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Research - Primary & Secondary

Research - Primary & Secondary

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Sector research (final) nisha a. & debankur Sector research (final) nisha a. & debankur Document Transcript

  • 8th April, 2009 1800hrs AUTOMOBILE SECTOR (4 WHEELERS) Submitted by: Nisha Arora (72) Debankur Adhikari (183) SIMC 2010 MBA / Sem 2 [RESEARCH] [Primary & Secondary research done on the ‘Effects of Recession in the 4 wheelers automobile sector. Our two major players are Tata Motors & Maruti Suzuki.] 1
  • INTRODUCTION While the other parts of the world have been excelling in automotive technology and in specifically in the 4 wheeler sector, India is still to establish itself as a major in this industry. The primary reason for this has been the all-pervasive regulatory atmosphere prevailing till the opening up of the industry in the mid-1990s. The various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as "unaffordable luxury". Post-liberalization, the automotive sector, especially the passenger car segment, saw a boom. The buoyancy in the sector was derived primarily from economic vibrancy, changes in Government policies, increase in purchasing power (especially of the upper middle class), improvement in life styles, and availability of car finance. The passenger car industry was finally deregulated in 1993, and many companies, both Indian and foreign (like Daewoo, Ford, General Motors, and DaimlerChrysler), entered the market. However, the smooth sailing was suddenly disrupted in the last quarter of FY1996. The automobile industry, which contributed substantially to industrial growth in FY1996, failed to maintain the same momentum between FY1997 and FY1999. The overall slowdown in the economy and the resultant slowdown in industrial production, political uncertainty and inadequate infrastructure development were some of the factors responsible for the slowdown experienced by the automobile industry. In FY2000, the sector experienced a turnaround, posted positive growth rates and witnessed the launch of many new models. But the spectacular growth in FY2000 was followed by a decline in FY2001 and only a marginal growth of 0.5% in FY2002. Since FY2003, industry sales have increased at a 3-year CAGR of 17.4% to 1.14 million in FY2006. Although there was a slowdown in FY2006, after the high growth in FY2004- 05, the recent high growth has been on the strength of an increase in the disposable income of middle-income salaried people, release of pent-up demand, and easy availability of credit. Low Penetration, but Rising Share of World Production Although the Indian automobile industry has come a long way since the deregulation in 1993, India does not rank well among its global peers in many respects, viz., the contribution of the sector to industrial output, number of cars per person, employment
  • by the sector as a percentage of industrial employment, number of months' income required to purchase a car, and penetration of cars. However, the major car manufacturers worldwide consider India a good potential market and they foresee a large future demand here. As can be seen from the table below, India is now a major global producer of cars, with India's share in world production increasing from 1.6% in 2000 to 2.7% in 2005. Two things that stunted growth of the Indian automobile industry in the past have been low demand and lack of vision on the part of the original equipment manufacturers (OEMs). However, the demand has picked up after the liberalization of the regulatory environment, and global OEMs who enjoy scale economies both in terms of manufacturing and research and development (R&D) entered the Indian market. This has resulted in a significant shift in the way business is conducted by suppliers, assemblers and marketers. Spending on Vehicles and Transport India's private final consumption expenditure (PFCE) on transport was estimated at around Rs. 3,124 billion in FY2005, accounting for around 16.5% of total PFCE. This comprises three categories: personal transport equipment, operation of personal transport equipment, and purchase of transport services. In terms of PFCE, the share of transport in total PFCE has witnessed rapid growth since the mid-1980s. By comparison, the share remained at around 3-5% till the mid-1980s. The motor vehicles sector is also an important source of central excise duties. Central excise duty collections from motor vehicles were Rs. 54.70 billion during FY2005, accounting for 6% of central excise duty collections. Taxes on vehicles, passengers and goods also form an important component of states' tax collections, and formed 8.7% of states' own tax collections during FY2005.
