Report On Automobile Sector

Submitted On 11-FEB-2011 Submitted To Prof.T.J.Joseph Submitted By Group-8 Sithara ShriHari Thilak Babu Meghana Bhagavan
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Naveen Kumar Reddy Faraz Mohammed Ismail

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We are thankful to Prof.T.J.Joseph for providing us the task of preparing the report on Automobile Sector in India. We believe in taking challenges and the report provided us the opportunity to tackle a practical challenge in the subject of Research Methodology (Industrial Analysis). This report tested our patience at every step of preparation but the courage provided by our teachers helped us to swim against the tide and move against the wind. We are also thankful to our friends and parents for providing us help at every step of preparation of the report.

With Regards Naveen Kumar Reddy Meghana Bhagavan Thilak Babu ShriHari Sithara Faraz Mohammed Ismail

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Objectives of the Report

- Study of the Indian automobile industry structure. - Analysis of performance of industry sub-segments and their future outlook. - Understanding the Indian auto component market and its growth aspects. - Evaluation of factors fuelling growth in the Indian automobile market. - Discussion of the forces countering the market growth. - Identification of future prospects for the Indian automobile industry

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Contents Introduction----------------------------------------------------------------------------------------6 Features of Automobile industry---------------------------------------------------------------.7 Industry Environment PEST Analysis--------------------------------------------------------------------------------------8 Domestic Automobile Sales Trends------------------------------------------------------------10 Global Comparison of industry-----------------------------------------------------------------12 Industry Structure-------------------------------------------------------------------------------12 Market share of each segment-------------------------------------------------------------------13 Differentiation Practised by various Players--------------------------------------------------15 Barriers in automobile industry-----------------------------------------------------------------18 Industry Concentration --------------------------------------------------------------------------19 Conduct and Practises--------------------------------------------------------------------------20 Industry Conduct----------------------------------------------------------------------------------21 Industry & Firm level Practises------------------------------------------------------------------22 Advertising Intensity------------------------------------------------------------------------------29 Technology Intensity-----------------------------------------------------------------------------30 Foreign Exposure----------------------------------------------------------------------------------33 Leverage of the firm------------------------------------------------------------------------------35 Working Capital Ratio----------------------------------------------------------------------------38 Performance Analysis---------------------------------------------------------------------------38 Analysis of Competition-------------------------------------------------------------------------39 SWOT Analysis-----------------------------------------------------------------------------------40 Conclusion ----------------------------------------------------------------------------------------41 References-----------------------------------------------------------------------------------------42 5| Page .

Telecommunications in the country this growth is due to liberalization in 1991 by Prime Minister P.The liberalization also allows foreign players to invest in various sectors which lead to increase in jobs thus disposable income increases which in turn increases purchasing power parity that leads to increase in sales of automobiles year-on-year 6| Page .V Narasimharao this liberalization which allows foreign players to operate in India leads to increase in investment in automobile sector thus provides more jobs in India . infrastructure.Abstract: The automobile industry in India is one of the fastest growing sectors along with IT.

4% which is one of the sectors to provide more employment 7| Page . Automobile sector in India increases because of easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry and also with new and fuel efficient models. resulting in heightened automobile production. Due to this large contribution of the industry in the national economy. This took the Indian automobile production from 5. The other reasons attracting global auto manufacturers to India are the country’s large middle class population.000 population in 2008).4 in commercial vehicles.000 people. De-licensing in 1991 has put the Indian automobile industry on a new growth track.India holds a 10th position in the entire world with being no.Introduction: Indian automobile industry is one of the giant industries in Indian market since 1898.D. the demand for passenger cars and commercial vehicles will increase with industrial development. the Indian automotive industry provided direct employment to more than 300.P is 8. growing earning power.8 Million Units in 2007-08. In 2009-2010 the automobile contribution to G. when the cars touched the Indian streets for the first time The automobile industry in India is the 7th largest in the world with an annual production of over 36 million units in 2010.87 Billion. In 2006-07. attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. Also. and contributed 5% to the GDP.1 in two wheelers and no. as India has low vehicle presence (with passenger car stock of only around 11 per 1. strong technological capability and availability of trained manpower at competitive prices The Indian automobile market is currently dominated by two-wheeler segment but in future. it possesses substantial potential for growth.3 Million Units in 2001-02 to 10. which attracted global to the Indian market to establish their plants. the Indian government lifted the requirement of forging joint ventures for foreign companies. exported auto component worth around US$ 2.

