Automobile Industry

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per
cent of the country's Gross Domestic Product (GDP). As of FY 2014-15, around 31 per cent of
small cars sold globally are manufactured in India. In addition, several initiatives by the
Government of India and the major automobile players in the Indian market are expected to
make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by
2020.

In order to keep up with the growing demand, several auto makers have started investing
heavily in various segments of the industry during the last few months. The industry has
attracted Foreign Direct Investment (FDI) worth US$ 14.32 billion during the period April 2000
to December 2015, according to data released by Department of Industrial Policy and
Promotion (DIPP). India’s automotive industry is also one of the most competitive in the world.
It does not cover 100 per cent of technology or components required to make a car but it is
giving a good 97 per cent. Leading auto maker Maruti Suzuki expects Indian passenger car
market to reach four million units by 2020, up from 1.97 million units in 2014-15.

PEST ANALYSIS OF CAR INDUSTRY

Political

1. Government assist in development of vehicles propelled by alternate energy sources to

reduce dependency on fossil fuel. India is the 4 th largest importer of oil. The current
account deficit of India at present is $7.8 billion.
2. Under make in India drive, government attracts foreign investment. Foreign direct
investment can stimulate the target country’s economic development, creating a more
conducive environment for you as the investor and benefits for the local industry.
3. Government aims at promoting an integrated, phased growth of the Indian automotive
industry as automobile industry consists of 7.1% of GDP.
4. Government allows tax deduction for R&D activities to promote innovation. Promotion
of technology transfer from national laboratories and nationally funded R&D
programmers to industry through public sector organisations. Customs duty exemption
to public funded R&D institutions and privately funded scientific and industrial research
organisations, both for capital equipment and consumables needed for R&D.
 5. OPEC keeping the price of oil as low as possible so that people do not look for alternate
fuel technologies. The OPEC nations illegally are forming cartel and regulating prices.

Economical

1. Lack of transportation infrastructure. Due to poor conditions of the roads, people try to
avoid high-end cars and the overall specific fuel consumption of cars increases and its
efficiency decreases.
2. Various schemes to woo customers like low interest rates EMIs.
3. Mature market since too many competitors.
4. Business of online transportation companies like Ola, Uber etc gets hurt due to odd-even
rationing, putting a cap on surge pricing.
5. Aggressive promotional campaign done by companies promotes sales.
6. JV ventures, long term contractual partnership between different firms lead to
investment.

Social

1. Growth in urbanization: having a car is a status symbol for most of the middle class
families.
2. Affordable cars coming in market so that common people can afford cars and increase
the sales of automobile industry.
3. Upward migration in income levels has led to increased sales in automobile industry.
4. Implication of green tax on vehicles to control pollution since pollution in cities is
increasing at alarming rates.

Technological

1. Due to entry of global companies in Indian market advanced technologies both in

product and production processes have developed.
2. Evolution of alternate fuel cars like hybrid cars.
3. Few global companies like Audi, BMW etc have R&D centres in India.
4. Government initiatives regarding tax rebates have led to global players set up their R&D
centre in India.

Segmentation
The car industry is basically segmented as per profile based on some of the mentioned
parameters.
 a. Geographic
 Density
 Metro size
 City/Town

b. Demographic
 Income
 Age group
 Social Class
 Occupation

c. Behavioural
 Usage rate
 Benefits
 User status

d. Psychographic
 Personality
 Lifestyle
 Awareness
 Attitude

Factors influencing Customer Behavior in India

 Social Factors (Family & Reference Group)
 Cultural Factors (Social Stratification)
 Personal Factors (Critical Life events & transformation)
 Post Purchase Behavior (Customer Suggestion & Feedback)
 Evaluation of alternatives (Expectancy value model)

Analyzing Customer Behavior

We conducted a survey to understand the customer behavior in the Sub4 sedan category and
found the following results.
The car industry is dominated by Hatchbacks followed by Sedan, SUV & MUV. We have
researched to understand the customer behavior for the sedan category and following factors
mostly influence behavior while buying a sub compact Sedan in India:

 Earning capacity

 Age Group
  Mileage

 Safety

 Additional Features

 Post Purchase Behavior

 Boot Space

 Internal Volume

 Aesthetics

Marketing Strategies of Major Competing Brands

The differentiated tax structure for smaller and larger vehicles in the Indian market has
resulted in the emergence of a unique category of compact sub-4 meter sedans which have
found increasing favour among consumers. Excise duty on sub-4 metre vehicles at 12-15% is
half of that levied on larger vehicles. Manufacturers can reduce the length of the vehicle and
introduce products at aggressive price points in the market. This has resulted in the creation of
category of products which is unique in India. The segment holds a lot of promise. Since the
entry in the segment in 2008, the market is growing by approx. 10%.

