TABLE OF CONTENTSCH-1 PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMERY RESEARCH METHODOLOGY RESEARCH PROBLEM AND OBJECTIVE DATA SOURCES RESEARCH APPROACH CONTACT METHOD RESEARCH INSTRUMENT SAMPLING PLAN LIMITATION INTRODUCTION TO AUTOMOBILE HISTORY CLASSIFICATION OF CAR INDIAN SENARIO IN AUTOMOBILE GLOBAL SENARIO IN AUTOMOBILE INTRODUCTION TO AUTOMOBILE INDUSTRY SIZE AND STRUCTURE OF AUTOMOBILE INDUSTRY MAJOR PLAYRS SWOT ANALYSIS PEST ANALYSIS FIVE FORCE ANALYSIS MARKET SHARE STP ANALYSIS SEGMENTATION TARGETING POSITIONING ANALYSIS OF PRODUCT STRATEGY PRODUCT MIX PRODUCT LINE, FILLING, STRETCHING LEVEL OF PRODUCT PRICE STRATEGY TYPES OF PRICING PRICING METHOD PRICE STRATEGY BY VARIOUS PLAYERS DISTRIBUTION ANALYSIS DISTRIBUTION CHANNEL DISTRIBUTION LEVEL DISTRIBUTION METHODS ROLES AND RESPONSIBILITY OF TNTERMEDIARIOS PROMOTION ADVERTISING STRATEGY PROMOTION STRATEGY PUBLIC RELATION STRATEGY PRSONAL SELLING AN ANYLITICAL STUDY OF CONSUMER BEHAVIOUR FOR AUTOMOBILE PURCHASE

CH-2

CH-3

CH-4

CH-5

CH-6

CH-7

CH-8

CH-9

CH10

CONCLUSION AND FINDINGS AND BIBLIOGRAPHY

PREFACE

One of the recurrent things in our report has been the Automobile industry in the mind of consumers. During the past few decades we have leaved in culture that is the evidence of changing consumers preference of automobile and the growing variety of cars in India. We have chosen to prepare a report on Automobile industry because of its importance for the consumer and for the Indian economy, we can never underscore how Automobile industry is important medium of revenue for our nation. At first when we were putting down our efforts we have no idea what we would have to say through our report but however we put aside all doubts and begun to examine the past of Automobile industry that how with the passage of the time Automobile industry has grown and became a strength for our economy as well as the present scenario, and where future lies of Indian Automobile industry. Every industry has struggled to achieve its goals. Generations have given their best to make life better for their offspring. There is nothing mysterious or hidden about it no alternative to effort. And yet we fail to follow the winning track. More than the problems outside globalization, recession, inflation, instability, and so on we are concerned about the inertia that has gripped the Automobile industry psyche, the mindset of defeat. e believe that when we believe in our goals that what we dream of can become reality results will began to follow. In the eight chapters of our report we have introduced you with our work and extent of our knowledge regarding different concepts of marketing and business environment and how we have linked theory with the practical issues of Indian Automobile Industry.

ACKNOWLEDGEMENT

While we are of course solely responsible for the content in this report Automobile industyr. We want to thank several people for their assistance. From the practical study we have got the experience and improved our knowledge and it provides us guidelines to perform work in actual situation. We have thankful to director of our college Prof. Shilpa Shah and Brahmchari Wadi Trust Institute of Business Administration to providing all the facilities to make this report and for all encouragement. Firstly we are thankful to the faculty who reviewed this report and provided us with rich guidance MR BHAUMIK NAYAK. We are thankful to all those respondents who actively engaged with our research given their precious time to us. At home we want to acknowledge the support and patience of our parents during the many hours we spent on working on the report. Last but not least we are also thankful to our classmates for sharing the information with us.

EXECUTIVE SUMMARYToday whole world is of globalization. Even India is developing. We need extra knowledge, talent, and managerial skills to make our position strong in this competitive world.

In present condition we must have some practical knowledge in business administration. In T.Y.B.B.A Program, we study different subjects like Advanced Marketing Management, Business Environment, and Organization Behavior. In first year we had industrial visit in second year we had industrial visit and financial project. In third year we have GROUP PROJECT. In this we take particular industry or company for study. The theme of GROUP PROJECT is to study an industry or company. If it is Industry than different aspects of that Industry are surveyed. This is a group project. This project is based Indian Personal Care Industry. Through this project it was surveyed that which type of cars people prefer, which are the different brands in the market, what is the market share of different brands, why people use Cars, and other determinants of cars. So, to get that practical knowledge we have surveyed different brands of Automobile which are also major ones in the market they are Maruti, Honda, Ford, Nissan, Toyota, etc.

CHAPTER 1: RESEARCH METHODOLOGY1.1 Research Objective:

Research objective can be defined as the purpose or motive behind the research which the researcher tries to conclude some of the major and minor findings. There are two types of objective in research. Primary objective secondary objective(1) PRIMARY OBJECTIVE:-

Our researchs primary objective is to identify the consumers preferences and consumption habit of purchase the car.(2) Secondary objective:-

To analyze the situation of automobile market in India. To understand competitive framework of Indian automobile industry. To analyze the marketing mix strategy adopted by various big automobile marketers. To understand the various internal and external factors affecting Indian automobile industry.

1.2) RESEARCH DESIGN:Research design is also known as framework or blue print of the research. There are three types of research design.(1) EXPLORATORY RESEARCH DESIGN:-

Exploratory research design means to find something new that help us to collect preliminary information and research hypothesis consumption.(2) DESCRIPTIVE RESEARCH DESIGN:-

Descriptive research design means to describe any situation or information in detail.(3) CASUAL RESEARCH DESIGN:-

Casual research design means to study the cause and effect relationship of situation. Here in the market research we have use exploratory research design and descriptive research design. We started with exploratory research for the following reasons and ended with descriptive research by explaining each by each topic in detail.

To find out scope for the product. To find out combination in distribution channel To find out effective media channels.

1.3) DATA SOURCES:The source from which we get the information or data for research is known as data source. The researcher can gather primary data, secondary data or both.(1) PRIMARY DATA:

The data that are freshly gathered for a specific purpose or for a specific research project. The researcher collects the data on his own without any use of secondary source.(2) SECONDARY DATA:-

The data which already exists somewhere and it was gathered for some other purpose in the past. Here we get the information through internet by using different websites and various related books. We started our investigation by examining secondary data to see whether the problem can be partly or wholly solved without collecting costly primary data. When the required data do not exist or out dated, inaccurate, incomplete or unreliable then we collected the primary data through various research approaches.

1.4) RESEARCH APPROACH:After deciding the data source we will get the information from our respondent that is consumers. Primary data can be collected in following five ways.(1) OBSERVATIONAL RESEARCH:-

Fresh data can be collected by observing the consumers when they shop or consume the products. Important points can be noted down while analyzing the behavior of consumers.(2) SURVEY APPROACH:-

It refers to face to face or direct communication with the respondents. In this pre-decided questions are asked to respondents. It is suited for descriptive research.(3) FOCUSED GROUP APPROACH:

In this researcher select people who are potential to afford their products. The trained moderator will ask the questions to the respondents and he will note the important points regarding his preferences.(4) EXPERIMENTAL APPROACH:-

In this two mutually exchange groups are selected having similar characteristics, keeping the same controllable factors and same variables in both groups but providing them different treatment to observe the differences in their opinion. Here we have used survey approach to know about consumers beliefs, preferences and satisfaction regarding the consumption of likeness or dislikeness of companies car.

1.5 CONTACT METHODS:In this we decide the methods through which we can contact the respondents to get the information. Some of them are as follows.(1) PERSONAL INTERVIEW:

It is a face to face communication with respondents. By this type of interview we can get the reliable information and researcher is able to complete all the questions. Explanation is given for the questions which are not understood by the respondents.(2) TELEPHONIC INTERVIEW:

In this researcher ask questions to respondents on telephone. It is the best method for gathering information quickly and is less costly also. But in this type of method researcher cannot get reliable, accurate and correct information.(3) MAIL QUESTIONNAIRE:

A structured questionnaire is prepared and sends to the respondent. The respondent is supposed to fill up the questionnaire and back to the researcher. This is very time consuming.(4) ONLINE INTERVIEW:

In this type of research we ask the questions to respondents online through chat or Email. Large number of respondents can be covered and it is less costly. For our research we used personal interview for getting the reliable information from the consumers. We met consumers of various age groups to know their consumption habit and preferences related different companies car.

