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Project Report On Indian Automobile Industry
Project Report On Indian Automobile Industry
AUTOMOBILE INDUSTRY
IN INDIA
(SPECIAL FOCUS ON
BAJAJ PULSAR BIKES)
SUBMITTED TO :
Prof. Ms.Simran sethi
(Faculty of Managerial economics )
BY GROUP 1
NIHAREIKA SINHA
PADMADEVI
SAURABH PANDEY
GAURANG SAHLOT
ISHA VASHIST
SIRAJ SIDDIQUI
1
INDEX
1. ACKNOWLEDGMENT.
3
2. INTRODUCTION.
4
3. COMPANY PROFILE(BAJAJ AUTO LTD)
..14
4. OBJECTIVE OF
STUDY...18
5. IMPORTANCE OF
STUDY.18
6. METHODOLOGY
.19
7. MARKET SHARE AND GROWTH
RATES.20
8. MARKET
STRUCTURE.2
2
9. PRIMARY DATA
ANALYSIS.23
10. SALES
FORECASTING
47
11. CORRELATION
55
12. HERFINDAHL
INDEX.56
2
13. PRICEANALYSIS
.58
14. CONCLUSION
59
15. APPENDIX
.72
16. REFERENCES
..73
Acknowledgement
INTRODUCTION
The Indian automotive industry consists of five segments: commercial
vehicles; multi-utility vehicles & passenger cars; two-wheelers; threewheelers; and tractors. With 5,822,963 units sold in the domestic market
and 453,591 units exported during the first nine months of FY2005
(9MFY2005), the industry (excluding tractors) marked a growth of 17%
over the corresponding previous. The two-wheeler sales have witnessed
4
ry
(FY1995-2004)
After facing its worst recession during the early 1990s, the industry
bounced back with a 25% increase in volume sales in FY1995.
However, the momentum could not be sustained and sales growth
dipped to 20% in FY1996 and further down to 12% in FY1997. The
economic slowdown in FY1998 took a heavy toll of two-wheeler sales,
5
MARKET CHARACTERISTICS
Demand
Table 1
Two-Wheelers: Comparative Characteristics
Scooter
Price*(Rs. > 22,000
Motorcycle
Moped
> 30,000
> 12,000
as in
January
2005)
Stroke
2-stroke, 4stroke
Engine
Capacity
90-150
(cc)
Ignition
Engine
Power
6.5-9
2-3
90-100
> 100
60-70
50-75
50-80+
70-80
High
Highest
Low
(bhp)
Weight
(kg)
Fuel
Efficiency
(kms per
litre)
Load
Carrying
*Ex-showroom Mumbai
9
Compiled by INGRES
10
and style, which are rugged and more durable. These features have now
been complemented by the availability of new designs and technological
innovations. Moreover, higher mileage offered by the executive and
entry-level models has also attracted interest of two-wheeler customer.
Given this market positioning of scooters and motorcycles, it is not
surprising that the new set of customers has preferred motorcycles to
scooters. With better ground clearance, larger wheels and better
suspension offered by motorcycles, they are well positioned to capture
the rising demand in rural areas where these characteristics matter most.
Scooters are perceived to be family vehicles, which offer more
functional value such as broader seat, bigger storage space and easier
ride. However, with the second-hand car market developing, a
preference for used cars to new two-wheelers among vehicle buyers
cannot be ruled out. Nevertheless, the past few years have witnessed a
shift in preference towards gearless scooters (that are popular among
women) within the scooters segment. Motorcycles, offer higher fuel
efficiency, greater acceleration and more environment-friendliness.
Given the declining difference in prices of scooters and motorcycles in
the past few years, the preference has shifted towards motorcycles.
Besides a change in demographic profile, technology and reduction in
the price difference between motorcycles and scooters, another factor
that has weighed in favour of motorcycles is the high re-sale value they
12
Figure 3
Shares of Two-Wheeler Manufacturers in Industry
Sales (FY2000-9MFY2005)
13
Although the three players have dominated the market for a relative long
period of time, their individual market shares have undergone a major
change. Bajaj Auto was the undisputed market leader till FY2000,
accounting for 32% of the two-wheeler industry volumes in the country
that year. Bajaj Auto dominance arose from its complete hold over the
scooter market. However, as the demand started shifting towards
motorcycles, the company witnessed a gradual erosion of its market
share. HHML, which had concentrated on the motorcycle segment, was
the main beneficiary, and almost doubled its market share from 20% in
FY2000 to 40% in 9MFY2005 to emerge as the market leader. TVS, on
the other hand, witnessed an overall decline in market share from 22% in
FY2000 to 18% in 9MFY2005. The share of TVS in industry sales
fluctuated on a year on year basis till FY2003 as it changed its product
mix but has declined since then.
