Cielo: A Car In TroubleCielo: A Car In Trouble

ceilo 1.avi

Group 8:

Ashish DagaPramod Hebballi

H.P. PandaSangeeta

DassMegha

KampariaWasim

Mukkaram

대우인터내셔널

““STRATEGY WITHOUT STRATEGY WITHOUT TACTICS IS THE SLOWEST TACTICS IS THE SLOWEST

ROUTE TO VICTORY. ROUTE TO VICTORY. TACTICS WITHOUT TACTICS WITHOUT

STRATEGY IS THE NOISE STRATEGY IS THE NOISE BEFORE DEFEAT.” BEFORE DEFEAT.”

ENTRY OF DAEWOOENTRY OF DAEWOOHeralded as a milestone for the

industryChallenged Maruti Udyog Ltd1 st vehicle launched in 3

versionsBookings reached an astonishing

no 114000Had plans to become a 100

billion company

Now comes the bad Now comes the bad partpart

70000 customers cancelled there booking Predicted an annual turnover of 10 billion and

20000 cars but managed 6.05 billion and 9044 cars

Again in April-Dec 52000 target but 13776 sold

Feb 1998, 9006 cars were sold again a decline of 41%

Next year reduced by 50 % Recorded a loss of 351.4 million in 6 months

as sales also declined to 1.22 billion from 2.7 It is not necessary that tried and trusted

formula in one country will work in every country

Reasons for their Reasons for their downfalldownfall

Stiff competition from General Motors and Ford

Targets set by Daewoo was too high and ambitious

Daewoo itself was responsible for the mess

Daewoo is good at making cars but rotten at marketing them

Background of daewoo Background of daewoo motorsmotors

Founded in 1967 in Korea it was a part of Daewoo group

In 2001 had its operations in 123 countries Basically a company whish exported readymade

garments to US Later diversified into trading, construction,

automotive, etc Automotive became one the most important

ventures In 1977 entered into joint venture with General

motors but conflicts arouse

In 1991 Daewoo bought out 50% stake in the venture for 50 billion

Faced tough competition in European and us market it looked to diversify it into eastern Europe, Latin America and Asia

Took over 50% equity held by Japans' Toyota in DCM-TOYOTA

Renamed it as Daewoo motors India ltd Dcm-Ltd again sold 24% of its stake which increased

its stake to 75% in Jan 1997 and 92% in 1998 Overseas investment on borrowed funds In 2000, co’s labor union refused to accept a

restructuring plan for the company Daewoo was declared bankrupt

Daewoo is good at making cars, but rotten

at marketing them.

-An Automobile Industry Analyst, 2000

Cielo

StrengthsStrengths

Size and Market share.

Quality Products.

Technology Potential.

Early movers advantage in India.

MISTAKESMISTAKESLack of a focused approach and

inconsistent policiesLaunching of the car into the Indian

market was done in an extremely hurried manner

High import contentLack of proper market surveyPoor fuel efficiency due to lack of

modification in Engine

Did not react to customer complaintsTried to tackle this problem through its

sales staff but they were also not properly trained

Daewoo assumed there was demand for cars in mid size segment

People tried to postpone their need to recession in an economy.

Focus On Numbers Not On After Sales Services

Promotional Promotional activitiesactivities

In 1995 Daewoo came up with Diwali bonanza scheme

Reduced the finance rates to 14.33%

Discount of 10% was given Test drive scheme in April 1997

Positioning ErrorPositioning ErrorCompany Keep on changing the

positioning of cieloDifferent positioning

“Technology & Aesthetics”“Premium Family Car”“Value Benefits”

CRITICISM FOR CRITICISM FOR PROMOTING PROMOTING

In the free scheme people felt there was something wrong

Lost its image as a feature-rich, luxury family car

Questioned by MRTP authoritiesTermed ‘unmemorable and poor’

due to constant changes in the positioning

THE BIGGEST THE BIGGEST BLUNDERBLUNDER

Hefty Price Cut Of Rs 1.5 LakhLaunch of the ‘Valyou’ campaign

ImplicationsImplications

Shock to competitors.

Loss to credibility of the car.

Loss of customer’s trust.

Launch of ‘Val-You’ Campaign.

Where Was Where Was Cielo ?????Cielo ?????

Dumped Without A Funeral Ceremony

MatizMatiz

SHIFTING THE FOCUS SHIFTING THE FOCUS

Oct 1998- MATIZ was launched .23,265 units in april-dec 1999, demand

increased by 52.2 to 35,398 units april-dec 2000

Further CIELO took a back seat after matiz success globally

Replaced CIELO GLE and GLX with EXECUTIVE and NEXIA but customers failed to see any difference

Advertising of CIELO stoppedMATIZ was going places operating in

114 countriesFailure in INDIA due to SANTRO

SUGGESTIONSSUGGESTIONSMassive cost cutting exercise Reduce the working hours Reduce the no of workers Increase the use of automation Postpone the launch of three new

cars due to the lossesChange the positioning of Cielo

once more

ConclusionConclusion

We believe the chances of its success after

re-positioning is bleak

Thank YouThank You

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