POWER OF WHEEL IN AUTOMOBILE WITH SPECIAL FOCUS

ON MARUTI UDYOG

NAME: ASHWIN SUBRAMANIAN

CLASS: TYBMS (V SEM) 2011

ROLL NO: 03

SUBMITTED TO: MRS.PREETI KHITANI

N.E.S RATNAM COLLEGE OF ARTS SCIENCE & COMMERCE

BHANDUP (W), MUMBAI-400 078

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 INDEX
SR.NO TOPIC
1 Executive Summary
2 Objective
3 Introduction of Indian Automobile Industry
4 Car market In India
5 Evolution of Automobile Industry
6 Indian passenger car market
7 Growth in production
8 Segments wise market share
9 Key players in automobile sector
10 Marketing Models Of Maruti Udyog
11 Company’s Main Objective
12 Impact of Maruti Udyog
13 Company information
14 TimeLine of Maruti Udyog Ltd
15 Market Targets Rural India For Sales
16 Marketing Strategies Of Maruti Udyog
17 SWOT
18 Research Methodology
19
Interpretation And Analysis
20 Recommendations
21 Conclusion
22 Wibilography
EXECUTIVE SUMMARY

The grand project study on a Maruti Brand car’s based on customer survey. The main
objectives of the project are

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  To know the perception of people about “Maruti” car.

 To know about awareness of products.

 To know about factors affecting purchase decision of “Maruti”.

 To know acceptance level of people in Mumbai City.

 To know how purchase decision of “Maruti”.varies from different

Income group.

For this project customer research was carried out at various area of Mumbai City. In
this customer research, I learnt about different types of customer’s perception about
Maruti in Mumbai City.

OBJECTIVE
The project work is the internal part of an BMS program. It helps the students
understand practical aspects of Business Management in a better way as a part of my
BMS. program. I was supposed to work with the organization.

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 “Marketing Research is the systematic and objective identification, collection,
analysis, dissemination, and use of information for the purpose of improving decision
making related to identification and solution of problems and opportunity”

“Perception is the process, by which an individual selects, organizes and

interprets information inputs to create a meaningful picture of the world around as”

To be a BACHELOR OF MANAGEMENT STUDIES student is a matter of pride

because we are in a field, which helps us to develop from a normal human being into a
disciplined, and dedicated professional. One has to be a good learner to sharper
knowledge in the particular field to achieve and attain the desired goals and heights. I
conducted to gain an understanding of what goes in to mind of the customer about
“Maruti ”. To find the perception of people on “Maruti” , I used research questionnaires
as the research and data collection tools. The responses were collected from 300
respondents. from various areas of Mumbai.
I had learned lot during my Grand Project on perception of people on Maruti”, and I
hope this will be helpful to find out perception of people on “Maruti” car
.

Introduction

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On the canvas of the Indian Economy, Auto Industry occupies a prominent place. Due
to its deep forward and backward linkages with several key segments of the economy,
automotive industry has a strong multiplier effect and is capable of being the driver of
economic growth. A sound transportation system plays a important role in the country's
rapid economic and industrial development. The well-developed Indian automobile
industry able to fulfils this catalytic role by producing a wide variety of vehicles:
passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles
such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.

The automobile sector is one of the core industries of the Indian economy, whose
prospect is reflective of the economic resilience of the country. With 4% contribution to
the GDP and nearly 5% of the total industrial output, the automotive sector has become
a significant contributor to the exchequer. Continuous economic liberalization over the
years by the government of India has resulted in making India as one of the prime
business destination for many global automotive players. The automobile industry
witnessed a growth of 19.35 percent in April July 2006 when compared to April July
2005.

The Indian automobile Industry has a mix of large domestic private players such as
Tata, Mahindra, Ashok Leyland, Bajaj, Hero Honda and major international players
including GM, Ford, Daimler Chrysler, Toyota, Suzuki, Honda, Hyundai and Volvo.

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India holds huge potential in the automobile sector including the automobile component
sector owing to its technological, cost and manpower advantage. Further, India has a
well-developed, globally competitive Auto Ancillary Industry and established
automobile testing and R&D centers. The country enjoys natural advantage and is
among the lowest cost producers of steel in the world. The Indian automobile industry
today boasts of being the Second largest two Wheelers manufacturers in the world,
World largest Motorcycle manufacturer is in India, Second Largest tractor manufacturer
in the world, fifth largest commercial vehicle manufacturer in the world and Fourth
largest Car market in Asia.

The Indian automobile industry has four major segments commercial vehicles (CVs),
passenger vehicles, three wheelers, and two wheelers. According to the Society of
Indian Automobile Manufacturers (SIAM), The Indian passenger vehicle market has
three categories passenger cars, multi-pupose vehicles (MPV’s) and utility vehicles
(UV’s)

The passenger car market is further divided into various segments based on the length of
the car. The Indian automobile industry was a highly protected slow-growth industry
with very few players till the opening up of the Indian economy in 1991. Low
manufacturing costs, availability of skilled labor, an organized component industry, and
the capability to supply in large volumes attracted global auto majors to set up their
operations in India after the opening up of the sector.

For example, Fiat and Daimler Chrysler started outsourcing their component
requirements to India. 100 percent Indian subsidiaries of global players, like Delphi
Automotive Systems and Visteon, exported components to other parts of the world.

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Macroeconomic factors like government regulations, low interest rates, and availability
of retail finance played an important role in the rapid development of the automobile
industry in India during the late nineties.

Car Market In India

Over the last few decades. the car market in India have been in a burgeoning stage
with all types of cars flooding the market in order to meet the demands of Indian
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customers who are increasingly exposed to state-of-the-world automobiles and want
the best when it comes to purchasing a car.

It is expected that by 2030, the Indian car market will be the 3rd largest car market
across the globe. Small cars seem to be ruling the roost in the Indian automobile
market with over 7.5 lakh small cars being sold in India in 2006-07. The main
encouraging factors for the success story of the car market in India are the increase in
the opportunity for new investments, the rise in the GDP rate, the growing per capita
income, massive population, and high ownership capacity.

The liberalization policies followed by the Indian government had been inviting
foreign investors and manufacturers to participate in the car market in India. The
recent trend within the new generation to get work in the software based sector has
led to the rise in the income level and change in the lifestyle which has further led to
the increase in the demand for different varieties of cars among them. Moreover, there
are many financing companies providing easy car loans at reasonable interest rates
and affordable installments.

The car Market in India is crowded with all varieties of car models like the small cars,
mid-size cars, luxury cars, super luxury cars, and sports utility vehicles. Initially the
most popular car model dominating the Car Market in India now are new models like
Maruti, Fiat, Hyundai, BMW, and many others. Moreover, there are many other
models of cars in the pipeline, to be launched in the car market in India.

Some of the leading brands dominating the car market in India at present are
Hindustan Motors, Reva Electric Car Co., Fiat India Private Ltd., Daimler Chrysler
India Private Ltd, Ford India Ltd., Honda Siel Cars India Ltd., General Motors India,
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 Hyundai Motors India Ltd., Skoda Auto India Private Ltd., and Toyota Kirloskar
Motor Ltd. Since the demand for foreign cars are increasing with time, big brands like
Mercedes Benz, Aston Martin, Ferrari, and Rolls-Royce have long since made a foray
into the Indian car market.

Small and mid-sized cars

The automobile sector is one of the core industries of the Indian economy, whose
prospect is reflective of the economic resilience of the country. With 4% contribution to
the GDP and nearly 5% of the total industrial output, the automotive sector has become
a significant contributor to the exchequer. Continuous economic liberalization over the
years by the government of India has resulted in making India as one of the prime
business destination for many global automotive players.

One of the largest industries in India, automotive industry has been witnessing
impressive growth during the last two decades. Abolition of licensing in 1991,
permitting automatic approval and successive liberalization of the sector over the years
have led to overall development of the automobile industry

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Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the
leader of the Indian car market for about two decades. Its manufacturing plant, located
some 25 km south of New Delhi in Gurgaon, has an installed capacity of 3,50,000 units
per annum, with a capability to produce about half a million vehicles.

In the late 1980s, Suzuki had increased its equity stake in Maruti from 26% to 40% and
further to 50% in 1992, converting Maruti into a non-government company.
Consequently, Suzuki began taking more active part in the management of the
company.  

The introduction of the Maruti 800 in 1983, marked the beginning of a revolution in the
Indian automobile industry. Maruti Udyog brought in the latest technology then
available, more fuel-efficient cars, and brought down the prices of cars in

India. This led to the creation of a huge market for all car segments as the Indian middle
class grew in size. This in-turn brought in more players to this segment. A number of
auxiliary car parts making units were setup as most car manufacturers realized it was
more cost effective to make their car parts in India rather than import them

The government seemed reluctant to take a decision as it felt that Suzuki had inflated
the project cost. The government came up with a scheme to fund the project through a
combination of debt and internal accruals. The transfer of gearbox technology was
another bone of contention between two partners.