7 million in 2006 (nearly 7 per cent of global automobiles production and 2. for investment.Sales of passenger cars during 2008-09 to 2015-16 are expected to grow at a CAGR of around 10%. It comes only once.Features of Automobile Industry: The Indian automobile industry is going through a technological change where each firm is engaged in changing its processes and technologies to maintain the competitive advantage and provide customers with the optimized products and services. 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 auto industry is just a multiplier. a driver for employment. and tractors to the multi utility vehicles. Due to its deep frontward and rearward linkages with several key segments of the economy. The cumulative annual growth rate of production of the automotive industry from the year 2000-2001 to 2005-2006 was 17 per cent.Motorcycle sales will perform positively in future. The well-developed Indian automotive industry skilfully fulfils this catalytic role by producing a wide variety of vehicles: passenger cars.Export of passenger cars is anticipated to rise more than the domestic sales during 2008-09 to 2015-16. scooters. . trucks. medium and heavy commercial vehicles.92 per cent. auto industry maintains a high-flying place. three wheelers. “The opportunity is staring in your face. motorcycles. whose prospect is reflective of the economic resilience of the country. commercial vehicles and the luxury vehicles. exceeding 10 Million units by 2012-13. . A sound transportation system plays an essential role in the country’s rapid economic and industrial development. Starting from the two wheelers.4 per cent of four wheeler production). the Indian automobile industry has achieved splendid achievement in the recent years. The automotive sector in India is growing at around 20 per cent per annum. automobile industry has a strong multiplier effect and is capable of being the driver of economic growth. tractors etc. 8| Page . light. mopeds. you will not get it again” On the canvas of the Indian economy. If you miss it. for technology” The Indian automotive industry started its new journey from 1991 with delicensing of the sector and subsequent opening up for 100 per cent FDI through automatic route. multi-utility vehicles such as jeeps. . The cumulative annual growth rate of exports during the period 2000-01 to 2005-06 was 32. The automotive sector is one of the core industries of the Indian economy.Passenger car production in India is projected to cross three million units in 2014-15. Since then almost all the global majors have set up their facilities in India taking the production of vehicle from 2 million in 1991 to 9.

economic. Promoting multi-modal transportation and the implementation of mass rapid transport systems.Establishment of India as a Manufacturing hub.Value of auto component exports is likely to attain a double digit figure in 2012-13.. technological factors Political Factor: Indian government auto policy aimed at promoting an integrated. compact cars.39.e.. oil prices now a day’s leads to reduce in sales of automobile’s 9| Page . affordable passenger cars as well as tractors and two wheelers. .5 per cent per annum. Allowing automatic approval for foreign equity investment up to 100 per cent. Several Indian firms have partnered with global players. The rise in inflation. phased and conducive growth of the Indian automotive industry. Industry Environment: The following tells about the automobile industry environment in which growth is affected PEST ANALYSIS: This analysis shows how the automobile industry is effected by political. and for auto components. While some have formed joint ventures with equity participation.Turnover of the Indian auto component industry is forecasted to surpass US$ 50 Billion in 2014-15.Government initiatives regarding tax rebates has led to global players setting up their R&D centres in India.900 to 45. The average per capita income rises to 6.1% in 2009-2010 i. OEMs. for mini. The Government is in the final stage of notifying the fuel efficiency standards for automobile sector in the country which will be enforced from 2011.000 cr. Finance availability to CV buyers has grown in scope during the last few years.000 employees & investment of 25. social. 2-wheeler plants which is expected to generate 20. The manufacturing sector has grown at 8–10 per cent per annum in the last few years. others have entered into technology tie ups . Establish an international hub for manufacturing small. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.500 rupees The fiscal deficit is reducing year-on-year which leads to government spending more on welfare schemes that leads to increase in income with people. Andhra Pradesh government reduces vat tax to 50% on tractors. Economical Factors: The Indian economy has grown at 8. Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activity.

Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. They are price sensitive and put a lot of emphasis on value for money. advanced technologies . educated and well informed.84 cr Automobiles . With the development or evolution of alternate fuels. the sales from 2001-2010 is increasing year-on-year growth at around 20% annually 10 | P a g e .Social Factor: Growth in urbanization. even amongst the well-off.46 billion USD This is the trend in automobile sector. 5th largest economy by PPP index. Total Sales in 2009-2010: • • • • • • Automobiles . The Tata Indica has the lowest running cost at US 8.45 cr Automobiles . hybrid cars have made entry into the market. Upward migration of household income levels.Tractors -------24080. Government giving tax incentives to environment friendly automobiles There is no tax for electric automobiles. Few global companies have setup their R&D centres in India.both in product and production processes have developed. The younger generation is buying more automobiles than for elder or older generation i.5 cents per mile.320. Increase in PPP . BMW. Hyundai etc have setup their manufacturing units in India.3 cr Automobiles . Gen Y is purchasing more than any other generation in India it is because of boom in IT sector. Preference for fuel efficient cars with low running costs.89 cr Automobiles . led to the increase in market share of compact cars.45155. Cars priced below USD 12000 account for nearly 80% of the market.passenger cars ---------55785.Motorcycles / Mopeds --------20301. Preference for small and compact cars.81 cr Total sales of automobile industry is -----------157.29 cr ~31. Technological Factor: With the entry of global companies into the Indian market.Scooters and 3-Wheelers -------------11996. Indian customers are highly discerning.LCVs/HCVs ---------. They are socially acceptable.e.. Major global players like Audi. 85% of Cars are financed in India (15% in China).

