ANALYSIS OF INDUSTRY, COMPANY AND CONSUMERS

AUTOMOBILE INDUSTRY

Source: https://epp-journal.nmims.edu/wp-content/uploads/2017/april/indian-passenger-vehicle-industry-strategic-analysis-with-focus-on-the-
big-four-firms-karunakar-b.pdf

The above figure is a perfect pictorial portrayal of the Indian automotive industry. The
automobile industry in India is one of the biggest industry on the planet with a yearly production
at 23.96 million vehicles in FY 2015-16 contrasted with 23.37 million vehicles in FY 2014-15,
enrolling a development of 2.58 per cent over the earlier year. It represents around 7% of the
nation's Gross Domestic Product (GDP).

The automobile industry contains bikes, three wheelers, passenger autos, multi-utility vehicles
and business vehicles. The bikes section, with 80 percent market share, is the pioneer of the
Indian Automobile Market; this portion has been seeing a developing demand from a youthful
working class population. Additionally, the developing enthusiasm of organizations to
investigate and explore the country's rural markets helped the development of the segment. The
Passenger Vehicle (PV) portion has 14% market share and Commercial Vehicles (CV) is at 3%.
The PV fragment developed at a CAGR of 2.7% in the course of the most recent 5 years while
the development rate of the CV section has been level, developing at a CAGR of 0.5%. Just the
bike portion has developed at a solid rate of 7% in the course of the most recent 5 years. India is
likewise a noticeable automobile exporter. In FY 2015-16, automobile sends out were 3.64
million in respect to 3.57 million in the earlier year with a development rate of 1.90%. On the
fare front, there was development supported by a rise in the worldwide auto industry, particularly
in the European Union and Africa.

For about three decades since autonomy and independence, the aggregate yearly production of
passenger autos was restricted to 40,000 units. The production was limited to three fundamental
makers - Hindustan Motors, Premier Automobiles and Standard Motors. The industry saw no
exploration and improvement or specialization. At first, work was untalented and needed to
experience a procedure of learning through experimentation. In the 1950's, Morris Oxford was
renamed as 'Envoy' and Fiat 1100 was renamed 'Premier Padmini'. In the 1960's, almost 98% of
the vehicles were created indigenously. Before the finish of the 1970's, there were critical
changes saw in the automobile industry. Solid activities like joint endeavors for light business
vehicles did not succeed. Contessa, Rover and the Premier 118NE, which were the new models,
hit the market. Till the later piece of the 1980's, India comprehensively took after a communist
framework and did not open up her economy.

Voyage from 1991 with delicensing of the segment and ensuing opening up for 100 percent FDI
through the automatic course. Financial changes and deregulation have made India an alluring
goal for speculation. India has just turned out to be one of the quickest developing automobile
markets on the planet. The Indian automobile industry experienced a mechanical change where
each firm occupied with changing its processes and advancements to keep up the upper hand and
furnish clients with upgraded products and services. Beginning from bikes, trucks, and tractors to
multi-utility vehicles, business vehicles and extravagance vehicles, the Indian automobile
industry has accomplished admirable outcomes in the recent years.

PRODUCTION TREND OF AUTOMOBILES

COMPETITION IN THE INDIAN MARKET

Market Shares in the Passenger Vehicles Industry in Fiscal 2015

The Passenger Vehicle Industry has backward and forward linkages with the accompanying
sectors:
Backward linkages: Steel, Aluminum, Copper, Plastics, Paints, Glass, Electronics, Capital
Equipment, Trucking and Warehousing
Forward linkages: Dealership retails, Credit and Financing, Advertising, Repair and Maintenance
and Logistics, Service parts, Petroleum products, Gas stations, Insurance.
Five Forces Analysis: Five forces shape rivalry and decide the general industry profitability.
Singular firm profitability will shift contingent upon its assets, core competencies, plan of action
and system to accomplish a profit over the industry normal.

Barriers to Entry - Not any firm can enter and begin producing automobiles. It is just the
worldwide competitors with many years of global experience, scale, required advances,
administration aptitudes and capital that began to undermine the market share of the Indian
automobile organizations. Globalization is a central point influencing the domestic auto market.
It has turned out to be progressively simpler for outside automakers to enter the domestic market
due to changed arrangements.