  • Demand Characteristics Passenger Cars In developed markets, engine capacity and wheel-base are the bases of segmentation of passenger cars: price does play a role but only up to a point. Since affordability is the most important demand driver in India, the domestic car market has until now been segmented on the basis of vehicle price. Price-based competition takes place in a continuum rather than in segments since nearly all the models are launched in multiple versions at different price points. As a result, a higher-end variant may compete with a lower-end variant of a car in a segment above it. MUVs The MUV segment consists of vehicles that are suited to both rural and urban areas. In rural areas where the roads are usually bad, these vehicles are used as goods carriers and also for public transportation. Northern and Western India account for nearly two- thirds of the demand for MUV. Specifically, in States like Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra, the demand for MUVs is the largest. There are three segments of buyers for MUVs: the private market, Government, and the Defence. Until the 1990s, the Government and Defence segments accounted for the largest share of the market. The reduction in Government and defence spending since the 1990s has substantially reduced sales to these two segments. This has pushed private sector purchases into greater prominence. Demand Structure When the industry was deregulated in 1993, the global carmakers chose to operate in the high price-high value segment. However, the strategy did not work as the market for premium and luxury vehicles in India was not large enough. MUL was entrenched in the low price-low value segment, and given its scale economies, it could not be dislodged. In the latter half of the 1990s, foreign car manufacturers changed their strategy. It was still difficult to remove MUL from its market leadership in the dominant low price-low value segment as scale economies formed the basis of competition in this segment. Thus, the global players changed the price-value equation by offering superior value at a price that was still higher than that of the Maruti 800 and Omni, but significantly lower than of the cars in the high price-high value segment. The process gained momentum in FY2000 when the growth in the car market was led by the Compact segment.
  • Although the compact segment now accounts for 65% of domestic sales of passenger cars, in recent years, the mid-size segment has captured a rising share of the market, and since 2004, sales in the mid-size segment have exceeded sales in the mini- segment. The growth in this segment has been led by new launches, lower prices, and the significant success of four models - MUL's Esteem, Honda's City, HMIL's Accent, and TML's Indigo. Introduction of stripped down versions of the vehicles in the Mid-size segment, attractive pricing by manufacturers (who also offer sales incentives) coupled with lower rate of interests and easy availability of finance have facilitated the growth of this segment. Low Penetration Levels Although India's 4W sales have increased in recent years, penetration levels are low at around 0.9%. Till the last decode, the industry was considered low priority as cars were thought of as 'unaffordable luxury', and treated as such through Government policies. Although reduction in excise duties, favorable Government policies, and lower prices have resulted in significant increase in penetration, India's passenger car penetration is low by global standards-1.3% in Chino, 59% in EU, and 81% in the US. Estimates from Notional Sample Survey 58th Round (2002) indicates that ownership of four-wheelers (car or jeep) is restricted to about 4.4% of urban households, and 0.6% of rural households. During 2002-03, ownership of cars/jeeps was restricted to around 0.9 million households in rural areas, and 2.57 million households in urban areas. Car penetration is high in Chandigarh, Delhi, Goa, and Kerala. However, penetration is extremely low in the eastern states of Bihar, West Bengal, Orissa; and central states such as Madhya Pradesh and Chattisgarh. Indian Automobile Industry – An Overview Indian automobile industry has come a long way to from the era of the Ambassador car to Maruti 800 to latest M&M Xylo. An industry is highly competitive with a number of global and Indian companies present today. It is growing at a pace of around 18% per annum for the last five years and is projected to be the third largest auto industry by 2030 and just behind to US & China, according to a report. The industry is estimated to be a US$ 34 billion industry. Indian Automobile industry can be divided into three segments i.e. two wheeler, three wheeler & four wheeler segment. Two wheeler segments enjoys 75% market share of automobile industry, followed by passenger vehicles with the 16% share of market.
  • Three wheeler segments have merely 4% share in domestic market. The domestic two- wheeler market is dominated by Indian as well as foreign players such as Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, and Suzuki etc. Maruti Udyog and Tata Motors are the leading passenger car manufacturers in the country. And India is considered as strategic market by Suzuki, Yamaha, etc. The major players have not left any stone unturned to be global. Major of the players have got into the merger activities with their foreign counterparts. Like Maruti with Suzuki, Hero with Honda, Tata with Fiat and latest Mahindra with Renault. In passenger car segment, Maruti Suzuki contributes the 52% market share, with complete monopoly over the small car segments. M&M enjoy the 42% market share in Multi Utility Vehicle in domestic market. Auto industry in 2008 All the major auto companies enjoyed the high growth ride till the mid 2008. But at the end of the year, industry had to face the hard truth and witnessed the fall in sales compared to last year. In December 2008, overall production fell by 22 % over the same month last year. Global recession has hit the Indian auto industry, India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined. Passenger Vehicles segment registered negative growth. One of its supporting facts is that the sales in December 2008 for passenger vehicles fell by 13.86% over December 2007. Maruti- the leading car manufacturer, registered 10% fall in sells (56293 units), as compared to December’07 (62,515 units). But interestingly, Hyundai motors, the second largest car maker of country, registered a growth in sells, with the help of export; Hyundai Motors reported 19% growth. Although the year 2008 saw a record launches of new products of various categories. Maruti launched A Star, its new small segment car. Honda Motors launched the new version of Honda city, its best selling sedan, also Civic Hybrid. Hyundai motor was not also far behind, in the end of the year, Hyundai launched its much awaited sedan i20.
