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Is Cross-Badging Helping Auto Companies in India?

Cross badging of vehicles hasn’t caught on in Indian markets

Published: Feb 16, 2013 06:11:23 AM IST
Updated: Feb 19, 2013 04:18:07 PM IST

The Duster has been a huge success for Renault in India. The car accounts for more than 70 percent of the company’s total sales. In 2013, though, Nissan, Renault’s alliance partner is due to launch a cross-badged version of the Duster under its own brand. It is another matter altogether that Renault-Nissan’s earlier attempt at selling cross-badged cars haven’t worked. Even the mighty Volkswagen group is struggling with it.

What is Cross Badging?
A car manufactured and sold by company X is also sold by company Y by making cosmetic changes. For instance a different logo, change in headlights, taillights, bumpers and so on.

The Rationale

Reduce Cost  It costs $300-500 million to develop a new car. Makers with several brands (Volkswagen, Renault-Nissan alliance) can optimise this cost by selling the same vehicle across its various brands.

Complete the Bouquet 

Feed vehicles in the network of a car company which a) does not have funds to develop a new car, or b) does not have a strong product portfolio or doesn’t have a particular vehicle in a segment.

Why Has the Indian Market Not Responded?

  • The cross-badged cars sold in India look similar and have similar features.
  • Cross badging works in markets where brand loyalty is high. The Indian buyer seeks value and will switch brands easily. Also, both Volkswagen and Renault-Nissan are still fairly new in India.

(This story appears in the 22 February, 2013 issue of Forbes India. To visit our Archives, click here.)