Competitive Rivalry - The auto industry has Maruti Suzuki, Tata Motors, Mahindra and
Mahindra, Hyundai, Toyota, Honda, Nissan, Ford, GM, Volkswagen, and so forth and is thought
to be an oligopolisitic (a market condition in which venders are few to the point that the activities
of any of them will physically influence cost). Very competitive enterprises for the most part
procure low returns in light of the fact that the cost of rivalry is high. The automakers understand
that cost based rivalry does not really prompt increments in the market share while undermining
profitability. Historically they have endeavored to keep away from cost based rivalry. In any
case, more recently, the opposition has strengthened - discounts, favored financing and long haul
guarantees have attracted in customers. Be that as it may, they additionally put weight on the
profit edges for vehicle deals. Consistently, auto organizations refresh their autos. This is a piece
of ordinary operations, however there can be an issue when an organization chooses to
essentially change the outline of an auto.

These progressions can cause enormous deferrals and glitches that outcome in expanded
expenses and slower income development. While another plan may pay off altogether over the
long haul, it is dependably a hazardous suggestion. There is serious rivalry from worldwide
brands in India (exceptionally in the B segment), reflecting in competitive offering at a lower
cost for a similar level of highlights. There are general product advancements and thrifty
designing from rivalry. Outside firms have bothered rivalry by changing their customary outlines
and customizing them to suit Indian needs.

Bargaining Power of Buyers – Indian customers have a solid bargaining power since they have a
decision of a few elective products from various makers in a similar value run. Then again, while
buyers are extremely value touchy, they don't have much acquiring power as they never buy a
substantial number of autos. Expanding fuel costs lessen the demand for autos from purchasers.
Vitality proficient autos that offer some benefit for cash advance up the demand from purchasers.
Government arrangements additionally influence the demand and supply side of the automobile
industry.

Bargaining Power of Suppliers – Suppliers are fragmented. Most suppliers rely upon maybe a
couple automakers to buy a larger part of their products/auto segments. On the off chance that an
automaker chooses to switch suppliers, the circumstance could be hindering to the provider's
business. Thus, suppliers are to a great degree helpless against the demands and needs of the
automobile producer and hold next to no power. Bargaining power of suppliers is low as the vast
majority of the auto part producers are had some expertise in a few segments identified with just
a single customer. Suppliers, thusly, rely upon them. For parts suppliers, the life expectancy of
an automobile is essential. The more extended an auto remains operational, the more prominent
the requirement for new parts. Then again, new parts are enduring longer, which is awesome for
purchasers, yet isn't such uplifting news for parts creators. At the point when, for instance, most
auto producers moved from utilizing moved steel to stainless steel, the change expanded the life
of parts by quite a while.

Threat of Substitutes - The substitute for movement via auto is the probability of individuals
taking the transport, prepare or plane to their goal. The higher the cost of operating a vehicle, the
more probable individuals will look for elective transportation choices. The cost of fuel largy
affects a customer's choice to purchase vehicles. Time, personal inclination and accommodation
of the auto versus the substitute are likewise impacting factors while evaluating the threat from
substitutes
COMPANY & CONSUMER ANALYSIS

TATA MOTORS

Since the company began in 1945, it has created in excess of 4 million unique sorts of vehicles,
for example, autos, trucks, business vehicles, and so on. Tata Motors has additionally turned into
the biggest automobile producer in the Indian market. In 2004, Tata Motors Limited procured
Daewoo Motor's business vehicle business for around USD $16 million. Since 2006, the
company has had a fruitful collusion with Italian mass producer Fiat that has upgraded the
product portfolio for Tata and Fiat as far as knowledge trade, production, logistics and
infrastructure. In 2008, Tata Motors obtained the Land Rover and Jaguar brands from Ford
Motors of UK for $2.3 million. Two of the world's extravagance auto brands were added to its
arrangement of brands, giving the chance to the company to market vehicles in the extravagance
segment.

(A). Segments, Product Portfolio and Positioning Tata Motors has outlined its products to suit
the necessities of the Indian market in view of particular customer needs, for example, security,
driving solace, fuel-effectiveness and solidness. The company trusts that its vehicles are suited to
the general states of Indian streets and the nearby atmosphere. The company's vehicles have
likewise been intended to follow relevant ecological controls as of now as a result. The company
additionally offers an extensive variety of discretionary arrangements to meet the particular
needs of its customers. The company is creating products to meet the expanding customer desires
for owning world class products. The company's autos are focused towards upper middle class
customers and situated as a pioneer in the automobile market teaching inventive advancements to
convey value to customers.

