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Honda Amaze, Ford Ecosportand Renault DusterNew Product Development

2/14/2014D&D AssignmentBharat Sharma



In 2013 three automobile products viz: Honda Amaze, Ford Ecosport and Renault Duster were gamechangers for their respective companies in terms of boosting their company's overall performance.

Please research, critically analyze and compare the product development process followed by thesecompanies for these products and the lessons we can draw from these cases. Also how does it compareagainst the NPD process studied in the class.

Solution

F ord EcoSport, H onda Amaze, Renaul t Duster

Sometimes, fortunes change overnight. It happened to Renault last year. In India since 2005, the

French automaker hadn't quite set Indian roads on fire. A weak debut with the Logan sedan (in a

joint venture with Mahindra & Mahindra that lasted four years), an inconspicuous presence with

the higher end Fluence and the Koleos sports utility vehicle (SUV), Renault was a fringe player

going nowhere in India.

Things changed dramatically when it launched the

Duster, an entry-level SUV, in July 2012. The

compact SUV took the market by storm. For a

company that barely sold 800 units a month, the

Duster launch brought in the problem of plenty.

Even though the company ramped up its monthly

sales to 6,000-odd units, it now had to grapple with

a waiting period of up to six months. "Renault

found a sweet spot.

Its Duster was a segment creator. The demand surge

must be seen in this light In June, almost a year later,

Duster met its match.

A new sensation, Ford's EcoSport, another entry-level SUV, debuted on the Indian roads.

Snazzier, priced aggressively (read lower than Duster), and packed with a load of features,

EcoSport became the talk of the town.Ford got 40,000 bookings in a record 17 days. The compact SUV today enjoys a waiting period

of up to nine months. Overwhelmed, dealers had stopped taking bookings, and said they will

resume around April next year. Meantime, the buzz around Duster has waned a bit.



Sales have since moderated, from a high of 6,313 units in March 2013 to 4,657 by October. There's nolonger a waiting period and it is readily available at all Renault dealers.

The Blockbuster Effect

Since it entered India in 1996, Ford has struggled to get a grip on Indian roads. Despite occasional andfleeting successes like the Ford Ikon and Figo, its India journey remained lacklustre. The launch of justone model, the EcoSport, has created a buzz around the brand and a reversal in fortunes of sorts. Thecompact SUV now contributes over 55% of Ford's total sales in India.

For good measure, market share has inched up from under 3% in 2012-13 and is now nudging 4%.Something similar happened with Renault. Since its India debut, it has been a fringe player. But with thelaunch of Duster, Renault has grabbed a market share of 8% in the UV segment from almost zero. It hasalso increased the overall market share (cars plus UVs) from under 1% in July 2012 (when the Duster waslaunched) to 2.3% now. The Duster today accounts for 86% of Renault sales and 100% of its exports.Also in the comeback lane is Honda Cars India Ltd.

Never a high-volume player, Honda had visibility on Indian roads thanks to its popular mid-market sedan,the City. But poor pricing strategies, the lack of diesel variants and an absence in the mass market ofcompacts ensured that Honda could not build on the City's gains. The launch of entry-level sedan Amazechanged all that. Priced aggressively, and armed with diesel variants, the Amaze contributed 85% ofHonda's October sales in India.

Consequently, Honda's market share in passenger cars has moved up from 2.7% in 2012-13 to 6.8%today. And it has leapfrogged to No. 3 position in the country — till March it was India's fifth largestcarmaker.

Glimmers of Hope

These are interesting times. Relatively small,niche players have suddenly hit the jackpotwith new launches. In an environment wherediscounts are galore, carmakers like Hondaand Ford are savouring the joys of waitlistedcustomers. The auto industry is going throughits roughest patch with sales in reverse gear — in 2013-14 (April-October) passenger vehiclesales declined 4.6%. But the dark horseshaven't had a better time in years. So whatexplains this situation? Broadly, three factors.One is the slowdown itself.

Amid poor consumer sentiments, the launch ofexciting models at attractive price points is perhaps the most important tool that the companies have inluring customers to their showrooms. "A market that was growing across all segments till recently isseeing selective growth not just segment-wise but even model-wise," says Rakesh Batra, national leader



(auto), Ernst & Young. This could partly be a perception issue. After all, when just one or two models seea spike in an otherwise flat or declining landscape, they do get noticed, and the spikes are magnified.