Relationship between the Government of India, under the United Front (India) coalition
and Suzuki Motor Corporation over the joint venture was a point of heated debate in the
Indian media till Suzuki Motor Corporation gained the controlling stake. This highly
profitable joint venture that had a near monopolistic trade in the Indian automobile

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market and the nature of the partnership built up till then was the underlying reason for
most issues.

Service is a major revenue generator of the company. Most of the service stations are
managed on franchise basis, where Maruti trains the local staff. Other automobile
companies have not been able to match this benchmark set by Maruti. The Express
Service stations help many stranded vehicles on the highways by sending across their
repair man to the vehicle.

To promote its bottom line growth, Maruti launched Maruti Finance in January 2002.
Prior to the start of this service Maruti had started two joint ventures Citicorp Maruti
and Maruti Countrywide with Citi Group and GE Countrywide

respectively to assist its client in securing loan. Maruti tied up with ABN Amro Bank,
HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram
to start this venture including its strategic partners in car finance.

Domestic Market Share for 2009-10

Passenger Vehicles 15.86

Commercial Vehicles 4.32
Three Wheelers 3.58

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Two Wheelers 76.23

Automobile Domestic Sales Trends (Number

of
Vehicles)
Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Passenger 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776
Vehicles
Commercial 260,114 318,430 351,041 467,765 490,494 384,194 531,395
Vehicles
Three 284,078 307,862 359,920 403,910 364,781 349,727 440,368
Wheelers
Two 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231
Wheelers
Grand Total 6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

The figures show that the automobile sector in India has been growing robustly. The
Evolution of Automobile Industry
market shares of the different types of vehicles will clearly depict the demand pattern in
this sector.

Initial Years
Early to
Domestic mid 90s
Market Share for 2008-09
Manufacturing was licensed
Passenger Vehicles 15.96%
•Seller’s market and long
•High Customs duty on import Mid 90s – 2006.
Commercial Vehicles
waiting periods 3.95%
•Steep excise duties & •Buyers market
•Delicensing in 1993
•salesThree
tax Wheelers 3.6%
•Increase in Indigenization
Two Wheelers •Removal of capacity 76.49%
•2 Major players:
restrictions
Premier Automobiles Ltd •Easy Auto finance
& Hindustan
Evolution Of Motors
Automobile Industry
•Decrease in customs &
•Manufactures diversifying
excise
1980s into related activities:
finance lease, fleet
•Auto finance boom- more
•Entry of MUL, better product, management, insurance
players (foreign banks &
with government support and used car market
non banking companies,
better schemes. 11
•Seller’s Market

•Long Waiting Periods

Indian Passenger Car Market

Pre-liberalization

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The Indian passenger car market was characterized by Government protection for a
period of over four decades after independence. Prior to the 1990s, there was little
choice for the Indian consumer as there were only a few major automobile
manufacturers like Hindustan Motors, Premier Automobiles, and Maruti Udyog
Limited. Hindustan Motors’ ‘Ambassador’ had ruled the roads for nearly three decades.
The ruggedness, comfort, and spaciousness made the Ambassador immensely popular.
In 1982, the Government of India (GOI) entered into a joint venture with Suzuki Motor
Corporation (SMC) of Japan. MUL’s plant was established at Gurgaon in Haryana and
it rolled out its first model, the M-800 on December 14, 1983. It was the most
successful model of MUL and enjoyed a near-monopoly status till the mid-1990s

Post-liberalization

Liberalization of the Indian economy in 1991 and de-licensing of the passenger car
industry in 1993 paved way for the entry of global players like Hyundai, Ford, General
Motors, Toyota, Volkswagen, Daewoo, and Honda.

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Hyundai Motors, the Korean giant, entered India with its small car ‘Santro’ in direct
competition with MUL’s Zen. Santro’s sales picked up momentum and the model was a
huge success. Tata Engineering and Locomotive Company (renamed Tata Motors in
2003), which was primarily engaged in the production of commercial vehicles and
utility vehicles till the mid-1990s, rolled out its small car “Indica’ in 1998. Indica was
well received in the market and emerged as one of the prime competitors to MUL.

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Growth In Production

One of the largest industries in India, automotive industry has been witnessing
impressive growth during the last two decades. Abolition of licensing in 1991,
permitting automatic approval and successive liberalization of the sector over the years
have led to overall development of the automobile industry. The freeing of the industry
from restrictive environment, on the one hand, helped it to restructure, absorb new
technologies, align itself to global developments and realize its potential and on the
other hand, this has significantly increased industry's contribution to overall industrial
growth in the country. The automobile industry witnessed a growth of 19.35 percent in
April- July 2006 when compared to April- July 2005.

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 INDIAN PASSENGER VEHICLE GROWING DYNAMICALY

“Indian automobile sector has become synonymous to success. The passenger car
segment in particular is going great due to healthy economic conditions, easy
finance schemes and low ownership costs.”

RNCOS, the market research consulting services company, has recently launched an
exhaustive research report on the Indian auto sector -

India Automobile Sector - A Booming Market. The report has found that in the zooming
passenger vehicle market of India, passenger car is the dominating segment that
accounted for over 76% sales during 2006-07. According to the report, increase in car
sales in India has roughly followed the trend shown by personal disposable income. It
identifies rising incomes, low ownership costs, affordable prices, favorable finance
schemes, and rising buyer incentives as the factors that are pushing the sales up and will
continue to drive demand, thus taking the annual average growth in car sales to about
12% during 2007-08 to 2011-12.

Also, with Indian banks fixing the interest rates at 8-year high, automakers are
launching new models everyday and offering discounts on older ones to catch the fancy
of customers. Industry experts are of the view that new models are certainly spurring car

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sales and despite the escalating interest rates, demand is still picking up as most of the
Indian customers turn to finance services to buy vehicles (over 50% of vehicles sold in
the country are purchased on credit).

Also, healthy economic growth of the country is making the consumers richer, thus
encouraging them to invest in cars. Besides this, the report provides information on the
production, sales, export, investment, market drivers, new avenues, and challenges for
the Indian auto market.

According to the latest statistics released by the Society of Indian Automobile

Manufacturers (SIAM), in the initial quarter of this fiscal, consolidated sales of
passenger vehicles jumped over 12.9% by selling more than 3,48,800 units against
3,08,700 units sold during April-June 2006. Segment-wise, utility vehicles upped by
around 10.9%, MPVs (Multi-Purpose Vehicles) by nearly 23.5%, and passenger car
segment inched up by about 12.6% during April-June 2007 as compared to same period
in 2006.

June 2007 saw the Indian passenger vehicle market going strong with over 94000 units
sold against over 80700 units in June 2006, a straight growth of more than 16%. But
sales of commercial vehicles lagged behind by moving slightly over 4% to around
35,900 units in June this year from nearly 33,900 units.

THE GROWING LURE OF EXPORTS

NOT SURPRISINGLY automobile export shave also registered a robust growth in

recent years because of an improvement in their quality and their competitive prices.

Export of cars rose nearly six times in the six years ending2004-05 to cross 166,000.
While this is still a fraction compared to international auto giants, India has now

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emerged as the fastest growing car market in the world. With the level of investment in
the small car segment, the inherent strengths built up over the years can beleveraged to
achieve higher export volumes of such vehicles. This is particularly relevant now as the
overseas market for sub-compacts is also growing.Over 100,000 cars will be shipped
from India to Europe and Africa. The export surge comes close on the heels of India
overtaking Italy as the world's second largest manufacturing base for small cars in 2003.
Japan still leads with 1.82 million cars units in 2002-03but its market is shrinking, while
the Indian market is growing.

Hyundai alone is cranking up its annual export capacity so that by 2010 it can export
500,000 small cars like the Santro and the Getz from its production base in Chennai, in
southern India. Maruti and Tata Motors have not revealed their export plans. But even if
they maintain their ratio of small cars exports vis-a-vis Hyundai, they would be
exporting 350,000 cars and 250,000cars respectively by 2010. Combined with sales in
the domestic market, India could well make more than 2 million small cars by then.
India's export surge comes at a time. When the global auto industry is in a state of flux.
More than 40 per cent of the global capacity is un utilized, forcing global majors to shut
down uncompetitive plants and shift them to profitable locations. Jagdish Khattar, MD
of the country's largest car maker, Maruti Suzuki says, “Raw material costs don't change
between different locations, labour costs do. And in India, labour costs are very low
making it profitable for companies to shift manufacturing.”

India's prospects for export of vehicles has a parallel that can be emulated in the way
Thailand has emerged as a global production base for utility vehicles. Large investments
have poured into Thailand from the global big three — GM, Ford and Toyota — for
setting up manufacturing facilities that rolled out pick up trucks and sports and multi-
utility vehicles. The immediate threat to India's emergence as a hub for manufacture of
small cars could come from Thailand, which is also fast emerging as a manufacturer of
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other passenger vehicles including sedans and sub compacts. Exports are growing and
small cars are making there way all over the world.