2 78 96.52.36 8 93.06.9 79 4.11 4 2.04 1 3.7 03 3.19 4 3.84.07 8 53.6 19 97.5 72 3.64.92 0 70.8 82 7 74.02.91 0 78.72.86 2 62.3 91 89.37.39 5 4.25 50 11 | P a g e .51.7 65 78.Automobile Domestic Sales Trends Category Passenge r Vehicles Commer cial Vehicles Three Wheelers Two Wheelers Grand Total 200304 9.71.09 6 2.97.49 4 3.78 1 43 (Numbe r of Vehicle s) 200910 19.84.6 29 200506 35 200809 34 200708 15.4 28 200607 13.61.0 76 3.3 34 76 5.76 5 4.90.2 31 123.24.5 37 200405 49 68.43 0 3.

44 5 65.00 6 5. 12 | P a g e .70 3 3.66.08 3 4.51.00.Automobile Production growth trends & Environment: Category Passenger Vehicles Commerc ial Vehicles Three Wheelers Two Wheelers 200304 9. competitors and publics.6 66 200708 17.08.2 23 5.26.87 0 4.22.7 41 200405 12.8 29 200506 0 3.56.8 76 3.3 00 3. The marketing environment is made up of Microenvironment and Macro-environment. suppliers.75.77.5 93 3 56.09 3 93. The marketing environment offers both opportunities and threats. The environment continues to change rapidly.34.66 0 80.2 40 5.56 0 2.1 45 Marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.42 3 76.49.60 8 6.45. marketing intermediaries. customer markets.6 81 200809 18. These actors are: the company.7 92 200910 23.5 83 97 200607 0 84.98 2 5.97.12 6 84.23. The Micro environment consists of the actors close to the company that affect its ability to serve its customers.19.

Only eight Indians out of every thousand own a car. availability of raw materials like steel. India is projected to have the largest number of cars in the world − 611 million to be precise − by 2050. India's largest four-wheel automaker. Global Comparison of the industry: China is second only to United States in automobiles. launches Nano for Rupees One Lakh. this means every sixth car produced in the world will be sold in India. Buses Two Wheelers Cars . political and cultural forces which we saw above. These forces are: demographic. which makes China the second largest auto market in the world. M&HCVs. less Labor costs .S. China and India. which is far below the world average of 120 cars. Tata Motors.The Macro environment consists of the larger societal forces that affect the microenvironment. Its sticker price of about $2.S No of cars/1000 Export 100 2nd Europe 87 1st China 30 3rd India 10 4th Industry Attractiveness’s: Government Policies. Chinese own close to 22 million at the end of 2006. According to Goldman Sachs. economic. U. there are 30 cars for every thousand people in China. Buses M&HCVs Three wheelers Two and Three Wheelers Cars and MUVs Cars LCVs. high skilled auto parts manufacturers. high disposable income of consumers. technological. Germany is the world’s largest exporter of automobiles in the world followed by U. M&HCVs. At present. Industry Structure: Manufacturer Ashok Leyland Asian Motor Works Atul Auto Bajaj Auto BMW India Daimler Chrysler India(Benz) Eicher Motors Electrotherm India Electric Fiat India 13 | P a g e Segments LCVs. more middle class society around 50m in 1990 to 500m in 2008.500 would make it the world's cheapest car. natural.

MUVs. LCVs. Volvo India Yamaha Motor India Three Wheelers. MUVs. Buses M&HCVs Cars. passenger cars. LCVs Electric Cars Two Wheelers Three Wheelers Cars Two Wheelers LCVs.. Buses Two Wheelers This shows the number of firms in each segment i. Royal Enfield Motors Scooters India Skoda Auto India Suzuki Motorcycles Swaraj Mazda Ltd. LCVs Three Wheelers Cars.Force Motors Ford India General Motors India Hero Honda Motors Hindustan Motors Honda Hyundai Kinetic Motor Mahindra & Mahindra Majestic Auto Maruthi Suzuki Piaggio Reva Electric Car Co. 3-wheelers. 2-wheelers has more share compared to other segments followed by passenger cars. M&HCVs. 2-wheelers. Cars and MUVs Motors Cars and MUVs Two Wheelers Three Wheelers. Market Share of each segment: The following pie chart shows the share of each segment . Commercial vehicles which is due to liberalization in 1991.e. MUVs Two Wheelers M&HCVs. MUVs and LCVs Cars and MUVs Cars & MUVs Two Wheelers Cars. Buses Cars. 14 | P a g e . Tata Motors Tatra Vectra Motors Toyota Kirloskar TVS Motor Co. MUVs and LCVs Two Wheelers. M&HCVSs. MUVs Three Wheelers. followed by commercial vehicles and 3-wheelers. Cars.

