Cross-badging or badge engineering, the strategy of selling a car model under two different brands with minor or no changes, has been adopted multiple times in India, but they haven't been great successes. So, when the popular Maruti Suzuki Baleno got an alter-avatar in the Toyota Glanza as part of the Suzuki-Toyota alliance, there could've been apprehensions about the move. But going by the first few months ' performance, it seems the strategy may be working for the Japanese OEMs.
Launched on June 6 for Rs 722,000, the Glanza's domestic sales have crossed the 10,000-customer mark and till end-September totalled 11,499 units. About half of them are first-time buyers of a Toyota model.
N Raja, Deputy MD, Toyota Kirloskar Motor says, more than the cross-badging, it's the focus on the customer experience around the product that is yielding positive results. "Right from exchange, giving loyalty offer for corporate and then the overall customer experience by way of our Toyota Edge (all- inclusive EMI covering insurance and maintenance for 3 years). In the current situation, banks hesitate to finance 85 percent. But here we are covering additional cost using Toyota Finance," explains Raja.
While the above is aimed at easing the affordability factor, Toyota Kirloskar Motor has adopted an approach to gain customer confidence on brand Toyota, especially from the first-timers. The SOP (Standard Operating Procedure) in the first service is to show them around the facilities, show them My Quick Service -- the 60-minute service facility and what all is done to the car during this period, to also allay any concern that there may be skimping of any operations.
Such efforts have helped gain some positive word of mouth, something that's very effective in India and perhaps more precious in the current challenging period in the industry.
Brezza, Ertiga and Ciaz in the re-badging pipeline
Toyota's first hatchback model, the Liva, didn't quite meet the expectations but the Glanza, the company says, is doing better than expected. More Suzuki models waiting to be badge-engineered are the Vitara Brezza SUV, Ertiga MPV and the Ciaz sedan.
"These are giving new platforms for us to engage with customers in two ways -- new customers, and existing additional customers," says Raja. Toyota Kirloskar Motor wants to gain customers for life, and the cross-badging strategy will be leveraged to gain more of them at a stage earlier than they enter into the Toyota fold in other segments now.
In the hatchback segment, the Glanza's affordability has been enhanced by around Rs 24,000 earlier this month with the introduction of a new entry-level variant G MT (manual transmission), priced at Rs 698,000.
In current times when the market is sliding, any strategy to arrest a fall, if not add volumes, is worth its weight in gold. However, with conditions not in line with the festive season, Raja expects the passenger vehicle market to be in negative territory with a drop of around 20 percent during the current calendar year.
Also read: Interview with N Raja: ‘India should be technology agnostic as long as its pollution reduction goals are met.'