1.6) SAMPLING PLAN:Researcher uses uses sampling plan to reduce time and cost of research. Few units from population are selected known as sample. Sampling plan has following three decisions to be made.(1) SAMPLING UNIT:

It refers to that who should we survey? Researchers select the target audience and do the research. For our research our sampling units are the consumers who are using the cars.(2) SAMPLING SIZE:

It refers to how many people to be survey? Sample size should be optimum to do survey to get more reliable results. For our research sampling size was 300 consumers, of whom 297 are car users and 3 are non car users.(3) SAMPLING PROCEDURE:

It refers to how should we choose the respondents? Sampling procedure is of two kinds: Probability sampling procedure: It is used where all the units of population are get known and equal chance to be selected as samples. Non probability sampling procedure: It is used where all the units of population do not get known and equal chance to be selected as samples. In our research we used non probability sampling procedure by convenience sampling as all the units of population do not get known and equal chance to be selected as samples.

1.7) RESEARCH INSTRUMENT:Basically there are 3 main types of research instrument. They are: questionnaire Qualitative measures Mechanical devices There are 2 types of questionnaire (1) STRUCTURED QUESTIONNAIRE: In this type of questionnaire all the questions are in pre decided format and it is asked in a logical sequence.(2) UNSTRUCTURED QUESTIONNAIRE:

In this type of questionnaire questions are ready but not asked in logical sequence. Researcher can ask any question at any time according to this wish as the format is not pre decided. There are 2 types of questions:(1) Open ended question:

It means where respondents is allowed to answer in his own way by using own words and sentences. Here freedom is provided to respondents to answer.(2) Close ended question:

It means where respondents are provided the options and is supposed to answer from those alternatives only. Here freedom is not provided to respondents to answer. For our report we have STRUCTURED QUESTIONNAIRE. That includes both open and close ended type of questions we have used dichotomous questions, multiple choice questions and rating scale type of questions.

1.8) ANALYSIS DATA:Analysis of our research is divided into 5 types. They are: (1) (2) (3) (4) SCREENING CODING DECODING TABULATION GENERAL TABULATION CROSS TABULATION (1) PIE CHARTS A detailed introduction of automobile aspect is as follows. (1) SCREENING Screening involves collection of all necessary information through questionnaire and then identifies the eligible questionnaires that are useful for research. In this process we have discriminated the correct questionnaire and conducted our analysis. On the basis of these error free questionnaires we have conducted the further analysis. (2) CODING In the second stage of our analysis we have marked 1 to 300 numbers on the questionnaires. That means our sample size was 300 respondents. Each and every question of questionnaire and the options given in each question was also assigned a code. Example: Why did you purchase this car? Good brand image Word of mouth communication Better after sales service 1 2 3

Resale value Other please specify

4 5

In the above example the question is assigned the code as Q-1 and the options given in Q1 are assigned 1 to 5 nos as code.(3) DECODING:

In this steps of our analysis the same method which we have applied at the time of coding in the actual questionnaire. In the computer fist of all we have entered 300 respondents as R1, R2, R3.R300 and the questions 1 to 29. These 29 questions include rating type of questions the options were also considered as a separate question at the time of decoding.(4) TABULATION:

In the tabulation we as a researcher have used 2 types of tabulation. They are general tabulation and cross tabulation. General tabulation: In general tabulation we have arranged the data in forms of table for every question. Likewise income and mode of purchase. This type of tabulation is being prepared from our side for each and every question in our questionnaire.Income/LEVEL Cash 0 0 1 3 15 Finance 0 2 5 3 12

less than 30,00031,000 to 45,000

46,000 to 55,00055,000 to 70,000

More than70,000

Cross tabulation: We have also tried to articulate the relation two different entities. Example:

Income of the respondents and the time at which he/she prefers to purchase the car.Income Less than 30,000 31,000 to 45,000 46,000 to 55.000 55,000 to 70,000 More than 70,000 Different levels Entery level 41 31 43 15 17

Executive level 11 25 26 22 23

Premium level 0 2 6 6 27

(5) CHART :

We have also presented the information collected from our side in the form of pie chart also so that a clear idea about the respondents and the responses given by them can be obtained. Example:

1.9) LIMITATION OF THE RESEARCH:There are certain limitations to be faced while doing these researches.(1) Time:

It is time consuming as it took nearly 6-7 methods months for data collection primary survey and analysis of it of 300 sample size.(2) Cost:

It becomes more expensive due to primary survey done to know the preferences of the consumers because it requires a skilled people.(3) Area:

The geographic area was limited to Ahmadabad only. Therefore result may be restrictive

(4) Professional approach:

No technical software is used. So problems and loopholes may found. For the purpose of analysis we have no used any technical software.

CHAPTER 2:INTRODUCTION TO AUTOMOBILE INDUSTRY2.1:- History of automobile industryHorses had dreams of them since time immemorial, but it was only in the 18th century that the first horseless carriage actually hit the roads. That's not to say that the idea never struck anyone. Seeds of the idea, in fact, originated long before the first contraption was rolled. The history of the automobile actually began about 4,000 years ago when the first wheel was used for transportation in India. Several Italians recorded designs for wind-driven . The first was Guido da Vigevano in 1335. It was a windmill-type drive to gears and thus to wheels. Vaturio designed a similar car that was also never built. Later Leonardo da Vinci designed clockworkdriven tricycle with tiller steering and a differential mechanism between the rear wheels. In the early 15th century, the Portuguese arrived in China and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power. By the 1600s, small steam-powered engine models were developed, but it was another century before a full-sized engine-powered automobile was created. Carl Benz and Gotttlieb Daimler, both Germans, share the credit of changing the transport habits of the world, for their efforts laid the foundation of the great motor industry as we know it today. First, Carl Benz invented the petrol engine in 1885 and a year later Daimler made a car driven by motor of his own design and the rest is history. Daimler's engine proved to be a great success mainly because of its less weight that could deliver 1000 rpm and needed only very small and light vehicles to carry them. France too had joined the motoring scenario by 1890 when two Frenchmen Panhard and Levassor began producing automobile s powered by Daimler engine, and Daimler himself, possessed by the automobile spirit, went on adding new features to his engine. He built the first

V-Twin engine with a glowing platinum tube to explode the cylinder gas-the very earliest form of sparking plug. The engines were positioned under the seat in most of the Daimler as well as Benz car s. However, the French duo of Panhard and Levassor made a revolutionary contribution when they mounted the engine in the front of the car under a 'bonnet'. Charles Duryea built a car carriage in America with petrol engine in 1892, followed by Elwood Haynes in 1894, thus paving the way for motor car s in that country.

2.2 :- History of Indian automobile industry.The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. An embryonic automotive industry emerged in India in the 1940s. Following the independence, in 1953, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies. In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars Indian automobile industry has grown leaps and bounds since 1898, a time when a car had touched the Indian streets for the first time. At present it holds a promising tenth position in the entire world with being # 2 in two wheelers and # 4 in commercial vehicles

2.3:- Classifications of cars:The classification of the cars are majorly on 3 bases i.e. it is mainly divided into 3 parts.1)

*CLASSIFICATION OF CAR ON THE BASIS OF INCOME*ENTERY DIFFERENT LEVELS OF CARS EXECUTIVE PREMIUM

COMPANY

MARUTI SUZUKI LIMITED

HYUNDAI MOTORS

FORD MOTORS NISSAN MOTORS VOLKSVAGON CHVEROLET

MARUTI 800 OMNI ECCO ALTO WAGON-R A-STAR SWIFT RITZ ZEN ESTILO i-10 i-20 SANTRO GETZ FIGO MICRA POLO SPARK BEAT AVEO UNO NANO INDICA INDICA VISTA PALIO

SWIFT DEZIRE VERSA SX4

GRAND VITARA KIZASHI

ACCENT VERNA FIEST IKON

SONATA

OPTRA TAVERA SAFARI LINEA LOGAN SCORPIO XYLO CITY JAZZ CIVIC INNOVA COROLLA ETIOS FABIA OCTIVIA C-CLAS

X-TRAIL JETTA BETTLE CRUEZ

TATA MOTORS FIAT MOTORS MAHINDRA & MAHINDRA LIMTED HONDA MOTORS LIMITED TOYOTA MOTORS SKODA MOTORS MERCIDES BENZ AUDI

ACCORD CR-V CAMERY FORTUNER LAURA SUPERB E-CLAS S-CLAS Q7 Q5 A4 A8

*CLSSIFICATION OF CAR ON THE BASIS OF LENGTH*SEGMENT A1 - MINI A2 - COMPACT LENGTH UP TO 3400 mm 3401 TO 4000 mm EXAMPLE M 800 NANO ALTO WAGON-R ZEN i-10 A-STAR SWIFT i-20 PALIO INDICA CITY SX4 DEZIRE LOGAN ACCENT FIESTA VERNA COROLLA CIVIC OPTRA OCTIVIA CAMERY E-CLASS ACCORD SONATA LAURA SUPERB S-CLASS 5 SERIES OMNI VERSA MAGIC

