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Luxury Carmakers’ Focus On Improving Efficiency Through Reduction In Waste

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A car manufacturing company makes significant contributions to the economy of the country where it does business. Job creation and enhancement of exports are some of the areas in which auto manufacturers have a definitive impact. However, there are environmental impacts that arise from car manufacture, distribution, use, and scrapping that need to be taken into consideration as well. This has rendered the automotive industry a constant source of scrutiny and study.

There are several areas in which luxury car manufacturers can improve their efficiency, hence reducing the overall wastage. In this article, we explore the strategies that car manufacturers in the luxury vehicle segment can utilise to improve their net profits.

  1. Renting instead of selling - This is a business model in which the luxury carmaker charges customers a certain amount of money to utilise its services and products. This results in greater convenience and peace of mind to the customer. The automaker also gets higher profits. This business model has already been successfully implemented in the music and movies industries. When this concept is utilised in the automotive industry, it can reduce consumer waste significantly by promoting the longevity of the vehicles.
  2. This model can also help automakers by improving customer loyalty and eliminate reduced product turnover. Effectively, per unit profits are improved without the need to continuously increase the sales numbers.

    Offering a lease programme on a long-term basis will be beneficial. The carmaker can charge customers a monthly fee for renting the vehicle. The automaker will retain the ownership of the car and offer it a lifetime warranty. The automaker will also cover the repairs of the car at no additional charges. The customer will only have to pay a fixed fee each month for the duration of use.

    This strategy proposes a significant shift in business model with a highlight on renting instead of selling. This model promises higher margins, improved customer loyalty, and more stable revenues based on service.

  3. Closed-loop recycling - This refers to using self-sufficient recycling processes and materials suited for the same. Closed-loop recycling is particularly desirable as it allows the product to be recycled back to its initial condition. Luxury car makers can come up with programs that will collect vehicles nearing their end of lives directly from the users. Some companies already have such programs today but the car owner is expected to contact the collection center for surrendering the vehicle. This can result in customer inconveniences.
  4. Ideally, luxury car manufacturers should offer greater incentives so that customers are compelled to return their vehicles towards the end of life. This way, the automaker can extract the eligible materials for closed-loop recycling directly and these can be remanufactured into new cars.

    This mode of recycling brings down the energy use by up to 75%, resulting in manufacturing process cost savings. This also enables automakers to keep track of the vehicles after the first sale and utilise the complete potential of these cars.

  5. Broaden the usage of products - Product refurbishment, recycling, and replacement can be done when car manufacturers directly engage with customers. When the points of contact with the customer increases, companies will have more opportunities to improve the brand loyalty, customer engagement, and profits. Currently, there is a lot of wastage in the industry as new cars are only kept by car owners for less than 10 years, while the average lifespan of a luxury car is 13 years.

The focus should be on the manufacture of vehicle parts that are reusable and recyclable from the beginning. Integrating these strategies into the design of products and manufacturing will reduce costs for production down the line.

Final Word

The industry of luxury cars can profit greatly by using circular economy strategies. Car manufacturers have already made good progress as far as sustainability is concerned. However, they can do more. The strategies mentioned above will help in improving efficiency and reap in greater profits for automakers. Moreover, the innovations in business model are useful for continued development and sustainability.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

