Automakers rev up to win lucrative MPV, SUV markets

Automakers rev up to win lucrative MPV, SUV markets

Agus W. Soehadi, Contributor, Jakarta

Spurred by the relative stability and slight improvements in
the country's economy during 2003, the automotive industry
recorded a positive response.

Data at the Association of Indonesian Automotive Manufacturers
(Gaikindo) shows that total car sales increased by 11 percent to
354,331 units in 2003 from 317,749 units in 2002.

Gaikindo chairman Bambang said multipurpose vehicles (MPVs)
and small sedans comprised 75 percent of sales, while sales of
sport utility vehicles (SUVs) also increased slightly. He
believes these categories will enjoy higher sales this year.

The great consumer interest in MPVs and SUVs comes from the
products' greater value-for-money compared to other types of
cars. To put it simply, Bambang said, consumers feel that MPVs
and SUVs offer much more for their prices, which are in an
affordable range.

The Toyota Avanza, for example, which goes for under Rp 100
million (US$ 11,000), offers a spacious and luxurious interior as
well as good gas mileage. Supported by Toyota's reputation and
nationwide after-sales services, Avanza is considered the best
MPV locally, and demand is so high that customers must order in
advance -- but they do not seem to mind waiting a few months for
their new car.

The various features and plus points of a car type attract
customers of different market segments.

For those who travel a lot, for example, a comfortable
interior and a powerful, reliable engine are a must.

Prudent, economical customers, on the other hand, put good gas
mileage, good resale value and low maintenance costs on their
list of priorities.

To borrow from J. Paul Peter and Jerry Olson's best-seller
Consumer Behavior and Marketing Strategy, the needs of consumers
can be divided into three basic categories: utilitarian, symbolic
and hedonistic.

The utilitarian consumer, as the word implies, tend to opt
directly for MPVs with a large passenger capacity, particularly
if they have a large family. Toyota Kijang, Isuzu Panther,
Hyundai Trajet and KIA Carnival would be the appropriate vehicles
for such a customer.

For those who drive solo or with one or two friends at the
most, then a city car or a small sedan would suffice.

Consumer behavior, however, is not cut and dry, and sometimes
a purchase is based not on a product's functionality or tangible
features, but more on the abstract personality and intangible
plus points inherent to the brand. This is the symbolic type of
consumer.

BMW customers, for example, perceive this particular make to
have much more than excellent performance and luxury features --
it reflects an achievement and prestige, and exudes an aura of
success.

The symbolic perception of cars can also work in reverse.
Observe, for example, the sad fate handed down to brands used as
taxis: The brand immediately loses its prestige. The Toyota
Soluna suffered a decline in its image when local taxi companies
chose it to outfit their fleets, and this was evident in a
drastic decrease in sales to individuals. Its succeeding model,
the Vios, almost experienced a similar fate. Catching on to local
consumer behavior, Toyota has now prepared a model version
specifically for taxis: the Limo.

It is curious to note, however, that in Europe, car models
used as taxis are considered tough and reliable.

The hedonistic consumer, meanwhile, goes for the sensory
aspect, that is, they seek the highest pleasure from their
purchases. They often purchase products, including cars, for
extreme personal satisfaction, for fun or just to show off.
Catering to this segment is the hardest for marketers.

To a certain extent, especially for the macho car owner, SUVs
have succeeded in matching hedonistic consumers' requirements. A
smart combination of sedan and jeep with all the comfort and
dependability of both, SUVs are a formidable partner to those who
seek adventure and challenges.

Given the current high sales and promising future for MPVs and
SUVs, it is only natural that more manufacturers are competing in
this segment.

In the smaller MPV category, the Hyundai Matrix, KIA Carens,
Suzuki Aerio, Mazda Premacy and Chevrolet Zafira are fighting it
out. In the larger MPVs, aside from the dominant Toyota Kijang,
quite a number of major automakers are also competing for a slice
of the market: KIA Carnival, Hyundai Trajet, Mazda MPV, Toyota
Previa and Honda Odyssey.

On the SUV frontline, the battle to win customers is not less
fierce. Nissan Terrano, Ford Ranger and Chevrolet Blazer are
competing in the heavy-duty segment, while Suzuki Escudo, Nissan
X-Trail, Honda CR-V, Mazda Tribute, Ford Escape, KIA Sportage,
Land Rover Freelander and Hyundai Santa Fe are vying for a cut in
the light-duty SUV market.

The question for car marketers is obviously how to win more
customers in view of the growing competition. Apparently, a total
solution must be provided to customers -- meaning that a car
should meet most of their requirements, or as many as possible at
least.

It should offer luxury to a certain degree, combined with
comfort, a powerful engine, good gas mileage and other features
that make for a convenient ride.

Honda Jazz is one unique example in the attempt to combine
many selling points.

Certainly not a gas-guzzler, Jazz enjoys a high resale value
and comes with an excellent after-sales service that spans the
country, as well as an established name. It has a luxury interior
within a sporty and trendy exterior, while it boasts a Steermatic
transmission using the Continuously Variable Transmission (CVT)
technology, which provides high-tech driveability ala Formula 1.
With the Steermatic, drivers can shift gears with their
fingertips -- on the steering wheel.

It is a car that tries to cater to all consumers: the
utilitarian, symbolic and hedonistic rolled into one.

The writer is chairman of the school of marketing at Prasetya
Mulya Business School.