A3 - MIDSIZE

4001 TO 4500 mm

A4 EXECUTIVE A5 - PREMIUM

4501 TO 4700 mm

4701 TO 5000 mm

A6 - LUXURY B1 - VAN

ABOVE 5000 mm

2) 3)

*CLASSIFICATION OF CAR ON THE BASIS OF BODY*MODEL OF CARS A7 RENAULT SANDERO RENAULT MEGANE SPARK BEAT PALIO PUNTO OPEL ASTRA FIGO SANTRO GETZ i-10 i-20 ALTO WAGON-R RITZ ZEN ESTILO A-STAR 800 SWIFT MICRA INDICA INDICA VISTA XETTA NANO FABIA POLO

4) HATCHBACK COMPANY AUDI CARS M & M LIMITED CHVEROLET FIAT FORD MOTORS HYUNDAI MOTORS

MARUTI SUZUKI INDIA LIMITED

NISSAN MOTORS CO. LIMITED TATA MOTORS

SKODA AUTO INDIA PVT. LTD. VOLKSVAGON

5)

SEDAN COMPANY M & M LIMITED AUDI CARS CHVEROLET

FORD FIAT INDIA PVT.LTD. HONDA MOTORS HYUNDAI MARUTI SUZUKI INDIA LTD. NISSAN SKODA

TATA MOTORS

TOYOTA MOTORS VOLKSVAGON

MODEL OF CARS RENAULT MEGANE LOGAN XYLO A4 A8 A6 OPTRA MAGNUM OPTRA CRUEZ AVEO U-VA FOCUS IKON FIESTA LINEA PETRA ACCORD CITY CIVIC ACCENT VERNA GETZ PRIME ESTEEM BALENO SX4 SWIFT DEZIRE LIVINA TEANA LAURA OCTIVIA CLASSIC OCTIVIA COMBI SUPERB INDIGO E-CS INDIGO CS INDIGO MARINA TATA ARIA CAMERY COROLLA PRIUS HYBRIDE PASSAT JETTA VENTO BETTLE

2.4:- Indian scenario of carsThis situation reflected the India of yester years. Economic reforms and deregulation have transformed that scene. Automobile industry has written a new inspirational tale. It is a tale of exciting multiplicity, unparalleled growth and amusing consumer experience all within a few years. India has already become one of the fastest growing automobile markets in the world. This is a tribute to leaders and managers in the industry and, equally to policy planners. The automobile industry has the opportunity to go beyond this remarkable achievement. It is standing on the doorsteps of a quantum leap. 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. Starting from the two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles and the luxury vehicles, the Indian automobile industry has achieved splendid achievement in the recent years. The opportunity is staring in your face. It comes only once. If you miss it, you will not get it again On the canvas of the Indian economy, auto industry maintains a high-flying place. Due to its deep frontward and rearward linkages with several key segments of the economy, automobile industry has a strong multiplier effect and is capable of being the driver of economic growth. A sound transportation system plays an essential role in the countrys rapid economic and industrial development. The well-developed Indian automotive industry skillfully fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc. The automotive sector is one of the core industries of the Indian economy, whose prospect is reflective of the economic resilience of the country. 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 automotive sector in India is growing at around 18 per cent per annum. The auto industry is just a multiplier, a driver for employment, for investment, 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. 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 9.7 million in 2006 (nearly 7 per cent of global automobiles production and 2.4 per cent of four wheeler production).

The cumulative annual growth rate of production of the automotive industry from the year 20002001 to 2005-2006 was 17 per cent. The cumulative annual growth rate of exports during the period 2000-01 to 2005-06 was 32.92 per cent. The production of the automotive industry is expected to achieve a growth rate of over 20 per cent in 2006-07 and about 15 per cent in 200708. The export during the same period is expected to grow over 20 per cent. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. With the Indian middle class earning higher per capita income, more people are ready to own private vehicles including cars and two-wheelers. Product movements and manned services have boosted in the sales of medium and sized commercial vehicles for passenger and goods transport.

2.5:- Global scenario of carsThe passenger car segment has emerged as a major driving force for upstream industries like steel, iron, aluminum, rubber, plastics, glass, and electronics and down stream industries like advertising and marketing, transport and insurance. The car industry generates large amount of employment opportunities in the economy. For example in the US, every sixth worker is involved in the making of an automobile. The global automotive car market is growing at a rate of only 2 percent per annum and is not expected to pick up in the near term. Growth has dropped due to the increasing levels of saturation in the larger car markets of the world. Worldwide the trend is towards ensuring that one's products are superior in terms of quality. This will enhance the useful life of cars and, hence, slow down growth in sales.The world car production has increased from 44.66 mn in 1996 to an estimated 48.3 mn cars in 1999. Japan, Canada and USA brought about the major increases, which contribute to 53% of the world's car production. The largest car market - the US market expects car sales to decline 8 to 9 per cent to 16 million cars in 2001, as compared to 17.4 million cars sold in 2000. The USA and Japan are the leaders with around 42% of the total world market. However, since the last two to three years, the international passenger car industry has been witnessing an over capacity of more than 30%. The trend suggests that industry volumes may grow by just 2% or around 10 mn vehicles per year. If this situation continues for the next few years the world car market may witness shakeout in the near future. Already signs towards this are being observed as the phenomenon of mergers catches on. The recent mergers in the international car market are Ford-Volvo, Renault-Nissan, Daimler-Chrysler. A few more players are expected to join the fray in the next few years so as to strengthen their hold in the world market. Among the top car manufacturing companies General Motors and Ford Motors group of USA lead with a contribution of 15.8% and 11.6%, of world car production, respectively. Volkswagen and Toyota stand third and fourth with more than 9% contribution each to the world car production. The global domination of the larger automotive manufacturers is slowly on the wane and the

trend in sales is shifting towards more "regio-centric" products. Automakers that have been enjoying a generally prosperous spell would have to rethink on the way vehicles are designed, manufactured, distributed or sold. Already, players like General Motors Volkswagen and Toyota have begun to re-examine their dealer relationships and pricing strategies. Car makers would now have to think in terms of a new customer focus and provide better financing and servicing. Strategic tie-ups, mergers and acquisitions have become the talk of the day. A few instances are Daimler Benz's tie-up with Chrysler of the US, Ford's acquiring of Daewoo and tie up with Volvo Car Corporation and Renault acquiring a stake in Nissan. Such deals will certainly lead to economy in terms of costs but it remains to be seen whether they will also create significant new opportunities for growth. With global consolidation in the car industry, it is expected that more international players will work closely to bring about operational efficiencies. By nature, the car industry is highly capitalintensive and vast amounts of money are being spent on R&D. With the players getting together to produce more technologically superior cars, they can derive greater benefits from their R&D efforts. Profits, which are under pressure due to wafer thin margins will be boosted due to greater economies of scale. The situation could become very difficult for the purely Indian automakers such as Telco, Mahindra and Hindustan Motors unless they rethink their strategy. It can easily be seen why TELCO has been in the news on rumors that it wants to hive off its car division and bring in an overseas partner. Reports suggest that HM is thinking of exporting parts from its manufacturing units and also assembling and distributing other makes of vehicles who may wish to enter into India, but cannot enter full scale manufacture due to the small market sizes. Clearly exports will be the big opportunity for Indian automobile companies if they can control costs and deliver good quality output. Already Maruti, Hyundai and Ford as well as Mercedes Benz have started exports in a small way and this can grow. Majors like TELCO and Ashok Leyland are already exporting their products in reasonable volumes. Availability of easy financing options has been a major reason for the dramatic growth the automobile market has witnessed in recent times. Maruti has set up a separate financing unit in association with banks. GM has one of the largest financing companies in the US and can easily bring them into India should it so decide.