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 Segment Wise Market Share

Three CVs
3.9% 4.03%
Growth Rates of different segments
Wheeler 13.44%

23.5
25
20
Passenger 15
14.3 14 14.2
11.3

R
vehicles

AG
10

4yearC
5
0
Commercial Passenger Two Three total
Two Wheeler Vehicles Vehicles wheelers wheelers Automobiles
78.63% Segments

•The industry has experienced much change in its structure over the last 6 years
•Tw o-wheelers form the major share of domestic sales
•Passenger vehicles lead the exports market(57.4%) and booming in its way
•2 w heelers form the bulk of exports.
•The growth in the two wheeler market is driven by the motorcycle market and is
expected to grow at 14-15 % YOY

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The Key Players In Automobile Industry

Others, 5.8%
Yamaha, Honda
Others, 5.73
3.8% Motors, 8.5%
Honda, 5.33

TVS Motors, Tata Motors,

17.7% 17.19
Maruti, 50.37
Hero Honda,
39.8%
Hyundai, 19.17

Bajaj Auto,
24.4%

Two wheeler Passenger vehicle

Commercial TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force
vehicles motors, Eicher Motors
Passenger TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra &
vehicle Mahindra, Daimler Chrysler, Hindustan Motors..but we can make out maruti is a
market leader w ith 50.37%
Tw o Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors

Three Wheeler Bajaj Auto, Piaggio India

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Indian auto sector uncertain of festival boost

New Delhi: India's top vehicle maker, Tata Motors said on Wednesday it does
not expect a sales surge during this year's festive season, and the government
said it was ready to help the sector sustain growth.

Leading passenger car manufacturer Maruti Udyog, 54 per cent owned by

Suzuki Motor Corp, said it would keep offering sales incentives but did expect
demand to pick up in the holiday period, which is now underway and runs
until the end of the year.

"Demand in festive season may not improve unless interest rates fall
significantly and stay low," Tata Motors Managing Director Ravi Kant said.

Automobile sales usually surge into the end of the year, when workers are
paid bonuses and firms lure buyers with discounts. This year, higher interest
rates have hit domestic demand as most customers take loans to buy cars and
trucks, while exports have been hit by the rupee's appreciation. "It has been a
double whammy for the auto industry," Kant said.

Tata Motors' passenger vehicles sales in August fell 5 per cent from a year
earlier and commercial vehicle sales fell 1.6 per cent. Maruti's sales rose an
annual 27 per cent in August, and the company said while it expected demand
to improve, it would offer incentives to both dealers and customers for now.

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Marketing Models Of Maruti Udyog

Six step model

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 MARTKETING STRATEGIES OF AUTOMOBILE INDUSTRY

 Target households that are 20% more likely to purchase your new
vehicle? 30%? 40%?

Now as we now the tendency for many people like to change car every 4 years
or say max 5 years now as every month companies are coming up wid new
models of there cars, and providing customer with better value for there money.
So as they keep customer base of all there customers they now human tendency
they call customer after say like 3 years and let them know about the schemes
for existing customers .so its quiet oblivious they target existing customers and
households who are morelikely to buy new car.

 Offer customers the right incentives to get them to visit your

dealerships and take a test drive?

Now it is very important to give proper and the best offers and give right
incentives to the customer Now over here they send prospectus of there new car
model with incentives and all other offer to there customer and they present in
such a manner that customer is attracted towards that model and comes for a test
drive of the same.one of the best and most successful way of selling car.

 Improve your direct mail response by mailing to fewer, better-

targeted households?

Now it is better to be mail to few people and better-targeted households and

reply back to those rather than mailing many people and then not able to
provide proper feedback to the queries of customers because of work load.

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  Target marketing and direct mail promotions for new vehicles before
you have customer purchase data?

Now over here target marketing is like suppose if u want to sell any particular
car for a month u should keep that in mind. So your target is fixed what u want
to sell and make a strategy for it Now as earlier discussed they have there
previous purchase data of there customers. So they track down mail address of
existing customers and provide information about the vehicle to targeted
customers. They send mails tell them to visit showroom and have a test –drive
and provide exchange schemes on there existing models.

Put your customer information to good use. The combination of your

customer data and segmentation and analysis tools allows the following:

Customer Acquisition and Retention - Identify your best customers so you

can find and keep more like them.

Direct Marketing - Improve direct mail lift and eliminate waste by targeting
customers with lifestyle and behavior segmentation data.

Market and Site Analysis - Determine where the hottest markets are.

Media Planning - Choose the appropriate media to reach your local and
national customers.

Establish an emotional attachment to the customer by offering them what

appeals to their individual lifestyles .

Track loyalty and understand who buys from the competition.

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Companies have started sponsoring reality shows for better visibility.

Now as we all know reality shows are making all time big in television and
entertainment industry. So now it is really a smart move by car companies to
gain visibility through reality shows. we all know reality shows are based on
voting system of audience and large number of crowd is following such reality
shows. Reality shows are becoming very famous and attracting the line of
sponsers for it.Reality shows are aired all over the world and there is huge
number of people seeing it.Now this was really a smart move by maruti as they
sponsored there new and attractive sx4 for Indian idol show. They gifted the car
to the winner of the show.

Now as per records the show was super-hit ompare to other reality shows. So it
was good for all sponsors as there sales where rising.

over-here we can see Indian idol finalist holding the key of sx4 gifted to them
by maruti sx4..and tell u he gt 7 crore votes from audience so great fan club.

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 Companies sponsors go-karting events

Go-karting events are really bomming up among young crowds. And that’s the
reason we see the craze for participating in go-karting events is on high. Well
it was not the case before 10 years back. But if somebody asks me today I
would say its growing like anytime high in few years. People have stared
taking interests in the sport and huge crowds turn up for such events. As a
reason seeing the craze in India even we got permission for f1 race by 2010 if
everything goes rite.But for sure car companies don’t want to miss chance of
the visibility they get in such compitions.

What's the best advertisement for an Indian auto company?

Tata Engineering is putting its money on the world's fastest Indian, Narain
Karthikeyan.

For the second year in a row, Narain Karthikeyan has been sponsored by Tata
Engineering as India's entry into the World Series motor car racing.

Last year, the Maruti Suzuki-sponsored Auto Cross rally had only 30 to 40
participants. This year, the demand was so great that it held three similar
rallies where 276 people participated.

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Is motor sport finally moving into the fast track in India? As the auto industry
becomes more competitive, the bigger companies are slowly putting money on
to the racetrack.

Already, Tata Racing, the motor sport division of the Tata group, is said to be
shelling out around Rs 3.5 crore (Rs 35 million) annually on Karthikeyan.
Maruti has an annual rally outlay of Rs 80 lakh (Rs 8 million).

Other car makers like Hyundai and Ford are keenly tracking the motor sport
market in India. And MRF Tyres and J K Tyres who have been at it for
decades have become more active.

"These manufacturers have brought in more money, and there's been at least a
three-fold increase in spends in the last four to five years," says Sanjay
Sharma, head of the JK Tyres' motor sports division.

Today, the market for motor sports in India is Rs 20 crore (Rs 200 million).

Mind you, that's chickenfeed for the motor sports industry where the cost of
running a team can be sky high. But there's no doubt that the big companies
are about to hit the accelerator and spend more.

Motorsports in India has come a long way from being just a sport for 'rich
kids' like the UB Group's flamboyant chairman Vijay Mallya or Vicky
Chandhok, who is now the Federation of Motor Sports Clubs of India
president.

In the mid-'70s, Mallya, a motor sports freak, provided the cash to establish
the McDowell Grand Prix. But automobile racing in the country still wasn't
run professionally and didn't have any corporate sponsors worth the name.

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 In 1980, with the establishment of the Himalayan Car Rally, things changed.
However, aspirations of making it at an international level were still several
pit stops away.

Companies enter market with the help of films

In terms of marketing strategies, Chevrolet Aveo found a unique way of

advertising by way of a Yash Raj Film Production, Tara rum pum.

The main objective behind was to popularize the product by twin motives
Youth and Family

In the first part of the movie, where the lead Actor Saif defines youth culture
in the form of Racing. Whereas In the next part of the movie he defends and
uses his car for saving his family, thus making him a family man. This is the
new revision that has been made and a new trend is noticed Automobile
companies are now looking for a more product unified approach rather than
just advertising banners and product displays.

Hoardings are put on on highways and roads

Now this is done before the car is going to launch say before 1 month so that
customer willing to buy car will wait for the option. And 1 major reason is to
bring the looks of cars in front of the customer.

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Advertising in news papers and magazines

In this companies advertise about the car in the business class news paper like
economic times and will give detail explanation about the features of cars,
keeping in what type of customer the car is made how is it worth money and
what it has to provide. And advertising in magazines related to cars like auto
cars.

After the launch media does the work

Once the car is launched during its day of launch they give ads in every
possible news paper, business magazines, car magazines, put hoardings.
Display cars in the malls. Now this is the time within a month it comes to
know wheatear the product is hot cake or not and if its then company will try
to sell more and more of that product.

