WHICH CAR WILL

VROOM AWAY

Group 4Ashish Bhasin (8), Ashish Dubey (9), Benz Thomas (11),

Pratik Sharma (32), Vivek Sharma (47)

A PROJECT TO UNDERSTAND CAR BUYING PATTERN FOR

HYUNDAI VERNA FLUIDIC AND MARUTI SUZUKI SX4 USING MICROECONOMICS CONCEPTS

A project for Dr. Biswajit Nag

by Group 4, Section A (MBA IB –PT – 2012-15)

Mitch Hedberg

I KNOW A LOT ABOUT CARS. I CAN LOOK AT ANY CAR’S HEADLIGHTS AND TELL YOU EXACTLY WHICH WAY IT’S COMING.

CONTENTS

Indian four wheeler market

Attributes being promoted

Sales figures

Verna and SX4 Demand Curve

Verna and SX4 Price Elasticity

Price sensitivity analysis

Conclusion

Indian four wheeler industry

• Installed capacity in millions – 3.88• Passenger Vehicles - 15.07%• Major players – Mahindra, Hyundai, Maruti, Tata, Ford, Renault, Honda, Nissan, etc.

• Models – Alto, WagonR, Dsire, Bolero, Swift, i10, Indica + vista, Innova, Verna, SX4, etc.

Source: SIAM

Total Sales

City18%

Vento14%

Verito9%

Rapid13%

Fiesta8%

SX46%

Verna32%

TOTAL SALES – Jan-Sept 2012

Source: www.motorbeam.com

Passenger cars manufactured vs GDPSource: Automotive report by MarketLine

www.Indiastat.com

0

200

400

600

800

1000

1200

0.000

500.000

1000.000

1500.000

2000.000

2500.000

2006 2007 2008 2009 2010 2011

thousand units

India GDP*

What do you first consult?

Auto TV programs

Magazines

Friends/relatives

Online

previous owners

0 2 4 6 8 10 12 14 16 18 20

First consultation

First consultation

Attributes being promoted

VERNA

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

price• Luxury• Power• Safety• Eco Friendliness

SX4

• Gentleman among cars• Amazing driving

experience• Commanding exterior• Plush interiors• Big on mileage• Loaded with entertainment• Spacious and comfortable• Safety• Power

Model wise sales figuresSource: www.motorbeam.com

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-120

1000

2000

3000

4000

5000

6000

7000

SX4Verna

Verna – Demand Curve

0 2 4 6 8 10 12 14900000

950000

1000000

1050000

1100000

1150000

1200000

1250000

Series1

Avg Verna price assumed at INR 913403.5

Demand drivers for Verna

Perfo

rman

ce/P

ower

Brand

nam

e/Bad

ge

Fuel e

fficie

ncy

Safet

y

Imag

e

Main

tena

nce

ease

Reliab

ility/

Consis

tent

per

form

ance

Trunk

Spa

ce

Luxu

rious

Inte

riors

Silenc

e ins

ide th

e ca

r

Comfo

rt

Refine

men

t

Servic

e Cen

tre0

4

8

12

Verna

Verna

SX4 – Demand Curve

0 2 4 6 8 10 12 14 16 18850000

900000

950000

1000000

1050000

1100000

1150000

1200000

Series1

Avg SX4 price assumed at INR 882555.25

Demand drivers for SX4

Perfo

rman

ce/P

ower

Brand

nam

e/Bad

ge

Fuel e

fficie

ncy

Safet

y

Imag

e

Main

tena

nce

ease

Reliab

ility/

Consis

tent

per

form

ance

Trunk

Spa

ce

Luxu

rious

Inte

riors

Silenc

e ins

ide th

e ca

r

Comfo

rt

Refine

men

t

Servic

e Cen

tre0

4

8

12

SX4

SX4

Verna – price elasticity

% age increase in Verna price

Number of customers from Verna

10 13

20 5

30 2

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

SX4 – price elasticity% age increase in SX4

priceNumber of customers

shifting from SX4

10 3

20 16

30 1

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

Price sensitivity

Rightward shift

Pric

e of

Ver

na

Demand for VernaOX

Y

Conclusions

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

New Markets for C segment• B and C

grade cities

Elasticity• People will

shift less from Verna than from SX4

Edge• Verna has

an edge over SX4 and other competitors

Market• Monopolistic

competition due to small number players occupying a major market share

Sales and support• Both

companies have comparable Sales and Service network

So who is coming for the ride?

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