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INDUSTRY IN INDIA
By group IX, MBA ‘Sec A’
Submitted to : Submitted by :
Mrs. Smitha Nayak Anooj
The satisfaction and joy that accompanies the successful completion of a task is incomplete
without mentioning the name of the person who extended her help and support in making it a
greatly indebted to
Mrs. Smitha Nayak
, our Project Guide and Mentor for devoting her valuable time and efforts towards our
project. We thank her for being a constant source of knowledge, inspiration and help during
this period of making project.
TABLE OF CONTENT
Objective of the project
Introduction to Indian automobile industry
BCG matrix representation of automobile sector among various sectors
Overview of two-wheeler sector
Fleet composition of all vehicles
Two-wheeler fleet composition in India
Structure of two-wheeler industry
Usage pattern of two-wheeler in India
Key players in two wheeler industry
Introduction & Product mix Hero Honda & Bajaj (competitor)
4 P’s of marketing of Hero Honda
Market segmentation, Targeting and Positioning of Hero Honda.
Porters five force model for Hero Honda
SWOT analysis of Hero Honda (Karizma)
SWOT analysis of Bajaj (Pulsar)
Comparison of advertising strategy of Hero Honda and Bajaj
Future challenges ,Plans and Suggestions
OBJECTIVE OF THE PROJECT :-
The main objectives of the Project study are:
•Detailed analysis of Automobile industry which is gearing towards international
•To conduct market research with regard to two-wheeler automobile industry and
understand its marketing strategies.
•Analyze the impact of qualitative factors on industry’s and company’s prospects
•Comparative analysis of major tough competitor.
•To understand the current trends in two-wheeler automobile industry.
INTRODUCTION TO INDIAN AUTOMOBILE
Automobile is one of the largest industries in global market. Being the leader in product and
process technologies in the manufacturing sector, it has been recognized as one of the drivers
of economic growth. During the last decade, well directed efforts have been made to provide
a new look to the automobile policy for realizing the sector's full potential for the economy.
Aggressive marketing by the auto finance companies have also played a significant role in
boosting automobile demand, especially from the population in the middle income group.
A Nations economy is well known from its transport system. For instant and rapid growth in
economy, a well-developed and well-networked transportation system is essential. As India's
transport network is developing at a fast pace, Indian Automobile Industry is growing too.
Also, the Automobile industry has strong backward and forward linkages and hence provides
employment to a large section of the population. Thus the role of Automobile Industry is very
essential in Indian economy. Various types of vehicles are manufactured by the Automobile
Industry. Indian Automobile Industry includes the manufacturing of trucks, buses, passenger
cars, defence vehicles, two-wheelers.
The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle &
Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.
The automobile industry in the country is one of the key sectors of the economy in terms of
the employment opportunities that it offers. The industry directly employs close to around 0.2
million people and indirectly employs around 10 million people. The prospects of the
industry also has a bearing on the auto-component industry which is also a major sector in the
Indian economy directly employing 0.25 million people.
BCG Matrix Representation of A utomobile Sector among
In an economy, different industries are present and different industries have different
growth rate as compared to the growth of the economy. In an economy, there are a
number of major industries and they all occupy different positions in the BCG matrix
according to their growth and contribution towards the economy. In the Indian economy,
some of the major sectors are FMCG, automobiles, banking and insurance, steel, telecom,
software, pharmacology and retail sectors and these can be placed in the different
positions in the matrix as shown below:
INDUSTRY BCG MATRIX
BCG matrix is used to determine the relative position of the companies of an industry or
different SBU’s of any institution, in terms of the market growth rate and the market share of
the company in the industry. In the Indian automobile sector, the major players are Maruti
Suzuki Limited, General motors, Mahindra and Mahindra, Tata Motors, Hero Honda and
Bajaj auto. In the BCG matrix, the companies are placed in one of the following four
categories: Star, Cash Cows, Dogs and Question marks. In the Stars we place the companies
with high market growth and high market share, cash cows are the companies who have low
market growth rate and high relative market share, the category of the question marks include
the companies with low relative market share and high market growth rate and dogs include
the companies who have low relative market share and low market growth rate.