Demo cars in dealers showrooms

During the first month of car launch customer who are interested comes to
dealers and take test-drives and see the features of cars. See the comfort it
provides. Compare the car within its segment and competitors cars see what it
has extra to give to customer and how much is the price of car is it worth
money.

30
Company decides same business strategy for all dealers.
Now the company decides the business strategy of the dealers its not the
dealer who can decide there business strategy .

Dealers has to strictly follow what company tells them to do.

E.g. if a company wants to sell there new launched car what they do is they
tell dealers to keep only the display of that car in the showroom so that if the
customer coming in for some other car will definitely have a look once on a
displayed car and may be that is the time when customer clicks. And the
dealers also try to sale the same model.

Company provides exchange offer to old customers

This is one of the most effective way adopted by the companies and very
successful marketing strategy which has helped company increase there sales.

Now in this what companies do is they see your old car and the condition of the
car and decides the price of your car and they tell u take a new car of ur choice
and make the adjustment. Now it helps customer is that they don’t need to go
anywhere so sell there car above that they get good exchange price and with
very minimum amount to pay they get the new car.And it also helps companies
to increase there car sales.

31
Car companies reach rural areas:

Rural India, with its poor and at times non-existent roads, has been dominated
by rugged multi-utility vehicles from Mahindra & Mahindra and the Tatas for a
long time. But in the past one year or so, car manufacturers like Maruti Udyog
(MUL) and Hyundai Motor India (HMI) have been trying to make inroads into
villages and small towns in an attempt to grow sales and maintain leadership
status in the domestic auto market.

The Indian rural market, heavily dependent on the monsoon as it is, is

undependable. But with the exception of the previous year, when the rains failed
in many regions, an unbroken record of successful monsoon years before have
resulted in substantially improved farming incomes in many parts of the
country.

According to a 2001 study conducted by the National Council for Applied

Economic Research (NCAER), there are as many ‘middle-income and above’
households in the rural areas as there are in the urban areas and about twice as
many ‘lower middle-income’ households.

At the highest income level there are 2.3 million urban households as against
1.6 million households in rural India. The study also says the number of middle-
and high-income households in rural India is expected to grow from 80 million
in 2001 to 111 million by 2007.

Enthused by studies of this kind, a number of fast-moving consumer goods

(FMCG) companies have been pushing consumer goods like refrigerators,
washing machines and colour televisions in rural areas quite successfully. But
car purchase entails significantly higher investment than consumer durables and
though MUL has been pushing ahead with its rural foray the going has not been
as good as hoped.

32
The Maruti game plan(COMPANY’S MAIN OBJECTIVES)

MUL managing director Jagdish Khattar admits that his company is having
trouble making progress in rural areas where despite poverty there are many
buyers. MUL was the first predominantly passenger carmaker to explore the
rural market for its entry level M-800. The company is making an all-out effort
to expand its consumer base in rural and semi-rural areas as its urban
marketshare is sliding.

MUL’s entry-level M800 has been seeing falling sales for the past three years or
more and last year its sales declined despite a price cut. The B segment with
cars like the Santro, Indica, Palio, Zen and the Alto began replacing the A
segment as the fastest-growing one in 1997. At the same time the Maruti 800
accounted for nearly 55 per cent of the total domestic passenger car sales.

At present, A, B and C segment cars account for 98 per cent of the passenger
car market with B and C segment accounting for 73 per cent. Thus, the A
segment now accounts for about 25 per cent of the market. Taking all its car
models together, MUL sold the highest number of cars in India last year but is
in a bit of a quandary regarding its M800, which many in the company feel still
has a future as an entry-level car.

33
But faced with falling urban sales, MUL’s concern is that if it continues to focus
on existing markets it could end up having to phase out the M-800. The other
choice it has is to try and find untapped markets. The rural market offers good
potential for growth given the rising aspiration and awareness levels of rural
consumers. It is also a good market for used cars that do not have Euro II
certification.

The main problem in rural areas is lack of financing facilities for automobiles.
Earlier this year, MUL removed this hurdle by entering into a tie-up with State
Bank of India (SBI) for financing car purchases in the remotest corners of the
country where the bank has its branches. With the tie-up, MUL obtained access
to SBI’s 14,000 branches and 120-million accountholders across the country.

Not only this, to make second-hand car purchase more attractive in small towns
and villages SBI and MUL have begun financing used-car sales at the same
interest rates, at 10.5-11.25 per cent, as on new car purchases. Most auto finance
companies charge at least 2-percentage points higher interest on used cars than
on new car purchases. SBI’s budget is about Rs 500 crore to finance Maruti car
purchases through this venture.

Says a Maruti spokesperson: “SBI has given us an extensive geographical reach.

Our sales outlets have increased tenfold. This will help us immensely in
expanding the four-wheeler family.”

At the same time, in an attempt to reinforce its rural foray, MUL has been
expanding its True Value network, its used car business, in semi-urban and rural
areas to market the car at very reasonable prices. The company is now offering
two- to four-year-old used M-800 models for below Rs 1 lakh at its True Value
outlets along with financing.

34
The company is also targeting to open additional 31 True Value outlets across
the country in the next one year, taking the total number to 50. Next, it is aiming
to get all its 183 authorised dealers, selling Maruti cars through 241 outlets, to
open at least one True Value outlet each within two years.

Maruti, Tata Motors win consumer confidence in TNS surve

Maruti Udyog has been rated the most trusted passenger car company of the
country while Tata Motors emerged the most trusted Indian company in the
commercial vehicle space.

In a study conducted by global research firm TNS, Maruti was followed by

Mahindra & Mahindra and Hyundai India in the consumer ranking of car
companies.

Hero Honda topped the charts in the TNS ranking of the two-wheeler segment.

Both Maruti and Hero Honda are seen as creating jobs and improving lives.
They were also commended for product safety.

The study named MRF as the most trusted company in tyres business and
Bharat Petroleum in fuel oils.

MRF, the TNS survey said, produced quality products with emphasis on
consumer safety while Bharat Petroleum has rooted business on more ethical
grounds. Tata Motors is appreciated for creating a sustainable future, TNS said.

Toyota is the global leader with highest ratings for manufacturing safe products,
promoting road safety and using innovation and technology to sustain the
environment with BMW coming second best and Honda third.

35
 Impact of Maruti Udyog

The introduction of the Maruti 800 in 1983, marked the beginning of a

revolution in the Indian automobile industry. Maruti Udyog brought in the latest
technology then available, more fuel-efficient cars, and brought down the prices
of cars in India. This led to the creation of a huge market for all car segments as
the Indian middle class grew in size. This in-turn brought in more players to this
segment. A number of auxiliary car parts making units were setup as most car
manufacturers realized it was more cost effective to make their car parts in India
rather than import them.

Maruti's most major influence was in helping the component industry in the
country because of its emphasis on localization and indigenization. As in the
beginning that sector hadn't grown much, Maruti had to start a dozen joint
ventures with Indian entrepreneurs. It got them foreign collaborations, which
led to collaborations for other manufacturers so that over a period of time the
whole component industry was able to upgrade itself and improve its quality.
Leading to a major existing export potential in vehicle components. It also
brought in better methods of financing that allowed more people, who given
their income levels could not afford to buy a car on their own. It still remains
the leader not only in terms of market share but also in customer satisfaction
surveys.

36
 Company information
Maruti Udyog, a joint venture between Suzuki of Japan and the Indian
government, has dominated India's automobile market by providing a wide
range of cars at affordable prices. In the late 1990s, as competition intensified, it
started losing its market share. A change in management control from the Indian
government to Suzuki, and intensive cost cutting and productivity improvement
initiatives helped the company to strengthen its competitive position. This case
covers the various restructuring activities undertaken by Maruti since the late
1990s.

Our policy is to be present in most segments, but our focus will be on small
cars. This country for a good number of years will be a small car market
because five million two-wheelers are sold and only six lakh cars. You have got
35-40 million two-wheelers on the road. They have to upgrade.

- Jagdish Khattar, CEO, Maruti.

37
TimeLine of Maruti Udyog Ltd

1970
 A private limited company named 'Maruti technical services
private limited' (MTSPL) launched on November 16, 1970. The
stated purpose of this company was to provide technical know-how
for the design, manufacture and assembly of "a wholly indigenous
motor car".

1971

 In June, A company called 'Maruti limited' was incorporated under

the Companies Act and Sanjay Gandhi became its first managing
director.

1981


The Indian Central government at the behest of Indira Gandhi
salvages Maruti limited and starts looking for an active
collaborator for this company.

Maruti Udyog Ltd was incorporated under the provisions of the
Indian Companies Act, 1956.

1986

 Maruti 800 ( New Model-796cc, hatchback Car)

 100,000 vehicles produced by the company.

1992
38
  Suzuki increases its stake in Maruti to 50 percent, making the
company a 50-50 JV with the Government of India the other stake
holder.

1994

 Esteem1.3L (1298cc, 3 box car) LX released in market, Maruti's

second sedan model. Produced the 1 millionth vehicle since the
production commenced. The first company in India to do so.

