Match made in heaven

M&M buys auto design house, Pininfarina, as design can make or break a car-maker’s fortunes

Photo: Pininfarina

“Choosing a car is like getting into an arranged marriage. You are attracted to physical appearances first.” VG Ramakrishnan, managing director, Frost & Sullivan, south Asia, draws an interesting analogy while explaining how important the outer design or appearance of passenger vehicles has become for Indian car buyers.

For decades, Indians had to discover beauty in what was available – Maruti Omni, Premier Padmini or Ambassador. Then there were the 800s and Esteems of the world, followed by the Santros and Altos. But the average Indian buyer’s aesthetic sense has evolved over the years. In fact, one could say that aesthetics have instead assumed a central role in buying decisions these days.

No wonder, then, that the SUV market leader of India, Mahindra & Mahindra has acquired iconic Italian auto design house Pininfarina. The design house is well known for designing more than 100 Ferraris in the past 60 years, also contributing to the stables of Maserati, Rolls-Royce, Alfa Romeo and Lancia, amongst others.

However, it has been ailing financially for more than a decade now, with debt becoming unbearable. Earlier this year, M&M bought a 51% stake in another Italian icon Peugeot for its two-wheelers, in order to upgrade its own offerings. Analysts feel that Mahindra has been under pressure to transform its product range for some time now.

Puneet Gupta, IHS Automotive forecasting“Its SUV leadership is under threat even when biggies such as Volkswagen and Toyota don’t have matching products in its segments. Going forward, international competitors are going to bring in the latest designs and products into the market.” says Puneet Gupta, associate director, IHS Automotive forecasting. XUV 500, launched four years back, was the first premium product from M&M’s stable, but in general, the company has lagged behind in presenting good-looking vehicles.

Of course, it’s not just that design can’t be ignored anymore – some companies are actually using it as a tool to establish themselves. Renault is a prime example: it succeeded with Duster primarily because it built a robust yet beautiful crossover at an appropriate price. Renault’s Logan (now Verito), which was jointly launched with M&M when both companies were part of a JV, flopped despite being a well-built, spacious car at a very attractive price because of its boxy and boring look.

Now, Renault is replicating that success – though it lacks the reach of a Maruti or Hyundai, it has tried to compensate by offering a product that looks contemporary, namely, the Kwid. No wonder, then, that it got 50,000 bookings in its first month. Companies that didn’t read the changing aesthetic preference of the Indian buyer in time have only suffered.

“Tata’s cars have similar engines and technology compared with its rivals but the company didn’t pay enough attention to design over the years. For example, the new Safari Storme doesn’t feature any major changes. A decade ago, Tata was the second largest passenger car player; now, it is nowhere on the list,” says Gupta. He adds that this can happen to any company that ignores consumer aspirations. “It is the price and design of the car that pulls customers to the showroom. Honda’s Jazz and City are great examples of that.”

VG Ramakrishnan, MD, Frost & Sullivan“While there are quite a few options for designer parts, India doesn’t have too many designers who create the outer shells of cars. It is only now that a lot of changes are happening: Renault has started its own design studio; Pininfarina comes with its own deep engineering and technology base. M&M has been looking out for an engineering services company for a long time – this is no secret,” says Ramakrishnan.

Observers are certain that this step will change things for Mahindra, although it still can’t churn out a Ferrari tomorrow even if it has Pininfarina under its fold. “A company cannot change product definitions completely. Mahindra’s products are known for certain features and that’s what customers expect from it. But this move will definitely enhance design capabilities,” adds Ramakrishnan.

Mahindra has been on the job for a while to make design the centerpiece of its regain-market-share strategy. It first came up with the Quanto compact SUV in 2012, which has utility but being a chopped-off Xylo, didn’t appeal to customers and failed to generate volumes. In September 2015, Mahindra launched the TUV 300 in the same segment, but with a much better design, achieved with help from Pininfarina. It has since dispatched 4,313 and 4,551 units in September and October, respectively, bringing volumes back for the company (in comparison with the Ecosport and Duster). A clear sign, then, that sometimes, arranged marriages are the way to go.