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SALES AND DISTRIBUTION

SYSTEM AT

SUBMITTED TO SUBMITTED BY

MR. NINAD PANHALE SURAJ DOSHI


Company Background

A) History

Hyundai Motor India Ltd. was established in 1996, and is a

subsidiary of the giant South Korean multi national, the Hyundai Motor

Company. It is Korea's top automobile manufacturer, with it sales revenue

touching 8.24 billion in 1997. The Santro is steadily capturing the Indian

market, and giving a strong competition to its rivals in the same segment.

It's success story is an example of a profitable Indian - Korean partnership

where Indian skills and workmanship combine with Korean design and

technology to produce one of the best cars.

The Hyundai Santro has been designed and developed in India at the

integrated auto-manufacturing unit at Irrungattukotai near Chennai. This

plant is capable of producing 1, 20,000 cars and 1, 30,000 engine and

transmission systems annually. It also has in built facilities for the


manufacture of critical components. It is planned to invest another $3

billion in this facility by the year 2011.

The Company has set up more than 70 dealer workshops that are

equipped with the latest technology, machinery, and international quality

press, body and paint shops, across the country, thereby providing a one-

stop shop for a Hyundai customer. Hyundai also has a fleet of 78

emergency road service cars - specially equipped Santro that can provide

emergency service to all its customers anytime, anywhere.

TATA Motors Ltd is subsidiary of TATA Sons, the holding company of the

TATA Group, the oldest and among the largest industrial conglomerates of

India.

Established in 1945, TATA Motors entered into collaboration with Daimler

Benz of Germany in 1954 to manufacture commercial vehicles. The

collaboration ended in1969.

The company until the nineties was a player only in the commercial

vehicles segment. In the early nineties the company entered the

passenger car market with the TATA Estate and the Sierra, at the same
time the company reentered into an agreement with Daimler Chrysler for

setting up a JV for Mercedes Benz in India.

The tie with Mercedes ended in the mid nineties and the company started

investing in the development of an indigenous car for the mass. Named the

Indica the car was launched 1998; this car was a totally indigenous product

and also the first in the history of the Indian automotive Industry.

In between the company also introduced the TATA SUMO in the utility

vehicle segment; the product went on to be a big success and became the

leader in the segment.

Around the same time the Indica was introduced the company also

introduced the TATA Safari, a SUV which enjoys enormous prestige in the

market today.
The most recent product of the company was the sedan TATA Indigo which

was based on the Indica platform. This product is a bestseller even after

one year of it’s presence in the now extremely competitive Indian

automotive industry.

The company has also developed numerous concept cars such as the

TATA Aria and the Marina.

The company today exports the Indica to countries across the world and

the most notable being the agreement with ROVER U.K for 5,00,000 cars

which are today being sold as the City Rover in the U.K.

The Company has spread its manufacturing facilities across India by

setting up plants at Jamshedpur, Pune and Lucknow.

This is coupled with a nation-wide sales, service and spare parts network.

The Company enjoys a significant demand in export markets like Europe,

Australia, South East Asia, Middle East and Africa. The Company's

vehicles are seen in all the continents.


B) Year of Establishment:

Hyundai Motors 1996

India Ltd.
TATA Motors 1945

Ltd.

C) Financials:

Particulars TATA Motors Hyundai

Turnover* Rs. 1549 Cr Rs 2310 Cr

The turnover for TATA is only for its passenger car unit.

* Source: India Info line & India Car (URLs).

E) Market Share
TATA Hyundai

B segment 18% 30%

C segment 17% 15%

MUV & SUV 28% 3%

F) Area of operation

Company North East West South

1. TATA motors    

2. Hyundai motors    

Distribution structure for Hyundai Motors


Factory/Plant

C&FA C&FA

Dealers Dealers

Dealers Dealers

Dealers Dealers

Distribution structure of TATA Motors


Factory
/Plant

Dealers Dealers Dealers Dealers Dealers Dealers

TATA motors does not have any C&F agents. The cars are delivered to the

dealers directly by the company owned transportation facility.