1995

 Esteem1.3L (1298 cc, 3 box car) VX released in market.

 Maruti 1000 production of Maruti 1000 stopped.
 Second plant opened , installed capacity reached 200,000 units

1996

 Five new models launched:

o Gypsy (E) (970cc, 4WD 8 seater)
o Omni (E) (796cc, MUV, 8 seater)
o Gypsy King (1298cc, 4WD, off road vehicle)
o Zen Automatic (993cc, hatchback car)
o Esteem 1.3L (1298 cc, 3 box Car) AX

1997

39
  Government nominated Mr. S.S.L.N. Bhaskarudu as the Manging
Director on August 27, as the then current Managing director,
R.C.Bhargava, was completing his tenure. Creating a conflict with
Suzuki.
 1998 Esteem (1299cc, 3 box car) LX, VX and AX models released.
 New Maruti 800 (796cc, hatchback Car) Standard and Deluxe
released the first change in design since 1986.
 Two million vehicles produced.

1999

 Six new releases:

o Maruti 800 EX ( 796cc, hatchback car)
o Zen VXi (993cc, hatchback car with power steering)
o Omni XL ( 796cc, MUV, high roof)
o Baleno (1600cc, 3 Box Car) released. Advertised as 'Maruti
Suzuki Baleno'
o Wagon R launched in market.

2000

 First car company in India to launch a Call Center for internal and
customer services.
 New Alto model released.

2001

40
  Zen LXi
 Maruti True Value launched in Bangalore and Delhi
 Maruti Versa, India’s first luxury multi-purpose vehicle launched.
 Alto Spin LXi, with electronic power steering
 Alto Vxi
 Customer information centers launched in Hyderabad, Bangalore
and Chennai

2002

 Esteem Diesel. All other variants upgraded

 Maruti Insurance. Two new subsidiaries started: Maruti Insurance
Distributor Services and Maruti Insurance Brokers Limited
 Alto Spin LXi, with electronic power steering
 Special edition of Maruti 800, India’s first colour-coordinated car
 Maruti True value in Mumbai
 Maruti Finance in Mumbai with 10 finance companies
 Suzuki Motor Corporation (SMC) increases its stake in Maruti to
54.2 percent.

2003

 New upgraded WagonR

 Enters into partnership with State Bank of India
 4 million vehicles Produced since start of production.
 Maruti Udyog Ltd is listed on BSE and NSE after a public issue,
which is oversubscribed 10 times.

2006

41
  The fiftieth lakh (5 millionth) car rolls out in April, 2005
 Growth in overall sales by 15.8%
 Suzuki Swift(1298cc 87 BHP 4Dr Hatch) Introduced into the
Indian Market

2007

 Maruti targets rural areas for there sales

 Increase in there sales of small car
 Zen reborn as zen estilo
 Comes up with there sedan model maruti sx4 to compete tith honda
city which a huge success.

Models of Maruti cars

42
 MODEL TYPE
Maruti 800 Small
 Maruti 800 STD BS III

 Maruti 800 AC BS III

Omni Small
 5 seater Maruti Omni
 8 seater Maruti Omni

 LPG Maruti Omni

Maruti Alto Small
 Alto
 Alto Lx

 Alto Lxi
Maruti Zen Estilo Mid-Size
 Maruti Zen Estilo Lx
 Maruti Zen Estilo Lxi

 Maruti Zen Estilo Vxi

Wagon R Mid-Size
 WagonR Lx
 WagonR Lxi
 WagonR Vxi

 WagonR Ax

43
Versa Mid-Size
 5 seater

 8 seater ( DX & DX2)

Maruti Esteem Mid-Size
 Maruti Esteem Lx
 Maruti Esteem Lxi

 Maruti Esteem Vxi

Baleno Mid-Size
 Baleno Sedan VXi

 Baleno Sedan LXi

Swift Mid-Size
 Swift LXi
 Swift VXi

 Swift ZXi
Maruti Zen Classic Mid-Size

Maruti Gypsy SUV

 Hard top

 Soft top
Maruti SX4 Mid-Size
 Maruti SX4 Vxi

 Maruti SX4 Zxi

Grand Vitara SUV

44
 AWAITED MODELS OF MARUTI MOTORS CARS
MODEL TYPE
Maruti Escudo SUV

Maruti targets rural India for sales

Maruti Udyog has started a marketing drive in villages and has entered into an
understanding with regional rural banks for car finance to push sales.

The company said it's rural drive is already showing results as it has already
sold 2,700 cars and generated about 20,000 enquiries through the rural scheme
that was started in April. Interestingly even in the rural hinterland, of the cars
sold under the scheme 50 per cent were Alto while about 23 per cent were
M800.

45
The company's success in penetrating rural India was based on its ability to rope
in regional rural banks as partners and for financing help from the company's
existing umbrella of car financiers including Mahindra Finance and
Magnum.Besides approaching the banks, MUL has also been innovating its
rural sales strategy by asking dealers to appoint rural sales executives (RSEs) to
build and maintain relationship with potential customers.

Marketing strategies of maruti udyog

Advertisements

Maruti does effective marketing through advertisement in television, radio,

newspapers etc.

Through radios they try to promote their product by organizing quiz contests
and the person who wins are offered a test drive.

Through television they promote their vehicle by showing the utility value, it s
comfort level in this way they try to endorse their product with the help of
celebrity which defiantely creates a great impact on people. The famous TV
serial “khulja sim sim” also featured maruti cars in its show.,

Thus marketing through advertising one of the important role of marketing.

46
Exchange offer :-

Maruti has also placed its step and made progress by marketing through
exchange offer , In this , it makes possible to leave and get it replaced for a new
one with barely some amount.

This is one of the greatest way to attract more and more customers and also
makes possible to increase sales.

Display what you want to sell

Now if u visit any of the maruti dealer showroom what you will notice is one
thing very similar is the display of a only one car in the showroom. Well this is
the strategy where if customers sees only a car he will definitely go and have a
look and here maruti can win one customer. Over here they set a target that in
this month we want to sell this many of cars of say zen estilo.

Tie up with many banks

To promote its bottom line growth, Maruti launched Maruti Finance in January
2002. Prior to the start of this service Maruti had started two joint ventures
Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide

respectively to assist its client in securing loan. Maruti tied up with ABN Amro
Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank,
and Sundaram to start this venture including its strategic partners in car finance.

Sbi maruti car loans

The country's largest bank and the largest car maker have joined hands to make
affordable car finance available to more and more people across the country.
The mega alliance makes car loans available at lower interest rates to a wider

47
section of people, with transparent terms and conditions. It is supported by the
unmatched combined network of SBI branches and Maruti outlets.

The Unbeatable Advantages of SBI-Maruti Car Loans

Two market leaders in their respective industries with trusted brand names.

Lowest interest rates

No processing fees or hidden costs to ensure transparency

Car loans available for diverse categories of customers including government

employees and agriculturists

More loan amount available as it is extended on the basis of the car's on-road
price, not ex showroom price.Longer loan repayment period -- upto seven years.

48
Swot analysis of Maruti udyog

Strengths: -
 Bigger name in the market.
 People trust name maruti udyog
 Maruti udyog is the market leader for now say around
decade.
 Has a great dealership chain in the market .
 Better after sales service
 Low maintenance cost of vehicle as parts are easily available
every where

Weakness
 Exports are not that good.
 Lesser diesel models in the market compare to others
 Global image is not that big

Opportunities

 Great opportunities to go global with

success of swift and sx4 all over.
 To enter into diesel cars market which is
growing
 Opportunity to grow bigger by entering
into bigger car markets
 Already a market leader so great
opportunity to be the king of market in every stage of industry.

49
Threats
 Foreign companies entering market so a bigger threat
from MNCs.
 To the market share as many big names are coming in the
industry
 There is hardly any diesel models , diesel cars which are
growing faster than petrol .
 No 1.5 lac car coming in.

50
India: The global small car hub

When Maruti Udyog Managing Director Jagdish Khattar announced at the eight
Auto Expo that his company will invest Rs 2,718 crore by 2007-08 to develop
new cars, the country took another firm step towards becoming a global
production hub for small cars.

With the government working on a favourable tax regime for small cars --
Finance Minister P Chidambaram talked about the need for special incentives
for small cars in September -- global automobile majors are investing thousands
of crores to make India a global production base for small cars.

Suzuki Motor Corporation, which owns 54.2 per cent of Maruti, leads the pack.
Suzuki is the leading player in the Japanese small car market and is putting its
money on India to ward off any competition.

The investment announced by Khattar is in addition to the Rs 3,200 crore the

company is investing in a new car plant and a diesel engine facility. Of the five
cars that Maruti plans to launch in the next five years, insiders say, at least three
may be small.

Hyundai, which posed the first challenge to Maruti's hegemony over small cars
in India way back in 1998, has already made the country a manufacturing hub
of sorts -- India is the only country in which Hyundai's Santro is manufactured.
And this is the reason why Hyundai is the biggest exporter of cars from India.

