Virtually one in two automobiles offered by Toyota Kirloskar Motor over the previous one 12 months in India was a rebadged Maruti Suzuki product — which propelled Toyota to its best-ever wholesale figures and a greater than 40% year-on-year progress in unit gross sales in FY24.
“Badge engineering” is proving to be an efficient gross sales technique for carmakers, and it’s prone to stay common within the new 12 months. What’s it, and why is it working so properly for producers equivalent to Toyota and Suzuki in India?
Platform sharing, with tweaks
Badge engineering refers back to the sharing of a platform or a whole car by completely different automobile producers, with a minimum of certainly one of them not needing to design or engineer a brand new mannequin from scratch.
Thus, two otherwise branded automobiles can share the identical platform, broad design cues, and the engine or components of it, with maybe a number of the aesthetics tweaked to align with the design traits of the person manufacturers.
There are variations in goals and levels — so, rebadging might produce fully completely different automobiles from the identical platform, or possibly simply swap badges with little else carried out to present every automobile a distinct or distinctive look.
For a century, from GM to Tata
One of many first documented circumstances of badge engineering dates again to 1909, when Normal Motors began sharing its chassis and platforms with all its completely different manufacturers.
So GMC, which was historically recognized as a truck builder, started to supply its merchandise with Chevrolet bending on the hood — and car platforms had been progressively shared with the opposite GM manufacturers together with Oakland, Oldsmobile, Buick, and Cadillac. Exterior appearances had been upgraded and interiors had been spruced up for the premium manufacturers equivalent to Buick and Cadillac.
In India, the Hindustan Motors Ambassador was most likely the earliest profitable badge-engineered product, with a manufacturing life from 1957 to 2014. At its core, the great previous Ambassador was a rebadged Collection III Morris Oxford.
The Rover CityRover, marketed by the previous British producer MG Rover beneath the Rover marque from 2003-05, was a rebadged model of the Tata Indica.
Whereas the Indica was successful in India, the souped-up Rover model was pummelled in the UK as a crude try to maintain MG Rover out of chapter.
The prices and the advantages
The auto trade is extremely capital intensive, and economies of scale matter. By producing extra of the identical, corporations can share prices and enhance volumes, whereas maintaining overheads low by spreading investments throughout fashions.
Whereas most shoppers know the automobiles are comparable, they will base their shopping for choice on elements equivalent to familiarity with a selected model, the guarantee on supply, or comfort of reaching a dealership. And carmakers can place themselves as builders of a premium product that prices greater than the fashions they’re typically related to.
Firms additionally get the chance to widen their buyer base in each instructions — thus, Maruti Suzuki can attain the upward finish of shopper segments, and Toyota Kirloskar can faucet shoppers on the decrease finish.
Maruti Suzuki can supply a Grand Vitara proprietor an improve to an Invicto premium utility car — a rebadged Toyota Innova Hycross — which permits it to retain clients whilst they transfer up the value bracket.
For Toyota, there’s the choice of providing clients a number of choices within the lower-end phase, the place it has historically struggled in India. With the Taisor and Glanza in Toyota showrooms, a Fortuner proprietor now has the choice to purchase a smaller second automobile.
The partnership additionally permits Toyota to supply automobiles kitted with the CNG possibility, an enormous draw within the utility car phase.
Whereas the Toyota-Maruti Suzuki twins are virtually the identical automobiles, the Toyota variations are usually barely costlier. As an example, the Taisor is about Rs 22,000-25,000 costlier than the Fronx variants with the 1.2-litre petrol engine. The trims with the extra premium 1.0-litre turbocharged engine are nearly identically priced, nonetheless.
Within the case of the Grand Vitara, Maruti sells extra of the lower-priced delicate hybrid variants, whereas Toyota sells larger volumes of the sturdy hybrids. Executives in each corporations say this isn’t the results of a deliberate technique, however is expounded extra to the consumer-pull impact.
Collaborating, not twinning
The opposite sort of cross-brand partnership entails collaboration on the platform degree, when the automobiles are being developed.
Within the Indian market, the Hyundai Creta and Kia Seltos have fairly shut underpinnings, though they’re not as alike because the Hyryder and Grand Vitara. The opposite instance is the Hyundai Venue and Kia Sonnet.
The Hyundai-Kia automobiles have some similarities of their primary platforms and share some engines and gearbox choices, however a lot of this collaboration is seeded at, and restricted to, the early growth phases. Thereafter, the 2 South Korean corporations — Kia is a subsidiary of Hyundai — fiercely compete within the markets they’re offered in.
Germany’s Volkswagen and its Czech group subsidiary Skoda have had an identical partnership, seen in case of the VW Taigun and Skoda Kushaq, or VW Virtus and Skoda Slavia. In these fashions, whereas the fundamental platform could also be shared or broadly comparable, there are marked variations in parameters equivalent to look, floor clearance, or the engines and gearbox choices.
Limits and a few classes
Whereas Toyota and Maruti Suzuki’s model engineering partnership has been a winner, others have struggled with it.
Renault and Nissan tried it, with the Terrano being supplied as a badge-engineered Duster, and the Japanese firm providing its Sunny because the Renault Scala. Each the Nissan Terrano and the Renault Scala flopped.
Some flagship fashions have been stored out of bounds — for example, Suzuki has not shared the Swift or Jimny with Toyota, and the latter has not supplied the Innova Crysta or Fortuner to its associate.
Badge engineering has been tried out throughout value segments as properly.
The enduring British sports activities automobile maker Aston Martin put Toyota’s metropolis automobile iQ on the street in 2011. The Aston Martin Cygnet was a Toyota iQ with extra bells and whistles, some beauty restyling, and an enormous soar within the price ticket. Autocar UK recorded that the automobile offered very poorly, and Aston Martin has not tried something comparable since.
The Audi 50 — the smallest Audi ever — was truly the first-generation VW Polo, which was curiously launched even earlier than the Polo’s manufacturing had commenced. The Polo went on to win over clients throughout markets, whereas the Audi 50 was quickly discontinued.
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