Cielo – A Car In Trouble

SHIFTING THE FOCUS TO MATIZ Contd..

The company's prospects however showed no signs of improving as for the first quarter of 2001-02, Daewoo posted a net loss of Rs 1.21 billion - almost double the Rs 607 million figure in the corresponding period in 2000-01. At this juncture, the company even had to postpone its plans to launch three new top-end cars, Lanos, Nubira and Magnus. In August 2001, Daewoo revealed plans to change the positioning of Cielo once more. The company's new managing director Young-Tae Cho claimed that the Cielo in its current form could not be continued. Until Daewoo managed to boost the car's sales, one would have to agree with the industry experts - who claimed that the company would never be able to make a success of Cielo.

QUESTIONS FOR DISCUSSION:

1. Analyze the reasons behind the failure of Daewoo Cielo. Do you agree that the company itself was responsible for its problems?

2. In spite of being the first MNC player in India after MUL, Daewoo could not make its automobile venture a success. How far was the Korean parent responsible for the Cielo debacle? Discuss.

3. Was Daewoo neglecting Cielo after the launch of Matiz? Do you agree with Cho's decision to change Cielo's positioning once again? Justify your answer with reasons.

EXHIBIT I

CATEGORIZING INDIAN CARS

Category	Models
Economy segment (up to Rs. 0.25 million)	Maruti Omni, Maruti 800, Padmini
Mid-size segment (Rs. 0.28-0.4 million)	Premier 118NE, Ambassador Nova, Fiat Uno, Zen, Hyundai Santro, Daewoo Matiz, Tata Indica, Contessa
Premium car segment (lower end) (Rs. 0.5-0.7 million)	Esteem, Cielo Executive, Fiat Siena, Hyundai Accent, Ford Ikon, Opel Corsa, Nexia
Premium car segment (upper end) (Rs.0.7-1 million)	Suzuki Baleno, Mitsubishi Lancer, Opel Astra, Ford Escort, Honda City
Luxury segment (Above Rs1 million).	Mercedes Benz and other imported models