51
Toyota also has been working on a small car project, reportedly in collaboration
with its subsidiary, Daihatsu, which is known for its small car capability.
However, it could also be based on Toyota's own Yaris, a hot selling model in
Europe.

More is in the pipeline, thanks to Mahindra & Mahindra's tie-up with Renault of
France. And VolksWagen, too, is knocking on the doors. Fiat is planning to
revisit its small car strategy for India with the Grade Punto. All three are
volume players in Europe and have small car capabilities.

"India has fortunately developed the capability in manufacture of small cars. We

are better at cost control than anyone, anywhere in the world," Khattar told
Business Standard.

India can boast of world-class capabilities in the production of small cars owing
to its strong domestic market. Of the 800,000 cars sold in the country in 2005,
600,000 were small cars of engine capacity up to 1,300 cc.

And the market could just explode if Tata Motors succeeds in bringing out its
Rs 1-lakh car.

Other small car hotspots of the world are Japan, whose small car market is
about 1.5 million, and Brazil, which sells 700,000-800,000 small cars. All of
Europe sells about 500,000 small cars.

Then, there are the cost benefits of producing in India. Privately, several
automobile multinationals admit that they can produce cars in India at a third of
the cost in the US because of the high cost of labour there.

Also, the Indian components industry is more evolved than many other global
production centres. Most small cars in the country are highly indigenous. Tata
Motors, built its small car, the Indica, from scratch with locally produced parts.
52
To India's advantage, China -- driven by institutional buying -- has become
predominantly a big sedan market. Only recently, the Chinese government has
started pushing for small affordable cars for individuals and easy finance
schemes.

53
GOVT SMALL CAR POLICY

The Government's small car policy seems to be yielding results, with the share
of compact cars increasing to 68.25 per cent in the April-July 2006 period
compared with 64.9 per cent in the same period last year.

Not surprisingly, compact cars emerged as the main driver of passenger car
growth in the period. While the overall passenger car market increased by 24.86
per cent to 3,24,671 units, sales of compact cars jumped by 31.2 per cent to
2,21,598 units in the April-July 2006 period. In fact, all the three major
carmakers (Maruti Udyog, Hyundai Motor, and Tata Motors) saw a sizeable
jump in their compact car sales in the period.

In comparison, the growth in the midsize car segment (which consists of cars
such as the Maruti Esteem and Hyundai Accent) was slower at 14.7 per cent
despite the recent launches. This has made almost all automakers to rework
their strategy to capitalise on the increasing demand for compact cars. Industry
officials point out that a large majority of the new capacity that is coming up is
dedicated for the manufacture of small cars.

54
New line-up

While General Motors has announced plans to build a new plant in India next
year to make a small car, Japanese carmaker Nissan has tied up with Maruti to
launch a small car for the Indian market. Maruti itself is planning to launch a
new compact car and the diesel variant of the Swift this year.

Further, Japanese carmakers Honda, Toyota and Mitsubishi have also indicated
plans to roll out compact cars, while Hyundai may introduce another compact
car from its upcoming facility in India. In addition, Tata Motors small car
project is going on track and the company may also through its collaboration
with Fiat roll out more compact cars in the market. India is already the third
largest manufacturer of compact cars in the world.

The Indian Government had reduced the excise duty on small cars by eight per
cent in this year's Budget. Analysts point out that in addition to small cars
becoming more affordable after the excise cut, rising fuel costs could also be
contributing to the growing popularity of these cars in India.

However, these twin factors have failed to drive sales of compact cars in China,
the world's second largest car market. The Chinese Government, in a bid to
decrease energy consumption, had provided sops to small cars, effective April 1
this year, which increased the taxation on cars with larger engines and
decreased taxation on smaller cars.

In fact, growth in the overheated Chinese car market tapered off in June and
July, with sales growing by just 5.82 per cent and 5.39 per cent respectively.
Industry watchers point out the slowdown affected small car sales the most,
with sales of small cars declining by 24 per cent in June.

55
SMALL CARS ON ROLE:

MAJOR small-car manufacturers claim that the A-segment — the entry level,
that is — is dying. However, when it comes to absolute sales numbers, this
segment , monopolised by the Maruti 800, does not reflect such a claim. Of
course, this is not deterring the other manufacturers from pointing out that the
discerning buyer will soon zoom up to the higher, top-end of this segment.

It is the small-car segment that has attracted the most attention and investment
since the car industry was thrown open to competition in the late 1990s. As with
other sectors, competition from established overseas manufacturers has done a
world of good to the domestic industry. Competition has ensured that the small-
car buyer's expectations and aspirations evolved constantly and this is likely to
become better in the years to come.

Says the Hyundai Motor India president, Mr B. V. R. Subbu: "The entry-level

small-car segment will fade away. Buyers in that segment will migrate to the
used-car market and will be able to find better bargains there." Some of the
other manufacturers too share this view. Statistics show an increasing number of
used-car deals in the country.

56
However, MUL officials do not foresee such bleak prospects for the M800.
They feel that while there is the possibility of the demand for the car shifting
from customers in the metros to those in the suburbs and the rural areas, there
will always be a section which would want to upgrade from the two-wheeler.

Maruti's competitors are not just writing the epitaph for the M800, but are
readying with shovels. The domestic car industry, which has been carved into
sub-segments based on the price, is expected to see another round of sub-
segmentation when a slew of new, globally popular small cars (sub-compacts as
they are called worldwide) are launched in the next two years.

Already, a number of manufacturers have announced plans for a foray into the
increasingly crowded small-car segment. But the lure for every one is the
prospect of a dramatic increase in volumes. Saddled as they are with excess
capacities, this alone should be a tantalising proposition. Many of the
manufacturers have matured after their initial experience in the Indian market.
The possibility of creating a new sub-segment within the small-car segment, in
the price band of Rs 4- 6 lakh, appears too attractive to ignore.

Further, international trends indicate a distinct shift towards smaller cars,

especially in Europe, where ease of use in cities with high vehicular density and
increased environment consciousness have led to increased demand for small
cars.

And so is the case in Japan, where carmakers have been making small cars for
the domestic market to enable users to get special privileges from the
government.

57
Round Two of the small-car war will be fought in the next 2-3 years. New
entrants into this segment could be Honda with its sub-compact Jazz, or Honda
Life as it is called in other markets; Ford India with either the Fusion or the
Fiesta; GM with its Chevrolet Cruze, that it has developed jointly with Suzuki
Motor Company of Japan; and Toyota with the mystery vehicle it is specially
building for the Indian market. The manufacturers already in the small-car
market are also likely to launch new models. Expect one each from Maruti and
Hyundai Motor India within the next year.

Suzuki (through MUL) is likely to introduce the Liana or the MR Wagon and
Hyundai could line up the Getz or the Matrix. All these cars are likely to be in
the Rs 4-6 lakh band, effectively creating a new sub-segment straddling the
current crop of small cars and the mid-sizers.

In fact, this is precisely why many of the manufacturers are taking time to
launch them. Cost and pricing are important issues that must be tackled before
these vehicles are rolled out. But many of the manufacturers are hoping that
there will be a distinct shift in favour of the new sub-segment, just like the
migration of demand that took place when the current bunch of B segment cars
were launched in 1999 and 2000.

Small is beautiful for India:

58
PUNE: According to a study conducted jointly by IBM and the University of
Michigan Transportation Research Institute, India’s stature as a global compact
car hub will be focused on the B-segment hatchbacks and small C-segment
sedans rather than the Rs 1 lakh segment.

And it is India’s already famed frugal manufacturing skills that will be coveted
by global auto companies as they set up sourcing and manufacturing shop in
this part of the world

The Indian automobile industry is estimated to be worth US $ 45 billion,

contributes 5 per cent of the country’s GDP, produces 9.5 million vehicles and
employs 3 million people, either directly or indirectly.
Given this size, it has global ambitions, and these are not the dreams of just the
home-grown domestic players but also those global majors who have set up
plants here. With the dominance of the small car, all of them are looking at
developing their own product for this segment.

So, how viable is India’s dream of being a global manufacturing hub for a small
car? Pretty good, going by the findings of `Inside India: Indians view their

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automotive industry’, a study conducted jointly by IBM and the University of
Michigan Transportation Research Institute (UMTRI). Most players are betting
on the entry level B and C segment cars rather than on the Rs 1 lakh (US $
2,500) car.

“Indian and foreign manufacturers and suppliers are focused on making India
the centre of expertise for these small, inexpensive vehicles... and if India
becomes home to the recognised global experts in two-wheelers and small cars,
it will position India to export more globally,” the report notes.

The report is based on interviews with 29 senior executives from the automotive
industry conducted late last year. IBM and UMTRI have done similar report on
the Chinese automotive industry, `Inside China: The Chinese view their
automotive industry’.
Sanjay D Rishi, global leader, automotive industry, global business services,
IBM, said, “Remove the Rs. 1 lakh car and the global automotive industry sees
India as a hub for the manufacture of small cars.”

