Can an improved Indica be sold for less than the Maruti 800? Can Bajaj create a service network that's miles ahead of the competition? Should TVS and Bajaj be developing next-generation two-wheeler engines together?
If Indian-owned automobile companies are not asking themselves these kinds of questions today they will be marginalised tomorrow.
True, the Indian auto sector is growing like gangbusters. But apparent success should not cloud our vision on long-term trends. Consider: Indian companies have already ceded market dominance in both mobikes and scooters.
The Tatas are No 1 in the C segment, but their current dominance may be transient. The Mahindras never will be No 1 anywhere, unless we are talking tractors. The Firodias and the LMLs do not have it in them to make it to world class.
What Indian entrepreneurs have not displayed so far is sharp, strategic thinking. They cannot expect to hold their own against global competition by simply following the strategies of the past. First and foremost, they must learn to identify the main enemy and dissect his long-term gameplan before working out a counter-offensive.
Though no one can rule the US and European carmakers out, the real long-term threat to Indian autos comes from the Japanese. Honda defeated Bajaj in two-wheelers with just one basic fuel-efficient bike. It is close to doing the same in scooters.
By launching a pincer attack with a 100 per cent subsidiary, it is now in a position to completely dominate the all-important segments in two-wheelers.
Dumping or sidelining the Hero group is only a matter of time. Yamaha and Suzuki decided to go it alone when they realised that their Indian partners (the Nandas and TVS) would be a drag on their ambitions. In four-wheelers, Suzuki wants only a minimal presence for Maruti in its new diesel and car plants.
If Japan Inc is the real enemy of Indian-owned auto companies, their strategies are worth studying. Three in particular are of relevance to the Indian context.
One is that they compete relentlessly on cost and quality. The Japanese grind their competitors into the dust using TPM, TQM and lean manufacturing techniques.
Toyota is already No 2 worldwide and it has achieved this by cutting costs (and/or improving quality) at a rate that is faster than its competitors. If Toyota cuts costs annually by 57 per cent, this means it can sell the Corolla at the price of an Indigo (in real terms) 10 years from now.
If Tata Motors wants to stay in the competitive game, it will have to cut costs and improve quality at a faster rate than Toyota, Suzuki, and Honda -- not to speak of Hyundai.
And cost cutting has to spread across the supply chain -- and not just in the Tata or Bajaj factories. The first key to global success is superior supply chain competitiveness.
The second way the Japanese compete is by targeting their rivals' profitable honeypots. Why did Honda get into scooters when everyone was saying the market was not growing as fast as mobikes? Answer: that's where Bajaj's margins were fattest.
To win the war, you have to destroy your rivals' profit centres so that their ability to compete is steadily reduced. This also explains why the next target for Honda is the Pulsar -- Bajaj's best-selling bike. Once the profitability of Bajaj is down to sub-normal levels, defeating Bajaj will be easy for the Japanese. It also explains why Suzuki wants a diesel engine plant: it has to neutralise Tata Motors' advantage.
The third Japanese war technique is the feint -- a mock attack that sends the opponent looking in the wrong direction for a counter-attack. Consider Toyota's first offering -- the Qualis.
Everyone knows that Toyota is world champ in cars but it chose to enter the MUV segment first. It did this to make its competitors invest more in this segment, forcing resources to be shifted there.
But as the Mahindras celebrate the short-term success of the Scorpio or the Sumo, the real attack will come shortly in low and middle end cars. And when that comes, the Tatas will face the battle of their lives.
So what should Indian auto-entrepreneurs do? One thing is to realise that they cannot take on their Japanese rivals in all segments. They have to work out strategic alliances in such a way that they can concentrate their resources in areas where they want to be No 1 and help their partners in the other ways.
In two-wheelers, for example, this could mean players like TVS and Bajaj working out an alliance in supply chain improvements, customer servicing, engine development, and various other areas.The Tatas and Mahindras could carve out segments of dominance in MUVs so that they can specialise and improve quality and reduce costs faster. Without such strategic thinking, 10 years from now India's hitherto successful auto players will find that they are losing the war.