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 .

Abstract: The automobile industry in India is one of the fastest growing sectors along with IT.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 .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 . infrastructure. Telecommunications in the country this growth is due to liberalization in 1991 by Prime Minister P.

the Indian government lifted the requirement of forging joint ventures for foreign companies.D.Introduction: Indian automobile industry is one of the giant industries in Indian market since 1898.000 people.India holds a 10th position in the entire world with being no.87 Billion. 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. the Indian automotive industry provided direct employment to more than 300.3 Million Units in 2001-02 to 10. attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. the demand for passenger cars and commercial vehicles will increase with industrial development. as India has low vehicle presence (with passenger car stock of only around 11 per 1. growing earning power.8 Million Units in 2007-08.4 in commercial vehicles.P is 8. 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.000 population in 2008). 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. it possesses substantial potential for growth. which attracted global to the Indian market to establish their plants. Due to this large contribution of the industry in the national economy. In 2006-07. exported auto component worth around US$ 2.4% which is one of the sectors to provide more employment 7| Page .1 in two wheelers and no. In 2009-2010 the automobile contribution to G. The other reasons attracting global auto manufacturers to India are the country’s large middle class population. De-licensing in 1991 has put the Indian automobile industry on a new growth track. and contributed 5% to the GDP. resulting in heightened automobile production. This took the Indian automobile production from 5. Also.

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

000 cr. 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. 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. Finance availability to CV buyers has grown in scope during the last few years.e.900 to 45.5 per cent per annum.Value of auto component exports is likely to attain a double digit figure in 2012-13. 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.000 employees & investment of 25.. and for auto components. technological factors Political Factor: Indian government auto policy aimed at promoting an integrated.Government initiatives regarding tax rebates has led to global players setting up their R&D centres in India. for mini. Economical Factors: The Indian economy has grown at 8. The average per capita income rises to 6. others have entered into technology tie ups . economic.Establishment of India as a Manufacturing hub.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. Allowing automatic approval for foreign equity investment up to 100 per cent. Establish an international hub for manufacturing small. . 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. phased and conducive growth of the Indian automotive industry. social.. Andhra Pradesh government reduces vat tax to 50% on tractors. Promoting multi-modal transportation and the implementation of mass rapid transport systems. 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. The rise in inflation. Several Indian firms have partnered with global players. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.1% in 2009-2010 i. 2-wheeler plants which is expected to generate 20. compact cars.39. The manufacturing sector has grown at 8–10 per cent per annum in the last few years. OEMs.

Preference for fuel efficient cars with low running costs. Hyundai etc have setup their manufacturing units in India.passenger cars ---------55785. Gen Y is purchasing more than any other generation in India it is because of boom in IT sector. They are price sensitive and put a lot of emphasis on value for money.Social Factor: Growth in urbanization.LCVs/HCVs ---------. the sales from 2001-2010 is increasing year-on-year growth at around 20% annually 10 | P a g e . The younger generation is buying more automobiles than for elder or older generation i. With the development or evolution of alternate fuels. 5th largest economy by PPP index. Preference for small and compact cars..89 cr Automobiles . Total Sales in 2009-2010: • • • • • • Automobiles . led to the increase in market share of compact cars. They are socially acceptable.320. Few global companies have setup their R&D centres in India.45155. Cars priced below USD 12000 account for nearly 80% of the market. The Tata Indica has the lowest running cost at US 8. Upward migration of household income levels. advanced technologies . BMW. educated and well informed. hybrid cars have made entry into the market. Technological Factor: With the entry of global companies into the Indian market. Government giving tax incentives to environment friendly automobiles There is no tax for electric automobiles.29 cr ~31. 85% of Cars are financed in India (15% in China).3 cr Automobiles .Tractors -------24080.81 cr Total sales of automobile industry is -----------157.5 cents per mile.84 cr Automobiles .Motorcycles / Mopeds --------20301.Scooters and 3-Wheelers -------------11996. Increase in PPP .both in product and production processes have developed.e. Indian customers are highly discerning. Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. even amongst the well-off.46 billion USD This is the trend in automobile sector.45 cr Automobiles . Major global players like Audi.

0 76 6 2.49 4 3.8 82 4.Automobile Domestic Sales Trends Category Passenge r Vehicles Commer cial Vehicles Three Wheelers Two Wheelers Grand Total 200304 76 5.91 0 4 3.78 1 72.2 49 2 62.64.43 0 3.10.5 34 200708 15.90.72 7 74.31.9 79 4.6 29 200506 11.64.92 0 70.2 31 123.06.39 5 4.5 72 3.6 19 97.2 78 96.07.04 1 3.11 4 2.07 8 53.7 65 78.49.4 28 200607 13.4 35 200809 15.52.76 5 4.84.2 43 (Numbe r of Vehicle s) 200910 19.3 34 93.09.36 8 03 91 37 200405 50 11 | P a g e .

