WHICH CAR WILL

VROOM AWAY

Group 4
Ashish Bhasin (8), Ashish Dubey (9), Benz Thomas (11), Pratik Sharma (32), Vivek Sharma (47)

A PROJECT TO UNDERSTAND CAR BUYING PATTERN FOR

HYUNDAI VERNA FLUIDIC AND MARUTI SUZUKI SX4

USING MICROECONOMICS CONCEPTS

A project for Dr. Biswajit Nag by Group 4, Section A (MBA IB PT 2012-15)

I KNOW A LOT ABOUT CARS. I CAN LOOK AT ANY CARS HEADLIGHTS AND TELL YOU EXACTLY WHICH WAY ITS COMING. Mitch Hedberg

CONTENTS
Indian four wheeler market Attributes being promoted Sales figures Verna and SX4 Demand Curve Verna and SX4 Price Elasticity Price sensitivity analysis Conclusion

Indian four wheeler industry

Source: SIAM

Installed capacity in millions 3.88 Passenger Vehicles - 15.07% Major players Mahindra, Hyundai,

Maruti, Tata, Ford, Renault, Honda, Nissan, etc. Models Alto, WagonR, Dsire, Bolero, Swift, i10, Indica + vista, Innova, Verna, SX4, etc.

Total Sales
TOTAL SALES Jan-Sept 2012

Source: www.motorbeam.com

City 18%

Verna 32%

Vento 14%

SX4 6% Fiesta 8%

Verito 9% Rapid 13%

Passenger cars manufactured vs GDP

2500.000 1200
Source: Automotive report by MarketLine www.Indiastat.com

1000 2000.000

800 1500.000
thousand units India GDP*

600

1000.000 400

500.000 200

0.000 2006

2007

2008

2009

2010

0 2011

What do you first consult?

First consultation
previous owners

Online

Friends/relatives

First consultation

Magazines

Auto TV programs 0 5 10 15 20

Attributes being promoted

VERNA
Fluidic design Commanding exterior Technology with design More features than the

SX4
Gentleman among cars Amazing driving experience Commanding exterior Plush interiors Big on mileage Loaded with entertainment Spacious and comfortable Safety Power

price Luxury Power Safety Eco Friendliness

Model wise sales figures

7000
6000 5000

Source: www.motorbeam.com

4000
3000 2000 SX4 Verna

1000
0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

Jul-12

Aug-12

Verna Demand Curve

1200000

1150000

1100000
Series1 1050000

1000000
Avg Verna price assumed at INR 913403.5

950000 0 2 4 6 8 10 12 14

Demand drivers for Verna

Verna
14 12 10 8 6 4 Verna

2
0

SX4 Demand Curve

1400000 1200000 1000000 800000 600000 Series1

400000
200000 0 0 5 10 15 20

Avg SX4 price assumed at INR 882555.25

Demand drivers for SX4

SX4
14

12
10 8 6 4 2 0 SX4

Verna price elasticity

% age increase in Verna price 10 20 30 5 2 Number of customers from Verna 13

At a 10% price increase the elasticity is 6.5 i.e >1 more than unit elastic At a 20% price increase the elasticity is 1.25 i.e >1 more than unit elastic At a 30% price increase the elasticity is 0.33 i.e <1 less than unit elastic

SX4 price elasticity

% age increase in SX4 price 10 20 30 3 16 1 Number of customers shifting from SX4

At a 10% price increase the elasticity is 1.5 it is more than unit elastic At a 20% price increase the elasticity is 8 it is highly elastic At a 30% price increase the elasticity is 0.166 <1

Price sensitivity
Y Rightward shift

Price of Verna

X O Demand for Verna

Conclusions
Verna dominates due to Innovation Design (fluidic) Brand is considered more luxurious

New Markets for C segment

B and C grade cities

Elasticity
People will shift less from Verna than from SX4

Edge
Verna has an edge over SX4 and other competitors

Sales and support

Both companies have comparable Sales and Service network

Market
Monopolistic competition due to small number players occupying a major market share

So who is coming for the ride?

All images in the presentation have been sourced from various contributors on www.sxc.hu

Thank you