Cielo -A Car in Trouble

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Case Details:

Case Code : MKTG010
Case Length : 8 Pages
Period : 1995-2000
Pub Date : 2001
Teaching Note : Available
Organization : Daewoo Motors India Limited
Industry : Automobile & Automotive
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Daewoo was a part of the $ 65 billion Daewoo Group, founded in 1967 in Korea. The group, which by 2001 had operations in 123 countries, had begun by exporting readymade garments to US retailers. Over the next decade, the group diversified into general trading, construction, machinery, automotive, ship building, electronics and telecommunications, among other areas...

The Mistakes

The lack of a focussed approach and inconsistent policies were reported to be the two main reasons that led to the Cielo's poor performance. However, the seeds for Cielo's downfall had been sown when Daewoo launched the car in an extremely hurried manner - the MoU was signed in October 1994 and the first Cielo rolled off the assembly lines in July 1995.

In its hurry to start its Indian operations, Daewoo entered the market with a high import content - thereby not being able to keep the prices significantly lower than the competitors...

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The Biggest Blunder?

As all of Daewoo's efforts seemed to be failing, the company Daewoo decided to introduce a hefty price cut of Rs 0.15 million in January 1998. After this, the GLE model cost Rs 0.49 million in Delhi showrooms compared to the earlier price of Rs 0.62 million, while the GLX model cost Rs 0.57 million compared to the earlier Rs 0.68 million...

Shifting the Focus to Matiz

In October 1998, Daewoo launched its small car 'Matiz,'which soon became very popular amongst the customers. Though Matiz did not fare as well as its rival Santro (from Hyundai) initially, over the next few months, its demand increased significantly.

While 23,265 units were sold during April-December 1999, demand increased by 52.2% to 35,398 cars during April-December 2000. Analysts claimed that Daewoo seemed to be neglecting Cielo after the launch of Matiz...


Exhibit I: Categorizing Indian Cars

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