The Failure of Daewoo Cielo in India



Case Code : CLMM005
Publication date : 2005
Subject : Marketing Management
Industry : Automobile
Length : 05 Pages
Price : Rs. 100

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Key words:

Daewoo Motors India Ltd. (Daewoo), Maruti Esteem, Cielo, Indigenisation, DCM-Toyota, Quality Defects, Fuel Efficiency, Market Survey, Sales Staff, Indian Middle Class, Corporate Segments, Promotional Scheme, Brand Equity, Status-Conscious Buyers, Monopolies & Restrictive Trade Practices, Positioning, Value-for-Money, Mid-size Car, 'Valyou' Campaign, Price Reduction


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The caselet provides detailed description of the entry strategy followed by Daewoo in Indian automobile market. It examines the factors behind the failure of Cielo, the company's flagship model, since its launch in the late 1990's. It also analyzes the corrective steps that the company has taken to revive Daewoo's sales and image.


   Pricing decisions and price cuts
   Positioning of a product
   Managing product portfolio
   Importance of product quality


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 mid-size segment, rushed to buy the Cielo.

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 an Rs 100bn company by 1998-99, Daewoo seemed all set to give MUL serious competition...

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.