Two, demand may have slowed but that hasn't put the brakes on the evolution in consumer behaviour; thishas significant implications. For example, "old segmentations are getting redefined and boundaries are

blurring", says Pravin Shah, CEO (automotive), Mahindra & Mahindra (M&M). Take for example theUV segment, M&M's bread and butter. The segment grew by 50% last year but has shrunk by 2.8% thisyear so far.

But the transformation in the fundamental attribute of the UV hasn't stopped. "Customers now want a feelof a UV but the comfort of a sedan," says Shah. Indian consumers are also slowly moving up the pricecurve. For example, Shah says, earlier their major growth came from vehicles up to Rs 6lakh.

Now, the Rs 5-10 lakh segment has become the sweetspot and is witnessing good growth. Three, theexternal environment — particularly policy fluidity

— has only added to the woes. The UV segmentsoared on the back of huge demand for diesel vehiclesas petrol prices surged.

With the diesel-petrol price gap narrowing, this ischanging. It didn't help that the Union budget earlierthis year raised the excise duty on SUVs from 27% to30%, making many existing models pricier. In thisfluid market and in an industry with a long gestation

period, only those carmakers that are able to moveahead of the curve and address the emerging segments will be able to woo the customer. This is where the

demand surge for EcoSport, Amaze and Duster fits in.Slowdown Collides with Ambitions

So although demand is soft, automakers aren't taking their foot off the accelerator when it comes to theirlaunch plans. To be sure, over the last year, a slew ofMNCs have launched game-changing models in India,investing significant money and resources. And in fact theAuto Expo scheduled for February 2013 will be the biggestever with over 50 companies participating. To understandwhy let's rewind to 2007-08.

In the wake of the global economic crisis, many globalcarmakers including Ford, Honda, Renault, Toyota and

Nissan began looking at India with new eyes andambitions. As developed markets like the US and westernEurope got roiled, the Indian economy remained relativelyinsulated and looked promising. In an industry with a

product development cycle of three to five years, these



automakers began developing new models at appropriate and attractive price points for the Indianconsumer.

As a result, many of these carmakers who till then were bit players — Honda, Ford, Renault and Nissan — now began to aspire for volumes and to join the mainstream. They started investing in developing products and ramping up their production capacity. Between 2008-09 and 2012-13, production capacityfor passenger vehicles went up from 1.93 million units in 2008-09 to 4.9 million in 2012-13. Not many atthat time had anticipated the slowdown.

Celebrating Cautiously

Demand for a select few models may have gone through the roof, but that doesn't mean automakers areworking overtime to produce more of these bestsellers; rather they're adopting a cautious and calibratedapproach. For example, Ford's plant has a capacity to manufacture 34 cars an hour. And the plant is 100%flexible, the company says, to switch from one model to another. And considering the huge waiting listfor the EcoSport — bookings are closed till March next year — you would expect them to ramp up

production. Not quite.

Ford is producing just 19 EcoSports today — using not even half of its capacity. "For now, our EcoSport production level will remain at that," says Piparsania. Partly, this has to do with the complexity of theauto industry. "This is the game of the weakest link. You cannot make a car with one component less,"says Deepesh Rathore, head, EMMAAA, an automotive research firm. And getting all the vendors toquickly scale up is not easy.

But there is another reason why celebrations are tempered with caution. Note that almost all these playersare still relatively small with low single-digit market shares in India. And their recent success and salesspurt are built overnight on the back of one successful model. Unsurprisingly, all the three new launchescontribute a large chunk — over half — of these MNCs' monthly sales.

The question that many are asking (including some of the carmakers) is how long will the good timeslast? Will they remain one-car wonders or can they follow through by creating a pipeline of bestsellersand in the process create a comprehensive

portfolio that comprises compacts, sedans andSUVs?

Mayank Pareek, chief operating officer(marketing & sales) at Maruti Suzuki, has someanswers. "New launches do well in the first year.The game starts second year onwards when theinitial charm wears out." In his experience and

based on Maruti's experience with its customers,the first wave of buyers is quite distinct in itscharacteristics. These buyers are usually high networth individuals who are trendsetters who loveto experiment and flaunt new products andtypically have a business background. In



numbers they are small (may be under 1%) but they are influential.

"The model's success is actually built by the second wave," Pareek says. Dominated by professionals andsalaried class, they are relatively conservative in their purchases, refer to other people's experience and donot get swayed by the product hype. Maruti has found that while the top model variant comprises 80% ofsales in the first wave, by the second wave it settles down at around 20%.