Chapter 3:-

INTRODUCTION TO INDIAN AUTOMOBILE INDUSTRYIntroduced to India in the late 1890s and the manufacturing industry only took off after independence in 1947. Introduced to India in the late 1890s and the manufacturing industry only took off after independence in 1947. The protectionist economic policies of the government gave rise in the 1950's to the Hindustan Motors Ambassador. Hindustan Motorsand a few smaller manufacturers such as Premier Automobiles, Tata Motors, Bajaj Auto, Ashokand Standard Motorsheld an oligopoly until India's initial economic opening in the 1980's. The maverick Indian politician Sanjay Gandhi championed the need for a peoples car; the project was realized after his death with the launch of "people's car"; the project was realized after his death with the launch of a state-owned firm Maruti Udyog which quickly gained over 50% market share. For forty years since India's independence from the British in 1947, the Indian car market was dominated by two localized versions of ancient European designs -- the Morris Oxford, known as the Ambassador, and a old Fiat. This lack of product activity in the Indian market was mainly due to the Indian government's complex regulatory system that effectively banned foreign-owned operations. Within this system (referred to informally as the "license raj"), any Indian firm that wanted to import technology or products needed a license/permit from the government. The difficulty of getting these licenses stifled automobile and component imports, creating a low volume high cost car industry that was inefficient, unprofitable, and technologically obsolete. The two dominant products Ambassador and Fiat, although customized to the poor road conditions in India, were based on a stale design concept (with outdated features), and were also fuel inefficient. In the early 1980's, the Indian government made limited attempts at reforming the automotive industry, and entered into a joint venture with Suzuki of Japan. The joint-venture, called Maruti Udyog Limited, launched a small but fuel efficient model (called "Maruti 100"). Priced at about $5,500, the product became an instant hit. The joint venture now produces three small-car models, a van, and a utility vehicle at a rate of more than 250,000 a year. Despite being a late entrant, Maruti's vehicles are estimated to account for as much as 70 per cent of India's car population. In 1991, a newly elected Indian government took over and faced with a balance-of-payments crisis initiated a series of economic liberalization measures designed to open the Indian economy to foreign investment and trade. These new measures effectively dismantled the license raj which

had made it difficult for Indian firms to import machinery and know-how, and had disallowed equity ownerships by foreign firms. In 1993, the government followed up its liberalization measures with significant reductions in the import duty on automobile components. These measures have spurred the growth of the Indian economy in general, and the automotive industry in particular. Since 1993, the automotive industry has been experiencing growth rates of above 25%. Data for the 1995-96 financial year is yet to be released by all the firms, but estimates indicate that passenger vehicle sales may reach or exceed 350,000 for the first time. (Passenger vehicles include cars and vans but not jeeps.) Table 1 presents the production data of passenger vehicles for the top four Indian assemblers. Foreign vehicle sales have been insignificant until the 1994-95 year.

3.1:- Size and structure of Indian automobile industryAt present the industry is enjoying a growth rate of 14-17% per annum, with domestic sales growth at 12.8%. The growth rate is predicted to double by 2015. As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-utility vehicles in the year 2005 reached the mark of 1.06 million. The current growth rate indicates that by 2012 India will overtake Germany and Japan in sales volumes. Financing schemes have become an important factor in the growth of automobile sales. More and more financial schemes are coming up with easy installment plans to lure the customers. Apart from domestic production, the industry is consistently focusing on the automobile exports. The auto component segment is contributing a lot in the export arena. The liberalized policies of the government are now making the companies go for more and more exports. The automobile exports are increasing year by year. According to the Society of Indian Automobile Manufactures (SIAM) automobile exports in the last five years are as

: Export trend over the last five years NEW LAUNCHES The Indian automobile sector is experiencing changes in every arena. Changes in the looks of the vehicles are taking place; the vehicles are being made more user-friendly. Each and every firm is competing to give the customers more customized vehicles with respect to speed, mileage, and maintenance. At present there are many new models entering the Indian market. To name a few, Suzuki Heat 125 and Suzuki Zeus 125X are the two bikes in the motorcycle segment; Kinetic Blaze and Honda DIO in the scooter segment; Maruti, Zen Estillo in the car segment, so on and so forth. EMPLOYMENT IN THE SECTOR Investment is leading to the employment growth in the sector. With the emergence of new projects and introduction of technological advancements, the focus is more on the skilled and experienced human resource. The companies are looking for skilled and hard working people who can give their best to the organization. The engineers in the automotive or electrical or mechanical field are in demand. Some of the firms going for automation, i.e. planning for CAD (Computer Aided Designs) systems, are also recruiting people with IT specializations.

3.2:- Major players Tata Mahindra Ashok Leyland Bajaj Hero Honda Daimler Chrysler

Suzuki Ford Fiat Hyundai General Motors Volvo Yamaha Mazda

3.3:- SWOT analysis of Indian automobile industry IntroductionThe overall evaluation of companys strength, weakness, opportunities and treats collectively called as SWOT analysis. The environment may give many opportunities but the business may not have strength to cope up with it. Similarly, sometimes a company will not have strength to meet the environment treats. It is very necessary for a company to monitor its external environment to know the opportunities and treats and internal environment to know the strength and weaknesses. Here the internal factors are controllable and external factors are not controllable. Now, lets discuss about the SWOT analysis in detail. Following are the points to be discussed:-

1)Strength:Strength are the positive areas of the company that the will help the industry to get strategic advantage over the competitors. Following are some points to be discussed in strength:-

(A) Capacity of manufacturing:-

During the recent year many development took place in the Indian automoboile industry like development of infrastructure facility, advance machinery, developed human resource, expert enginers. Domestically, some consolidation or alliances might be expected, driven by the need for access to better technology, manufacturing facilities, service and distribution networks. The components sector is in a strong position to cash-in on Indias cost-effectiveness, profitability and globally-recognized engineering capabilities. As benefits of collaborations become more apparent, super-specialists may emerge in which the automobile is treated as a system, with each specialist focusing on a sub-system, akin to the IT industry. Though this approach is radical, it could prove an important step in reducing complexity and investment requirements, while promoting standardization and meeting customer demands. Manufacturers are already planning for the future: early advocates of technological and distribution alliances have yielded generally positive results, enabling domestic OEMs to access global technology and experience, and permitting them to grow their ranges with fewer financial risks.

(B) Competitive advantage:The Indian automobile industry have gained the competitive advantage over the other automobile industry by gaining the good HR power as India is one of the fastest growig economy of the world and with growing economy population is also increasing over here. As being one of the fastest growing economy the standard of living of people over is also incresing which results into the increasing demand of the luxury product like cars.

(C) Unique selling:The customer of India are not aware or not informative about the services of the automobile in the past. But now the scenario has changed totally the companies of India have used various majors steps to develop the awareness. They have adopted the unique selling concept by which the market has developed fully.

(D) Resources:With the increasing demand of the cars in the Indian market, the continuous supply of raw material is very necessary . In India all those resources are available to the manufacturer so it helps in the development of the Indian automobile industry. Resources in the sense of Human Resource, raw material, auto parts & components are available to them easily.

(E) Financial background:-

The financial background of the Indian automobile industry is becoming strong. By the entering of the new foreign companies in the Indian market and establishing of many financial institution in the market the availability of the finance is becoming continuous so the production is also becoming continuous. On the other side from the prospective of the customer also the availability of finance provides the credit facility to the customer.

(F) Experience:The companies of the Indian automobile market are gaining the experience over the period of years. New and new foreign companies are also entering in the Indian market like skoda, wolksvagon, etc which gives the teach to the Indian companies also. So by new experence they serving the market with great expectation.

(G) Distribution:By the passing of time, the distribution channel of the Indian automobile industry is becoming strong. For ex:- Ford India when entered the Indian market have weak distribution channel and does not have any chain of showroom in Gujarat for the starting 3 years. Bt now overall all company are focusing on the distribution channel.

(H) Revolution Green Revolution: In a price conscious economy such as Indias, the shift towards green vehicles will be slow unless spurred by Government mandates. Although the major players are already equipped with the necessary capabilities to develop cleaner vehicles, They do not see much merit in commercializing these technologies until the green revolution gains momentum most likely through Changes in political legislation and it achieves the market scale required for commercial viability. Manufacturers are placing greater faith in dual-fuel technologies than in battery powered alternatives because the necessary support infrastructure, such as recharge stations, is not yet in place for the widespread adoption of the latter. The launch of electric motorcycles Could have a significant impact on the market, given that motorcycles account for the majority of two-wheeler sales in India. Manufacturers of four-wheelers and commercial vehicles in particular stress the importance of optimizing conventional combustion engines before experimenting too radically with costly new technologies.

(I) Quality comparison:In the market many types of cars are available so the customer gets the base for comparison. Among all the major type of cars the customer get the vast base to select the model of car which best suit to them and they can make the comparison between them about its quality and various other parameters.