Mahesh Lunani, partner, automotive strategy and change practice leader, global
business services, IBM, added that the most attractive segments for manufacture
in India would be the lower B and C segments.

While global automotive manufacturers have, in the past, used the joint venture
route for market access into India, the value that Indian partners can offer
overseas players is decreasing.
This is why manufacturers coming now are setting up wholly-owned
companies. But the Indian partner can still offer value, in the form of cultural
inputs, Lunani remarked.

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“The Indian partner offers a cultural mindset, beyond market access. The Indian
manufacturer has the mindset of low cost, high quality production and these
skill sets are needed by the MNC. These skills cannot be recruited: they are
management inputs,” he said.
He cited the example of a global luxury car maker who wanted to know how
Tata Motors made their seat belts at the cost they did. Wringing the cost out of
the process is part of the mind set.

Having said the good things, the report turns to the problem areas: that Indian
companies do not invest in research and development.
This leaves them dependent on JV partners with Indian partners complaining
their foreign partners withhold important knowledge and technology.

The choice for the Indian companies then is to either develop technology in-
house or, like the Chinese, go and buy it. Indian companies have not yet reached
that level of buying, as the Chinese bought MG Rover, for instance.

The reluctance on the part of the foreign partner in sharing proprietary

technology is the lower cost product thus manufactured, using technology on
which a lot of time and money have been invested, could then find its way back
into the home market, Benjamin T Stanley, senior strategic analyst, automotive
industry business consulting services, IBM, said.
“This will mean the MNC manufacturer competes with his own product in his
home market,” Stanley pointed out.

Automotive R&D is a high investment area and indications are that Indian
companies do not have the stomach for such investments. A new vehicle
programme, for instance, requires investments upto $ 1 billion and could take,
for an Indian company, upto $ 250 million.

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“Is there an appetite in the Indian automotive manufacturer for this kind of
investment? The cost is beyond the grasp of some Indian OEMs,” Rishi said.
Moreover, this investment will not give any return for three years or so, a
situation no Indian company can afford.

SMALL CARS BOOMMING LETTING THE A SEGMENTS CAR

DYING:

MAJOR small-car manufacturers claim that the A-segment — the entry level,
that is — is dying. However, when it comes to absolute sales numbers, this
segment , monopolised by the Maruti 800, does not reflect such a claim. Of
course, this is not deterring the other manufacturers from pointing out that the
discerning buyer will soon zoom up to the higher, top-end of this segment.

It is the small-car segment that has attracted the most attention and investment
since the car industry was thrown open to competition in the late 1990s. As with
other sectors, competition from established overseas manufacturers has done a
world of good to the domestic industry. Competition has ensured that the small-
car buyer's expectations and aspirations evolved constantly and this is likely to
become better in the years to come.

Says the Hyundai Motor India president, Mr B. V. R. Subbu: "The entry-level

small-car segment will fade away. Buyers in that segment will migrate to the
used-car market and will be able to find better bargains there."

Some of the other manufacturers too share this view. Statistics show an
increasing number of used-car deals in the country. However, MUL officials do
not foresee such bleak prospects for the M800. They feel that while there is the
possibility of the demand for the car shifting from customers in the metros to

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those in the suburbs and the rural areas, there will always be a section which
would want to upgrade from the two-wheeler.

Maruti's competitors are not just writing the epitaph for the M800, but are
readying with shovels. The domestic car industry, which has been carved into
sub-segments based on the price, is expected to see another round of sub-
segmentation when a slew of new, globally popular small cars (sub-compacts as
they are called worldwide) are launched in the next two years.

Already, a number of manufacturers have announced plans for a foray into the
increasingly crowded small-car segment. But the lure for every one is the
prospect of a dramatic increase in volumes. Saddled as they are with excess
capacities, this alone should be a tantalising proposition. Many of the
manufacturers have matured after their initial experience in the Indian market.
The possibility of creating a new sub-segment within the small-car segment, in
the price band of Rs 4- 6 lakh, appears too attractive to ignore.

Further, international trends indicate a distinct shift towards smaller cars,

especially in Europe, where ease of use in cities with high vehicular density and
increased environment consciousness have led to increased demand for small
cars.

And so is the case in Japan, where carmakers have been making small cars for
the domestic market to enable users to get special privileges from the
government.

Round Two of the small-car war will be fought in the next 2-3 years. New
entrants into this segment could be Honda with its sub-compact Jazz, or Honda
Life as it is called in other markets; Ford India with either the Fusion or the
Fiesta; GM with its Chevrolet Cruze, that it has developed jointly with Suzuki
Motor Company of Japan; and Toyota with the mystery vehicle it is specially

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building for the Indian market. The manufacturers already in the small-car
market are also likely to launch new models. Expect one each from Maruti and
Hyundai Motor India within the next year.

Suzuki (through MUL) is likely to introduce the Liana or the MR Wagon and
Hyundai could line up the Getz or the Matrix. All these cars are likely to be in
the Rs 4-6 lakh band, effectively creating a new sub-segment straddling the
current crop of small cars and the mid-sizers.

In fact, this is precisely why many of the manufacturers are taking time to
launch them. Cost and pricing are important issues that must be tackled before
these vehicles are rolled out.

But many of the manufacturers are hoping that there will be a distinct shift in
favour of the new sub-segment, just like the migration of demand that took
place when the current bunch of B segment cars were launched in 1999 and
2000.

Used car market in India

Buying a second hand car has a lot of advantages. The cost of car is
significantly lower than new car, the depreciation is lesser, the loans are easier

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and to top it is readily available. According to a recent estimate the used car
market demand is 1.4 million cars annually.

Interestingly, at least 90 percent of the used car market remains unorganized,

while the organized market is a mere 10 percent. In the unorganized sector, used
car vendors constitute 30 percent, while majority of selling/buying car is carried
out between buyer and customer. The volume of these transactions is very huge,
but within the limits of law. The direct transactions are done between two
individuals who are known to each other.

But consumers should beware that this sector is susceptible to individual

impulse and fancies. The pricing, claims for maintenances, and clear ownership
records and others can be fabricated. People like mechanics who check the
vehicle and middlemen who handle the deal can influence a decision. For first
timers who have no clear idea of cars, are gullible victims to unscrupulous car
seller who want to sell their old cars for good price.

The second hand car sellers too can trick the buyers who go looking for a good
car but end owning damaged cars. It has been noted that second hand car
dealers use fake parts or sub-standard equipments to offer an attractive price.
The second hand car dealer make anywhere from 5-10 percent by settling the
deal through low quality parts. It has been the experience of many a car owners
who brought cars from second hand car dealers that they had to spend a
handsome amount on repairs.

However, this should not deter second hand car buyers - as most car owners
want to sell of their well maintained cars and upgrade to bigger cars. Also
second hand cars are valued lower than new cars. Hence the loan amount will

65
be considerably lesser. Also they do not undergo the rapid depreciation in value
compared to new cars and they can be customized to owner’s preference.

A second hand car has a lot of promises, but falls short of few things that new
car gets, -warranties, OEM equipments, insurance and taxes. This is where car
manufacturers have ventured to bring in a system of checks and balances. The
certified used car outlets monitored by car manufacturers offer a good deal with
peace of mind.

For the sellers, the certified use car outlets offer the best market price, thorough
assessment by experts, and an option to choose any other car from the
manufacturer portfolio. For the buyers, these outlets offer a lot more- warranty
(depending on the outlet brand), insurance, assistance taxes, repairs make use of
OEM parts and meets high quality standards and thorough check up by trained
technicians. To top it the buyer gets to own a car at attractive price after
dealer/manufacturer discounts.

Some of the well known certified used car dealers in India are – Maruti
TrueValue, Honda Auto Terrace, Ford Assured, Toyota U Trust, Hyundai
Advantage, Mahindra and Mahindra’s First Choice and many more are yet
come to India. The branded used car chains have realized the potential for used
car market.

Some industry watchers predict that 50 percent of the used cars sales will be
brought under organized car market by 2013. Mahindra plans to increase its
numbers to 300 outlets in five year’s time. Maruti TrueValue already has 270
outlets and plans to increase them a few hundred more in five years. Other car

66
manufacturers plan the same. Used car outlets will spread into II tier cities in
the next couple of year.

Car manufacturers’ have realized fast that the used car market can generate
large revenue. Leading car players say that their used car ventures are paying
handsome dividends. Hence the companies are now making it mandatory for
their dealers to run used car outlets also.

The branded used car outlets are now dealing in multiple brands. They know
that they can win over customer loyalty by offering one-stop shop for all
queries. They are offering not only assistance in sales and buying, but in
offering finances, insurance and many other services.

Global Car Manufacters Eye Indian Market

Global car manufacturers eyeing the explosive growth of the Indian market
unveiled new compact models at the Delhi auto show Tuesday as they seek to

67
break the dominance of entrenched local producers.

