Pricing-Automobile Sector

Alyn Varghese Bhumika Vagrecha Dharmesh Mehta Sainatth Wagh Sneha Samuel Vrishali Sinha

A u to m o b i e se cto r l

 It is one of the core sectors of Indian economy.

 the advent of new business and manufacturing

practices in the light of liberalization and globalization.

 Competition has changed the sector.

 Entry of new foriegn players.

 Indian Automobile sector is growing at 18% per


C o n td …
Country's passenger car sales grew 22%, the

highest growth rate in current financial year. Passenger car and motorcycle segment is set to grow by 8-9%. The production of passenger cars in India is expected to grow to over 14 million units in 2014-2015 The sales are expected to increase at a rate of 10% per annum. In February 2009, monthly sales of passenger cars in India exceeded 100,000 units.

S e g m e n ta ti n - A u to m o b i e o l se cto r

M a rke t S h a re

Four Wheeler Segments :

Key Players :
Notable Indian automobile manufacturers
 Ashok Leyland  Mahindra: Major, Xylo, Scorpio.  Maruti Suzuki: 800, Alto, WagonR, Estilo, AStar,

Ritz, Swift, Swift DZire, SX4, Omni, Versa, Gypsy  Tata Motors: Nano, Indica, Indigo, Sumo, Safari, TL.

Electric car companies in India  Ajanta Group  Mahindra  Hero Electric  REVA

Locally manufactured Automobiles of Multi - national Companies
Audi: A4, A6. BMW: 3 Series, 5 Series. Chevrolet: Spark, Aveo U-VA, Aveo, Optra, Cruze, Tavera. Fiat: Palio, Grande Punto, Linea. Ford: Ikon, Fiesta, Fusion, Endeavour Honda: Jazz, City, Civic, Accord. Hyundai: Santro, i10, Getz, i20, Accent, Verna, Sonata. Mercedes-Benz: C-Class, E-Class Mitsubishi: Lancer, Lancer Cedia. Renault: Logan Škoda: Fabia, Octavia, Laura. Toyota: Corolla, Innova, Fortuner Volkswagen: Jetta, Passat.

Psych o l g i lPri n g o ca ci

Maruti 800 — Rs . 2 , 37 , 898 /-

Alto LX — Rs . 2 , 99 , 000 /-

T h i p ri o f A l LX d e l b e ra te l ke p t i th e ra n g e b e tw e e n s ce to i y n th e p ri o f M a ru ti8 0 0 a n d Z e n . ce

Maruti Zen --- Rs . 3 , 24 , 103 /-/-

Discriminatory Pricing

Honda City Same car sold at different prices based on their geographical locations .
E.g.: Cars in Delhi, Haryana and Chandigarh are much cheaper than other Indian cities.

This is because of two critical factors :
1.Insurance rates 2.Road Tax

Price Wars

Hyundai Santro

Ford Fiesta

Started when the carmakers in India slashed the prices to sustain their sales in the market. Hyundai Santro started selling its car at its 1998 launch price of 2,99,000 down from the regular price of 3,33,000 As a result Ford’s Indian Unit had to cut its price by upto Rs.91000. Because of this price war, Toyota Kirloskar had to put the launch of their Prius Hybrid on hold.

Pricing Method:

Target Return Pricing: Target pricing is used by general motors, which price its automobiles to achieve a 1520 percent ROI.
The target pricing method is used most often

by public utilities, like electric and gas companies, and companies whose capital investment is high, like automobile manufacturers.

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Premium pricing: It is a strategy by which prices are set distinctly higher than average to reflect better product quality, exclusivity or status. E.g. Mercedes-Benz, Ferrari, Audi, Bentley, Porsche.

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Perceived Value Pricing:

It is a market-based approach to pricing

wherein the price is set by estimating what the perceptions of potential consumers are regarding the value of the product. Market research is a very important component of this type of pricing.

Honda Jazz

Tying: It is the practice of making the sale of one good (the tying well) to the customer conditional on the purchase of a second distinctive good (the tied good).
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Vertical tying is the practice of requiring

customers to purchase related products or services from the same company.

For example, a Hyundai car can only be

serviced by its dealers.

Discount Pricing

Chevrolet Spark It is a pricing method which is generally offered during the festive seasons or during special occasions.  E.g.: General Motors offered a massive discount available on Chevrolet Spark during Diwali. It was being offered at a starting price of Rs 2.79 lakh.

Penetration Pricing

TATA Nano It is a pricing method whereby the organisation sets a low price to increase sales and market share.  E.g.Nano which is priced at around one lakh is a prime example of penetration pricing. Aims at gaining high market share.

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Product Line Pricing:

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Optional Feature Pricing:

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