Market Share of individual firms in passenger vehicle segment: Market Share of individual firms in commercial vehicle segment: Market Share of 2-wheelers firm wise: 15 | P a g e .

16 | P a g e . In 2-wheeler segment Hero-Honda is the market leader but now the joint venture between Honda& Hero is broken down.. to be profitable to attract new investors. So company must fix up a price by keeping segment in mind accordingly they can design ads.5 Lakh. The products in this segment are Maruthi 800. there are less firms than the potential market.Market share of 2-wheelers as segment: Nature of Competition: The nature of competition is oligopoly i. in auto rickshaw segment Bajaj is leader & in tractor segment M&M is the leader. Differentiation practised by various players: Marketers see to produce products for different segments one cannot create segments but one should identify segments to cater to their needs so that to be competitive in the world which a company wants to be innovative.e. In 3wheeler i. In passenger car segment Maruthi Suzuki is the market leader because all other firms won’t increase the prices unless increased by Maruthi Suzuki. In commercial vehicles Tata is the market leader. Alto and the newly launched product of TATA motors i. 2..e. NANO. Differentiation can be any of the following:  THE PRICE OF THE CAR  THE LENGTH OF THE CAR  THE USER SEGMENT BASED ON THE PRICE OF THE CAR On the basis of price of car we can segment the car in following ways-:  Economy Segment ○ The economy segment of car ranges up to Rs.e. promotional campaigns etc.

Honda city.5 meters long (800. Mahindra Scorpio etc. ford fiesta)  D segment.5 meters long (Verna.Cars between 3.  Super luxury car segment ○ The super luxury segment of car ranges above 10 Lakh. It includes the products like Skoda Laura.5 Lakh to 10 Lakh. Mercedes and Audi etc.Cars that are less than 3. Skoda) BASED ON THE USER 17 | P a g e . Honda Accord.5 Lakh to 4. Maruthi Zen and Tata Indica etc. Santro)  C Segment.Cars between 4 meters to 4.5 meters long( Mercedes.  Luxury car segment ○ The luxury segment of car ranges from 4.5 Lakh. This segment satisfies the elite class of the society. Hyundai Verna. Omni)  B segment. BMW. BASED ON THE LENGTH OF THE CAR  A segment. SX4.Cars that are more than 4. Sonata.Size Segment ○ The mid-size segment of car ranges from 2.5 meters to 4 meters long( Zen. Accord. It includes the products like Hyundai Santro. Mid. It includes the products like Honda city.

Hyundai Santro is targeting middle professionals Accent was launched to target corporate clients 18 | P a g e . HYUNDAI MOTORS Hyundai marketing strategy is differentiated marketing. it came up with a new model of the car having Round Tail Lights to distinguish it from the car having vertical tail lights used by the individual buyers. when it observed that their product ‘INDICA’ is used extensively by the taxi operators. Like the example of TATA Motors. Its secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car. Its primary business target is midsized to large sized corporate that want to help their managers and employees by providing them a car for ease of transport. Its primary consumer target is middle to upper income professionals who need true value for their money and comfortable ride in city conditions.Segmentation of automotive sector is also based on the user of the products. The buyers are:  Individual Buyers  Taxi operators -:  Government /non-government institutions VOLVO MOTORS Volvo Motors develops its cars for buyer to whom automobile safety is a major concern. Its secondary consumer target is college students who need style and speed. Volvo therefore positions it’s as a safest a customer can buy.

etc of age group of 50-60 years. chairmen. BMW is targeting high class people but it is mainly targeting the young people who earn a lot of money up to the age of 35-40 years Mercedes is also targeting high class people but it is mainly targeting the CEO’s. The other barriers are: Entry Barrier: 19 | P a g e . Marketers usually identify niches by dividing a segment into sub segments.  Maruthi Suzuki targeting the upper middle class people who are earning 6 Lakh per annum Barriers in the automobile industry: The above graph shows the conditions of post liberalization and pre-liberalization.NICHE MARKET A niche is a more narrowly defined group seeking a distinctive mix of benefits.

Exit Barrier: As more investment is needed to start but it is easy to exit but with losses. Industry Concentration: Herfindahl Index Herfindahl Index is a measure of the size of firms in relationship to the industry and an indicator of the amount of competition among them. if mergers & acquisitions are not possible . Herfindahl Index – Decision Criteria As 2-wheeeler share is 76. commercial vehicles 4. H=∑i=1n (Si )2 Where.23%. 3-wheelers is 3. passenger vehicle is 15. Si = Contribution of each individual firm to Industry sales. It is defined as the sum of the squares of the market shares of each individual firm in the industry.32%.58%. H = Herfindahl Index.86% so ‘H’ is as … 20 | P a g e . They include an extensive range of measures to protect domestic auto industries and restrict market access. n = Number of firms.Non-Tariff Barriers (NTBs) are extensively used to restrict trade and investment opportunities in the automotive industry today.