Japanese groups Toyota and Honda, Germany's Volkswagen and US giant

General Motors (GM) put new vehicles on show designed for the growing car-
buying middle classes with modest budgets and for the country's notoriously
bad roads.

All models face a challenge in a market growing at more than 10 percent a year
due to the dominance of local Indo-Japanese producer Maruti Suzuki, which has
a 55-percent market share, and Indian groups Tata Motors and Mahindra.
"In terms of total volume of sales we are not a big player, but this will change
it," Volkswagen India marketing manager Lutz Kothe told.
The compact hatchback from VW, which wants a 8-10 percent market share by
2016, will hit the roads in March at an as yet undisclosed price.
This year's Delhi auto show is the 10th, but it first caught the world's attention
in 2008 when Indian manufacturer Tata Motors unveiled its Nano, the world's
cheapest car. The 115,000-rupee (2,500-dollar) Nano added impetus to the race
to produce cheap, small vehicles, which account for 80 percent of all car sales in
India.

Recent months have seen foreign giants Ford, Hyundai and Renault join a
stampede to India, where each has promised a small, cheap model designed for
what Ford boss Alan Mulally termed the "sweet spot" of the market.

Rising incomes mean Indians are following the familiar pattern of upgrading
their transport from push bikes, to motorbikes, then to cars, but the vast majority
of vehicle sales are still two-wheelers .This is set to change, says GM India
chief Karl Slym, who cites figures showing 8.5 cars per 1,000 people in India,

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20 per 1,000 in China and more than 500 per 1,000 in developed countries such
as Germany or the US.

Car ownership is rising fast and Maruti will see its market share cut back in the
face of pressure from foreign and domestic competition, Slym says.
"I think everybody used to wake up and say 'I'm going to buy a Maruti', but
times are changing," the GM India boss told AFP. "People are now looking for
the best value proposition on the market."
India's market has gone from a largely closed one two decades ago when
consumers had only a couple of locally-made alternatives to one offering a
plethora of choices amid fierce competition.

Total car sales are forecast to reach two million this year and triple in the next
decade, according to industry estimates. AutoExpo 2010, which runs in New
Delhi until January 11, features 10 global releases of vehicles designed for
India's new consumer generation.

Japan's Toyota took the wraps off its first compact model designed for India,
which has adapted suspension for the rough roads, plenty of storage space for
large families and an engine made with city driving in mind.
The Etios will probably be launched later this year, the company said, at a price
-so far undisclosed- that will attract young professionals and families.
Toyota's plan is to export it from India, which, though lacking in important
infrastructure such as cutting-edge ports, is fast developing as a small-car
production hub.
"It's not a copy of a Japanese or European model," said Kazuo Okamoto, vice
chairman of Toyota, at the presentation. "Etios is newly developed for
customers in India."

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Honda unveiled its first small car concept model that it aims to start selling next
year, while GM put on show its new 7,000-dollar Beat model and a new mini
electric vehicle called the e-Spark.

Maruti Suzuki -majority owned by Japan's Suzuki in which Volkswagen intends

to buy a nearly 20 percent stake- said it was aware of the pressure on its market
share.
"We are trying to expand our portfolio and refresh our products to offer
customers new cars," said I.V. Rao, senior director at the group, when asked
about the competition.

RESEARCH METHODOLOGY:

INSTRUMENTATION:

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 SOURCES OF DATA COLLECTION

PRIMARY:
For my survey primary data have been used as a questionnaire to
collect the data.

SECONDARY :
The secondary date has been collected from the following modes:
● Magazines
● Data through internet sources

RESEARCH DESIGN
Research Design is the arrangement for conditioned for data collection &
analysis of data in a manner that aims to combined relevance to research
purpose with economy in procedure.

A research design is a master plan or model for the conduct of formal

investigation. It is blue print that is followed in completing study.

THE research conducted by me

Is a descriptive research. This is descriptive in nature because study is focused
on fact finding investigation in a well structured form and is based on primary
data.

RESEARCH PLAN
 Type of study: For completing my study I have gone for sample study
because looking at the size of population & the time limitation it was not

71
 convenient for me to cover entire population. Hence I have gone for
sample study rather than census study.

SAMPLING PLAN
A sample design is a definite plan for obtaining a sample from a given
population. It refers to the technique or the procedure that researcher would
adopt in selecting items from sample. Sampling plan may as well lay down the
member of items to be inched in the sample i.e. the size of sample. Sampling
plan is determined before data are collected.

STEPS IN SAMPLING PLAN

Sampling frame :
The list of sampling units from which sample is taken is called sampling frame.
MUMBAI city map was studied thoroughly and samples were selected from the
places in a scattered manner to get effective result.

SAMPLING SIZE:
Total sample size is 300 .The following sample size according mumbai

SAMPLING PROCEDURE:
The selection of respondents were accordingly to be in a right place at a right
time and so the sampling were quite easy to measure, evaluate and co-operative.
It was a randomly area sampling method that attempts to obtain the sample of
convenient elements.

FIELD WORK:

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I have collected the data through medium called questionaire collecting the
responses from 300 people in all. I had done my field work in the following
area.
Pl type list of are according of mumbai
I started my project very first educating the respondents about my entire
project, and ask them to co-operate with me. Mostly all the respondent were
aware of this type of surveys. So I didn’t face any type of difficulty during my
project in the process of explaining and taking there responses on the
questionnaire.

INTERPRETATION AND ANALYSIS

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Table : 1

GENDERWISE BI-FURCATION

NO. FREQUENCY PERCENTAGE

MALE 245 81.67

FEMALE 55 18.33

TOTAL 300 100%

Graph : 1

The above mention graph which clearly states that out of 300 respondents ,
245 are Male and 55 respondents are Female .

Table : 2

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AGE DISTRIBUTION

NO. FREQUENCY PERCENTAGE

18-30 100 33.00

30-50 150 50.00
Above 50 50 17.00

Graph : 2

There are more customers in the age group of 30-50 and 18-30 covered
under this study. Percentage wise graph has given here.

Graph : 3

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Do u like Maruti or not :

From the above graph we can see that there are 90.66% respondents like
Maruti” car. in that respondents who do not want to go for “Maruti” but even
they like “Maruti” are also covered, very few respondents with 9.33% has given
negative response to the “Maruti” and it is very less compare to overall sample
size.

INTERPRETATION OF RESULTS:

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 I have found in my study that most of the respondents who like to go for
Maruti” belongs to income group of 5000 to 15000, so it can be said that
“Maruti” will be most welcome by this income group of people.

 Most of the respondents who belongs to the Private Sector or Govt.

Sector having greater acceptancy level for “Maruti” in Mumbai city and
they would also like to go for “Maruti”.I have found that all the
respondents of Mumbai City which covered under my study are well
aware about Maruti”.

 In my study I have found that above 90% of respondents like the Maruti”
car. Those respondents who would not like to go for “NANO”, they are
also like the Maruti” for various reason like affordability, brand name,
shape/design this shows the preference of the respondents in Mumbai
city.

 More than half of the respondents would like to buy “Maruti” in next 1 to
2 year. Respondents who like to buy “Maruti” are curiously waiting for
its launching, respondents like to go for “Maruti” as it’s most affordable
cost and of course due to its Brand Name that is Maruti.

 Respondents also prefer “Maruti” due to its promise of good mileage

about 21KM/Litre so, if Maruti will fulfill the promise and if
continuously maintain the mileage of its car the Maruti than it’ll surely
helpful to attract more customer.

 Respondents who are preferring the second hand car , after the launching
of Maruti’s Rs. 3lakh car the “Maruti”, they would also like to go for

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 “Maruti” due to its low cost and of course due to its attractive shape and
design , its newness as compare to second hand car.

 More than half of the respondents believe that “Maruti” is their Dream
Car, so it shows Maruti car will be warmly welcome by the people of
Mumbai City.

CONCLUSION:

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 During my study I done a project on perception of people on Maruti car
in Mumbai city. I had learn a lot and get opportunity to know what consumer
actually thinks and what they perceive about Maruti because I had done field
work and I was in between the people only. I gain a practical knowledge which
I haven’t get any where.

I had used a Questionnaire as a tool through which I had gathered a lot of

information. I fill up 300 questionnaire from the 9 areas of Mumbai city, under
my study I have covered different class of people to know their perception and
acceptance level for “Maruti”. I analyze from my questionnaire that 100%
respondents aware from the TATA’s upcoming “Maruti” car, and out of 300
respondents 90% respondents like the “Maruti”. I also found that 71% of
respondents would like to buy “Maruti” in next 1 to 2 year, It shows the
acceptance level of the people of Mumbai city and it’s good sign Maruti Brand.
Respondents who like the “Maruti” or want to buy are preferring the “Maruti”
due to its Affordability and Brand Name.

All this information will be benefited to know the Perception and

Acceptance level of people in Mumbai City. It can be also benefited to the
Maruti as I had mention all the likes and dislikes of the respondents in my
Study.

WIBILOGRAPHY :
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http://www.marutimotors.com

http://www.autocarindia.com

http://www.ugsindia.com

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