  • Road ahead- 2009 The Indian automobile market is expected to grow by 9%. Although the industry has faced the brunt of recession, the sales figures of December’08 are the true indicator of bang of global slowdown. India with growing middle class, strong economy (although recession has hit the economy, but to be on positive side, will come over soon) and with trained workforce has a strong future of automobile industry. All the big foreign players are eyeing on Indian market. MAJOR PLAYERS: Stiff competition among the market players, domestic as well as global  Maruti Udyog ltd.  Hyundai Motor India Ltd.  Hindustan Motors Ltd.  Daewoo Motors India Ltd.  Fiat India Ltd.  Ford India Ltd. TATA MOTORS LTD. "Leading the Future" Tata Motors is India's largest automobile company. It is the largest commercial vehicle manufacturer in India and 2nd largest passenger car manufacturer. It is the 5th largest medium and heavy commercial vehicle manufacturer in the world. The popular brands of the company are Tata Indica, Tata Indigo, Tata Sumo and Tata Safari. Quick Facts: Founder Jamshedji Tata Year of Establishment 1945
  • Industry Automotive Business Group The Tata Group BSE – Code: 500570 Listing & its codes NSE – Code: TELCO & TATAMOTORS NYSE – Code: TTM Bombay House, 24, Homi Mody Street Corporate Office Mumbai 400 001, India Tel.: +(91)-(22)-56561676 Works Jhamshedpur, Pune, Lucknow, Dharwad am@tatamotors.com E-mail rbc@telco.co.in (for international inquiries) www.tatamotors.com Website www.tata.com/tatamotors COMPANY PROFILE: Tata Motors Limited is India’s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer. The company’s 23,000 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.” Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company’s manufacturing base in India is spread across Jamshedpur
  • (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is establishing two new plants at Dharwad (Karnataka) and Sanand (Gujarat). The company’s dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India. Tata Motors, the first company from India’s engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano’s presence is being expanded in other markets. In 2006, it formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company’s pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand at the Bangkok Motor Show 2008. Tata Motors is also expanding its international footprint, established through exports since 1961. The company’s commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. The foundation of the company’s growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer- desired offerings through leading edge R&D. With over 2,500 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India’s first fully
  • indigenous passenger car. Within two years of launch, Tata Indica became India’s largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India’s first indigenously developed mini-truck In January 2008, Tata Motors unveiled its People’s Car, the Tata Nano, which India and the world have been looking forward to. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. When launched in India later in 2008, the car will be available in both standard and deluxe versions. The standard version has been priced at Rs.100,000 (excluding VAT and transportation cost). The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future Segments & Brands: PRODUCTS BRANDS Indica V2 Indigo Indigo Marina Passenger Cars Indigo SX Indigo V2 Turbo Indica V2 Xeta Indigo XL Utility Vehicles Safari Décor Sumo Vista Trucks All types of Medium & Heavy Commercial Vehicles. Starbus Globus SFC 407 Turbo Mini-bus LP 407 Turbo Mini-bus LP 709 E Turbo LPO 1510 CGS bus Bus (CNG bus) Buses LP/LPO 1510 LP/LPO 1512 TC LP/LPO 1512 TC Turbo Bus Turbo Bus LPO 1610 TC RE Semi LPO 1616 TC LP 1109 Bharat Low Floor Bharat Luxury Bharat Stage II Stage – II Bus Stage – II Bus
  • Tata 407 (4 x 4) Soft Tata 407 / (4 x2) Tata LPTA 713 TC Top Troop Carrier Hard Top Troop (4 x4) Carrier Defence Tata LPT 709 E Hard Tata SD 1015 TC Tata LPTA 1615 TC Top Troop Carrier (4 x4) (4 x 4) Tata LPTA 1621 TC (6 Tata LPTA 1615 x6) TC (4 x2) Milestones: It has been a long and accelerated journey for Tata Motors, India's leading automobile manufacturer. Some significant milestones in the company's journey towards excellence and leadership: 2006 Tata Motors vehicle sales in India cross four million mark Tata Motors unveils new long wheel base premium Indigo & X-over concept at Auto Expo 2006 Indica V2 Xeta launched Passenger Vehicle sales in India cross one-million mark Tata Motors and Marcopolo, Brazil, announce joint venture to manufacture fully built buses & coaches for India & markets abroad Tata Motors first plant for small car to come up in West Bengal Tata Motors extends CNG options on its hatchback and estate range TDCV develops South Korea's first LNG-Powered Tractor- Trailer Tata Motors and Fiat Group announce three additional cooperation agreements Tata Motors introduces a new Indigo range
