AUTOMOBILE INDUSTRY (INDIA)ANALYSIS USING PORTER S MODEL

MARKETING MANAGEMENT (MGT -514)
Submitted To:MS. Kanika Jhamb Submitted By:Prateek Mahajan Sec-A17B1 Roll No.16 Reg.No-7470070109

It is the world's second largest manufacturer of motorcycles. It is the market leader in India and on 17 September 2007. accounting for over 45% of the domestic car market. It was the first company in India to mass-produce and sell more than a million cars. the arrival of new and existing models. It is largely credited for having brought in an automobile revolution to India.AUTOMOBILE INDUSTRY:The Automobile industry in the Republic of India is one of the largest in the world. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world. In 2009. . The company's headquarters are located in Delhi. with annual sales exceeding 8.5 million in 2009. Maruti Udyog Limited was renamed Maruti Suzuki India Limited. Following India's growing openness. South Korea and Thailand.6 million units in 2009. with an annual production of more than 2. behind Japan. easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry. is India's largest passenger car company. India emerged as Asia's fourth largest exporter of passenger cars. INTRODUCTION TO COMPANIES:MARUTI UDYOG LIMITED:Maruti Suzuki India Limited (Hindi: ë÷ â óú û Ó ßì÷ î ëÝß) a partial subsidiary of Suzuki ùÅÁ Motor Corporation of Japan.

6. PAL. MUL. Estilo (Launched 2009) 7. Eeco (Launched 2010) 12. there were only five major automobile manufacturers in India. Tamil Nadu capable of producing 600. Gypsy (Launched 1985) 4. 2. Maruti New Wagon R (Launched 2010) HYUNDAI:Hyundai Motor India Limited is a wholly owned subsidiary of the Hyundai Motor Company in India. HM. It is the 2nd largest automobile manufacturer in India after Maruti Suzuki. Hyundai Accent (Launched 1999) Hyundai Santro Xing (Launched 2003) Hyundai i10 (Launched 2007) Hyundai i20 (Launched 2008) Hyundai Sonata Transform (Launched 2009) Hyundai Verna Transform (Launched 2010) . During the entry of Hyundai in 1996. HMIL has two manufacturing plants in Sriperumbudur. 800 (Launched 1983) 2. the Hyundai Santro was launched in 23 September 1998 and was a runaway success. Swift (Launched 2005) 6.e. TELCO and M&M. Daewoo had entered the Indian automobile market with Cielo just three years back while Ford. Within a few months of its inception HMIL became the second largest automobile manufacturer and the largest automobile exporter in India. Opel and Honda had entered less than a year back. 5. PRODUCTLINE:1. Ritz (Launched 2009) 11. Hyundai Motor India Limited was formed in 6 May 1996 by the Hyundai Motor Company of South Korea. A-star (Launched 2008) 10. Swift DZire (Launched 2008) 9. HMIL's first car. Omni (Launched 1984) 3. When Hyundai Motor Company entered the Indian Automobile Market in 1996 the Hyundai brand was almost unknown throughout India. SX4 (Launched 2007) 8. 3. 4.PRODUCT LINE:1. i.000 vehicles annually. Alto (Launched 2000) 5.

Here Mul and Hyundai are both established brands in the Indian market which has a big product line and both concentrates on the small segment fuel efficient cars. BARRIERS TO ENTRY :Time and cost of entry ± Time is most essential thing while launching a product in any market. price etc. Now to be competitive in market other companies have to either slash rates of their existing model or have to go back to the drawing board and build again. the small car market in India is very competitive with players like Maruti Suzuki.5 to 3lakh segment it will be very difficult to compete in knowledge and technology with the giants like Maruti and Hyundai who have a lot of experience in this car making industry. which was pretty much dominated by Maruti with the launch of 800 which played a great role in putting India on wheels. Attractiveness can be measured in the terms of the features . Hyundai etc. and if the cost is less the chances of the new entrant becomes low to compete with the existing product.Ideas and Knowledge that provides competitive advantage over others when patented.Porter¶s Five Forces Model:Porter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. The launch of the small cars is quite viable as the demand of the small car is on the rise in the market. Product Differentiation and Cost Advantage ± The new product has to be different and attractive to be accepted by the customers.This describes the competition between the existing firms in an industry. By the cost of the entry we mean the initial capital required to set up a new firm. The HYUNDAI/MARUTI UDYOG have great knowledge/ experience in the automobile industry . Porter of Harvard Business School in 1979. preventing others from using it and thus creates barrier to entry. Tata Motors. . Knowledge and Technology . Therefore if the new company such as Bajaj have to launch its car in the 2. The five forces are:y y y y y The threat of entry of new competitor The threat of substitute product Bargain power of suppliers Bargain power of buyers Intensity of competitive rivalry COMPETITORS:. The current scenario.

