AUTOMOBILE INDUSTRY

By Abin jose, Sachin S, Bhartath Reddy, Deepak Manmohan, Uthapalakshi, Kiruba devi

Cars are a part of our lifes journey, something that reminds us that the joy is often in the journey itself, and not just in the destination..........

INTRODUCTION TO AUTOMOBILE INDUSTRY

The Automobile Industry of India has come a long way since 1898 when the first car rolled out on the streets of Mumbai. The then government policies were not favorable to the industry and the lack of interest of the state machinery was also responsible for the delayed growth of the industry. After the liberalization of policies and tax reliefs, the industry shed its cover of gloom and lazy image and emerged as one of the major sectors

of India. As of now, the estimated size of this industry stands at a staggering $6.7 billion
and is set to reach the size of $17 billion by 2012. The industry has registered a steady growth of 17%-18% for the last ten years. The automobile industry can be divided into 3 major parts : two-wheeler segment, passenger cars segment commercial vehicles segment.

BRIEF INTRODUCTION
Volkswagen Slogan Founded FounderPeoples Car Das Auto (The Car) 1937 German Labour Front

Head quarters CEO Employees Products-

Wolfsburg, Germany
Martin Winterkorn 5,50,000 Automobiles, Motorcycles, Commercial vehicles, Engines and Turbo machinery

Production facilities - 100 across 27 countries

OPERATING AREAS
Automobile
Financial

PRODUCTS

PLACE

Largest Car maker in Europe 1 in 4 cars made by volkswagen 12.8% share in World Passenger market

SALES BY CONTINENT

SALES BY COUNTRY

BRICS

SALES IN INDIA
Year 2010 2011 2012

Volkswag en
30,319 76,107 70,535

Audi 3,003 5,511 9,003

Skoda 20,019 30,005 34,265

Bentley NA 52 39

Lamborgh ini
NA 14 17

Porsche NA 0 225

Total 53,341 111,693 115,237

PRICE RANGE IN INDIA

Low Price (lakhs) High Price (lakhs)

Volkswagen Audi Skoda Porsche Bentley Lamborghini Bugatti

4.5 25 5 70 166 166 1200

76 200 25 220 270 480 2500

Scani
Ducati

78
8.7

120
49

PROMOTION
Pele signed as brand ambassador to represent the company during upcoming FIFA world cup and Olympics

Maria sharapova for Porsche

Bentlys brand ambassador and five times Le mans winner Derek Bell Customer offers Ipods,Guitars Media promotion most of the communication takes place through Magazines, newspapers. The Talking Newspaper ad ----- Web promotion - Podcasting , Linkedin, Facebook, Twitter. Dedicated site innovation for everyone and Think Blue.

SEGMENTATION
Passenger cars Volkswagen Audi (99.55%) Bently Lomborghini Skoda Bugatti Porsche Seat Suzuki Motors (19.9%) Commercial Vehicles VW Commercial Vehicles MAN(75%) Scania(82%) Motorcycles Ducati

SPORTS CAR OR CLASSIC CAR

In 2002 VW divided car sector into Sports and Classic Audi (Sports) Audi Lomborghini Seat Duacti Volkswagen (Classic) Volkswagen Bently Skoda Bugatti

TYPES OF VEHICLES

TARGET
Age: 18-48 Status: Upper middle class and higher class

POSITION
Third largest in production

Operating in 153 countries

Rank 1 2 3

Company Toyota General Motors Volkswagen

Units (millions) 9.75 9.39 9.20

STRATEGY
Double its sales by 2018 : Intends to deploy intelligent innovations and technologies to become a world leader. To increase unit sales to more than 10 million this year. To increase its return on sales before tax to at least 8%

Aims to become the top employer across all brands

Volkswagen SWOT

SWOT
Global presence

Strengths

Weaknesses

Weak position in the US passenger car market Most cars are not environment friendly

Strong brand portfolio Synergy Strong presence in China Well performing brands
Opportunities

Threats

Changing customer needs Positive attitude towards green vehicles Growth through acquisitions Increasing global demand for buses

Govt. policies Fluctuating fuel prices Rising raw material prices Exchange rates

HISTORY
Maruti Udyog Limited (MUL) was established in February 1981.

Originally, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan.
Then the government of India sold its complete share to Indian financial institutions Actual production commenced in 1983.

Initial competitors were Hindustan Ambassador and Premier Padmini.

Signed agreements with Hungary for exports of Maruti cars. Suzuki motor corporation acquired major stake in MUL in 2002. Maruti Udyog Limited renamed as Maruti Suzuki India limited in 2007.

EVOLUTION
First lot of Maruti cars assembled in 1983.(m-800)

Release of Indias first iconic MUV Maruti Omni at 1984.

