakh range," says Mahesh. "This fact is further underscored by the economic downturn."

So, the main action will continue to be in the small-car section, where margins will be low, so volumes need to be high -- and it's the segment with the biggest potential for expansion in numbers. Concurs Mahindra: "The small-car segment is increasingly being viewed by overseas entrants as mandatory because of volumes." He stresses that any manufacturer needs volumes to be a "serious car company and for dealership and supplies. No overseas player can afford to ignore it". In that sense, odds weigh in favour of old companies with adequate volumes and not just those with deep pockets. "A new company has definite disadvantages," says a Cielo dealer in Mumbai. "People wonder, is this guy going to stick around? What about my deposit money? What about service and parts, maybe when I drive down the Konkan coast?"

While newcomers try and correct imbalances by increasing their reach -- it can take up to five years to settle down with brand identity and service -- what is interesting is that most analysts feel that financing will immediately play a critical if not decisive role in the choice of cars. Even big guns like TELCO are working out arrangements with Tata Finance, and plan to rope in other companies to fund their ambitious sales plans. There could be a temporary hiccup, with the RBI coming down heavily on the functioning of non-banking finance companies. But eventually, the shakeout will make way for stronger, more efficient moneybags to woo the customer.

There is also the crucial point, as Daewoo's Awasthi says, about confusion -- in the mid-sized segment in particular and the market in general -- about who was selling exactly what: too many models too soon and too many variants within some models in many cases. Daewoo itself is a good example, Awasthi admits. With all its models and various combinations thrown in, a customer finally had 15 variants to choose from. In its new avatar, Daewoo has ensured the Cielo has just three, a result of re-orienting strategy backed by recent consumer research.

This second stage of the New Indian Car Market will be a leaner, meaner one, with some hard lessons learnt. In a way, what is happening in India was expected, sure signs of an emerging market used to few models from near-monopolies for years. "The automobile industry is still in its infancy," says John Parker, managing director, Mahindra Ford. "The spurt of growth in the beginning has settled down to a steady one, and the growing affluence of the middle class will continue to contribute significantly to the growth of the automobile industry."

Ford knows where it's coming from in India, global behemoth or not. The company planned to produce 12,000 cars in 1997. It's unlikely to do more than 10,000. But that hasn't stopped it from going ahead with plans to introduce the Fiesta in 1999 and set up a one lakh cars-a-year plant. The logic: You can't be competitive in India until you localise, and as you can't sell all your cars here, you have to plan to export. "The mid-car segment is a sort of brand-building segment, a place to demonstrate quality," adds Mahindra. "Only companies that use India as an export base will survive."

It's what Ford, Daewoo, General Motors and newer entrants like Honda, which has a tie-up with Siel, are eyeing. They are looking to capitalise on add-ons, providing firsts, or benchmarks as the trade calls it, to lure customers. Aditya Vij, vice-president, marketing, with General Motors India Ltd, says that in a large country like India it is important to provide the customer with "assurance and peace of mind, meet his expectations of promptness, expertise and geographical presence". It's this that prompts Maruti executive director (marketing) Jagdish Khattar to say smugly: "the customer has evaluated and is evidently satisfied with our price and support system." With 120 dealers and 150 sales outlets, it's a support system that nobody can match yet. But the competition won't stop trying: to increase numbers or effectiveness and to expand a market and counter a presence. As Khattar correctly points out, "Today, the industry's marketing strategy starts from the Maruti 800, which is the choice of 55 per cent of first-time buyers."

Competition will aggressively attempt to change that, with price and innovation. For instance, Honda-siel deputy general manager Ananda Mohan Gupta talks about a survey of dealers the company conducted a few years ago and came up with a dismal picture. Now it plans showrooms which will provide what he calls three-S facilities: sales, service and spares all under one roof. This is forcing dealers to cough up Rs 1.5 crore per dealership for the privilege, but besides convenience, Honda sees another benefit. "The massive investment also ensures that they (dealers) will have to be that much sincere to break even. The customers won't come to us, we'll go to them."
It's already happening, it will happen even more. And the deals on wheels will get even better.

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