(j) small cars :In India the lowest expensive & luxurious cars are available. The Tata nano was the worlds cheap car available in India. Also the electronic cars are also available.

2) Weakness:Weakness are the negative area of the company which arises because of the internal defect of the industry. Weakness are such factor on which the company have full control. Lets discuss all the point in detail:-

(A) Dependency on the other countries:Though many innovation took place in the model but still the product are not up to the mark. The low quality product are made as the innovation is still less in this sector. So still India is dependent on other countries for technological advancement.

(B) Weak research and development:Though develop market is there thhe financial facility is still not so strong compare to other country. So the research and development is also not so fledge.

(C) High investment cost:The entry in the market proves to be very expensive because the market is still not developed well so the resources are available at a higher cost.

(D) Old technology:The financial need is not well fulfilled so the companies are sill using the old tecnologies. This old technologies give less output also the quality differs.

(E) Lack of innovation:In Indian market no such major innovation had took place. Major companies are making collaboration with the foreign companies for the technology . thus the Indian automobile industry lack in the technological sophistication.

3) OpportunitiesThe opportunity is staring in your face. It comes only once. If you miss it, you will not get it again.

(A) Industrial trend:Car manufacturers in India dominate the passenger vehicle market by 79%. Maruti Suzuki is the largest car producer in India and has 52% share in passenger cars and is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share. Hyundai and Tata Motors is the second and third car producer in India. The auto industry is just a multiplier, a driver for employment, for investment, 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. 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 9.7 million in 2006 (nearly 7 per cent of global automobiles production and 2.4 per cent of four wheeler production).

(B) Market development:The cumulative annual growth rate of production of the automotive industry from the year 2000-2001 to 2005-2006 was 17 per cent. The cumulative annual growth rate of exports during the period 2000-01 to 2005-06 was 32.92 per cent. The production of the automotive industry is expected to achieve a growth rate of over 20 per cent in 2006-07 and about 15 per cent in 200708. The export during the same period is expected to grow over 20 per cent.

(c) Innovations:India is up-and-coming a significant manufacturer, especially of electrical and electronic equipment, automobiles and auto-parts. During 2000-2005 of the total FDI inflow, electrical and electronic (including computer software) and automobile accounted for 13.7 per cent and 8.4 per cent respectively.the new 28 models are coming of different companies in the market.

(E) Global trends:The passenger car segment has emerged as a major driving force for upstream industries like steel, iron, aluminum, rubber, plastics, glass, and electronics and down stream industries like advertising and marketing, transport and insurance. The car industry generates large amount of employment opportunities in the economy. For example in the US, every sixth worker is involved in the making of an automobile.

(F) Developing markets:-

As the automobile industry has matured over the past decade, the auto components industry has also grown at a rapid pace and is fast achieving global competitiveness both in terms of cost and quality. In fact, industry observers believe that while the automobile market will grow at a measured pace, the components industry is poised for a take-off. For it is among the handful of industries where India has a distinct competitive advantage. International automobile majors, such as Hyundai, Ford, Toyota and GM, which set up their bases in India in the 1990s, persuaded some of their overseas component suppliers to set up manufacturing facilities in India.

(G) Cost of manufacturing:The value of cumulative output of the auto components industry rose rapidly to Rs 30,640 crore at end-2003-04 from just Rs 11,475 crore in 1996-97. Foreign companies such as Delphi, which followed General Motors in 1995, and Visteon, that followed Ford Motors in 1998, soon realised the substantial cost advantage of manufacturing components in India. Finding the cost lower by about 30 per cent, they began exploring the possibility of exporting back these low-cost, high-quality components to their global factories and, thus, reducing their overall costs. Not surprisingly, the industry's exports registered a more than fourfold jump to Rs 4,800 crore in 2003-04 from just Rs 1,033 crore in 1996-97 Automobile majors such as Maruti Udyog, Toyota, Hyundai have now finalised their plans to invest in some of the critical auto components. According to the Automotive Component Manufacturers Association of India (ACMA) officials, auto component manufacturers are expected to invest about Rs 10,000 crore over the next five years at the rate of Rs 2,000 crore per annum.

(H) Increase in the income :The bumper-to-bumper traffic of global automobile biggies on the passage to India has finally made government sit up and take notice. In a bid to drive greater investments into the sector, ministry of heavy industries has decided to put together a 10-year mission plan to make India a global hub for automotive industry.

(I) Increasing export level:In fact, industry observers believe that while the automobile market will grow at a measured pace, the components industry is poised for a take-off. For it is among the handful of industries where India has a distinct competitive advantage. International automobile majors,

such as Hyundai, Ford, Toyota and GM, which set up their bases in India in the 1990s, persuaded some of their overseas component suppliers to set up manufacturing facilities in India.

4) ThreatsThreats are the external factors which are effecting the industry. Threats are the negative factor which effects company outside environment.

(A) Vulnerable competitors:Evidently, Indian players have learnt from past mistakes and developed the skills to build cheaper automobiles using `appropriate' technologies. TVS, for instance, paid an overseas source $100,000 to fine-tune home-grown engines rather than $1.5 million to import the entire engine. Similarly, M&M adapted available systems and off-the-shelf components from global suppliers to keep costs down and go for aggressive pricing. True, Indian players are still lacking in scale of operation. While economies of scale no doubt play an important role in the auto sector, a few Indian manufacturers relied on innovation rather than scale of operation for competitive advantage. For instance, Sundram Fasteners was able to achieve the feat of directly supplying radiator caps to General Motors purely on the strength of innovation in product quality. The domestic tooling industry bagged the order for the Toyota Kirloskar transmission plant in the face of stiff competition from multinational corporations. The cost of the entire job turned out to be only a fraction of the original estimate.

(B)Recession:Unfortunately, during the global meltdown in 2008, auto companies suffered a double whammy with rapidly rising oil prices and escalating raw material costs coupled with a drastic drop in demand of their fuel guzzling SUVs due to changes in consumer buying habits. As consumers tightened their purse strings, many looked for more fuel efficient, smaller cars while others re-evaluated their private vehicle usage, deciding to switch to public transport and delaying their auto purchases. As a result, many leading manufacturers, including the American Big Three (Chrysler, Ford and General Motors) and Japans Toyota suffered major losses and were forced to seek government assistance, shut down manufacturing plants, retrench large numbers of workers, re-organize their line-ups and offer substantial discounts across their existing ranges.

(C) Import liberalization:-

The Indian economy gives the opportunity for the development of Automobile industry. There are no restriction on imports on major of the spare parts. So it becomes favorable condition for the automobile industry to develop.

(D) Social activation:In spite of this there are opportunities to exploit lower costs right across the board. Its true that labour costs are definitely increasing but they are still five per cent of the total operational costs. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. Low-cost base can never last long. 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 now.

(E) healthy competitors:Indias expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. A survey conducted by the research, KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming skeptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising.

3.4:- PEST analysis*PEST ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY*

POLITICAL ENVIRONMENT

Favorable government policy:-

Indian government auto policy aimed at promoting an integrated, phased and conducive growth of the Indian automotive industry. The govt. is providing the incentives and the tax benefits to the manufacturer.

Increasing foreign investment:-

Allowing automatic approval for foreign equity investment up to 100 per cent, with no minimum investment criteria. The FDI had increased the rate of investment thus sounds to be the favorable for the development of the automobile industry.

Establish an international hub for manufacturing small, affordable passenger cars as well as tractors and two wheelers. The

Affordability:-

Stable economy

Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.

High resources:Assist development of vehicles propelled by alternate energy sources.

Favorable taxation policy:-

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 activities.

Favorable insurance policy:-

Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles.

Developing transportation services:-

Promoting multi-modal transportation and the implementation of mass rapid transport systems.

ECONOMICAL ENVIRONMENT Growing economy:-

The Indian economy has grown at 8.5 per cent per annum. Growing automobile sector The manufacturing sector has grown at 8-10 per cent per annum in the last few years.India's robust economic growth led to the further expansion of its domestic automobile market which attracted significant India- specific investment by multinational automobile manufacturers.[3] In February 2009, monthly sales of passenger cars in India exceeded 100,000 units.

Good credit facility:Finance availability to CV buyers has grown in scope during the last few years.

Increasing govt. investment:The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs playing on Indian roads. Foreign trade:Several Indian firms have partnered with global players. While some have formed joint ventures with equity participation, others have entered into technology tie-ups. Investment on manufacturing:Establishment of India as a manufacturing hub, for mini, compact cars, OEMs, and for auto components.