Utility Vehicles: The company produces a range of Tata-branded utility vehicles, including the
Sumo and the Safari (SUVs), the Xenon XT (way of life pickup), the Tata Aria (hybrid), and the
Venture (multi-reason utility vehicle). Under the Safari brand, the company offers two
variations: the Dicor and the Safari Storme. Under the Sumo brand, the company offers the
Sumo Gold. There are six auto lines under the brands of Range Rover and Land Rover in the top
notch off-road vehicles classes, including the Range Rover, Range Rover Sport, Range Rover
Evoque, Land Rover Discovery, Discovery Sport and the Defender.

Premium and Luxury: The company's Jaguar Land Rover operations have a built up nearness in
the premium and extravagance passenger auto class under the Jaguar brand name. There are four
auto lines under the Jaguar brand name including the FTYPE two-seater sports auto car and
convertible (counting all-wheel drive subordinates), the XF (counting the sport brake and all-
wheel drive subsidiaries), the XJ saloon, and the new XE sports saloon. In Fiscal 2015, it sold
2,827 JLR vehicles.
(B). Strategy

The company has built up a solid position in the Indian automobile industry by propelling new
products, putting resources into innovative work, strengthening its money related position and
expanding its manufacturing and appropriation arrange. The company has expanded its essence
in the worldwide automotive markets and upgraded its product range and capacities through key
acquisitions and organizations together. “The company intends to position itself as a noteworthy
worldwide automotive company by offering products crosswise over different markets by
consolidating its designing and other qualities and also through vital acquisitions. Tata Motors
embraced a strategy that included (I) Leveraging customer commitment experience to procure
new customers (ii) Leveraging mergers and acquisitions to gain more up to date technology (iii)
Augmenting the conveyance and administration organize in different nations. The company's
passenger auto products depend on third and fourth era stages that put Tata Motors Limited off
guard with contending auto makers. Other contending auto makers have been in the passenger
auto business for at least 40 years. Therefore, Tata Motors Limited needs to make up for lost
time as far as quality and lean production. Sustainability and environmentalism could mean
additional expenses for this minimal effort producer. This could affect its supporting competitive
preferred standpoint. By going worldwide and becoming tied up with other brands, this issue
could be eased.

Its internationalization approach so far has been to keep nearby administrators in new
acquisitions, and to just depute two or three senior directors from India into the new market. The
advantage is that Tata has possessed the capacity to trade expertise. For instance, post the
Daewoo obtaining, the company learned work teach and getting the last product 'right the first
run through.' Despite purchasing the Jaguar and Land Rover brands, Tata lacks an a dependable
balance in the extravagance auto segment in its domestic, Indian market. The brand is related
with business vehicles and minimal effort passenger autos and has confined itself from lucrative
segments in an all the more trying India. Going to the key dangers in the long haul, with the
expansion in market share of electric vehicles in the extravagance vehicles market, as shown
beneath in the US, can be extremely negative for extravagance auto creators like Tata Motors.

(B.1) New Product Development proceeded with center: During Fiscal 2015, the company
propelled the accompanying products.

Rush: In January 2015, the company reported the dispatch of a sporty hatchback, the all-new
Bolt, which is fabricated at the Pimpri plant in Pune, India.

Zest: In August 2014, the company propelled the Zest, a sub-four meter conservative vehicle. It
is fabricated at the Pimpri and Ranjangaon plants in Pune, India. Zest, one of the company's most
recent increments, got the 'Zee Ignition Car of the Year' honor, and its new petroleum Revotron
motor, which was included in more than 35% of Zest sales, got the 'Technology of the Year'
grant.

Land Rover Discovery Sport: In September 2014, Jaguar Land Rover propelled the new
Discovery Sport, an adaptable premium reduced sport utility vehicle that is the primary
individual from the new Discovery family. Sales of the new Land Rover Discovery Sport have
been in progress since mid 2015.