  • 2007 Construction of Small Car plant at Singur, West Bengal, begins on January 21 New 2007 Indica V2 range is launched Tata Motors launches the longwheel base Indigo XL, India's first stretch limousine Common rail diesel (DICOR) engine extended to Indigo sedan and estate range Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and market pickup trucks. Roll out of 100,000th Ace Tata-Fiat plant at Ranjangaon inaugurated Launch of a new Upgraded range of its entry level utility vehicle offering, the Tata Spacio. CRM-DMS initiative crosses the 1000th location milestone Launch of Magic, a comfortable, safe, four-wheeler public transportation mode, developed on the Ace platform Launch of Winger, India’s only maxi-van Fiat Group and Tata Motors announce establishment of Joint Venture in India Launch of the Sumo Victa Turbo DI, the new upgraded range of its entry- level utility vehicle, the Sumo Spacio Tata Motors launches Indica V2 Turbo with dual airbags and ABS Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L Direct Injection Common Rail (DICOR) engine. Rollout of the one millionth passenger car off the Indica platform. 2008 Ace plant at Pantnagar (Uttarakhand) begins production. Indica Vista – the new generation Indica, is launched. Tata Motors' new plant for Nano to come up in Gujarat. Latest common rail diesel offering- the Indica V2 DICOR, launched.
  • Indigo CS (Compact Sedan), world’s first sub four-metre sedan, launched. Launch of the new Sumo -- Sumo Grande, which combines the looks of an SUV with the comforts of a family car. Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo. Xenon, 1-tonne pick-up truck, launched in Thailand. Tata Motors signs definitive agreement with Ford Motor Company to purchase Jaguar and Land Rover. Tata Motors completes acquisition of Jaguar Land Rover. Tata Motors introduces new Super Milo range of buses. Tata Motors is Official Vehicle Provider to Youth Baton Relay for The III Commonwealth Youth Games Pune 2008. Indica Vista – the second generation Indica, is launched. Tata Motors launches passenger cars and the new pick-up in D.R. Congo. 2009 Tata Marcopolo Motors' Dharwad plant begins production Effects of Recession: 1. Tata Motors has finally launched Tata Nano, the ultra-low-cost car, on March 23, 2009. Had things gone according to the plan, Tata Motors would have launched Nano six months earlier. Tata Motors was supposed to build its Tata Nano manufacturing facility in West Bengal. Due to political pressure, the project was scrapped and replaced in the industry friendly Gujarat province. Tata Nano which costs Rs. 100,000 ($2050) is the cheapest car in the world. The snub nosed car is 10.2 feet long. It comes with a windshield wiper, a 623cc rear engine and diminutive trunk. There are no extra-safety or comfort features. The car does not have any air bags, anti-lock brakes, air-conditioning, radio, or power steering. If buyers want to have these features, they would have to pay extra money.
  • Now, the million dollar question is: Will Tata Nano see the face of profit? Had Tata Nano released the car six months earlier, the question could be answered with a positive note but now, the gloom of economic recession is hanging over India and stalled its economic growth. Like many other companies Tata Motors is also facing the heat of the recession. Only two years ago, Tata was on the path of unprecedented growth. Last year, it bought Jaguar/Landrover from Ford for $2.3 billion. The company took huge loan to buy the two brands. Now, everything has changed for Tata Motors. In the economic recession, commercial vehicles which make up Tata’s core business had been badly hit. The company registered a loss of $54 million in the last October-December quarter. 2. Due to competition, Tata motors have cut down on its production, shift hours. The decision has also affected our working, our shift hours. Some temporary workers have been laid off. The problem is going to remain for some time. Tata Motors Ltd, India's largest vehicle maker, is closing two of its commercial vehicle plants for six days later this month to avoid inventory build-up. Its commercial vehicle plant in Pune, in the western state of Maharashtra, will be shut from Nov. 21-26, while its commercial vehicle plant in Lucknow will be shut from Nov.10-15. The cost cutting measures of the car plant has also affected the prospects of the ancillary units. 3. Looks like Tata Motors is on a tie-up spree to offer the best of financing to their customers. After a list of tie-ups with various banks, Tata Motors adds on two more banks to its tie-up list so that they can offer help in financing of their range of passenger vehicles. The latest tie-up of the carmaker is with Bank of Baroda and Dena Bank, who will lend help and assistance in the financing sector. Even in this periods of recession, Tata Motors seems to be banking on their customers by offering them a rich experience and best customer service.