internet etc. gold coin .CHEVROLET etc to come up to the level and build their belief in the heart of middle class people. y 600 New car sales outlets covering 393 cities. radio. accessories on purchase gifts like luggage bag. Therefore there is a very tough competition for other car brands like NISSAN. Therefore there is a huge competition in this segment and a big bargaining power is available to the buyers. Access to Distribution Channels ± When a new product a launched a well developed distribution is must for its success. As the automobiles companies in India knows that maximum Indian population is middle class and therefore almost all the companies target this middle class people . Persuading advertisements in TV.If there are few buyers then they are able to dictate the terms. Sponsorships Introduction of driving schools .At this level the price of the Santro in the case of HYUNDAI and MUL 800 that have been already successful in attracting so many customers in India with its price and reliability and above all this. Due to this big competition and lot many new companies coming to the Indian market there is a huge bargaining power for buyers and therefore every company is tending to give a lot more at genuine prices and takes the help of various promotion techniques like:y y y y y y y y Reintroducing of new models with new interiors and shape like free insurance. They pull down the cost by Bargaining. the image and trust the name HYUNDAI/MARUTI carries with itself. The MUL motors had a advantage of well established distribution channel across the world. The bargaining power of buyer is high as there are lot of choice available to the buyer and the service do not vary from one manufacturer to the other. y 265 µMaruti True Value¶ outlets spread across 166 cities. They force the manufactures to improve the quality. y 2628 Maruti Authorized Service Stations.watches etc trade shows number of workshops like Maruti has 2628 no of workshops in 1220 cities. HYUNDAI and MUL both very old automobile brands in India almost around 30 years old who have already captured middle class hearts by their reliability and economic cars. These both companies have adapted cost leadership technique as the price of the cars are economical and have also expanded manufacturing of the cars to achieve economics of sale. covering 1220 cities BARGAINING POWER OF BUYERS:Number of customers/ Volume of sales . services.

BARGAINING POWER OF SUPPLIERS :Number and Size of Suppliers ± A company to manufacture its products requires raw material. a large number of companies are entering in Indian market as India is one of the fastest growing automobile market. which in most cases is not feasible to do. So the entire production line depends upon them only. If the price of the ACCENT/ESTEEM car will increase the main expected customers ie the one switching from economical cars like SANTRO/800 might not move . Unique Service / Product ± Supplier¶s products have few substitutes. Substitutes performance -The performance of the substitute sector will also play a important role in the success of these cars .GM. then the long list of depended parts also have to be changed . labor etc. for ex The success of the electric car segment with player like REVA can effect the demand of such cars. It will determine the willingness of the buyer to buy the Maruti or Hyundai car. Powerful suppliers can squeeze industry profitability to great extend. Ability to substitute ± Supplier¶s products have high switching costs. If there are few suppliers providing material essential to make a product then they can set the price high to capture more profit. If the change in any part is brought.The threat that consumer will switch to a substitute product if there has been an increase in price of the product or there has been a decrease in price of the substitute product. The Maruti/Hyundai car has more than 128 suppliers in all and the major portion of the building cost of the car is the parts supplied by the suppliers.VOLKSWAGEN etc have all entered INDIAN market and trying their best to increase their market share. The some parts of the car are obtain from the supplier who themselves are big enough and limited substitutes are available against them. They might be willing to go for the test products like spark which is from CHEVROLET family THREAT OF NEW ENTRANTS:As already discussed. Supplier industry is dominated by a few firms. Companies such as NISSAN. In many case even when substitute are available it¶s not that easy to opt for substitute as the next product in the assembly line depends upon it. . THREAT OF SUBSTITUTES :Price band . Buyers willingness ± Products with improving price/performance tradeoffs relative to present industry products.

outlets . servicing etc. Firstly the high investment which these two companies have made in the Indian market such as numerous number of service centers . When the company dropped. pricing.5 to 3lakh segment it will be very difficult to compete in knowledge. Exit Barriers for present companies:These are barriers that the companies have to face when they want to leave a market or industrial sector. They have well established network of distributors. Therefore these two companies have created a huge entry barrier for the new entrants. These two brands have highly hit the hearts of the Indian middle class because of their reliability and economisibility. share market etc Secondly a numerous number of cars of these companies are running on Indian roads which require maintenance. For ex the case that happened with Daewoo . spare parts . service centers and moreover the spare parts of these two brands are quite cheap as compared to the other car brands. Entry barriers for new companies:Maruti and Hyundai are very old brands of the Indian market . experience and technology with the giants like Maruti and Hyundai who have a lot of experience in this car making industry. So this is a big hindrance as the company have to provide all these services to it¶s customers. the customers with cars matiz and cielo had to face many problems. .For ex if the new company such as Bajaj have to launch its car in the 2.

html http://www.wikipedia.scribd.org/wiki/Hyundai_Motor_India_Limited .REFERENCE:http://www.wikipedia.com/business-and-economy/automobile-industry.com/doc/20230666/Maruti-Suzuki-India http://en.org/wiki/Maruti_Suzuki http://en.economywatch.

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