Indias first off roader Maruti Gypsy launched in 1985. Marutis first luxury sedan Maruti 1000 launched in 1990. Launch of Zen in 1993.

Esteem launched in1994.

Launched Indias 1 st 24 hours on road service in may 1996. Started customer care centre in 2000. Started true value outlets in 2001.

TAG LINES
For a country obsessed with mileage Maruti Suzuki makes Indias most fuel efficient cars India comes home in a Maruti Suzuki Maruti Suzuki- Big like India smart like you Maruti Suzuki-way of life. Maruti Suzuki-count on us.

PRODUCTS

PRICING
Considers various factors such as market share, competition, material costs, product identity and the customer's perceived value of the product The price decision is very sensitive and for that special care is to be taken to get the competitive edge .

Maruti Car Models

Maruti 800 Maruti A-Star Maruti Alto 800 Maruti Alto K10 Maruti Eeco Maruti Ertiga Maruti Grand Vitara Maruti Gypsy Maruti Kizashi Maruti Omni Maruti Ritz Maruti Swift Dzire Maruti Swift Maruti SX4 Maruti Wagon R Maruti Wagon R Stingray Maruti Zen Estilo

Price Range (Rs.)

2,12,885 - 2,35,469 3,84,896 - 4,69,944 2,46,500 - 3,60,500 3,25,083 - 3,38,324 3,08,715 - 4,13,933 5,98,971 - 8,70,971 22,68,064 - 24,60,529 5,51,410 - 6,04,373 16,52,875 - 17,52,875 2,20,492 - 2,82,014 4,32,238 - 6,33,613 4,92,355 - 7,50,484 4,48,894 - 6,87,769 7,21,736 - 9,79,787 3,61,606 - 4,48,400 4,13,724 - 4,70,724 3,49,554 - 4,39,861

PLACE
Maruti Suzuki has two manufacturing facilities in India. Both manufacturing facilities have a combined production capacity of 14,50,000 vehicles annually. It has the largest dealer and service network. In fact it was one of the very first companies in the country to understand the importance of after sales service in high involvement products like cars. To increase their reach to rural India,, they opened extension counters which are operated by some dealer in the city thereby ensuring increased customer touch points without risking the viability of the dealers.

DISTRIBUTION NETWORK
Years Sales Outlet Cities Covered By Sales Network 343 454 555 668 801 874 Dealer Sevice Maruti Cities True Authorised Covered Value Service By Service Outlets 2628 2767 2740 1845 1653 1514 1220 1314 1335 1395 1408 1423 266 315 341 358 409 456 Cities Covered By True Value 166 181 198 208 233 256

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

600 681 802 933 1100 1204

683 779 906 1101 1305 1415

 The promotion includes all communications a marketer used in the market for his products and services to create awareness, to persuade the customers, to buy and retain in future also. The company emphasise on road safety and environment friendly products.

Institute of Driving Training and Research (IDTR) and the Maruti Driving Schools spread across the country. Of the 5, 00,000 people to be trained, at least 1,00,000 will be people from underprivileged section of society, who are keen to take driving as a profession. Promotes the concept of "Reduce, Reuse, Recycle" (3R's).

 Considers festival seasons.

Cash discounts, lucky draws, shopping coupons or vouchers

Free Accessories Print media Radio Road shows Tv advertisements

COMPANY PROFILE
Tata Motors Limited is Indias largest automobile company, with consolidated revenues of Rs.70, 938.85 crores (USD 14 billion) in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the worlds fourth largest truck manufacturer, and the worlds second largest bus manufacturer. The companys 23,000 employees are guided by the vision to be best in the manner in which we operate best in the products we deliver and best in our value system and ethics. Established in 1945, Tata Motors entered into collaboration with Daimler Benz of Germany in 1954 to manufacture commercial vehicles. The collaboration ended in 1969. Tata Motors has grown from strength to strength. Tata Motors has the unique distinction of giving India its first and only indigenously built passenger car The Tata Indica and the premium feature sedan The Tata Indigo. The Indica, launched in 1998, reached the 2.50,000 sales mark within 52 months of launch. Tata Motors, the first company from Indias engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Koreas second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the companys pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata Motors is also expanding its international footprint, established through exports since 1961. The Tata Nano has been subsequently launched, as planned, in India in March 2009.