98 2 5.09 3 93.08 3 4.19. The Micro environment consists of the actors close to the company that affect its ability to serve its customers.56.04 0 3.66 0 80.51.42 3 76.19.2 23 5.8 29 200506 13. marketing intermediaries.22 3 0 4.12 6 84.1 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.5 83 8 6.5 93 4.89. The marketing environment is made up of Microenvironment and Macro-environment.3 00 These actors are: the company.8 76 3.56 0 2.91.7 92 200910 23. suppliers.6 81 200809 18.02 0 84.74.00 6 5. The marketing environment offers both opportunities and threats.00. 12 | P a g e .70 3 5 65.6 66 200708 17.6 97 200607 15.Automobile Production growth trends & Environment: Category Passenger Vehicles Commerc ial Vehicles Three Wheelers Two Wheelers 200304 9.16.7 41 200405 12.45.34. The environment continues to change rapidly.2 40 5. customer markets.08. competitors and publics.

S No of cars/1000 Export 100 2nd Europe 87 1st China 30 3rd India 10 4th Industry Attractiveness’s: Government Policies. natural. China and India. which is far below the world average of 120 cars.S. According to Goldman Sachs. India's largest four-wheel automaker. high disposable income of consumers. this means every sixth car produced in the world will be sold in India. M&HCVs. high skilled auto parts manufacturers. launches Nano for Rupees One Lakh. economic. availability of raw materials like steel. At present. M&HCVs. These forces are: demographic. Buses M&HCVs Three wheelers Two and Three Wheelers Cars and MUVs Cars LCVs. Tata Motors.500 would make it the world's cheapest car. Buses Two Wheelers Cars . 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. India is projected to have the largest number of cars in the world − 611 million to be precise − by 2050. there are 30 cars for every thousand people in China. Its sticker price of about $2. technological. Only eight Indians out of every thousand own a car. U. political and cultural forces which we saw above. more middle class society around 50m in 1990 to 500m in 2008. Global Comparison of the industry: China is second only to United States in automobiles. Germany is the world’s largest exporter of automobiles in the world followed by U.The Macro environment consists of the larger societal forces that affect the microenvironment. less Labor costs . Chinese own close to 22 million at the end of 2006. which makes China the second largest auto market in the world.

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

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 .

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. So company must fix up a price by keeping segment in mind accordingly they can design ads. in auto rickshaw segment Bajaj is leader & in tractor segment M&M is the leader.. 2. The products in this segment are Maruthi 800.5 Lakh. promotional campaigns etc. NANO. 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. 16 | P a g e . to be profitable to attract new investors.e. In 2-wheeler segment Hero-Honda is the market leader but now the joint venture between Honda& Hero is broken down. 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. Alto and the newly launched product of TATA motors i. there are less firms than the potential market.e. In commercial vehicles Tata is the market leader..Market share of 2-wheelers as segment: Nature of Competition: The nature of competition is oligopoly i.

5 meters long( Mercedes.  Luxury car segment ○ The luxury segment of car ranges from 4.5 meters long (Verna. SX4. It includes the products like Honda city. Santro)  C Segment.Cars between 4 meters to 4. ford fiesta)  D segment. Accord. BMW.5 Lakh to 4. Mercedes and Audi etc.Size Segment ○ The mid-size segment of car ranges from 2. It includes the products like Hyundai Santro. Mid. BASED ON THE LENGTH OF THE CAR  A segment. Honda city. Honda Accord. Sonata.5 Lakh.Cars that are less than 3. Omni)  B segment. This segment satisfies the elite class of the society. Skoda) BASED ON THE USER 17 | P a g e .Cars between 3. Hyundai Verna.5 meters long (800. It includes the products like Skoda Laura. Maruthi Zen and Tata Indica etc.  Super luxury car segment ○ The super luxury segment of car ranges above 10 Lakh. Mahindra Scorpio etc.5 Lakh to 10 Lakh.5 meters to 4 meters long( Zen.Cars that are more than 4.

Like the example of TATA Motors. Volvo therefore positions it’s as a safest a customer can buy. HYUNDAI MOTORS Hyundai marketing strategy is differentiated marketing. 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. 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. 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. Its secondary consumer target is college students who need style and speed. Its secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car.Segmentation of automotive sector is also based on the user of the products. Hyundai Santro is targeting middle professionals Accent was launched to target corporate clients 18 | P a g e . Its primary consumer target is middle to upper income professionals who need true value for their money and comfortable ride in city conditions. when it observed that their product ‘INDICA’ is used extensively by the taxi operators.