Gnaneshwar Sen, senior VP (sales & marketing), Honda Cars India Ltd agrees. "Sustainability of salesafter the initial hype is extremely important for any model to be successful. That mostly comes from wordof mouth," he says. It is for this reason that both Pareek and Sen say they have a very distinct strategy forthe first and the second wave. In the first wave, the focus is on the big cities and creating a buzz aroundthe new launch.

In the second wave, when they give a booster doze to their marketing thrust, the focus is on deepercustomer engagement. For example, in the second wave of marketing Ertiga, Maruti launched test-drivecampaigns in small cities and for Swift Dzire it conducted a mileage rally to connect with customers. Thisis something that the industry is well aware of. Moderating of Duster sales should be seen in this light.And it is for this reason that carmakers are treading with caution. Maruti and M&M are of course dyed-inthe-wool auto companies, having carved out their significant presence with a portfolio of vehicles(M&M largely in the UV space). Their success clearly is not built on one or two models.

So for instance, when Maruti launched the Ertiga, it sold like hot cakes and had a five-month waiting period. To that extent, the Ertiga's success was not too different from that of the Duster or the EcoSport.The crucial difference, though, is that the Ertiga contributed just 8% to Maruti sales even in its bestmonth. Ditto with the XUV500 of M&M, which also has the Bolero and the Scorpio (besides the Xyloand Quanto) amongst its bestselling UVs. At its peak, the XUV500 had a nine-month waiting period butstill contributed just 17% to M&M's total auto sales.

Clearly, Honda, Renault and Ford are trying something similar — to have more irons in the fire and createa winning portfolio rather than just winning models. Honda, which just unveiled its new City with a dieselvariant, plans to launch three vehicles including an MPV within a year and is looking at the possibility of

building a car in India for the Indian market.

Early this week, Renault too announced that it is considering launching an MUV and a sub-Rs 4 lakh carin the Indian market. Ditto for Ford which is likely launching its global small car Ka in India in 2014."For us these proportions [the high dependence on Amaze sales] will keep changing as we launch newmodels," says Sen. In these uncertain times, consumers may not be waiting with bated breath, but makeno mistake: if they see something as value-for-money, they'll go for it.



Product Development of H onda Amaze

1) Planni ng Phase

Honda Amaze has been developed at Honda R&D Asia Pacific Co., Ltd. located in Bangkok, Thailandfollowing extensive market surveys in India on people‘s driving needs and lifestyles. India is the firstcountry to launch the Amaze with Honda‘s latest i -DTEC diesel engine technology besides the successfuli-VTEC petrol engine. Coming to the development of Honda Amaze, it is the most strategic model in theIndian market and has been developed with strong focus on Indian requirements. The Honda Amaze andthe compact i-DTEC diesel engine are engineering marvels and they are very confident that they willexceed customer‘s expectations and would set new b enchmarks in the industry in terms of design,

packaging, cabin comfort, and fuel-efficiency. With the launch of Honda Amaze, they were lookingtowards newer horizons in the Indian market. They‘ve worked on aggressive localization overcomingmany challenges in terms of timelines, technology and costs to be ready to launch the Honda Amaze inIndia at an attractive and affordable price. This will enable more customers to experience the joy ofowning and driving a Honda car. With the best of both petrol and diesel technologies, we are very

confident that we are ready for an exponential growth in our business in India. Amaze will be a gamechanger for us and over the next few years we will look to increase our operating universe in India toaround 50%

2) Concept Development

The grand concept for the all new Honda Amaze is Smart Micro Limousine which reflects values ofstylish design, compactness, manoeuvrability and class leading space. The Amaze design takes Honda‘s―man maximum machine minimum concept to a new le vel, maximizing the space available for peopleand minimizing the space required for mechanical components. Exceeding customer‘s expectation, theefficient packaging of Amaze adopts a right balance between Rear occupant space and Trunk room which

helps to achieve one class above interior space with significantly superior Knee Clearance, HeadClearance & Leg room inside cabin and offers a class leading boot space of 400L accommodating 2 pieceof medium size luggage and 2 piece of small size luggage. The Amaz e‘s Advanced CompatibilityEngineering (ACETM) body enhances self-protection while mitigating damage to other vehicles in theevent of a collision. The Amaze features host of Honda‘s active and passive safety technologies includingDual SRS airbags, Anti-Lock Brake System (ABS) which prevents wheel locking, Electronic BrakeDistribution (EBD) which enhances braking performance, Pretentioner seat belts with load limiters andimpact mitigating headrests. The ABS with EBD is being offered as standard across all Diesel and ATvariants. The front body structure of the Amaze is equipped with Pedestrian injury mitigation technologydesigned to absorb impact energy