Car Insurance Reviews

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  • HDFC Ergo Car Insurance
    "Need to reduce the premium"
    0.5 4.5/5 "Excellent!"
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    , hyderabad
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  • New India Car Insurance
    "Good"
    0.5 5.0/5 "Blown Away!"
    My car insurance was recently purchased with New India Assurance through online. When I logged into the online site it gives better option with multiple insurer and I felt New India Assurance is good with reasonable premium and better benefits. I have paid 13,500 rupees for a year. I got the insurance paper. The claim experience is very good.
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    , hyderabad
    Reviewed on Jan 23, 2019
  • ICICI Lombard Car Insurance
    "Good Policy."
    0.5 3.0/5 "Satisfactory"
    I have bought my car insurance with ICICI Lombard for last 5 years which I'm continuing for with the same company. The claim experience was better and when i applied for the same, they have given upto 80%. Its covered with bumper to bumper facility. They have given the claim in 1 week.
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    , bangalore
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    "Good policy "
    0.5 5.0/5 "Blown Away!"
    My car insurance was purchased in the year 2014 with Royal Sundaram. My dealer has recommended me about this policy. I pay the premium amount of Rs. 14000 with the coverage value of Rs. 6.27 lakhs which covered with the bumper to bumper facility.
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    , ahmedabad
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    "Good Policy"
    0.5 3.0/5 "Satisfactory"
    I had taken this insurance policy a while back and the premium amount has been quite good and not too high. The payment method has been easy and there has not been any sort of charges, and the policy covers bumper to bumper. Their customer support has also been responsive and was helpful as well.
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    , mumbai
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    "Its Good"
    0.5 4.0/5 "Great!"
    There was no claim experience for my Tata Tiago with ICICI Lombard. I have renewed the car policy at last june, I paid the amount around Rs. 10,600 because its around 1.5 year old vehicle. I took comprehensive plan which includes loss , damage, ICICI Lombard got tie up many showroom.
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    , new delhi
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  • ICICI Lombard Car Insurance
    "Best cover"
    0.5 4.0/5 "Great!"
    Very recently I took policy from Car insurance for my new Baleno car, it was done by ICICI bank, they deducted insurance fee from the loan. The loan department issued the policy copy on time. For first year its 100% coverage available its a bumper to bumper with ex showroom.
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    , new delhi
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  • ICICI Lombard Car Insurance
    "Good Car Insurance policy"
    0.5 4.0/5 "Great!"
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    "Yet to experience the policy"
    0.5 3.0/5 "Satisfactory"
    I have applied the claim for my car recently. I have given the car into the showroom and they have asked me to inform in the insurance company. When i visited other branch they have asked me to the home branch. They have given me a sufficient IDV value. Its covered with a bumper to bumper facility.
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    , chennai
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  • ICICI Lombard Car Insurance
    "Reliable Policy"
    0.5 5.0/5 "Blown Away!"
    Purchased my car insurance through ICICI Lombard and They have given me a low premium since i have taken a loan from ICICI bank. They have given me a good IDV value. This is a bumper to bumper covered policy. They have given me a road side assistance, no claim bonus benefits.
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    , chennai
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  • National Insurance Car Insurance
    "Good Insurance"
    0.5 3.0/5 "Satisfactory"
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    , bhubaneshwar
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  • ICICI Lombard Car Insurance
    "Competitive price"
    0.5 5.0/5 "Blown Away!"
    I have taken a car insurance from ICICI Lombard and the service is really good. I spoke wtih the customer care once for the claim. The garage people taken care of the full settlement process. The premium amount is nominal. They have given me a best claim what they can offer according to their norms.
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    , bangalore
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  • Royal Sundaram Car Insurance
    "Economic offering and wide accessibility"
    0.5 5.0/5 "Blown Away!"
    Because it was good comparison between other companies hence i have chosen the Royal sundaram. The premium amount is reasonable. The IDV value is good. This a comprehensive policy which covers third party insurance. They have tie up with most of the garages. They have cashless facility in most of the places.
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    , bangalore
    Reviewed on Jan 21, 2019
  • Royal Sundaram Car Insurance
    "Average"
    0.5 3.0/5 "Satisfactory"
    I took my car insurance with Royal Sundaram. I never contacted the customer service. It is a default insurance from the showroom. The premium is high because I go for bumper to bumper offer, road side assistance, zeo dep. It is a first party insurance and no claim. The policy period is one year.
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    , bangalore
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    "Good Policy"
    0.5 4.0/5 "Great!"
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    , new delhi
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  • National Insurance Car Insurance
    "Smart protection with National"
    0.5 4.0/5 "Great!"
    The major factor to chose National Insurance because of the premium is economic, I took the policy for 3 years the IDV value remains the same for the whole tenure. The customer support is good on time they activated the policy. I have Tata Tiago , its around four months vehicle. Its zero depreciation comprehensive plan. I taken the policy through showroom.
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  • ICICI Lombard Car Insurance
    "Satisfied with the policy"
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    My car insurance is with ICICI Lombard. The customer services are good and I got the policy documents on time. The policy coverage is good and there are features of a road side assistance is there. The premium is economical too. Good overall.
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    , bangalore
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  • ICICI Lombard Car Insurance
    "Need to reduce the premium"
    0.5 3.0/5 "Satisfactory"
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    , new delhi
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  • Tata AIG Car Insurance
    "Excellent"
    0.5 5.0/5 "Blown Away!"
    I took my car insurance from TATA AIG through online channel. They have given lesser premium with zero dep and it includes road side assistance. The customer service is very good. The policy period is one year. I have no claim experience. It is a first party insurance.
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    , new delhi
    Reviewed on Jan 19, 2019
  • Tata AIG Car Insurance
    "Satisfied policy"
    0.5 5.0/5 "Blown Away!"
    TATA AIG is the best company to take the car insurance. Since long time i have taken this insurance. The customer care people used to call me to renew the policy and they used to policy renewal letter. I will do payment through online. Several times i have claimed the policy and i have received very good response.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Jan 18, 2019
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