1586)2 =0.24% So here to withstand investment should be more Concentration level is between 50% to 80% i. index is between 1000 to 1800 Conduct & Practises: The following shows the imports & exports of the automobile sector Exports of automobile sector: Imports of Automobile sector 21 | P a g e .0358)2+(0.H= (0.6124 =61.e.7623)2+(0.0432)2+(0..

Industry Conduct: Vehicle Production in India 22 | P a g e .

India’s largest automobile manufacturer is now targeting the premium segment with their latest model from the Suzuki’s stable.Industry & Firm level Practises: Pricing of Automobiles: MARUTHI SWIFT After launching cars for the masses since so many years. This price range would 23 | P a g e .4 Lakh. Pricing of this premium hatchback is start from Rs.

we are confident of retaining our leadership and growing our lead. were kept in mind while deciding the prices. Fiat. Maruthi Kazashi: It is the new version of luxury sedan car from Maruthi they are now concentrating on this luxury car segment it costs around 18 Lakh targeting business class people TATA INDICA Tata Motors adopted a competitive pricing strategy for Indica in the global market.” Munjal told FE in an exclusive interview. Both the companies are known for their value based offerings and Maruthi with their extensive service network and brand reputation for making reliable cars should get the customer’s nod over their competition.000 cr two-wheeler markets. managing director Munjal said the company has put in place a strategy to retain its leadership in the Rs 33.Scorpio was to compete with the midsize cars like Hyundai Accent. if needed. Maruthi Suzuki Esteem on the one side and UVs like Toyota Quails. Prices were fixed on the basis of the norms prevailing in the international market. 4. That includes developing new high-performance engines in 100cc. “As confident as they are of upstaging us. 5 -7 Lakh. 24 | P a g e . Also the prices offered by their competitors like Toyota.5 Lakh. Scorpio adopted the penetrative pricing strategy positioned in the psychological price barrier of Rs. Tata Safari and the Tata Sumo on the other. Ford. Pricing in 2-wheelers: Faced with an uncomfortable scenario of Bajaj Auto closing in on Hero Honda Motors in monthly unit sales. Opel Corse. Ford Icon.practically rip apart Hyundai’s offering in Getz. expanding capacity to beyond 5 million units and reducing the price of 100cc bikes. which is priced at a much higher tag of Rs. SCORPIO Pricing Strategy: to be a premium brand yet having universal appeal .

There are more than 1000 committed dealers & service outlets spread across the country. Having your motorcycle serviced at an authorized workshop ensures highest standards of service quality and reliability For Cars: SCORPIO Since the Scorpio was targeted at an urban The Scorpio was launched in a phased manner first in Metros Mumbai.500 bicycle dealers. “We have dominated the 100cc segment for many years and will continue to dominate. To counter Bajaj’s move to offer 125cc bikes at the price of 100cc bikes. Chennai.833 in September. pneumatic tools & a team of highly trained service technicians.” Munjal told FE. Munjal said Hero Honda intends to strengthen its offerings in the segment. This ensured attention to main 25 | P a g e . which is exiting the 100cc segment. Twenty cities were included over a period of 4 months and within a year 50 cities were covered. The authorized workshop have well laid out standards for motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments. He said the company is developing new engines that will deliver superior performance in the 100cc bikes in future. Bangalore. the Group's dealer network has catalyzed growth and acted as a strong bridge between the customers and the Group. Munjal said Hero Honda could reduce prices of its 100cc bikes to nullify Bajaj’s strategy. Possibly it may be the reason for Bajaj Auto leaving the segment. ensures convenient access to the Group's products across the country. The gap between Hero Honda and Bajaj Auto has narrowed from 92. 350 dealers for mopeds and 225 franchise holders for motorcycles. 2010 Distribution: For 2-wheelers: At Hero essentially they have a completely customer-driven approach.206 in September. 2005 to 37. Delhi.Reiterating that unlike Bajaj. Strong dealer company relationship with a deep sense of belonging to the Hero fraternity. A nation-wide dealer network comprising of over 3.