14
Technology
Hitherto, technology transfer to the Indian two-wheeler industry took
place mainly through: licensing and technical collaboration (as in the
case of Bajaj Auto and LML); and joint ventures (HHML).
Table 2
Technological tie-ups of Select Players
Nature of Alliance
Company
Product
Technological tie-up
Motorcycles
Technological tie-up
Two-wheelers
Technological tie-up
Diesel Engines
HHML
Joint Venture
Motorcycles
KEL
Technological tie-up
Motorcycles
KEL
Italjet, Italy
Scooters
Motorcycles
Aprilia of Italy
Scooters
Bajaj Auto
and distribution
LML
Technological tie-up
.BAJAJ
Auto limited
16
BAJAJ PULSAR
Bajaj Pulsar is a motorcycle brand owned by Bajaj Auto in India. The
two wheeler was developed by the product engineering division of Bajaj
Auto in association with motorcycle designer Glynn Kerr Tokyo R&D.
Currently there are four variants available -with engine capacities of
150cc, 180 and two variants with capacities of 220 cc. More than a
million units of Pulsar were sold by November 2005. A Pulsar 200
variant was discontinued in July 2009. With monthly sales of more than
48,000 units in June 2009, Pulsar is the leader in the 150 cc segment in
India with a market share of 43%.
Before the introduction of the Pulsar, the Indian motorcycle market trend
was towards fuel efficient, small capacity motorcycles (that formed the
80-125 cc class). Bigger motorcycles with higher capacity virtually did
not exist (except for Enfield Bullet). The launch and success of Hero
Honda CBZ in 1999 showed that there was demand for performance
bikes. Bajaj took the cue from there on and launched the Pulsar twins in
India on November 24, 2001. Since the introduction and success of Bajaj
Pulsar, the Indian youth began expecting high power and other features
from affordable motorcycles.
DTSi
DTSi stands for Digital Twin Spark Ignition, a Bajaj Auto trademark.
Bajaj Auto holds an Indian patent for the DTSi technology. The Alfa
Romeo Twin-Spark engines, the BMW F650 Funduro which was sold in
India from 1995 to 1997 also had a twin-spark plug technology, and the
17
Objective of Study
The objective of this research is to determine the customer as well as
retailers preferences regarding different brands of motorcycles which
result in their market share. It involves the study of consumers buying
behaviour and attitudes towards a variety of attributes and factors, which
help them in decision-making.
18
Importance of Study
The importance of this study is to practically understand the relevance of
the concepts of managerial economics in the business organisations and
here in the realm of the motorcycles industry. The present market
scenario was analyzed and future demands forecasted using the simple
regression techniques. Also, a comprehensive study of the major factors
involved in this market was conducted so as to see how different and
similar a market structure is from the theories.
Methodology
Primary data collection:
For primary data collection we designed a questionnaire to survey
various dealers and consumers. The objective of survey was to
19
f this figures have daunted you the best is yet to come, the country leader
in two-wheelers hero honda have crossed the three million mark during
the year 2005/2006 which is a good few lakhs more than its nearest
competitor Bajaj Auto. The company accounted for nearly 40% of then
two-wheeler market. In the motorcycle segment the company has been
able to attain a market share of about 50%. The segment in which hero
honda has emerged as a clear winner is the Deluxe segment, which is the
largest segment in the motorcycles category, with its flagship family of
motorcycles splendor selling over 1.2 million units which is just a shade
21
less than all the two wheelers sold by TVS during the same year.
The motorcycle category is expected to see a further growth and
according to industry experts it will drive all other category of twowheelers to the periphery.
The table below shows the over all trend of Industry Sales over a 5 year
period. The figures are provided by the Society of automobile
Manufactures Association (SIAM).