Evoque: In February 2015, Jaguar Land Rover started sales of the privately produced Evoque
through its joint venture with Chery Automobile Co. Ltd., China. The 2016 Range Rover Evoque
made its reality make a big appearance at the Geneva Motor Show in March 2015, the main
model from Jaguar Land Rover to include full-LED versatile headlamp technology.
Jaguar XE: The Jaguar XE influenced its worldwide introduction at the 2014 Paris Auto To show
and went discounted in May 2015. It is the primary aluminum monocoque vehicle in the fair size
vehicle class.

Jaguar XF: The 2016 Jaguar XF influenced its official world introduction at the 2015 New York
International Auto To show on April 1, 2015. Likewise with other new Jaguar models, the XF
highlights strengthened, lightweight aluminum-serious development. It is relied upon to go
marked down amid Fiscal 2016.

(B.2) Marketing

Leveraging brand value: The company trusts that customers relate the Tata name with
unwavering quality, trust and moral values. The company's brand name increases noteworthy
universal acknowledgment because of the global development methodologies of different Tata
organizations. The Tata brand is utilized and its advantages are utilized by Tata organizations
further bolstering their shared good fortune. The company, alongside Tata Sons and other Tata
organizations, use the Tata brand in India and in different universal markets. Bolstered by the
Tata brand, the company trusts its brands, for example, Indica, Indigo, Sumo, Safari, Aria,
Venture, Nano, Prima, Ace, and Magic, alongside Daewoo, Jaguar, Range Rover and Land
Rover, are exceptionally respected, which the company plans to sustain and advance further. In
the meantime, the company intends to keep on building new brands, for example, the recently
propelled Ultra range of LCVs, the Zest and the Bolt to further upgrade its brand value.

Advertising: Advertising is a standout amongst the most widely recognized approaches to make
the auto purchaser or auto aficionado mindful of another auto with an exceptional advancement
cost. Another more essential method for advertising is to make a picture or brand picture.
Throughout the years, Tata Motors has been fruitful in making its brand picture particularly by
utilizing celebrated stars as the company's spokespersons.

Estimating: There are different factors that decide the cost of an auto - costs offered by rivalry,
cost brought about to make an auto, merchant's bonus and profit edge of the company. Offering
rebates and unique advancements for specific kinds of vehicles is likewise one of the marketing
approaches utilized by Tata Motors. Rebates are offered either from the company's profits or
from the merchant's profits or both, inside a specific range.

(B.3) Sales, Distribution and Support

The sales and conveyance organize in India as of March 31, 2015 contained 3,904 sales and
administration contact focuses for passenger and business vehicles. The company has conveyed a
Customer Relations Management, or CRM, framework at all the company's dealerships and
offices the nation over; this is the biggest such organization in the automotive market in India.
The consolidated online CRM and distributor administration framework underpins clients both
inside the company and among distributors in India and abroad. The company's 100% backup,
TML Distribution Company Ltd, or TDCL, goes about as a committed dispersion and logistics
administration company to help the sales and dissemination operations of vehicles in India. The
company trusts TDCL encourages it enhance arranging, inventory administration, transport
administration and opportune conveyance. After-sales benefit is an imperative thought for a
potential customer to pick the correct auto. The client won't have any desire to invest a great deal
of energy to head out too far just to have the auto overhauled particularly for basic processes, for
example”, changing the motor oil, oil channel, and so on. Parts and frill should likewise be
effortlessly available when required.

MAJOR ISSUE FACED BY TATA MOTORS

Tata Nano is a project of the chairman of the Tata Group Mr. Ratan Tata. It was a car which was
considered and which was expected to change the game of automobile sector in India. Tata Nano
challenged to raise the bar so high that it would become extremely difficult for the competitors to
match, in the highly competitive small-car market of India. The dream of having a car for a small
amount of Rupees 1 lakh (Rs.100,000 – roughly USD2500) was too exciting for thousands of
Indians who are not able to afford even a small little car. Tata Nano received a great media
coverage from the very day it got announced. However just after two years of its inception, the
Tata Nano manufacturing plant at Sanand in Gujrat, India is running at just 20% utilization and
finally it got closed recently.

REASONS

1. Price Perception: Since it was just priced at 2Lac rupees, therefore the perception of the
people was such that it would not be having good quality and would not be durable.
2. Resale Value: The resale value of the car was almost negligible and since Indians need
good monetary value after sales also.
3. Safety: After a few incidents of fire getting caught into the car parts while running, there
were a numerous protests and allegations on the brand to take it back since it was not at
safe on road.