Mumbai: German in-car entertainment brand, Blaupunkt has finally set up shop in India, through a joint venture (55:45) with its current India partner AutoSonics India. Though the brand has been present in India for almost 15 years now, it was through multi-channeled distribution networks.
The JV is being fashioned as a re-entry of the brand in the Indian market. Lars Placke, CEO, Blaupunkt, says the JV does not change much on one level. And yet, he says, “On a second level, it has brought us closer to the customer. He will now be dealing directly with Blaupunkt, meaning a higher commitment on the brand’s part to customer as well as a wider product portfolio.”
The timing couldn’t be more perfect. It comes at a point when the Indian auto and auto components industry is growing at a steady rate of 15 - 18 per cent. The move could also help the company up its share, especially in the retail segment (or after-market sales as it is popularly known). As per estimates, in a Rs 600 crore retail market, the company holds just a 5 -6 per cent share. The rest is held by competition led by JBL, Sony, Pioneer and so on.
Experts feel that the JV will help the company scale up its distribution and reach, critical for after-market sales as well as connect better with original equipment manufacturers (OEM). “In this (in-car entertainment) market, the success is largely dependent on how a player connects with the OEM,” says Abdul Majeed, leader (automotive practice) at PwC. Especially since, increasingly, the trend veers towards cars being fitted with stereo options at the assembly level by auto players, even for basic models.
Blaupunkt seems to have identified both these factors and is preparing for its first step in the direction - invest in a larger after-market sales team and up its distribution network. As per Pankaj Jagwani, director, Blaupunkt India, the newly formed JV will now concentrate on four different channels - tieups with OEM, retail sales, car showrooms and organised retail.
On the OEM front, Blaupunkt already has tie-ups with Tata Motors, Mahindra & Mahindra and Hyundai.
As for the car showroom sales, a player must be approved by the automaker to be present through this channel. While Blaupunkt has approvals from Tata Motors and Hyundai, the channel itself is not favoured much by analysts. Reason: a strong unorganised service market in India. One auto analyst hazards a guess, “Of 10 cars, possibly just three - four come back to the dealers for any kind of servicing. Most would prefer their neighbourhood garages or service providers for cheaper (cost wise) servicing.”
For the retail sales, the company is looking at upping its distributor reach from 25 to 40. Each distributor in turn will cater to around 100 retailers, translating into a coverage of around 4,000 retailers pan-India.
The key advantage of the JV would be the scope for customising the solutions for OEM as well as on the retail front. “As distributors, our role was restricted to taking products from Blaupunkt and selling them in-turn. But as partners, we’d be able to help customise the solutions for each OE player,” says Jagwani. Important, since no OEM accepts in-car entertainment solutions as built for the retail market. They are modified to suit the car requirements from design and aesthetic perspectives. To this end, the company may at some point consider localising assembly operations as well, till then the Malaysian factory will continue to be the source of supply.
Lastly but most importantly, the success of Blaupunkt will be determined by the pricing given that, in India, small cars constitute around 70 - 75 per cent of overall passenger car sales, quite unlike the global markets. A Rs 40,000 high-end model could work wonders for the premium segment. But, the success will be driven by the ability to cater to a fairly lower price point.
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