The major competing brands in this category:

 Maruti Swift Dzire

 Hyundai Xcent

 Honda Amaze

 Ford Figo Aspire

All the above mentioned brands have focused on the middle and upper middle income group
of working professionals. In view of the nature of the target segment, the price of the sedans is
in the range of INR 5-8 lacs.
Marketing Mix

Maruti Swift Dzire Honda Amaze Hyundai Xcent Ford Figo Aspire
Price
(competition
5.23-8.58 lacs 5.36-8.26 lacs 5.4-8.1 lacs 5.21-8.48 lacs
based pricing
strategy)
1200 dealerships in 213 dealerships in 503 dealerships 241 dealerships
800 cities 140 cities across India in 196 cities

Place Showrooms Showrooms Showrooms Showrooms

Service centres Service centres Service centres Service centres

Fleet Sales Fleet Sales Fleet Sales Fleet Sales

Product Petrol and Diesel Petrol and Diesel Petrol and Diesel Petrol and Diesel
variants variants variants variants
Mileage – 18.1 Mileage – 19.1 Mileage –18.16
Mileage - 18 kmpl
kmpl for Petrol kmpl for Petrol kmpl for Petrol
for Petrol and 26
and 25.8 kmpl for and 24.4 kmpl for and 25.8
kmpl for Diesel
Diesel Diesel kmpl for Diesel

Power – (Petrol)84 Power – 87 bhp @ Power – 82 bhp @ Power – 87 bhp

bhp @ 6000 rpm 6000 rpm 6000 rpm @ 6000 rpm

(Diesel)74 bhp @ 99 bhp@ 3600 71 bhp @ 4000 99 bhp @ 3750

4000 rpm rpm rpm rpm

Automatic & Automatic & Automatic & Automatic &

Manual Manual Manual Manual
Transmission Transmission Transmission Transmission
Colour – 6 shades Colour – 7 shades Colour - 4 shades Colour- 7 shades
 Safety features – 3- Safety features – Safety features – Safety Features-
point seat belts, front dual airbags, Antilock Braking Dual airbags,
rear door child engine System, dual engine
locks, security immobilizer, pre- airbags, rear immobilizer, 3-
alarm system and tensioner seat parking assist and point seatbelts,
engine belts with load rear defogger. keyless entry
immobilizer, speed limiters, WAVE engine and speed
sensitive automatic key, ACE body immobilizer, sensing door
door lock facility, structure and ABS central locking, , locks, perimeter
ABS with EBD with EBD. rear camera alarm and a
driver seatbelt
reminder
Japanese Japanese Korean American
Technology Technology Technology Technology

Direct marketing Direct marketing Direct marketing Direct marketing

Offers & discount Offers & Offers & Offers & discount
discount discount
Words of mouth Mass media
Mass media Words of mouth communication
Mass media
communication
communication Mass media Demo( Test
Promotion Sponsorship communication Drives)
Sponsorship
Demo( Test Sponsorship
Demo( Test
Drives)
Drives) Demo( Test
Motorsport Drives)
Motorsport
events
events Motorsport
events
 Space Compact Space Safe

Low maintenance Powerful engine Comfort Powerful engine

Positioning
High fuel High fuel High fuel High fuel
efficiency efficiency efficiency efficiency

Ford Motors holds low market share in India and has lost shares over the past 5 years.

FY 2011-12 2012-13 2013-14 2014-15 2015-16

MARKET SHARE
3.29 2.01 3.63 2.34 2.75
% IN INDIA

At any given point in its Indian history, Ford has managed to sell one model only - that is, one
car brings it an overwhelming majority of volumes. In 2015, 55% of its volumes came from the
EcoSport and discontinued Ford Classic from the market.