SOCIAL ENVIRONMENT Urbanization :Growth in urbanization, 4th largest economy by PPP index. Increasing income:Upward migration of household income levels. Increasing share of compact car:Increase in PPP, led to the increase in market share of compact cars. Good credit facility:85% of Cars are financed in India (15% in China). Wide variety of passenger car:Vehicles priced between USD 7000 12000 form the largest segment in the passenger car market. Savvy consumer:-

Indian customers are highly discerning, educated and well informed. They are price sensitive and put a lot of emphasis on value for money. Social Value:Preference for small and compact cars. They are socially acceptable, even amongst the well-off. Middle class Preference for fuel efficient cars with low running costs. The Tata Indica has the lowest running cost at US 8.5 cents per mile. India has emerged as one of the world's largest manufacturers of small cars. According to New York Times, India's strong engineering base and expertise in the manufacturing of lowcost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki

TECHNOLOGICAL ENVIRONMENT Import Technology:With the entry of global companies into the Indian market, advanced technologies, both in product and production processes have developed. New methodology:With the development or evolution of alternate fuels, hybrid cars have made entry into the market. Development in R&D Few global companies have setup their R&D centers in India. Investment by foreign competitors:Major global players like Audi, BMW, and Hyundai etc have setup their manufacturing units in India. Government initiated investment:Government initiatives regarding tax rebates have led to global players setting up their R&D centers in India. Government initiated technology:-

Govt. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements.

3.5:- Porters 5 force analysisA Porter's Five Forces Analysis explores five principal industry factors to determine the attractive of a given industry in a given market. In this P5F exercise, we look at the automobile industry in India. This is independent of any manufacturer. As such, it applies to every Indian car manufacturer.

1) THREAT OF NEW ENTRANTIn most markets, the capital and expertise needed to setup an auto or parts manufacturing facility would be a great enough barrier to entry to prevent many new entrants from setting up.

However, given India's incredible growth forecasts, infrastructure progress (especially new and better roads), and ever-expanding financing options to rural residents, the market is attractive. As such, we expect the threat of new entrants1) GOVT. POLICY

The Government of India has liberalized the foreign exchange. Government has liberalized the investment norms for the auto sector. Local content requirements and export obligations have been scrapped, and minimum investment requirements also have been diluted. Import duties on vehicles and parts have been gradually coming down and are expected to decline further in the next two years. Several state governments also offer attractive incentives, such as sales tax relaxations and concessional land, to potential investors. However, manufacture of certain components continues to be reserved for the small-scale sector. This reservation is also expected to lift gradually over the medium term. The Ministry of Heavy Industries has released the Automotive Plan 2006-2016, with the motive of making India the most popular manufacturing hub for automobiles and its components in Asia. The plan focuses on the removal of all the bottlenecks that are inhibiting its growth in the domestic as well as international arena. So the entry of any new firm can enter into the market easily as govt. policy is moderate towards the automobile industry.2) MONOPOLY

The domestic players as well as the foreign players dominate the Indian automobile sector. The key players contributing to the growth of the sector are discussed below. The key players in Indian automobile industry are: 1) Maruti Udyog Limited 2) Tata Group 3) Mahindra Group 4) Hyundai Motors India Limited 5) Toyota Kirloskar Motor Private Limited 6) Honda Siel Cars India Limited 7) Ford motors private limited 8) Skoda motors private limited From above we can see that there are many competitors in Indian market for new entrant so if they plan to enter the Indian market new innovative idea and proper focus should be design

3) CAPITAL REQUIREMENT As per as the capital requirement is concern for automobile industry the requirement of capital is very huge. So to enter in the automobile industry company new to much difficulty because to establish the plant lay out, machinery, hr is too much difficult for the company. 4) PRODUCT DIFRENTIATION The Indian automobile sector is experiencing changes in every arena. Changes in the looks of the vehicles are taking place; the vehicles are being made more user-friendly. Each and every firm is competing to give the customers more customized vehicles with respect to speed, mileage, and maintenance. At present there are many new models entering the Indian market. To name a few, Suzuki Heat 125 and Suzuki Zeus 125X are the two bikes in the motorcycle segment; Kinetic Blaze and Honda DIO in the scooter segment; Marutis Zen Estillo in the car segment, so on and so forth. Thus, if any new entrant comes in the market they should emerge with the product substitutingon. E.g.: Companies are coming with new design of cars of exterior as well as interior , with great fuel substitute, and many innovation are developed. 5) ECONOMIES OF SCALE While quite a few new vehicles launched in the Indian market have been developed locally, vehicle affordability significant concern. Although the price of an average motorcycle in India (about USD 900) is comparable to the average per capita income, the prices of passenger cars have a long way to go. Although the entry level car (Nano) is priced at around USD 2,500, the passenger car Market could grow multi fold if the raise break-through of another price level in the Years to come. John Flintham, global CEO of Amtek Auto, believes four-wheelers are particularly well placed to take advantage of these changing trends. If you look at the Tata Nano, people. Buying twowheeler bikes who have a bit more disposable income and can now afford To buy a car instead. I think youre going to see a doubling of sales over the next three To four years and I think thats going tobe driven by both domestic demand and by India becoming a small car export hub. The Indian automobile industry is going through a phase of rapid change and high growth. With new projects coming up on a regular basis, the industry is undergoing technological change. The major players are expanding their plants and focusing on mass customization, mass production, etc.

2) Bargaining power of buyersBuyers in India have a wide variety of choice. There are more than 20 foreign manufacturers selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). Of course there are also a plethora of incredibly cheap choices, like the famous Tata Nano. This situation arises when the buyer gain the power of bargaining. Following are some of the situations in which bargaining power by side of buyer arises.

1) Volume of purchaseIf the volume of purchase is high by the buyers side than the bargaining power of the buyer would increase substituting. In automobiles substitute mainly the buyers general customer.

2) Importance of product to buyersIf the product is more important to the customer than the customer will surely buy the product, but if the product is not more important to the customer they can substitute it. In context of automobile the bargaining power of buyer is less. Cars are one of the luxurious products whose consumption can be substitute for the future time. Thus if the economy is in boom period there must be growth in the automobile substitute & in recession the market goes down. For ex. In the recession period of 2008 the automobile substitute goes tremendously down.3)

Switching cost to marketer:The switching cost to the marketer explain that if one customer also switch to the competitors product how much the producer is effected. In context of automobile it doesnt effect much to the producer. Thus switing cost effects is low.

4) Extent of buyers informationExtent of buyer information shows that if the co. r more the customer have more bargaining power but if co hour less than bargaining power is less. In automobiles industry the bargain in power of customer is high. They are gaining lots of information.

5) Ability of buyer for backward integration. The backward integration means the customer have to power n to switch the backwardness / integration they have more power. In automobile customer have high backward integration power For eg. Customer can buy swift than i10 or i20.

3)Bargaining power of suppliersIt is likely that the suppliers to the manufacturers have considerable bargaining power. They are not held ransom by one single manufacturer as they can market their products to any of the others in India.

1)

Importance of product to buyer

If the supplier of raw mat. Or components are less the producer have to suffer delay in production if the raw mat. Cant be generated from any other sources. So if supplier of raw material is not continuous n customer have no other mode than they have less bargaining power.

2)

Switching cost to supplierIf there are many supplier of raw material so the bargaining power of manufacturer increases. For ex:- sonakoyo is supplying the raw material to the maruti but if maruti switch to the other supplier than it will effect more to the sonakoyo company. Thus the if company change its source of rawmaterial company than that company would be effected more.

3)

Potential for forward integrationForward integrating shows that if the manufacturer have power of providing its own raw material

4)

Ability of substituting the productIt shows that if manufacturer have almost of components or raw mat. They have high bargaining power. In automobile the substituting product is less.

(4) Rivalry amongst existing firmsThe key players in Indian automobile industry are:

1) Maruti Udyog Limited 2) Hero Motors Limited 3) Tata Group 4) Bajaj Auto Limited 5) Mahindra Group 6) Ashok Leyland 7) Yamaha Motor India 8) Hyundai Motors India Limited 9) Toyota Kirloskar Motor Private Limited 10) Honda Siel Cars India Limited

1)Growth of industryThe automobile industry is one of the biggest growing industry in Indian country. Since last five years is a golden year for growth of Indian automobile industry because the companies like Nissan,volksvagon are coming and launch different model of car in india. As per the new recent data in 2009-10 there are 88 different cars going to enter in Indian automobile market.as the government policy is also in the favour of the growth of automobile industry. Maruti Suzuki- new swift Hyundai-new verna Toyota-etios liva Tata-nano diseal Mahindra-mini xylo etc. . Cost structure There are two types of cost which are as follows fixed cost and variable cost in automobile industry both goes are high. But the tata nano has introduced new one lacks rs car which was design specially by emphasizing on cost structure.