OVERVIEW OF TWO WHEELER SECTOR
T wo Wheeler Industry
Indian two -wheeler contributes the largest volumes amongst all the segments in automobile
industry. This segment can be broadly categorized into 3 sub-segments viz.; scooters,
motorcycles and mopeds. In the last four to five years, the two-wheeler market has witnessed
a marked shift towards motorcycles at the expense of scooters. In the rural areas, consumers
have come to prefer sturdier bikes to withstand the bad road conditions. In the process the
share of motorcycle segment has grown from 48% to 58%, the share of scooters declined
drastically from 33% to 25%, while that of mopeds declined by 2% from 19% to 17% during
the year 2008-09. The Euro emission norms effective from April 2000 led to the existing
players in the two- stroke segment to install catalytic converters. All the new models are now
being replaced by 4-stroke motorcycles. Excise duty on motorcycles has been reduced from
32% to 24%, resulting in price reduction, which has aided in propelling the demand for
Within the two-wheeler industry, motorcycle segment grew at a phenomenally high rate of
35% as against a deceleration of 3% for scooters and 27% for mopeds. In fact, motorcycle
has been taking away the share of scooters and mopeds in a 4.3 million two-wheeler market
and surging ahead with its market share of 68%. The increasing demand from semi-urban and
rural segments may have caused this positive shift towards motorcycles. Also, easy credit
coupled with low interest rate regime, constrained personal transport, increasing income
levels in middle class and higher aspirations of young people all seem to be the factors
responsible for such high growth in two-wheelers. The growth in two-wheelers has been
robust enough to counter the slowdown and other factors constraining the overall business
activity in the country. Also, rationalization of excise duty in the Union Budget 2002-03 had
a positive impact on the demand for motorcycles. We also expect the motorcycles to continue
to lead the two-wheeler segment like in all other Asian countries. Available forecasts suggest
that this trend would continue for another couple of years and the industry would record
nearly double-digit average annual growth up to 2006.
During the year, there have been important developments in two-wheeler industry. The
competition has strengthened though there are hardly any new entrants into the industry.
There is an increasing emphasis on price and this has led to cost cutting efforts all across the
industry, thereby, making the customer an ultimate beneficiary. The trend also saw
introduction of new motorcycles with capacity ranging from 100 to 180cc bikes. We
anticipate that many more new models will be launched during the year and provide
customers plenty of choice at competitive prices.
Businesses cannot consistently grow at 25-30 per cent. Each business has a tendency to taper
and plateau after attaining a particular size. An annual growth rate of 10-12 per cent over a
period of time is extremely healthy.
The TCS study rankings are conducted at the motorcycle segment-level to provide
comparisons among similar groups of motorcycles. Motorcycles ranking highest in their
respective segments for TCS are: Hero Honda CD100 SS (best standard motorcycle
segment); Hero Honda Splendor (best executive motorcycle segment); Bajaj Pulsar (best
premium motorcycle segment); and Royal Enfield Bullet Electra (best cruiser motorcycle
The feeling of freedom and being one with the Nature comes only from riding a two wheeler.
Indians prefer the two wheelers because of their small manageable size, low maintenance,
and pricing and easy loan repayments. Indian streets are full of people of all age groups
riding a two wheeler. Motorized two wheelers are seen as a symbol of status by the populace.
Two wheelers in India are the second largest producer and manufacturer of two-wheelers in
the world. It stands next only to Japan and China in terms of the number of two-wheelers
produced and domestic sales respectively. Indian two-wheeler industry has got spectacular
growth in the last few years. Indian two-wheeler industry had a small beginning in the early
50's. The Automobile Products of India (API) started manufacturing scooters in the country.
Bikes are a major segment of Indian two wheeler industry, the other two being scooters and
mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. In
the initial stages, the scooter segment was dominated by API; it was later overtaken by Bajaj
Auto. Although various government and private enterprises entered the fray for scooters, the
only new player that has lasted till today is LML.
The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts 175cc
bike. The two-wheeler market was opened to foreign competition in the mid-80s. And the
then market leaders - Escorts and Enfield - were caught unaware by the onslaught of the
100cc bikes of the four Indo-Japanese joint ventures. With the availability of fuel efficient
low power bikes, demand swelled, resulting in Hero Honda - then the only producer of four
stroke bikes (100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and
Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.
These two players initially started with assembly of CKD kits, and later on progressed to
indigenous manufacturing. In the 90s the major growth for motorcycle segment was brought
in by Japanese motorcycles, which grew at a rate of nearly 25% CAGR in the last five years.
The industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited new
entries and strictly controlled capacity expansion. The industry saw a sudden growth in the
80s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mn
vehicles in 1990.
In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a
decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles.
Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94.
Hero Honda showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant rise in fuel prices, high input costs
and reduced purchasing power due to significant rise in general price level and credit crunch
in consumer financing. Factors like increased production in 1992, due to new entrants
coupled with the recession in the industry resulted in company either reporting losses or a fall
Two wheeler fleet composition in India :-
STRUCTURE OF TWO WHEELER INDUSTRY
Over the last 15 years, moped’s contribution in overall 2-wheelers has declined significantly
and now it remains a marginal category with just one manufacturer for the product. Its
contribution in the 2-wheelers industry now stands at 5% and we expect that this segment
will continue to be marginalised. The only player in this segment is TVS Motor.