MARKETING MIX
PRODUCT (Brand, Packaging, Innovations, Quality) : a. Brand : Advertising is often used to make consumers aware of a products special low price or its benefits. But an even more important function of advertising is to create an image that consumers associate with a product, known as the brand image. The brand image goes far beyond the functional characteristics of the product. The products of Tata Motors have many special characteristics to them, but when consumers think of it, they not only think of its features, but they may also associate it with quality, performance, class. All of these meanings have been added to the product by advertising. Consumers frequently buy the product not only for its functional characteristics but also because they want to be identified with the image associated with the brand. Tata Motors have been successful in creating and maintaining a professional brand image. b. Packaging : A vehicle cannot have a material packaging. Here, packaging refers to and effective assembly of features. Tata Motors provide many innovative features to suit the target customers and the product. E.g. Tata Safari Dicor has Reverse Guide System which includes a weather -proof camera to help the driver while reversing the vehicle. c. Innovations : The various motives behind buying an automobile are Need, Prestige, Comfort, Fashion, Jealousy and Novelty. The R & D Department continuously strives to bring new innovations in their product. Tatas have an industrial experience of over 100 years and they are well known with the Psychology of Indian customers, who desire more at less price. This experience has helped them to develop products which fulfill the expectations of Indian consumers. d. Quality Control : Tata Motors have their Quality Control standards and the QC Dept. ensures that the customer does not face any inconveniences of a defective product.

PRICING STRATEGY
The prices are fixed keeping in mind a number of factors. As told by Mr. Desai, prices have to be at par with the prices of the competitors. Tata Motors give a relative price advantage as compares to its competitors. The various determinants of price are i. Market Condition ii. Costs incurred iii. Profit percentage desired by the Co. iv. Dealer Profit b. Alterations : The Company does not allow any alterations to any of the features of the product. If there is an alteration which affects the performance of the engine, then the warranty becomes void. However, there may be alterations in the accessories, if desired by the customer. c. Discounts : Discounts are decided by the Co. every month. Any further discounts made from the profits of the dealer. However, the Co. may compensate the dealer for the discounts allowed to a certain extent.

PROMOTION
a. Personal Selling : There is minimal personal selling involved. The Sales Officers at the dealerships collect prospective customer databases and perform cold calling to attract customers. b. Advertising : Advertising is a form of commercial mass communication designed to promote the sale of a product or service. Tata Motors is responsible for the advertising of its products. The dealer does play any role in the advertising. The various media used for advertising are T.V., Newspapers, Magazines, Hoardings, Internet etc. The dealer conducts point-of-purchase displays to advertise the products. The advertisements done by the Co. help the dealer to capitalize on the market. c. Sales Promotion : The purpose of sales promotion is to supplement and coordinate advertising and personal selling; Sales promotions are designed to persuade consumers to purchase immediately by providing special incentives such as cash rebates, prizes, extra product, or gifts. The Co. conducts intensive sales promotion during festivals such as festive discounts during Diwali. d. Public Relations : Public Relations is a management function that creates, develops, and carries out policies and programs to influence public opinion or public reaction about an idea, a product, or an organization. The Co. takes serious measures to maintain good public relations. The Co. follows business ethics to ensure that the customer is satisfied and receives good service whenever and wherever he desires

PLACE
a. Channels of Distribution : In case of vehicles, dealership method of distribution and sales is generally adopted. Tata Motors have also adopted dealership method of distribution of its products. The dealers purchase products from the Co. at a negotiated price. The MRP is fixed by the Co. and the dealer gets a profit within these prices. As the Co. deals in commercial and passenger vehicles, there may be a single or distinct dealerships to market its commercial and passenger vehicles in a town. However, if there is a single dealership appointed, then the commercial and passenger vehicles are managed under Commercial Vehicles Dept. and Passenger Vehicles Dept. respectively. Tata Motors have contracts with the Government of India and it supplies buses and passenger vehicles, in some cases, to the Govt. Sometimes, bulk quantities of vehicles are ordered by a Govt. Dept. or a private company. The sales, distribution and billing of these are looked after by the Co. itself. b. Physical Distribution : The commercial vehicles are manufactured at Jamshedpur, Lucknowand Pantnagar whereas the passenger vehicles are manufactured at Pune plant. From the plant, the finished product is transported to the dealerships. The nation-wide dealership, sales, services and spare parts network comprises over 2,000 touch points. The dealerships are strategically located in the target and potential markets to ensure efficient and timely availability of its products in the market.

SWOT ANALYSIS
STRENGTHS World class Italian cabin design Engine capacity up to 560BHP Up to 75 ton load bearing capacity 1000+ customizations Meets international testing standards Multiple combination of power train, WEAKNESSES Low return on equity Declining operating margin Comparatively high price than competitors New concept to customer base. low promotion activities

SWOT Analysis

OPPORTUNITIES Increasing demand for fuel efficient vehicle in the market. Existing goodwill in target market Existing distribution channel Technological advances Acquisition of Daewoo motors commercial vehicle department added to manufacturing abilities.

THREATS Competition from existing industry partners Rising prices of raw material in global market e.g. steel, aluminum, etc. Fuel is getting costlier Global economic meltdown affected production.