Two-wheeler domestic sales trend
Motorcycles
2001-02
2002-03
2003-04
2004-05
2005-06
2887194
3647493
4170445
4964753
5815417
MARKET STRUCTURE
Market Structure
22
18-24
24%
23
24-30
38%
30-36
19%
ABOVE 36
19%
As is clear the maximum buyers are of the age group 24-30 , hence it
can be interpreted as being popular in college going youth.
2. Bikes owned (categorisation)pulsarbajaj
Splendor
Apache
Unicorn
cd-dawn
enfield
bullet(old)hunk
enticer
ct100
CBZ
Pulsar DTS i
hero honda
0%
15%
35%
35%
15%
24
Which shows that a majority group belonging to the pulsar kind of bikes
is more from the income group category 3-5 & 5-10 lakh group.
Moreover none of the customer was from < 1 lakh category which is also an
important finding from the marketing point of view.
25
1 LOWEST
-
30%
10%
15%
5%
5 HIGHEST
-
LOWEST
HIGHEST
26
40%
1 - LOWEST
5%
20%
35%
40%
5 - HIGHEST
LOWEST
LOWEST
0%
HIGHEST
HIGHEST
OTHER
27
1 - LOWEST
5%
45%
5%
30%
5 - HIGHEST
15%
1 - LOWEST
2
0%
33%
0%
5 - HIGHEST
LOWEST
HIGHEST
28
33%
33%
5.Buying decision
Mileage/looks/brand/service/price
LOWEST
LOWEST
1 LOWEST
-
0%
0%
30%
25%
5 HIGHEST
-
45%
1 LOWEST
-
0%
0%
25%
35%
5 HIGHEST
-
40%
HIGHEST
HIGHEST
29
LOWEST
1 LOWEST
-
0%
0%
20%
45%
5 HIGHEST
-
35%
1 LOWEST
-
0%
HIGHEST
15%
55%
25%
5 HIGHEST
-
LOWEST
HIGHEST
30
5%
LOWEST
HIGHEST
6.Purchasing decision
31
1 LOWEST
-
0%
0%
40%
30%
5 HIGHEST
-
30%
Friends/family/dealer/adventure/other
1 LOWEST
-
0%
5%
55%
0%
5 HIGHEST
-
LOWEST
LOWEST
40%
HIGHEST
HIGHEST
32
1 LOWEST
-
15%
15%
25%
20%
5 HIGHEST
-
25%
LOWEST
1 LOWEST
-
25%
40%
30%
5%
5 HIGHEST
-
0%
HIGHEST
1 LOWEST
-
LOWEST
HIGHEST
OTHER FACTORS
33
0%
10%
50%
15%
5 HIGHEST
-
25%
1 LOWEST
2
0%
0%
25%
5 HIGHEST
-
LOWEST
HIGHEST
34
75%
0%
7.Chosen media
Television/hoarding/print media/internet/other
LOWEST
1 LOWEST
-
0%
0%
0%
15%
5 HIGHEST
-
85%
HIGHEST
1 LOWEST
-
LOWEST
HIGHEST
35
5%
15%
20%
45%
5 HIGHEST
-
15%
LOWEST
LOWEST
1 LOWEST
-
0%
5%
10%
60%
5 HIGHEST
-
25%
HIGHEST
HIGHEST
OTHERS
36
1 LOWEST
-
30%
20%
20%
20%
5 HIGHEST
-
10%
LOWEST
HIGHEST
Radio,pamphlets
1 LOWEST
-
50%
25%
25%
0%
5 HIGHEST
-
0%
Bajaj/herohonda/Yamaha/Honda/tvs
LOWEST
LOWEST
1 LOWEST
-
0%
0%
10%
25%
5 HIGHEST
-
65%
1 LOWEST
-
0%
0%
0%
60%
5 HIGHEST
-
40%
HIGHEST
HIGHEST
38
1 LOWEST
-
LOWEST
LOWEST
0%
35%
30%
35%
5 HIGHEST
-
0%
1 LOWEST
-
5%
5%
45%
35%
5 HIGHEST
-
10%
HIGHEST
HIGHEST
TVS
39
1 LOWEST
-
15%
50%
25%
10%
5 HIGHEST
-
LOWEST
HIGHEST
40
0%
8.Bike on preference
Pulsar/apache/f-z 150/hunk/other
LOWEST
1 LOWEST
-
0%
0%
10%
45%
5 HIGHEST
-
45%
1 LOWEST
-
0%
5%
30%
65%
HIGHEST
5 HIGHEST
-
LOWEST
HIGHEST
41
0%
LOWEST
1 LOWEST
-
5%
0%
5%
30%
5 HIGHEST
-
60%
HIGHEST
1 LOWEST
2
10%
40%
50%
5 HIGHEST
-
LOWEST
HIGHEST
ANY OTHER
42
0%
0%
LOWEST
HIGHEST
IF OTHER,PLEASE SPECIFY
Splendor,karizma
1 LOWEST
-
0%
0%
0%
50%
5 HIGHEST
-
50%
Style/power/performance/value/brand
LOWEST