Advent of fuel efficient motorcycles in the Indian 2-wheelers industry led to decline of
Scooters. However, over the last five years, it has made a recovery and is emerging as a niche
segment targeted towards women commuters. One of the reasons for this is the increasing
need of mobility for the women commuters especially in the urban areas is due to higher
number of college going girls and greater participation of women in urban work force. The
product itself has gone for a complete revamp and now this category mainly consists of
gearless products. This segment is now dominated by Japanese manufacturers with HMSI
having the leadership. HH, which is a late entrant in this segment, has also cornered a
sizeable market share in the scooter segment. Another development in this segment is the
launch of battery operated scooters. However, given the high replacement cost for the
batteries, this has remained a marginal segment.
➢Motor cycles and bikes :-
Executive segment is the largest motorcycle segment and this is the stronghold of market
leader HH. Competitors have tried to challenge HH in this segment, however all such
challenges have fizzled out over time. With higher growth in economy segment, the
contribution of this segment had come below 50% in FY06. However over the last three
years, it has made a strong come back and now accounts for almost 60% of the motorcycle
This segment was creation of HH with 'CBZ' And ‘KARIZMA’; however major boost to the
segment was given by BAJAJ through 'Pulsar' which has dominated the segment. HH has
remained a marginal player in this segment and one of the reasons for this is presence of
HMSI in this segment. This segment remains a small segment in the Indian market with
contribution of around 23% to the motorcycle industry. This is the performance segment and
customers pay a premium for the novelty. Hence constant upgradation in the product is a
requisite for success in this segment.
Usage Pattern of two-wheelers in India
Is quite different from other countries
Initial cost and fuel economy are highest priority.
Low maintenance costs are desired.
Small entrepreneurs and farmers conduct their business carrying loads.
Very limited usage for sports bike.
Indians prefer the two wheelers because of their small manageable size, low
maintenance, and pricing and easy loan repayments.
Key players in the Two-wheeler industry:
➢Hero Honda motors ltd.
➢Bajaj auto ltd.
➢TVS motors company ltd.
➢Yamaha motors India
➢Honda motorcycle and scooters India
Motorcycles in India:
Bikes comprise a major segment of Indian two wheeler industry.
Companie s :
Hero Honda Motors Ltd (HHML )
Hero Honda Motors Limited was established in 1984, as a joint venture between India's Hero
Group (world's largest bicycle manufacturers) and Japan's Honda Motor Company. And
created the world's single largest two wheeler company and also one of the most successful
joint ventures worldwide. During the 80s, Hero Honda became the first company in India.
Over 19 million Hero Honda two wheelers running on Indian roads today.
* Hero Honda CD Dawn
* Hero Honda CD Deluxe
* Hero Honda Glamour
* Hero Honda Glamour-Fi
* Hero Honda Karizma
* Hero Honda Passion Plus
* Hero Honda Pleasure
* Hero Honda Super Splendor
* Hero Honda Splendor NXG
* Hero Honda CBZ X-Treme
Bajaj Auto Ltd Company :
Bajaj is the first Indian two wheeler automobile company in the market since 1945 with the
name M/s Bacharj trading corporation private limited. In 1959 M/s Bacharj trading
corporation private limited change its name as Bajaj Auto Ltd. Bajaj Auto obtains license
from the Government of India to manufacture two- and three-wheelers vehicles in 1959.
* Bajaj Avenger
* Bajaj CT 100
* Bajaj Platina
* Bajaj Discover DTSi
* Bajaj Pulsar DTSi
* Bajaj Wave
* Bajaj Wind 125
* Sonic DTSi
TVS Motor Company :
TVS Motors is the third largest company in the two-wheeler industry with a market share of
16%. Infect, it is the only Indian company without a foreign collaboration in the two-wheeler
industry. When the company opted out of the collaboration with Suzuki in 2002, many
believed that TVS was headed towards extinction. But the company proved the doomsayers
wrong and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally
incorporated in 1982 to manufacture two-wheelers in collaboration with Suzuki Motors of
Japan, TVS was one of the leaders in two-wheeler industry.
* TVS Apache
* TVS Centra
* TVS Fiero
* TVS Star
* TVS Victor
Yamaha Motor India:
Yamaha Motor Corporation is the auto mobile company of Japan (1953) which works in
India since 1955 and providing latest technology in India from last two decades. Yamaha
Motor India was incorporated in august 2001 as a 100% subsidiary of Yamaha motor
* Yamaha CruxS
* Yamaha G5
* Yamaha Gladiator
* Yamaha FZ 16
* Yamaha R15
* Yamaha Fazer
Honda motors of Japan is not a new name in the two wheeler scenario in the country, they
were in a tie up with the Firodias owned Kinetic group. However in the late 90s they parted
ways after problems arose over issues like introduction of new models, advertising
expenditure, marketing strategies and other related issues. In the mid 80 Honda motors of
Japan joined hands with the largest bicycle maker of India the Hero cycles to create Hero
Honda which in a couple of decades or so have gone on to become the single largest
motorcycle company in the world. Though Honda has come on its own on the Indian market
yet it will be providing technological support to Hero Honda for the next ten years. Thus
presenting a unique situation in which the company will be in direct competition with the
company which it has been associated for nearly two decades. Honda Motorcycles and
Scooters India limited, a 100% subsidiary of Honda motor company Japan eventually entered
the Indian market with Honda Unicorn in 2004.