2) Product standardizationAs the passing of time new and new innovating technology are upcoming in Indian automobile market which provide better quality of cars and standards product to the customer for example Nissan, Chevrolet ,bmw, Audi. They are the company coming out with new diff car design style, fuel efficiency, n data performance.

3) Exit Barriers:It show that when company wants to exits out of the mrket there can be problem.

5] Threat of Substitute:1) Extent of Substitution:If one ve to buy vehicle then they ve option of purchasing car ,two wheeler etc. but if they decide to buy car only then less option r available to them.

2)Importance of Product:The car are gaining importance in Indian market now a days. Before it was consider as status symbol for the person but now it was become the basic need product to travel from one place to another through it has not much gain importance as per the europian market.

3.6:- Market share:At present major Indian, European, Korean, Japanese automobile companies are holding significant market shares. In commercial vehicle, Tata Motors dominates over 60% of the Indian commercial vehicle market. Tata Motors is the largest medium and heavy commercial vehicle manufacturer. Among the two-wheeler segment, including scooters and mopeds- motorcycles have- major share in the market. Hero Honda contributes 50% motorcycles to the market in which Honda holds 46% share in scooter and TVS makes 82% of the mopeds in the country. In the three wheeler industry in India, Piaggio holds 40% of the market share. Bajaj is the leader by making 68% of the three-wheelers. Car manufacturers in India dominate the passenger vehicle market by 79%. Maruti Suzuki is the largest car producer in India and has 52% share in passenger cars and is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share. Hyundai and Tata Motors is the second and third car producer in India.

Chapter 4:SEGMENTING, TERGETING AND POSITIONINGSEGMENTATIONSegmentation is the process of grouping people or organizations within a market according to similar needs, characteristics, or behaviors which might require separate products or marketing mix. Segmentation is about identifying and targeting customer groups through their needs and wants, as well as determining which customers and needs to address and with what manner and intensity".

DefinitionProcess of defining and sub-dividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment. The segmentation of cars is based on the cost & size of the car. Typically entry level cars like the Maruti 800, Alto, Omni fall in the A segment. Slightly expensive hatchbacks like the Indica, Santro, Wagon R, I10 etc. fall in the A segment. Cars like the GM SRV, Ford Fusion, Skoda Fabia fall in the premium B segment. The sedan category form the C segment which comprises entry level cars like the Indigo CS, Mahindra Renault Logan and Esteem. The higher end C segment is made up of Honda City, Chevrolet Aveo, and Ford Fiesta etc. Then comes the D segment which comprises entry level cars like the Skoda Octavia, Toyota Corolla etc. The higher end of the D segment comprises of the Toyota Camry, Honda Accord, and Skoda Superb etc. So its all a game of the price and the features.

The above chart shows how different products in the same segment/sub segment have been offered by the same company targeting different needs of the buyers.

For ex: Maruti offers a car, Alto which low on price, maintenance cost, style but is high on fuel efficiency. When you compare this with Maruti swift, it is higher in price (in the small car), technology, style, space and comfort, but lower in fuel economy. Maruti has a gamut of cars in the small car market, as it has off late focused on creating new sub-segment or creates deep segmentation within a segment.

Segment invasion plan Maruti Udyog limited

Dark color indicates competition existed at the time when Maruti targeted the segment

1.

M-800 had dominated the Indian car market since it was launched in 1984.

2.

Maruti introduced Maruti Zen into the market (in 1993) which catered as an entry level car for the people who can afford to spend more (as compared to M-800), with better features available. Maruti enjoyed being the only small car manufacturer till year 1996, when Hyundai launched Santro.

3.

In the mean while Tata also launched Indica, and there was a gradual decrease in sales of M800. The Introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over a decade. Hence Maruti launched Alto in the year 2000, trying to recover the lost market. Alto was once again targeting the entry level low cost segment, but it gave features of a good car. Within 18 months of the launch, the Maruti was able to regain its market share and was once again in a position to hold entry level A-segment in its pocket.

4.

Watching the dominance of Maruti in the A-segment, competitors focused on other segments, Maruti also followed and launched its first Duo

car, Wagon R duo in the year 2004. This car could be run on LPG along with petrol.

5.

In an effort to move beyond the value for money or the basic utilitarian function of a car, Maruti launched Swift in the year in 2004, to target the high end customers, who are willing to pay more for a better styled, safe, sporty car.

6.

Maruti strengthened its position in the small car market by launching Ritz in the year 2009 , which was targeting upper middle income group ,who were looking for exciting looking globally renowned car.

TYPES OF SEGMENTATION

1:

GEOGRAPHIC SEGMENTATION

Geographic Segmentation calls for dividing the market into different geographical units such as nations, states, regions, countries &cities etc.

A.REGION:

The major regions for small car market in India are north, south, and west. The most auspicious moths in the south, when buyers, laterally lap up cars from the showrooms, often turn out to be the lean season in the north or west. So marketers need to identify when to market a product according to the region in which the consumer lies.

B.RURAL/URBAN:

Since more than 60% of the total population is living in interiors, it becomes all the more important to cater to this segment. However, so far, the marketers have laid more focus on Urban/semi urban market and their products are primarily catering to the needs of the urban segment. But with the recent market hits, the companies are trying to pay more attention the rural market segment to gain profits.

Ex: Maruti Suzuki India said that by the end of 2009 calendar year as much as 8 per cent of sales will come from rural areas, up from 3.8 per cent last year. Ex: Tata Magic which is priced @ 2.6lacs is primarily targeted to the rural India.

2: DEMOGRAPHIC SEGMENTATIONDemographic segmentation consists of dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality. As you might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is partly because customer wants are closely linked to variables such as income and age. Also, for practical reasons, there is often much more data available to help with the demographic segmentation process.

The main demographic segmentation variables are summarized below:

a.Age & life cycle stage:Student, Young Married, Single working. The average age profile of a car buyer is 25-46 years. Although the percentage of people buying cars between 31 and 40 years of age has remained stagnant at 31 per cent (1999-03), there has been a 9 percentage point increase in the number of car buyers in the 25-30 age groups. The number of older people (51 to 60 plus) buying cars has gone down. For ex: the car likes swift ,i-20 , beat are mostly like by the people who are come in the age of 25 to 35 people. The car like verna, optra, city, accord, accent, swift dezire are mostly like by the executive people who are ranging from 35 to 50 people.

b.Family Size:Average Indian household size is 5 people. Hence Small cars are the most obvious and affordable choice available for the Indian middle class. For ex: Maruti had come out with different cars o the basis of family size like

Class according to family Model size Lower class people Maruti 800 Omni Middle class people Alto Swift Ritz Zen Estillo A-star Upper class people Grand vitara Maruti kizashi

C.INCOME:

Higher income households tend to be less price-sensitive, placing a higher value on buying Higher-quality merchandise. Because of the growth in dualincome households, there has been a dramatic growth in the proportion of total spending in the economy coming from such households, implying that the market for high-end products and services should increase substantially. Thanks to the easy availability of cheap financing options, there has been an increase in the number of younger people buying cars in India during 1999-2003EMI: a factor affecting the most of the buyers. 3 out of the 4 cars sold in the country are funded by a loan. For ex:

The companies like Maruti Suzuki, Tata motors, Chevrolet. And Hyundai are mostly targeting the lower income and middle income class people.

While on other side the companies like BMW, mercedez Benz, and Skoda are targeting the elite class and upper class people who have their own business and higher salary.

d. OccupationOccupation of the consumer affects the buying power. For ex: A Regular salaried employee will easily get finance done for buying a car , whereas a self employed consumer will opt for full down payment option. This explains the reason for high contribution from salaried and self employed people in buying small cars

For ex: People who have higher position in their occupation and who have large amount of salary are mostly prefer to purchase BMW, audi, beentle, nissan, mercidiz benz.

3:Psychographic segmentation

Psychographic segmentation is sometimes also referred to as behavioral segmentation.