LOWEST
1 LOWEST
-
0%
0%
25%
20%
5 HIGHEST
-
55%
HIGHEST
HIGHEST
44
1 LOWEST
-
0%
5%
20%
45%
5 HIGHEST
-
30%
LOWEST
1 LOWEST
-
0%
0%
45%
35%
5 HIGHEST
-
20%
1 LOWEST
-
0%
5%
35%
55%
HIGHEST
5 HIGHEST
-
LOWEST
HIGHEST
45
5%
LOWEST
HIGHEST
46
1 LOWEST
-
0%
0%
10%
80%
5 HIGHEST
-
10%
Brand recall
Sales Forecasting
47
Sales forecast of Pulsar for the year 2008 using Least Square
method (which is same as simple linear regression method):
48
YEAR
2000
2001
2002
2003
2004
2005
TOTAL
SALES(S)in
Crores
865
1011.55
1374.94
1512.43
1647.86
1799.6
8211.38
T2
ST
1
2
3
4
5
6
21
1
4
9
16
25
36
91
865
2023.1
4124.82
6049.72
8239.3
10797.6
32099.54
49
The straight line trend equation used for projecting future sales is:
S = a + bT
Where, S = annual sales
T = time in years
a, b are constants
S = na + bT
ST = aT + bT2
Here, n = 6
S = 8211.38 crores
ST = 32099.54 crores
T = 21
T2
= 91
51
RMSE Calculation:
On the basis of the calculated values of a and b, the predicted sales value
for the years 2006,
2007 and 2008 will be:
Sp2006 = 696.63 + (191.98*7) = 2040.49 crore
Sp2007 = 696.63 + (191.98*8) = 2232.47 crore
Sp2008 = 696.63 + (191.98*9) = 2424.45 crore
And, the actual sales values for the above three years are:
Sa2006 = 2072.00 crore
Sa2007 = 2487.00 crore
Sa2008 = 3497.00 crore
RMSE = {(3497.00 2424.45)2 + (2487.00 2232.47) 2+ (2072.00
2040.49)2}1/2
(3) 1/2
= 636.69
3. Exponential smoothing:
It is a popular technique for short-run forecasting. It uses a weighted
average of past data as the basis for a forecast. It gives higher weight to
most recent data and least weight to observations of distant past. The
weights for past data are chosen in accordance with their degree of
influence on the future. The formula for exponential smoothing isST+1 = AyT + (1-a) St
Where, St+1 = exponentially smoothed forecast
Yt = actual sales of previous year
St = forecasted sales of last year
53
S2006
= (865.00+1011.55+1374.94+1512.43+1647.86+1799.60)/6
= 1368.56
54
Calculation of Correlation:
This shows that there is a high degree of correlation between the time
period and sales i.e more the time period, more are the sales. This means
that sales are highly dependent on the time period positively.
56
The maximum number of bikes lie in the range between 40-50 thousands which is also a
usp of pulsar as it is almost near to the given range and provides a better value for money.
57
CONCLUSION
58
The bike was launched in the year 2000, and for it to capture the largest
share of market and beat existing and flourishing brands like Hero
Honda is a great achievement.
Also the root mean square error value in the least square method
is less than that in the exponential forecasting method. Thus, the sales
predicted by least square method will be a better estimate of the future
sales than that predicted by exponential forecasting method.
