SCORPIO FROM MAHINDRA

By:
Abhishek Jha
Deepak
Nishith Nishesh
Shuchi Tomer
Vasudha Bharadwaj
 HISTORY OF AUTOMOBILE
INDUSTRY IN INDIA
 1898: First motorcycle rode
 1942: Hindustan Motors (HM) set up
 1944: Premier Automobile (PAL) set up
 1946: First car in India by PAL
 1949: First car by HM
 1991: LPG
 One of the fastest growing economies
 Many international brands contain more than 70%
locally produced parts
 Parts exported; India- a major manufacturing base
 2002: Maruti Udyog Ltd. privatized to Maruti Suzuki
Pvt. Ltd.
 INTERESTING FACTS: INDIAN
AUTOMOBILE INDUSTRY
 2nd largest two-wheeler manufacturer in the world
 2nd largest tractor manufacturer in the world
 5th largest commercial vehicle manufacturer in
the world
 3rd largest car market in Asia
 (Including component industry) Employs
 0.45 million people directly
 10 million people indirectly
 Turnover in 1999-2000:
 Auto industry: US$ 10 billion
 Auto-component industry: US$ 2.7 billion
 POLICY INITIATIVES
 2002, Govt.:
 Opened automobile sector to 100% FDI
 Removed the minimum capital investment norm for fresh entrants
 Made auto sector WTO compatible

 New policy:
 Addresses emerging problems
 Has excise duty concessions to small cars, multi-utility vehicles and
low emission vehicles
 Has incentives to facilitate R&D

 Import tariffs promote manufacturing in India, without undue

protection to domestic industry

 Tariff structure to be reviewed periodically to prevent India

from becoming a ‘dumping ground’ for international rejects
 OPPORTUNITIES IN INDIA

 Cost advantage wrt. auto-ancillary

manufacturing capabilities

 Labour cost component:

 Developed nation: 30-35% of sales
 India: 8-9% of sales

 Number of vehicles manufactured in India

has risen: increase in demand for automotive
components
 MAJOR PLAYERS

 Maruti 55%
 Hyundai 18%
 Tata 13%
 Ford 6%
 Hindutan Motors
 Mahindra & Mahindra
 Toyota
 CAR INDUTRY
 Share:
 90.2%- Economy segment
 9.8%- Mid size & luxury segment
 Segmentation:
 A
 B
 B+
 Lower C
 Upper C
 D
 E
 Luxury
 Multi utility vehicles: higher acceptability in urban areas
 CATEGORY OF CARS

 Economy segment- up to Rs. 0.25 million

 Mid-size segment- Rs. 0.25-0.45 million

 Luxury segment- Rs. 0.45-1 million

 Super luxury segment- above Rs. 1 million

 MULTI UTILITY VEHICLES
 Transport goods (smaller loads) as well as passengers
over medium and small distances
 Low fixed and operating costs in comparison to LCVs
 Can be converted into an ambulance, a minivan, a
pickup van, leisure vehicle, etc.
 Major consumer: Army uses it as
 mounting recoil-less guns
 transporting explosives
 towing equipment like DG sets, gun carriers, etc.
 Classification:
 Soft tops (canvas/PVC tops): stagnating market
 Hard tops: growing market for luxurious vehicles
 Pick ups
 16% share in total car market in India
 MAJOR PLAYERS IN INDIAN UV
MARKET
 Mahindra & Mahindra:
 Jeep
 Scorpio
 Marshal
 Tata:
 Tata Safari
 Tata Sierra
 Tata Sumo
 Toyota:
 Toyota Qualis
 CUSTOMER PERSPECTIVE FOR
UV
 Preferred big size as it stands for status
 Seek latest technology
 Want sheer thrill and passion of driving an
SUV but at affordable prices
 Feel international vehicles define imagery
 Consider:
 Power of vehicle
 Luxury served
 Want to consume premium imagery at
affordable prices
 MAHINDRA
 Market share largely from semi urban and
rural markets of India
 Institutional sales- army, police, paramilitary
groups, etc.
 Late 1990s, witnessing loss of market share
 Lacked products catering to modern urban
consumer needs
 Markets where Mahindra was strong were
stagnating
 Urban markets where it had no product to
offer were seeing all the growth
 MAHINDRA IMAGE
 Positives:
 Rugged
 Tough
 Reliable
 Economical
 Negatives:
 Not modern or technologically advanced
 Uncomfortable
 Rough
 Not easy-to-drive
 Rural imagery
 Down market
 Fuddy-duddy
 NEW OBJECTIVES

 To create a new segment and retain market

domination
 To differentiate offering (vis-à-vis MNCs) i.e. to
provide an excellent value proposition to the customer
 To optimize project costs
 Make SUV a mass concept in India
 To be seen as comfortable, easy-for driving and should
have imagery comparable to international brands
 Two-pronged strategy:
 Continue to dominate rural and semi-urban market for low-
cost mass transportation needs
 Develop a strong presence in fast growing urban markets
with a range of vlaue for money products
 SCORPIO
 1997 vision:
 to continue domination of UV market in India (over
50% market share)
 to be a global niche player
 Not directly participate in the car market
 Quality, durability and reliability of products and
services
 Active role in development of the nation
 Creating a market of highly demanding
customers: Value for money
 Required optimization and innovation
 Prioritize customer values and excel at it
 ACHIEVEMENTS OF SCORPIO’S
DEVELOPMENT PROCESS
 A unique process called IDAM (Integrated design and manufacturing):
 World class, zero defect, trouble free product
 Encompasses the entire value chain starting and ending with the customer
 Product designed around the customer due to outside-in approach
 Best in the world tie-ups but in-house execution:
 Fukui, Japan for the press shop
 Fuji, Japan for the dies
 Wooshin, Korea for body shop
 Fori Automation, USA for the tester line for final assembly
 Durr, Germany for the paint shop
 Lear, USA for seats and interiors
 Visteon, USA for exteriors
 Samlip, Korea for suspension
 BEHR, Germany for AC
 Renault for petrol engines
 Played role of an integrator
 ACHIEVEMENTS OF SCORPIO’S
DEVELOPMENT PROCESS
 Customer focus from thought to finish:
 Trap requirements and map market potential
 Key buying factors evolved through Quality Function Deployment
Process (QFD)
 A cross functional, co-located, young, lean team:
 Average age 27
 120 people: worked in tandem
 19 cross-functional design teams for design, testing, marketing,
manufacturing, supply
 Intensive testing:
 74 vehicles only for testing
 Simultaneous Testing & Examination Process (STEP)
 Quality measurer: NOVA-C (New Overall Vehicle Audit-Customer)
 Most grueling tests
 ACHIEVEMENTS OF SCORPIO’S
DEVELOPMENT PROCESS
 Lowest project costs: US $ 120 mn
 All, new manufacturing set up in Nashik:
 120 acres
 Production capacity: 40000 units on a 2 shift basis
 3 new state-of-the-art lines:
 A fully automated press shop set-up with dies
 The body shop and CMM equipped automated line
 A Trim Chassis Final (TCF) line with a world class tester
line, paint shop
 Programmed logistics and flexible manufacturing
system accommodated large number of variants in
the product mix
MARKETING STRATEGY: CREATE
NEW CATEGORY