* Honda Unicorn
* Honda activa
Market share of two wheeler automobile
Now further the marketing strategies of HERO HONDA and its competitor
BAJAJ will be analyzed.
➢The Company was Incorporated on 19th January,1984 at New Delhi as a joint
➢Today Hero Honda is the largest two-wheeler manufacturer in the world producing
more than 3 million units of two-wheeler per year.
➢ The company's most popular model is the Hero Honda Splendour, which is the
world's largest-selling motorcycle.
➢Over 19 million Hero Honda two wheelers are on Indian roads today.
➢Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India in
➢ During the fiscal year 2008-09, the company has sold 3.28 million bikes.
➢Established in 1945.
➢Started production of scooters in 1961 and became first two wheeler manufacturing
company of India.
➢ Bajaj Auto, is ranked as the world's fourth largest two and three- wheeler
➢ Bajaj Auto is India’s largest exporter of two wheelers.
➢ During 2008-09, the company exported 772,519 two and three-wheelers recording a
growth of 25 percent over 2007-08.
➢ Exports now constitute 37 per cent in volume terms and 35 per cent IN value of net
4 P’s OF MARKETING OF HERO HONDA :-
Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently
discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal said.
However, the company has a binding clause with Honda's scooter manufacturing Indian
subsidiary, preventing it from making scooters till 2004.
Hero Honda Motors, India's largest motorcycle company, has launched the premium segment
223cc motorcycle Karizma priced at Rs 79,000 (ex-showroom, Delhi). Many of the products
which the company has started with have been phased off. Now the existing products are
Karizma, Ambition, CBZ, Splendor, Splendor+, Passion, Passion Plus, CD 100 SS, CD 100
and CD Dawn.
The TCS study examines customer evaluations at three distinct ownership periods: 1 to 6
months, 7 to 18 months, and 25 to 36 months. This helps in understanding the differences in
satisfaction during initial ownership, in-warranty and post-warranty ownership periods.
Satisfaction ratings decline as the length of vehicle ownership increases. However, Hero
Honda Splendor is among the few models to maintain consistency across the three ownership
Pricing is a important component of marketing mix of the firm. Determining the prices of
different products of a firm is very difficult task of the marketing manager. Price denotes
money value of a product. If represent the amount of money for which a product can be
exchange. In other words, prices represents the money which the buyer pays to the seller for a
product price represent the exchange value of goods and services in terms of money. Price is
Price factor has very well been touched by the manufacturers. The pricing strategy of the
company is very set. They price their product according to the cost of production and also by
keeping an eye on the price of the competitors of that segment and demand of the product in
A pricing strategy that ensured an average manufacturer margin that game dealer an adequate
return and created a reputation with consumers like “a company selling a good quality
product at a reasonable price. Industry focus themselves the low cost producer with good
quality and aimed to maintain the price advantage in every market of two wheelers.
Hero Honda group ensures an easily affordable pricing through excellent transportation to
common man. It fixes customer centric pricing that provide customer total satisfaction.
Hero Honda’s pricing objectives are: List price, Discount, Financing schemes, Credit terms,
and Maximize profits
Hero Honda group ensures an easily affordable pricing through excellent transportation to
common man. It fixes customer centric pricing that provides the customer with total
CHANNELS OF DISTRIBUTION:
As a company, dealers play a major role in serving customers, while growing and sustaining
markets. Hero Honda has a network of more than 3500 strong and dedicated Authorized
dealers. A network that has helped Hero Honda’s name and its promise of reliable quality to
every part of the country. The power of this highly efficient and motivated network goes a
long way to create goodwill for Hero Honda brand among countless consumers besides
creating availability and after sales services.
The channel of distribution is a direct dealer network. A direct dealer is a dealer who is
authorized to purchase the product directly from the company and sell.
Hero Honda has more than 3500 showrooms in India. Some of the Authorized dealers of
Hero Honda Karizma, in and around Bombay, are:
• Max Motors (Bombay)
• F. P. Motors (Bombay)
• Axis Motors (Thane)
• Ranjeet Motors (Thane)
• Ahir Motors (Kalyan)
• Spectra Motors (New Bombay)
• H. M. Motors (Panvel)
1.ADVERTISING: It is defined as a paid non-personal communication with a target
(usually mass) market. It is cost effective and can reach a large number of people. It can
also be used for long term or short term objectives.
There are various forms or mediums through which can advertise.
•Posters and billboards.
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