The maximum buyers are of the age group 24-30 , hence it can be
interpreted as being popular in college going youth .A majority group
belonging to the pulsar kind of bikes is more from the income group
category 3-5 & 5-10 lakh group The maximum number of bikes lie in
the range between 40-50 thousands which is also a usp of pulsar as it is
almost near to the given range and provides a better value for money.
The youth were more inclined towards the adventure part of bikes
,looks, consult friends, use television and internet and prefer style and
value the most whereas for the elders go for household and office,
mileage, family, print, value and brand before making a bike purchase.
Annual incomes have a direct correlation with increasing demands of
consumer also. Pulsar overall enjoys a favorable demand among all the
categories and consist of maximum alluring qualities amongst the tested
ones.
APPENDIX
59
Q2.Age :
18-24
24-30
30-36
ABOVE 36
Q3.WHICH BIKE DO YOU OWN PRESENTLY ?
<I LAKH
1-3 LAKH
3-5 LAKH
5-10 LAKH
>10 LAKH
60
a)OFFICE
1
LOWEST
HIGHEST
b)TRAVELLING
1
LOWEST
HIGHEST
c)HOUSEHOLD
1
LOWEST
HIGHEST
d)ADVENTURE
61
LOWEST
HIGHEST
e)OTHER
1
LOWEST
HIGHEST
a)MILEAGE
1
LOWEST
HIGHEST
b)LOOKS
62
LOWEST
HIGHEST
c)BRAND
1
LOWEST
HIGHEST
d)SERVICE
1
LOWEST
HIGHEST
e)PRICE
1
LOWEST
HIGHEST
63
a)FRIENDS
1
LOWEST
HIGHEST
b)FAMILY
1
LOWEST
HIGHEST
c)DEALER
1
LOWEST
HIGHEST
d)ADVERTISEMENT
64
LOWEST
HIGHEST
e)OTHER FACTORS
1
LOWEST
HIGHEST
a)TELEVISION
1
LOWEST
HIGHEST
65
b)HOARDINGS
1
LOWEST
HIGHEST
c)PRINT MEDIA
1
LOWEST
HIGHEST
d)INTERNET
1
LOWEST
HIGHEST
e)OTHERS
1
LOWEST
HIGHEST
66
a)BAJAJ
1
LOWEST
HIGHEST
b)HERO HONDA
1
LOWEST
HIGHEST
c)YAMAHA
1
67
LOWEST
HIGHEST
d)HONDA
1
LOWEST
HIGHEST
e)TVS
1
LOWEST
HIGHEST
a)PULSAR
1
68
LOWEST
HIGHEST
b)APACHE
1
LOWEST
HIGHEST
c)F-Z 150
1
LOWEST
HIGHEST
d)HUNK
1
LOWEST
HIGHEST
e)ANY OTHER
1
3
69
LOWEST
HIGHEST
IF OTHER,PLEASE SPECIFY
a)STYLE
1
LOWEST
HIGHEST
b)POWER
1
LOWEST
HIGHEST
70
c)PERFORMANCE
1
LOWEST
HIGHEST
d)VALUE
1
LOWEST
HIGHEST
e)BRAND
1
LOWEST
HIGHEST
71
72
REFERENCES
1. EBSCO HOST(database)
2. PROWESS(database)
3. INDIA STATS(database)
4. Peterson, Lewis and Jain: Managerial Economics
5. www.bajajauto.com
6. http://auto.indiamart.com/motorcycles/bajaj-pulsar
7. http://www.fadaweb.com/two_wheeler_industry.htm
8. auto.indiamart.com/motorcycles
9. www.iloveindia.com/bikes/index.html
10.
www.infibeam.com/bikes/make/herohonda.html
11.
bikes.whereincity.com
12.
www.bikesalesindia.com
13.
www.infibeam.com/bikes/make/bajaj.html
73
14.
www.autoblogs.in/.../bajaj-pulsar-300-cc-india-bajaj-bikes.html
15.
www.autoindiaforum.com/bajaj-to-launch-6-new-bikes-in2009.html
16.
FOR VEIWING THE COLLECTEDPRIMARY DATA VISIT
http://spreadsheets.google.com/ccc?
key=0Au4_eI1zvZ0YdF8yT2VCRHFKWmJZQm4zQkdlQ0d3enc&h
l=en
74