3) System L evel Design

The All New Amaze powered by the 1.5L 4 cylinderDOHC i-DTEC diesel engine is the most fuelefficient car in the country with a certified mileage of25.8 km/l, as per test data. In line with the objectiveof producing more power along with strong torque atlow rpm, the 1.5L diesel engine of Amaze gives best



in class max power output* of 100PS@3600rpm and 200 Nm of torque @1750 rpm that makes the car soenjoyable to drive. The 1.5L i-DTEC engine has been developed exclusively for India considering Indiandriving conditions and is based on the Honda‘s latest ‗Earth Dreams Technology‘ reali zing both excellentdriving performance and offering matchless fuel economy. With an aluminium cylinder head joined to anopen deck engine block, it is the lightest engine in its torque performing class. The use of lightweight

crankshaft and a number of friction-reduction technologies help to control friction in a diesel engine togasoline engine levels. The 1.2L 4 cylinder SOHC i-VTEC petrol engine successfully delivers maximumoutput of 88 PS @ 6000 rpm and Torque of 109 Nm@ 4500 rpm, while giving an impressive fueleconomy of 18 km/l for MT and 15.5 km/l for AT as per test data. The emission from the Amaze meetsthe stringent Bharat Stage 4 emission standards.

4) Detail Design

The exterior styling of Honda Amaze is smooth and strong with distinctive character lines from fronttorear which ensures strong road presence even with compact dimensions. The two character linessmoothly integrate the Front Dynamic Image and Rear Elegant Design. The Front Grille design concept

and aerodynamic body colour bumper emphasize the sporty image of the car and its wider shape andconcave cut profile provides a premium image. The headlights exemplify quality and craftsmanship usinglarge-diameter cylinders which emphasize presence and Chrome-plated parts & black garnishes providethem a 3D effect.The rear combination lamp has been designed to give a wider and clearer rear viewwhile adding a premium touch with the inclusion of chrome housing and sensitive lens cut on the outerlining to provide a futuristic image when rear light is in operation. The overwhelming presence of rearview is completed by extending the rear license garnish line and enhancing overhang feeling.The newlydesigned Alloy wheel with solid cut design makes the wheel look bigger and delivers dynamic andelegant driving performance.



road capacities. Depending on the market, it ships in 4x2 or 4x4 versions.

2) Design Detail

All-terrain vehicles are frequently synonymous with bulk, but Renault Duster ‗s compact dimensions – 4.31m long and 1.82m wide – show that this does not have to be true. The reinforced under body issuitable for all-track, all-terrain use, with high ground clearance of 210 mm, short overhangs (822 mm atthe front, 820 mm at the rear) and big clearance angles.

In terms of active safety, Renault Duster features, depending on versions, ABS with electronic brake forcedistribution (EBV) and emergency brake assist (EBA).Depending on the markets, Renault Duster featuresspecific characteristics. Alongside a different grille design, the version for the South American marketships with exclusive cabin design and colours. In India, Duster is equipped with a separate air

conditioning system for the rear compartment with independent controls. A real global phenomenon,Duster is built at the plants in Pitesti (Romania),Moscow (Russia), Curitiba (Brazil) and Envigado(Colombia) as well as at the Renault-NissanAlliance site in Chennai (India)


Options Petrol RxE Diesel 85 RxEDiesel 100 PS RxZ OptionBack

ENGINE &TRANSMISSION

Engine Code 1.6 K4M 1.5 dCi K9K HP 1.5 dCi K9K THP

Displacement (cc) 1598 1461 1461

Engine Type 4 Cyl in-line 4 Cyl in-line 4 Cyl in-line

Max Power : PS @rpm

104 PS @ 5850 rpm 85PS @ 3750 rpm 110PS @ 3900 rpm

Max Torque : Nm@ rpm

145 Nm @ 3750 rpm 200 @ 1900 rpm 248 @ 2250 rpm



4) Testing

An extensive road testing was done before the launch of product in India. It was tested in different Indianroads and terrains to check whether it is suitable for Indian roads or not.