Sales structure of Hyundai


MD

President

Executive Director
(Marketing &
Sales)

GM
(Sales)

Regional Regional Regional


Manager Manager Manager

Sales Sales Sales


Manager Manager Manager

Sales Sales Sales


Executives Executives Executives
(Dealers
(dealers)) (Dealers) (Dealers)
Sales Structure for TATA Motors

Chairman
Chairman

Commercial
Commercial Engineering
Engineering
PassengerCar
Passenger Car
Vehicle
Vehicle Research
Research
BusinessUnit
Business Unit
Division
Division centre
centre

Business
Business
Development
Development

VP
VP

DGM
DGM
Dealerdevelopment
development
GM
GM DGM
DGM GM
GM Dealer
& commercial
& commercial
Sales(cars)
Sales (cars) Sales(UV)
Sales (UV) Service
Service planning
planning

Regional
Regional Regional
Regional Regional
Regional Regional
Regional
Manager
Manager Manager
Manager Manager
Manager Manager
Manager
South
South West
West East
East North
North

DealerAccounts
Dealer Accounts
Manager
Manager

Dealers
Dealers Dealers
Dealers Dealers
Dealers
Channel Structure for Hyundai Motors India Limited

The distribution system for Hyundai Motors can be broadly divided into two

tiers:

Tier 1:

The cars are shipped from the factory to the dealer direct by the C&FA.

There is no warehousing at this level.

Tier 2:

The cars are transported through train under the RAKE system.

The Hyundai Motors plant is located in Chennai, from where after the

dealer request his order through the order request form. The order is

routed through the regional office to the plant over the company’s ERP

system. Once the allotted car is rolled out, it is stored in the car lot which

has designated areas for each area. The C&FA agent takes over from

there and the cars are loaded in trailers and are transported through road.

However there are two different ways a car is shipped to its required

destination:
1. The conventional Method

2. RAKE Movement.

1. Conventional Method:

The cars are handed over to the C&FA who transports all the cars to the

required destinations. Different C&F agents are contracted for different

regions. The C&FA move all the cars from the factory to the dealers by

trailers.

2. RAKE Movement:

This system is used for the Key regions, namely Delhi and Mumbai. The

Company has constructed a railway terminal within its factory premises

where all the cars required for these markets are loaded onto a separate

train made possible by a contract with Indian Railways. The C&FA for the

market will have his own terminal at the destination where the cars are

unloaded and dispatched to the dealers by trucks.


The logic behind this system is that for these key markets, the volume of

cars required are more than other markets, hence if the cars are to be sent

by truck, it will lead to a shortage of trucks for the other markets. Also the

cost is more viable through such means for such large volumes over long

distances. The company pays for all the transportation costs of the cars.

Sales Targets

The company normally issues targets to all the dealers based on the sales

of the corresponding month of the previous year. The target is also

assigned depending on the regions classified territory.

Due to the company’s export obligations, wherein the Letter of credit is

prepared one month in advance to shipping the cars, the company cannot

possibly default on the shipments. Hence, the target is not based on the

company’s total production but the production apart from the export

obligations.

The production level including exports, for the month once set is divided

between domestic and exports and then a certain target is allotted to each

region. This target though issued to the dealers, is overseen by the

regional sales office.


Channel structure for TATA Motors

The distribution network for TATA motors is very simple. There is no C&F

agent involved. After the production of the car the cars are directly

transported to the dealers in the different regions. The transport is done

through TATA itself.

TATA has its manufacturing units in Jamshedpur, Pune and Lucknow. After

the dealer has placed his order to the company through a request form the

cars are allotted to them and loaded in the trailers to be sent off the

dealers.

However here also there are 2 methods of shipping the car.

1. Conventional method

2. By train

1. Conventional method

the cars are loaded onto the trailers from the factory and transported to

different dealers located in the different regions. There are different type of

trailers with capacities to carry 5,7 and 10 cars.

2. By Train
It is very rare that the cars are transported through the trains, if so then

C&F agents are hired for the job. This transportation is done very rarely

and mainly for key regions like Delhi & Mumbai.

This transportation is usually done when there is a high demand in the

market and the transportation by trailers is not able to meet the high

demand of the market.

Sales Targets

The dealers are normally assigned targets based on their area of operation

and their sales based on the corresponding month of the previous month.

The sales targets are not only assigned keeping in mind the region but

also the festive season and not to forget the financial year. During the

festival season the company assigns little higher targets because this time

of the year is considered very auspicious and people buy cars in this

season. Similarly during Shraad the company assigns low targets to the

dealers as the people don’t buy cars or any form of metal during this time.

In the month of March the company expects the dealers to sell high

volumes because all the allocation of the budget is done in this month and

the company whishes to capitalize on it. Due to TATA’S export obligation

the target is not based on the full production capacity of the factories.