Imagine going for a weekend holiday with your family in your premium Nissan multi-purpose vehicle (MPV) from Delhi towards Rajasthan. As soon as you cross the Delhi border, you see a stripped down version of the MPV tagged as an Ashok Leyland being driven to move goods or used as a taxi to ferry people. Will you be proud or just aghast?

Late entrants to India’s car party, especially those that are global alliance partners, have started re-badging cars and selling them under different brand names, albeit with similar looks, platforms and engines. While re-badging is an established phenomenon in mature markets like Europe and Japan, carmakers such as Renault-Nissan, Volkswagen-Skoda and Ashok Leyland-Nissan have started trying this out

in India.

The primary reason behind re-badging remains cutting costs. But it tends to confuse customers when it comes to choosing between the retagged models.

“An average Indian consumer won’t be able to figure out whether a model is a retagged version of another car. He only sees the physical appearance. The critical part for such a purchase will, however, remain the brand (of the manufacturer) because of brand loyalty,” Mohit Arora, executive director at global marketing and information company, JD Power Asia-Pacific.

Volkswagen-group owned Skoda Auto launched the ‘Rapid’ mid-size sedan, the re-badged version of Vento in November last year. While Skoda expected Rapid to be company’s largest selling car in India, it failed to make an impact with sales hovering around 1,100 units against Vento’s average of 3,000 units per month. The Rapid looks same as the Vento from the side profile with similar 1.6 litre engines and turns out to be cheaper by about Rs 25,000 compared with the Vento variant-by-variant.

Arora, who has been tracking the Indian auto industry for 17 years, said it was easier for Skoda to dole out a shared product rather than make huge investment to build an independent model. “Skoda would have found it a big challenge to fight with an already established player like a Maruti or a Hyundai with an independently developed model,” he said. “However, I don’t see a concern about safety or quality of a car due to re-badging,” Arora added.

Giant alliance, Renault-Nissan has also entered the re-badging race and may continue doing so for its future products. Last week, Renault rolled out the ‘Pulse’ hatchback that has the features and dimensions of Nissan’s Micra. Both cars share the same 1.5 litre diesel engine, looks and interiors.

Arora said it is too early to say whether re-badged models will be a hit in India, but warned, “If market starts to accept these products, it may become a major threat to established players”.

Nissan and Ashok Leyland, through their commercial vehicle joint venture, will roll out two separate versions of an identical van later this year. While Nissan’s van Evalia will be a premium version targeted at personal usage segment, Ashok Leyland’s ‘Stile’ will be targeted at commercial segment for applications such as BPOs, radio cabs and airport / hotel vans.

“In the end, it all depends on the customer whether he is discerning enough to know difference between two products or not. But the manufacturers are clever, they may create visible differences in re-badged cars such as differentiating the models with black or beige colour of seats, tweaked bumper moulds and different type of claddings,” said Arora.