5) Production Ramp Up

Renault launched the Duster on 4 July 2012 in India, it's not only a rebadged version of the Dacia Duster,it has also received a lot of changes according to the Indian market. The Duster has been pitched as anUrban SUV and its 205mm high ground clearance helps it become compatible both for city rides anduneven terrains. To add more off-roading capabilities the suspension system as well as the underside has

been strengthened. The car is currently available in 10 different variants, out of which 8 are diesel and 2are petrol. Having equipped with a bunch of several basic safety features including engine immobiliser,door open warning lamp, central locking and engine protective under guard as standard features, theDuster proves it to be a safe car. It also comes with advanced safety features like Anti-lock Brake System,Emergency Brake Assist besides Electronic Brake-force Distribution, stability control module, two frontair-bags and three- point seatbelt tensioner‘s features are incorporated as per the variants. In August 2013DilipChhabria , Mumbai based car designer of DC Designs came out with a Lounge variant of Duster.

Renault India has finally rolled out the Adventure Edition of its compact SUV Duster at Rs. 12.18 Lakhs(Ex. Showroom, Delhi). Renault Duster Adventure Edition is available with 110PS trim only and it ismore of a 110PS RxL variant with some added features. The added features are smoked headlights, doorside sill, new alloy wheels, Adventure Decal on Tallgate D-Pillar, front with lamps, wheel arch cladding,side body moulding, lime green Seat fabric upholstery and door trim fabric insert, piano black finish onthe center console and steering wheel, and metal finish grab handle are a few to mention.

Product Development Process for Ford Eco Sport

1) Concept

It's based on Fiesta running gear, to give you an idea of the baby 4x4's footprint. ‗City – ready for workand ready for play.‘

Ecosport is car which can be used on the compact roads, busy traffic areas and at the same time it can also be used for long drives. Sports utility vehicle alternative to a small car. The Ford Eco Sport offers aconfident stance, a high driving position and robust character on top of the agility, manoeuvrability andfuel efficiency that comes with a compact footprint.

2) Design Detail

Contemporary design aerodynamically honed for fuel economy, to second the aerodynamic design, beautiful, agile, smart technology, crafted with highly qualified technical designers were involved tomatch the expectations of people in the Indian Market.

The front end features a large, ‗gaping fishmouth‘ grille flanked b y slim headlamps and big fog lamps,reflecting Ford‘s global design language. Two bold lines on the bonnet flow onto the roof, highlighting

http://en.wikipedia.org/wiki/Dilip_Chhabria





the car‘s aerodynamic prowess. I particularly liked the muscular fenders, tailgate -mounted spare tyre andthe sleek roof- rails that enhance the vehicle‘s SUV stance. The tailgate handle is beautifully integratedwithin the tail lamp and that‘s a nice touch. The only thing missing is a pair of sidesteps that could greatlyaccentuate the SUV‘s ruggedness. Overall, the Eco Sport has a quirky design


1.0-litre Eco Boost engine. And while this motorcycle-sized 999cc turbo-petrol engine may sound like a pip-squeak, it gets the job done, and is actually spritelier than the second engine in the range, a 1.5-litrefour-cylinder mill.

4) Testing

As Ecosport already existed in South American and Brazil market from 2003, 2012 respectively and alsomade a mark of 700,000 plus cars in SA. But for Indian market before the launch in India the product itwas displayed in Auto expo held in 2012 and was tested in different weather conditions, humidity andalso on the busy streets of India.

5) Production Ramp up

Ford India has invested Rs.700 Cr at its Chennai plant to manufacture the EcoSport. Production capacity – Initially in 2013 the capacity 250,000 vehicles per year and 200,000 engine. Increased the capacity byend of 2014 which totalled to 440,000 vehicles and 610,000 engines with the help of new plant in Gujarat(Sanand).

Inference from the development process and NPD learned in the classroom sessions

Honda, Ford and Renault have followed a normal Generic Development Process for their abovementioned models. The generic product development process that they‘ve used consisted of mainly

product planning, design detail, system level design, testing and Production Ramp-up.

The NPD process is followed by some companies which consist of understanding the consumer‘s needsfirst. Then they access the opportunities where they concentrate on size of the market, competition,market share and ease of entry. After this step they do STP (Segmentation, Targeting and Positioning) andthen they determine the marketing strategies for their new product where they typically think of 4P‘s(Price, Place, Promotion and Product).

According to my view, all the three cars of Renault, Ford and Honda has also kept in mind of the process

involved in NPD and followed the generic development process. Without considering the market size,market share, competition and strategies none of the car would have been such a big game changer in theautomobile industry.

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