This type of segmentation divides the market into groups according to customers lifestyles. It considers a number of potential influences on buying behaviors, including the attitudes, expectations and activities of consumers. If these are known, then products and marketing campaigns can be customized so that they appeal more specifically to customer motivations. The main types of psychographic segmentation are:

Lifestyle Different people have different lifestyle patterns and our behavior may change as we pass through different stages of life. For example, a family with young children is likely to have a different lifestyle to a much older couple whose children have left home, and there are, therefore, likely to be significant differences in consumption patterns between the two groups. One of the most well-known lifestyle models, the sagacity lifestyle model, identifies four main stages in a typical lifestyle: Dependent (e.g., children still living at home with parents); Pre-family (with their own households but no children); Family (parents with at least one dependent child); and Late (parents with children who have left home, or older childless couples). Each group is then further subdivided according to income and occupation. For ex: life style are different from person to person a person who have a great personality they are using the cars like BMW, ROLS ROYAL, AUDI, BENZ.

Opinions, interests and hobbies This covers a huge area and includes consumers political opinions, views on the environment, sporting and recreational activities and arts and cultural issues. The opinions that consumers hold and the activities they engage in will have a huge impact on the products they buy and marketers need to be aware of any changes. Good recent examples include the growth of demand for organic foods or products that are (or are perceived to be) environmentally friendly

Degree of loyalty

Customers who buy one brand either all or most of the time are valuable to firms. By segmenting markets in this way, firms can adapt their marketing in order to retain loyal customers, rather than having to focus constantly on recruiting new customers. It is often said that it is ten times more profitable selling to existing customers than trying to find new ones. So the moral is work hard at keeping your customers. In this now days no one person are loyal for any one company because now a days different company are coming out with different car they are purchasing the car according to their capability, income , comfort and other variables.

Occasions This segments on the basis of when a product is purchased or consumed. Weekly basis. Marketers often try to change customer perception of the best time to consumer a product by promoting alternative uses for a product. In India people are mostly like to purchase the car on some occasions like diwali , rakshbandhan, dashera etc.

Benefits sought This requires marketers to identify and understand the main benefits consumers look for in a product. For ex: now a day there is a great problem occurred in securities of royal class car the people are expecting different facility like air bags, power window, gps system, music system,nion lights facility in their cars.

3 Behavioral segmentationBehavioural segmentation divides customers into groups based on the way they respond to, use or know of a product. Behavioural segments can group consumers in terms of:

a.Decision Roles:When it comes to car, where huge investment is involved, people generally tend to take reference from other users. They go for

test rides, get it checked from some experienced people who are much more comfortable about cars. For that reason noe a days companies are providing test drives so that customer are easily take the decision regarding purchase any car.

b.Occasions:In India, people do buy cars in the festival season, and during the marriage seasons.

c.Benefits:Consumer looks for the following benefits from a car. I. Power:

People do look for power from power.According to their need they look for cars intheir respective power basket (i.e. 600cc 1300cc) A higher power is related to give higher speed, acceleration by the consumers. Distribution of households (owning a car) by income Distribution of household (owning a car) by literacy% For ex: maruti Suzuki come out swift which has a 1300cc engine with four cylinders.

Ii .Technology:

With all sort of products available in the small cars market, technology can act as A differentiator for consumer. New technologies such as MPFI (multi point fuel injection), turbo charging, electronic traction control, anti locking braking systems, and catalytically converters. Iii.Fuel Economy: People do look for better fuel economy in terms of mileage given by the car. Preferred Fuel: With the rise in petrol prices, people have been looking for alternatives such as diesel, CNG, LPG. Many car buyers in India prefer the diesel variant whatever may be the choice of car, because of the favourable cost differential diesel For ex: Hyundai come out with kappa engine then maruti fit k series engine in their all cars.

Market targetingA specific group of consumers at which a company aims its products and services Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments.

Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities

Maruti is now planning to enter the D segment of cars with its new offering Kizashi. Expected to be launched in the early 2011. The multi-utility vehicle (MUV) category is growing fast in India. It has made many car makers in the country plan production of the same. Maruti Suzuki, Tata Motors and Skoda Auto are planning to enter the growing segment of MUVs. Tata Motors has plans to launch Tata Aria. The vehicle is develop." "Skoda Auto has advanced its small car launch by more than a year and is now targeting a rollout in 2011.Skoda Auto India operations head and board member (sales & marketing) Thomas Kuehl said the decision to advance the small car launch by 2011. " Auto maker Volvo is planning to launch two new models in India within a year. The cars will be targeted at the premium segment of the market. The company is likely to launch its sports utility vehicle Volvo XC60 in next 6-7 months. Volvo S60 is also expected to be launched this year.

Different targeting pattern1) PRODUCT SPECIALISATION M1 M2

M3

P1

P2

P3

HERE FIRM SPECIALISE IN A PARTICULAR PRODCUCT CATEGORIES IN ALL MARKET. HERE FIRMS ARE PRODUCING THE PRODUCT FOR THE DIFFERENT CLASS OF CONSUMER. FOR EX: MARUTI IS SPECIALISE IN 4 WHEELER CARS. MARUTI HAVE A CARS FOR ALL KIND SEGEMENT OF CONSUMERS like they have maruti 800, omni are made for lower class of consumers. The cars like alto, Wagno-r, swift,a-star,ritz are made for middle class of consumers. The cars like grand vitara, newly launched kizashi are made for upper class of consumers. 2)market specialization

m1

m2

m3

P1

P2

P3

Here marketer are targeting one class of consumers. They have a product for only one segment of consumers. For ex: The companies like mercedez benz,audi,BMW,bentle,rols royal are targeting to the higher level of consumers.

POSITIONINGWhen the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But an important step before developing the marketing mix is deciding on how to create an identity or image of the product in the mind of the customer. Every segment is different from the others, so different customers with different ideas of what they expect from the product. In the process of positioning the company: Small cars have been positioned in India as city cars, which are easy to drive, give high mileage, with low operational cost and low price. Because of the tremendous growth in the small car market, various global car manufacturers are entering this market and thus leading to growing competition. This has further led to each manufacturer positioning it, better than the rest; by upgrading products, several versions, new technology giving discounts & offers, better financing options.

Positioning Hyundai Santro Case

Hyundai Motors shows that a company has repositioned its product about 5 times in past ten years. The main factors were either competitors activities or changes in the mindset of consumers. Each time the company has repositioned itself, they have changed their Target customers and has done a deeper penetration in segmenting its market.

The average age of a car owner had declined from around 35-40 three years ago, at that time, to 25-30, primarily because of changing lifestyles, cheap and easily available finance, etc Age group of 25-30 years and First time buyers.

Positioning maruti Suzuki case Earlier maruti have no more car in the middle class segment for that maruti come out with different cars like ritz, a-star, swift etc to get a maximum market share in the market.

Different strategies. 1)product differentiation you design your product in different way in terms of technology, features etc. for ex: Hyundai first come out with kappa technology in the Indian automobile market. Now a days companies are likely to provide the air bag in the cars which provide safety to the consumers. 2)service specialization

you should provide service in different manner than your competitors. For ex: As per as the service differentiation is concern Maruti Suzuki provide extremely good after sales service than the competitors. They have a largest service network in the Indian automobile sector. 3)people differentiation differentiation in knowledgeable employees. As per as the people differentiation is concern all the automobile companies have good and knowledgeable EMPOYEES TO COMMUNICATE WITH THE PEOPLE. 4)channel differentiation as per as the channel differentiation is concern there is no differentiation has been seen in the automobile sector. 5)image differentiation certain brand customer can identify product easily, colure shine, symbol. As per as the image differentiation is concern all the companies have different symbol so that customer can easily identified the companies. For ex:

4.4:- Differentiation Strategies:1)Product differentiation strategiesBrand can be differentiated on the basis of a number of different products. Product different in colour, size, packing, features, performance, quality, style and design as well as such service. In automobile industry major car model are different from each other in sense of their design, interior look, mileage, performance, etc Ex:- Some cars are MUV, SUV, hatchback, notchback and sedan are different type of cars which are based on different type of body, performance, miledge, etc.

2)Personnel differentiation strategiesBetter trained personnel exhibit six characteristics: They possess the required skill and knowledge They are friendly, respectful and considerate creditability. They perform the service. They respond quickly to customers. They easily understand to the customer. In automobile industry the companies people are different. Employees are effective tool for the customer satisfaction. So the people or employee must be trained, skilled and effective much to provide the better service to consumer. Ex:- the employee of maruti company are well trained and they are providing better service to the customer than other companies in the market.

3)Channel differentiation strategiesCompanies can achieve competitive advantage through the way they design their distribution channels, coverage, expertise, and performance. In automobile industry also the all companies are using the different ways for distribution. The d