INDUSTRY: AUTOMOTIVE

The Indian automobile industry has come a long way since its launch in erstwhile Bombay in
1898. Presently, the automotive sector is a major contributor to the Indian economy in terms of
both revenue and employment. The Indian automotive industry comprises heavy vehicles,
passenger vehicles and two-wheelers.

Due to the rise in the middle class and young population, the automobile industry has seen
strong growth in the past decade. Many international players have entered the Indian market.
Low-cost steel production, robust R&D facilities, availability of skilled labour at cheaper prices
and the various reforms made by Indian government to support the industry has been a major
driver in the turnaround of the industry.

Here are the key insights about this industry:

● India became the fifth largest auto market in 2019 with sales reaching 3.81 million units.
● It was the seventh largest manufacturer of commercial vehicles in 2019.
● It is expected to be the world's third-largest automotive market in terms of volume by
2026.
● The current $118 billion Automobile industry is expected to reach $300 billion by 2026.
● Overall, automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of
6.94 per cent during FY16-FY20.
 ● Two wheelers made up 73.9 per cent of the vehicles exported, followed by passenger
vehicles at 14.2 per cent, three wheelers at 10.5 percent and commercial vehicles at 1.3
per cent.

However, in the last one year the Automobile Industry has switched to reverse gear mode.
Sales of vehicles witnessed the steepest fall in nearly 19 years with numbers reducing to 18.5
lakh units, down from about 22.45 lakh units, a year ago. The industry is finding it hard to adjust
to the emerging challenges in an increasingly competitive industry.

Key Players:

• Tata Motors is one of the leading Automobile Companies in India and the world, providing
mobility solutions to over 175 countries. The portfolio includes a wide range of cars, utility
vehicles, trucks, and buses. They generate revenue over Rs 296,917 Cr. Tata Motors is the
leader in India’s commercial vehicle market with a market share of 45.1% and 6.3% im
passenger vehicles and sales of 4,68,788 vehicles in FY 2018-19.
• Maruti Suzuki India Ltd is the market leader in the passenger vehicles segment. Maruti is
the Second largest automobile company in India by the revenue of Rs 83,281 Cr. Maruti
Suzuki is the largest car company in India based on Market share, they own 53% shares for
passenger vehicles.
• Hero Motocorp Ltd was the World’s largest two-wheeler manufacturer in 2001, in terms of
unit volume sales in a calendar year and has maintained the coveted title for the past 18
consecutive years. With over 90 million satisfied customers across the globe. They generate
a revenue of Rs 32,871 Cr. Hero MotoCorp is the dominant market leader in India – the
world’s largest two-wheeler market – with over 50% share in the domestic motorcycle
market.

The Company:

XYZ limited, an international automobile manufacturer, is considering entering the Indian market
with their cars' range by Jan 2021. It is a reputed company in many international markets with
their SUVs, passenger vehicles, and two wheeled motorcycles. They have also branched out
into making electronic vehicles to cater to the eco-friendlier customer base. They have
revolutionized the automobile industry with their innovative mass production system and lean
manufacturing system.

The growing need of customer preferences over the car models is playing a major role in the
industry with the company known for their innovative models. The company is ready to invest
1.2 bn euros with an intention to achieve 10% market share by 2030, an ambitious target for a
new brand entering India.

As a part of the top management of the company, you have to understand whether it makes
sense for the company to enter Indian markets in these challenging times or not.
What you need to do:

1. Share Business Market Analysis.

● What are the consumer segments that will take interest in buying XYZ’s cars?
● How will the company differentiate itself from the players active in the Indian
market for decades?
● Can they come forward as a socially responsible company to win share of heart?

2. What should be the Go-to Market strategy of the company?

● From their diverse portfolio, which products should they consider launching in
India?
● Test drives and salesperson's guidance is given high importance by the Indian
consumers. But covid-19 has made that difficult now. What are the innovative
ways for the company to engage with the consumers who move up the funnel
from awareness stage?

3. Also provide details on what should be the economics of each strategy suggested by
you in terms of - “Investments and Returns”.

Wishing you all the best!