Manufacturer-TKM India. Toyota Flagship Dealer Consumer Bangalore DISTRIBUTION CHANNEL OF HYUNDAI 26 | P a g e .markets and to ensure that initial production of the vehicle could match demand.


whether or not listeners actually own a set. Print Ads 28 | P a g e . 2009 In a co-operative marketing initiative. Radio Radio is the medium with the widest coverage. The brand tied up with the station to extend the experience to the people who were unable to participate in the activity. The Swift Night Life Rally was organized for the Swift Life Club. Honda Road Shows The company plans to stage road shows. Event Organized By Maruthi to Promote Swift ch 24. Sony and doordarshan etc as it has more viewers. etc. and this aggressive pricing only reinforced this feeling. Zee. So radio announcements are made and advertisements are announced on the radio about the product features and price.variant carrying a retail tag of Rs 3. Many people listen to other people's radios or hear them in public places. Studies have recently shown high levels of exposure to radio broadcasting both within urban and rural areas. to display vehicles in the pavilions during various college festivals and exhibition.85 Lakh . Fever FM and Maruthi Suzuki Swift came together to organize a Night Rally in Delhi. Major music and sports channels promote and they reach out to the youth will be promoted through Star. Hyundai Television advertisements Advertisements to promote and market our product are shown on leading television channels. qualities. ex-showroom. New Delhi.

In 1999 Toyota last time participant at the RAC rally in Britain. Workshops and Seminars Workshops and seminars are held in colleges and big corporate to make people aware about the companies past performance and product features. Christmas. neon signs are displayed at clubs. The company used to take part in these types of fairs and used it for its Sales Promotion. vast distribution network. neon signs Hoardings. banners. 29 | P a g e . Some of the major elements of Promotion Mix of Toyota Corolla are listed as under: One of the major sources of Sales Promotion is Trade Fairs like AUTO EXPO. TOYOTA COROLLA The Promotion for Toyota Corolla consists of a blend of activities making its Promotion Mix. outside theatres. discs. So therefore the company is now keeping away from fairs. These booklets provide information about its company. the products offered which suits the customers need accordingly. But now the trend is shifting because the company thinks that if they want to launch a product on a National Level. MOTOR SHOW etc. Banners. etc for the customer to read. Navratri etc to boost short term sales. Some other Sales Promotion technique used by the company is the Festival Season Offers it introduces in the market at the time of Diwali. malls. Leaflets at the initial stage are distributed at railway stations. retail battery outlets. highways and shops to promote its brand car. New Year. then there is no need for such kind of shows as now there are various other powerful sources of media available to them. college areas and various other locations. Its Promotion Mix consists of almost all the possible techniques of Promotion used for any other product. its affordability and usage. Booklets and pamphlets Booklets are kept at car showrooms. Moreover the cost spent on these kinds of fairs was not justified.Daily advertisements in leading newspapers and magazines are used to promote the product.

Public Relations and Community Building Exercise • • • • • Contribution to Tsunami Toyota Kirloskar Motor wins Best Ornamental Garden award for its landscape Toyota Kirloskar signs MoU with Bangalore University for promotion of Japanese Language Toyota observes earth day by supporting local schools Organizing Drawing/Painting Competition on ‘Me and my Environment’ for kids from Govt. Sales Presentations. Corporate Sales. Sometimes the Senior Sales Executive has to make Sales Presentation to Corporate Buyers. PERSONAL SELLING Personal Selling largely takes place at the Dealers’ End. Mostly in case of Individual Sales the Customer goes to the showroom and takes a look at the product. 30 | P a g e . Personal Selling is also practiced at Trade Fairs and Auto Shows wherein the Company appointed Sales Personnel attend prospective customers and also book their orders. The way the customer is attended depends mainly on the Dealer as he acts as an interface between the company and the Consumer. Sometimes the existing customers also provide references of prospective buyers such as their friends or relatives. For example in case of Road Shows. Auto shows etc. There he is attended to by the Sales Personnel of the Dealership. DIRECT MARKETING In the case of Direct Marketing the Company Officials directly contact the Prospective buyers with the information available through various sources. Trade Fairs. Fair and trade Shows. Schools. The various cases in which Personal Selling takes place is Individual Sales.

the world class technology. Opel Carnivals. which is superiority and uncompromising attitude. 2 year service holiday etc. Such programmes have helped GM in building its brand equity and developing a loyal customer base. the people behind the Scorpio. It also summarises the spirit behind the making of the Scorpio. SCORPIO Brand Promise: ‘Luxury of a car. the obsession. OK 5-Star used car programme. which will help the brand have a distinct image in the consumers’ mind. Media coverage on the IDAM process. chauffeur training programmes.GM STUXX GMI has launched several industry first programs such as Opel Club Card facility. Media Strategy *Dramatic and high impact launch * High visibility * Push brand image even by the media vehicle Building impact through multiple-media * PR. Direct Marketing. Events Public Relations Pre-launch excitement and buzz was created by a full blown PR program. the Scorpio media posture was to ensure that Scorpio was present on the decided media but ‘with 31 | P a g e . Opel Autobahn newsletter. Thrill of an SUV’ this brand positioning addresses the key consumer Insight and the product delivers the promise. The position is also a unique proposition. There is two-year and four-year warranty schemes. It got four cover stories Mass Media ‘While the media targets would be achieved through the right selection of the media mix. PR was also the first tool used for launching the Scorpio. mobile road-show caravan. Mass Media. The baseline captures the essence of the brand. car exchange programme for Opel customers. etc set the tone for the hyped up launch. The coverage of the launch was massive.