Ford Classic was segmented in Sedan category and targeted at young executives &
businessmen, positioned as one of the most fuel efficient automatic sedan which also has
stylish features. This product had matured and the company ended its production.

Ford Figo Aspire was launched in August 2015 and the sales have declined over the past 9
months. It is segmented in Sub -4 Sedan category and targeted at economic minded segment,
positioned as one of the most fuel efficient automatic sedan which has high safety standards.

Aug’15 Sep’15 Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16

Ford
Figo 5176 3596 3041 2366 2252 1748 855 1328 1156
Aspire
Recent Updates of Ford Aspire
 “Poor sales of the Figo and Aspire challenge Ford’s multi-product India strategy”

Overdrive.in (19 April 16)

 Ford India cuts production of Figo, Figo Aspire due to poor market demand

International Business Times (19 April 16)

 Ford Recalls Over 40,000 Units of Figo and Figo Aspire

Auto.NDTV (22 April 16)

Problem Analysis
All these updates indicate that there is a serious problem with respect to the sales of Ford Figo
Aspire. We have analysed some of the probable reasons for decline in the sales.

Product:

Figo as discussed above is on par or infact above than the competitors. It is a clear
winner in terms of safety and warranty. In safety, it is the only model in this
segment to provide 6 airbags. In Warranty, this is the only product in this category
to provide 100000 Km as compared to 40000 Km by other competitors. These 2 are
stand-out features of Figo Aspire.

Price:
Its lowest model is cheapest in this segment and hence with the given product
specifications, it is competitively priced. Hence there is no problem with respect to
pricing.

Promotion:

We see 2 problems with respect to promotion. First being the amount of Ad

spends by Ford compared to its competitors. As per Pitch Madison Ad Report-
2016 , Ford spends the least when it comes to Ad expenditure on Television
compared to competitors.

Company Name Approx Spends in Crores in 2015

Maruti Suzuki 500-600
Honda Motors 200-300
Hyundai Motors 150-200
Ford 150-200

As this sub-4 compact Sedan market is very competitive, aggressive marketing is

necessary to drive the sales. The Youtube link of the first TV commercial of Figo
Aspire is https://www.youtube.com/watch?v=_xF6acSYYV8

The TV commercial speaks it being a family car with high power and good mileage
and doesn’t speak about safety. As it is not mentioning its safety feature it failed to
differentiate from its competitors. With increasing safety awareness among the
consumers, this would have helped Apsire to increase its sales.

Also the tagline of the car when it was launched was “ITS OKAY TO STARE”. This
might have gone well if they were targeting Teens or revolutionary people who
would want to distinguish themselves from the crowd. But their target segment
was young working professionals who are single or with a small family. This tag will
not go well with this target segment. Also there is no emphasis on its distinguishing
feature of safety in its tagline.
Place:

Number of service centers of Ford company is very less compared to its

competitors. For instance, Ford has only 196 service centres compared to 1200 of
Maruti Suzuki. Also, the perceived impression among customers is not good when
it comes to the maintenance cost of Ford cars compared to its competitors.

Recommendation

We recommend Ford aspire to be positioned as a “Safe and Powerful Modern

Sedan”. New ad focusing on safety features like air bag saving people from a fatal
accident can be aired, utilizing the ‘Fear’ element, like the one used in Saffola Ad.
Frequency of TV Ads has to be increased to increase awareness among the target
population. Our survey, which had majority of population in aspire’s the target
segment, also reinforced the fact that they have not seen any television AD
(around 51% of the respondents). Ford had worked on the cost of ownership by
localizing most of its components for Ford Aspire. The review from NDTV Auto also
proved that:

But Ford, failed to communicate to the customer about this feature. Some
promotions highlighting this feature have to be strongly communicated to change
the customer’s perception about cost of ownership.

We see there seems to be no problem with respect to the product and

pricing
 Bibliography
 https://www.cardekho.com/

 http://economictimes.indiatimes.com/

 https://autoportal.com/newcars/ford/figo-aspire/sales-statistics/

 http://www.exchange4media.com/pmar2016/pmar-report.pdf

 http://www.team-bhp.com/