The entry of the Korean automobile major, Daewoo Motors India Ltd. (Daewoo) in the Indian passenger car market was heralded as a milestone for the industry

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• Marketing Management
•  
• CASE STUDY (20Marks)
• The entry of the Korean automobile major,
  Daewoo Motors India Ltd. (Daewoo) in the Indian
  passenger car market was heralded as a milestone
  for the industry. This was because Daewoo was the
  multinational to challenge the might of the
  market leader Maruti Udyog Ltd. (MUL). Daewoo's
  first vehicle, the 1500 cc Cielo was launched in
  three versions (Cielo, Cielo GLX and Cielo GLE)
  in July 1995. Consumers who until now had no
  other option besides the Maruti Esteem in the
  midsize segment (Refer Exhibit I), rushed to buy
  the Cielo.

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• Bookings for the three models reached
  114,000 in a short span of time. With the car
  registering high initial volumes and its plans to
  become a Rs 100 billion company by 199899, Daewoo
  seemed all set to give MUL serious competition.
  However, Daewoo was in for a major shock as
  around 70,000 customers cancelled their bookings
  within a few months. Daewoo had predicted an
  annual turnover of over Rs 10 billion and sales
  of 20,000 cars by March 1996 but managed to
  record a turnover of Rs 6.05 billion and sales of
  only 9,044 cars. During April December 1996, only
  13,776 Cielos were sold against the targeted
  52,000.

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• During April 1997February 1998, 9006 Cielos
  were sold, a decline of 41 from the
  corresponding period previous year. In 199899,
  5500 Cielos were sold, a fall of nearly 50 over
  the previous year. The entry of competition in
  form of General Motors and Ford in 1996 and the
  general downturn in the midsize car segment added
  to the company's problems. Daewoo recorded a loss
  of Rs 351.4 million in the six months ended March
  1998 as sales declined to Rs 1.22 billion from Rs
  2.7 billion in the corresponding period in the
  previous year. Daewoo was surprised to realize
  that its globally tried and trusted formula of
  providing excellent service with low prices had
  failed miserably in India.

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• Answer the following question.
•  
• Q1. Give an overview of the case.
•  
• Q2. Give reasons in detail for the failure of the
  marketing strategy of new entrant, Daewoo Motors
  India Ltd. (Daewoo), in the automobile market.

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