Customer Relationship Management (CRM) CRM as a tool was used to create positive word-of-mouth. to monitor customer experiences and generate referrals.a difference. and Driving Pleasure. Styling. Most of the Print Ads of Toyota Corolla are individually targeted at one of these factors such as Comfort. events and customer research. etc. One most common feature of almost all the Ads is that in every Advertisement. The CRM plan included a welcome Pack on filling up Scorpio Club (Top Gear) form. Design. Festive offers. Rewards Program. satisfaction surveys. The Indica is now synonymous with the word ‘More.’ Scorpio would use media innovations to create differentiation on the traditional media and do things in a ‘bigger and better’ manner. MARKETING/ADVERTISING INTENSITY The Marketing/Advertising Intensity analysis provides an insight regarding the focus of the firm on the marketing and promotion activities. A series of CRM activities were implemented with regular direct communication. Marketing/Advertising Intensity = Total Marketing Expenses / Net Sales Advertising: Promotion is a pushing strategy where as advertising is a selling strategy promotion is a short term where as advertising is a long term impact on the consumers to buy the product so companies spend more on advertising than on promotional campaigns There are many different techniques of Advertisement as a part of its Advertising Strategy. Power. by encapsulating the inherent product strengths and marrying them with the customer trait of desiring ‘More’. TATA INDICA ‘More car per car’ is the famous tagline of this product. Performance. the fact that it is 32 | P a g e . The Indica’s positioning has remained consistent with the brand's offering in an increasingly competitive market. Media innovations have been a key to the success of the Indica. A promotion strategy for Indica v2 in international market is more or less same as that of the Indian market. Leg Room. Events.

At the showroom also. Percentage of ads on T. It has been positioned as a little sportier which is the main reason that it is for young people and is also like by them too. Displays. POP. there are huge amount of Point Of Purchase Displays and also Symbols/Logo which add to it. Style. The Commercials show that this Car is targeted mainly at the Indian youth and young Executive. The Brochures. This is done to because the company wants to differentiate the product in terms of its Reliability that it is an entrusted brand of 30 Million people across the globe. The company does the Advertising of Corolla by displaying Bill Boards and Display Signs at various target places where it feels that prospective buyer will come across it. The Other Sources of Advertisement include Bill Boards.the World’s Largest Selling Car and its presence across 160 countries is present. Posters/Leaflets are such designed that shows that Corolla is a car for people who demand Performance. Symbol/Logo. Power and Sheer Driving Pleasure.V in 2005-2010: Car/jeep—50% Motor cycles—35% Commercial vehicles—4% Scooters—7% Tractors—2% Passenger Car segmentà Tata Motors Commercial Vehiclesà Tata Motors Motor Cycleà Hero Honda 33 | P a g e . There are 3 TV Commercials of this Car in India. The car being a perfect combination of these factors makes it a huge success across its segment. The fact that it is present in 160 countries proves that it is a Global Car. Display Signs.

found evidence suggesting an increasing trend of investments on R & D seeking to develop new products and processes Technology exchange: As stated earlier. With the entry of leading multinationals and transfer of design and drawings. firms operating in a restrictive regime directed their in-house R & D efforts either to complement imported technology to facilitate technological trajectory shifts or to locate their technology imports.Technology Intensity/orientation: In-house R&D: The absence of competitive pressure and the perpetuation of sellers markets may lead to low R & D activity in firms belonging to a developing country. increasing competition and higher costs of technology imports. firms may realise that to catch up with technological frontier. As a result expenditure on in-house R & D would increase in a liberalized environment. as a result. the technological search activity during the post Liberalisation period may have resulted in bringing about cost reduction and technological up gradation of vehicles to face global challenges R & D for commercial vehicles: 34 | P a g e . could have used the interaction between technological imports and in. they need to direct their efforts to build capabilities for technology generation. With a more open policy environment. rather than depend on imports. Limited use of in-house efforts. either for adaptation of imported technology or in locating technology imports could also explain low R & D activity. on the basis of a survey of 32 R & D units of transnational corporations in India. Some firms in the process of diffusion of imported technology.

restricted trade and strict exchange rate control. Higher imports could also be because firms would choose the quicker option of importing the parts and 35 | P a g e . In an era of domestic Liberalisation. imports of components were used by some firms as a source of technological up gradation of their product.R & D for 2-wheelers R & D for passenger vehicles: R & D for whole automobile industry: Technology Imports: Gives an insight into the company's interest to acquire and adopt new technology which it is not able to develop on its own A firm use imported components and parts either as a part of a 'package' in the transfer of technology or due to certain costs and quality advantages.