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. 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 .NICHE MARKET A niche is a more narrowly defined group seeking a distinctive mix of benefits. etc of age group of 50-60 years. chairmen.

23%. n = Number of firms.Non-Tariff Barriers (NTBs) are extensively used to restrict trade and investment opportunities in the automotive industry today. H=∑i=1n (Si )2 Where. Si = Contribution of each individual firm to Industry sales. They include an extensive range of measures to protect domestic auto industries and restrict market access.58%. It is defined as the sum of the squares of the market shares of each individual firm in the industry. 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.86% so ‘H’ is as … 20 | P a g e . H = Herfindahl Index. 3-wheelers is 3. passenger vehicle is 15. Herfindahl Index – Decision Criteria As 2-wheeeler share is 76. if mergers & acquisitions are not possible . Exit Barrier: As more investment is needed to start but it is easy to exit but with losses. commercial vehicles 4.32%.

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 .6124 =61.e.H= (0.0358)2+(0.1586)2 =0.24% So here to withstand investment should be more Concentration level is between 50% to 80% i.7623)2+(0..0432)2+(0.

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

Pricing of this premium hatchback is start from Rs.4 Lakh. This price range would 23 | 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.

Fiat. 24 | P a g e . 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. Scorpio adopted the penetrative pricing strategy positioned in the psychological price barrier of Rs.5 Lakh. That includes developing new high-performance engines in 100cc.practically rip apart Hyundai’s offering in Getz. 5 -7 Lakh.000 cr two-wheeler markets. Pricing in 2-wheelers: Faced with an uncomfortable scenario of Bajaj Auto closing in on Hero Honda Motors in monthly unit sales. we are confident of retaining our leadership and growing our lead. SCORPIO Pricing Strategy: to be a premium brand yet having universal appeal .” Munjal told FE in an exclusive interview. Opel Corse. Ford. Tata Safari and the Tata Sumo on the other. if needed.Scorpio was to compete with the midsize cars like Hyundai Accent. Ford Icon. Also the prices offered by their competitors like Toyota. managing director Munjal said the company has put in place a strategy to retain its leadership in the Rs 33. 4. which is priced at a much higher tag of Rs. Prices were fixed on the basis of the norms prevailing in the international market. expanding capacity to beyond 5 million units and reducing the price of 100cc bikes. 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. “As confident as they are of upstaging us. were kept in mind while deciding the prices. Maruthi Suzuki Esteem on the one side and UVs like Toyota Quails.

This ensured attention to main 25 | P a g e . Munjal said Hero Honda intends to strengthen its offerings in the segment.Reiterating that unlike Bajaj. There are more than 1000 committed dealers & service outlets spread across the country. 2005 to 37. Bangalore. 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. 2010 Distribution: For 2-wheelers: At Hero essentially they have a completely customer-driven approach. “We have dominated the 100cc segment for many years and will continue to dominate. ensures convenient access to the Group's products across the country.833 in September. Possibly it may be the reason for Bajaj Auto leaving the segment. Delhi.206 in September. The authorized workshop have well laid out standards for motorcycle servicing supported by fully equipped infrastructure in terms of quality precision instruments. Twenty cities were included over a period of 4 months and within a year 50 cities were covered. The gap between Hero Honda and Bajaj Auto has narrowed from 92.500 bicycle dealers. He said the company is developing new engines that will deliver superior performance in the 100cc bikes in future. To counter Bajaj’s move to offer 125cc bikes at the price of 100cc bikes. Chennai. pneumatic tools & a team of highly trained service technicians. 350 dealers for mopeds and 225 franchise holders for motorcycles. Strong dealer company relationship with a deep sense of belonging to the Hero fraternity. which is exiting the 100cc segment.” Munjal told FE. 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. A nation-wide dealer network comprising of over 3.

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


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

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

Corporate Sales. PERSONAL SELLING Personal Selling largely takes place at the Dealers’ End. Schools. Sometimes the existing customers also provide references of prospective buyers such as their friends or relatives. 30 | P a g e . Trade Fairs. Sometimes the Senior Sales Executive has to make Sales Presentation to Corporate Buyers. Auto shows etc. 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. Fair and trade Shows. For example in case of Road Shows. Mostly in case of Individual Sales the Customer goes to the showroom and takes a look at 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. The various cases in which Personal Selling takes place is Individual Sales. The way the customer is attended depends mainly on the Dealer as he acts as an interface between the company and the Consumer. Sales Presentations. 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.