136/55785.89 =0. dependency on imports of components may actually decline.875/55785. however. move towards tariff controls and more realistic exchange rate.078=>7. Technology Imports (%) = Forex Spending on Technology Imports / Net Sales =24. firms may use the latter option.89 =0. This is because of the choice between importing at a higher price and domestic procurement.6% Foreign/International Exposure: For passenger cars: a) Export Intensity Export Intensity (%) = Total Forex Earnings / Net Sales =4361. To stay put in competition.1143=>11.8% b) Import Intensity Import Intensity (%) = Total Forex Spending / Net Sales =6380. With an across the board change in trade policy.4% For Motor Cycle: a) Export Intensity 36 | P a g e .components rather than encouraging parallel technology transfer to component manufacturers as well. devaluation of the currency.

34 37 | P a g e .81 =0.57/40414.0460=>4.9926/20301.Export Intensity (%)=422.34 =0.81 =0.3 =0.5862/40414.08% b)Import Intensity Import Intensity (%) =859.23% For Commercial Vehicles: Export Intensity Export Intensity (%)=2078.2% For Automobile Sector: Export Intensity Export Intensity (%)=2287.6% Import Intensity Import Intensity (%)=1898.0566 = 5.0208 =2.891/45155.66% Import Intensity Import Intensity (%)=3046.0423=>4.765/45155.838/20301.3 =0.0420=>4.

=0.0753=>7.53% Leverage of the firm: It is the ratio of debt to equity if it is more than one then the firm is not working properly if it is below one the firm is performing properly The following debt-equity ratio shows the leverage of the firm and the industry as a whole Debt-Equity Ratio of Commercial vehicles: Debt-Equity of motor cycle: 38 | P a g e .

they have assets to pay if a company have more positive working capital ratio it has huge inventory.e.Debt-Equity ratio for passenger car: Debt-Equity ratio for automobile sector: Working capital Ratio: This ratio indicates that firms ability to pay their borrowings if it is negative firm is unable to pay borrowing if it is positive firm is able to pay lender money i. 39 | P a g e .

Performance analysis: PROFITABILITY TREND Profitability gives us the earnings available to the investors and owners of the company after taking into account all the expenses incurred during the business operations.O.45=>45% R.O.S=PBIDT/Sales 9.886/55785.01=>10% Analysis of Competition: Porter’s Model of Industry Structure Analysis Potential entrants Threat of new Entrants Industry degree of rivalry Supplier 40 | P a g e Bargainin g power Bargainin g power Buyers . Profitability is calculated as: Profitability (%) = Profit after Tax (PAT) / Net Sales =0.5% Accounting based measures: R.886/11516.165 =0.49 0.085 =8.A=PBIDT/Assets 9.

Barriers to entry: The barriers to enter automotive industry is substantial. Buyers power: the power axis is tipped in favor of the consumers favor. sports bikes.Threat of substitutes Substitu Degree of rivalry: despite the high concentration ration in the automotive sector the Indian automotive sector is intense due to entry of foreign companies into the market Threat of substitutes: 2-wheelers. Suppliers power: the power axis is tipped in the industry favor. 41 | P a g e . The industry has powerful buyers who are able to dictate their terms to the suppliers. This is due to standardization and low switching costs associated with selecting from competing brands.

education etc previously firms has to do according to government i. no OEM manufacturers no proper supply of materials etc and also no incentives to do a businesses Liberalization: India liberalize on its policies towards entry of foreign players and in some sectors government allowed 100% FDI like automobile. government is the monopoly but after liberalization it changed. infrastructure.e.SWOT Analysis: Key terms: Closed Market: This is a market where there is no potential buyers . 42 | P a g e .

The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. India taxation remains a big disadvantage. In spite of this there are opportunities to exploit lower costs right across the board.Fuel-emission standards: These standards include Bharat Stage IV. A survey conducted by the research. This is the way to preserve our low cost. KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming sceptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising. In the longer term. Low-cost base can never last long. etc which automobile manufacturers have to follow to reduce carbon emissions Conclusion: India’s expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. The percentage of automobile sector contributing to GDP is 2. It’s true that labour costs are definitely increasing but they are still five per cent of the total operational costs. BS III. This indicated that it is one of the major contributing factor to employment etc. This is not about tax rates it is just about unnecessary complexity. Global auto majors are also cynical about India’s low cost manufacturing base. 43 | P a g e . Indian auto businesses will only flourish if they boost investments in automation. But some companies also believe there is scope for reducing the cost of doing business. cost advantage will only be retained if Indian capital can be used to develop lowcost automation in manufacturing. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate.5% in 2002-2003 to 5% in 2008-2009. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model. The survey said many executives believe that India’s cost advantage is grinding down fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult.

org/industry/ http://www.siamindia.html http://auto.aspx 44 | P a g e http://www.References:

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