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

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

The fact that it is present in 160 countries proves that it is a Global Car. Display Signs. The Other Sources of Advertisement include Bill Boards. Percentage of ads on T. POP. Symbol/Logo. The car being a perfect combination of these factors makes it a huge success across its segment. 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 World’s Largest Selling Car and its presence across 160 countries is present. There are 3 TV Commercials of this Car in India. Style. 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.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 . Power and Sheer Driving Pleasure. The Commercials show that this Car is targeted mainly at the Indian youth and young Executive. there are huge amount of Point Of Purchase Displays and also Symbols/Logo which add to it. At the showroom also. The Brochures. Posters/Leaflets are such designed that shows that Corolla is a car for people who demand Performance. 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.

rather than depend on imports. 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. 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 . 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. either for adaptation of imported technology or in locating technology imports could also explain low R & D activity. found evidence suggesting an increasing trend of investments on R & D seeking to develop new products and processes Technology exchange: As stated earlier.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 efforts. As a result expenditure on in-house R & D would increase in a liberalized environment. as a result. could have used the interaction between technological imports and in. firms may realise that to catch up with technological frontier. With a more open policy environment. increasing competition and higher costs of technology imports. With the entry of leading multinationals and transfer of design and drawings. they need to direct their efforts to build capabilities for technology generation. Limited use of in-house efforts.

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 . 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. In an era of domestic Liberalisation.

This is because of the choice between importing at a higher price and domestic procurement. With an across the board change in trade policy. devaluation of the currency.89 =0.89 =0. To stay put in competition.1143=>11. dependency on imports of components may actually decline.8% b) Import Intensity Import Intensity (%) = Total Forex Spending / Net Sales =6380.136/55785. however.875/55785.6% Foreign/International Exposure: For passenger cars: a) Export Intensity Export Intensity (%) = Total Forex Earnings / Net Sales =4361.components rather than encouraging parallel technology transfer to component manufacturers as well. firms may use the latter option.4% For Motor Cycle: a) Export Intensity 36 | P a g e . Technology Imports (%) = Forex Spending on Technology Imports / Net Sales =24. move towards tariff controls and more realistic exchange rate.078=>7.

0460=>4.0423=>4.66% Import Intensity Import Intensity (%)=3046.23% For Commercial Vehicles: Export Intensity Export Intensity (%)=2078.3 =0.34 =0.34 37 | P a g e .838/20301.6% Import Intensity Import Intensity (%)=1898.0566 = 5.57/40414.0208 =2.0420=>4.3 =0.891/45155.2% For Automobile Sector: Export Intensity Export Intensity (%)=2287.81 =0.Export Intensity (%)=422.5862/40414.765/45155.08% b)Import Intensity Import Intensity (%) =859.9926/20301.81 =0.

=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.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.e. 39 | P a g e .

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 .S=PBIDT/Sales 9.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.886/55785.886/11516.49 0.5% Accounting based measures: R.165 =0. Profitability is calculated as: Profitability (%) = Profit after Tax (PAT) / Net Sales =0.O.A=PBIDT/Assets 9.O.085 =8.45=>45% R.

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. Suppliers power: the power axis is tipped in the industry favor. Barriers to entry: The barriers to enter automotive industry is substantial. sports bikes. Buyers power: the power axis is tipped in favor of the consumers favor. 41 | P a g e .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.

42 | P a g e . government is the monopoly but after liberalization it changed.SWOT Analysis: Key terms: Closed Market: This is a market where there is no potential buyers . 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. education etc previously firms has to do according to government i. infrastructure.e.

cost advantage will only be retained if Indian capital can be used to develop lowcost automation in manufacturing. In spite of this there are opportunities to exploit lower costs right across the board. A survey conducted by the research. This indicated that it is one of the major contributing factor to employment etc. BS III. 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. Low-cost base can never last long. 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. 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.Fuel-emission standards: These standards include Bharat Stage IV. But some companies also believe there is scope for reducing the cost of doing business. Indian auto businesses will only flourish if they boost investments in automation. This is the way to preserve our low cost. The percentage of automobile sector contributing to GDP is 2. In the longer term. This is not about tax rates it is just about unnecessary complexity. It’s true that labour costs are definitely increasing but they are still five per cent of the total operational costs. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. 43 | P a g e .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. India taxation remains a big disadvantage. Global auto majors are also cynical about India’s low cost manufacturing base.

com/automotive-logistics-india-2010conference-held-in_newsitem_1048 http://www.indiamart.acmainfo.References: http://living.oneindia.html 44 | P a g e .siamindia.ibef.

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