  • With all these various tie-ups with financial institutions, the company aims at offering a single window for both cars as well as car loans, thus offering comfort and convenience to the customer. 4. Tata Motors enters into tie-up with United bank of India for financing its range of passenger vehicles In order to provide an added facility of car finance to its customers, Tata Motors has entered into an understanding with United Bank of India for financing its range of passenger vehicles. 5. Commercial Vehicles The company’s sales of commercial vehicles in November 2008 in the domestic market were 16,229 nos., a decline of 40% compared to 26,895 vehicles sold in November last year. M&HCV sales stood at 5,792 nos., a decline of 60% over November 2007, while LCV sales were 10,437 nos., a decline of 16% over November2007. Cumulative sales of commercial vehicles in the domestic market for the fiscal were 1,81,123 nos., a decline of 3% over 1,86,859 nos. last year. Cumulative M&HCV sales stood at 81,909 nos., a decline of 16% over last year, while LCV sales for the fiscal were 99,214 nos., a growth of 11% over last year. Passenger Vehicles The company’s sales of passenger vehicles in November 2008 in the domestic market were 14,327 nos., a decline of 12% compared to 16,322 vehicles sold in November last year. The Indica range sales at 9,039 nos. declined by 13.8% over last November despite orders in hand which could not be converted into sales due to lack of financing in the market, but held close to October 2008 level of 9,484 nos. The Indigo range with sales of 3,477 nos., reported a 73% growth over November 2007. Car sales of 12,516 nos. between the Indica and the Indigo range in the month of November 2008 are marginally up, compared to car sales of 12,502 nos. in November 2007, continuing the growth uptrend registered for the first time this fiscal in October 2008. The Sumo and Safari accounted for sales of 1,811 nos., a decline of 52.6% compared to November 2007. The UV/SUV segment in the industry continues to be under pressure in the market since the July ad hoc imposition of an additional element of excise duty on vehicles having engine displacement of over 1.5 litre.
  • Cumulative sales of passenger vehicles in the domestic market for the fiscal were 1,29,246 nos., a decline of 5.5% over 1,36,820 nos. in the same period last year. Cumulative sales of the Indica at 68,078 nos., reported a decline of 25%, with de-growth having been controlled from a peak of 32.2% in July 2008 to 13.8% in November 2008, since the launch of the Indica Vista. Cumulative sales of the Indigo family were 34,759 nos., a growth of 86%. Cumulative sales of Sumo and Safari at 26,409 nos. went into a decline of 4% for the first time this fiscal arising from a slowing down of the segment since July. Exports The Company’s sales from exports at 2,140 vehicles in November 2008 declined by 43% compared to 3,730 vehicles in November 2007. The cumulative sales from exports for the fiscal at 27,741 nos. declined by 22% over 35,562 nos. in the same period last year. Tata Motors’ announcement on price reduction Tata Motors had confirmed earlier that the company would pass on the benefit of the reduction in CENVAT to customers, for both passenger vehicles and commercial vehicles. Effective December 8, the cut in prices are as follows: PASSENGER VEHICLES Passenger Cars (Indica and Indigo family): Between Rs. 12,000/- to Rs. 23,000/- depending on the model. Utility Vehicles (Safari and Sumo family): Between Rs. 16000/- to Rs. 36000/-, depending on the model. The new prices along with the Schemes as applicable are available at all Tata Motors outlets, across the country. COMMERCIAL VEHICLES Light Commercial Vehicles: Between Rs. 17,000/- to Rs. 23,000/-. Medium &Heavy Commercial Vehicles: Between Rs. 30,000/- to Rs. 60,000/-.
  • MARUTI UDYOG LIMITED Established in 1981, Maruti Udyog Limited (MUL) is a subsidiary of Suzuki Motor Corporation of Japan. The first ever Indian company to manufacture low cost cars, in collaboration with Suzuki of Japan, Maruti is considered to be the largest automobile company in India. The company is known for producing high quality, fuel-efficient cars with Japanese technology, but adaptive to Indian roads. The company has attained the annual production mark of 3,20,000, which is a trend setter for any Indian company Maruti delivers a variety of passenger vehicles- compact cars to luxury cars. Its product range includes Maruti 800, Omni, Maruti Zen, Estillo, Alto, Wagon R, Gypsy, Esteem, Baleno, Versa, Swift and Grand Vitara XL7. Maruti has also introduced upgraded versions of Wagon R, Zen and Esteem with the motive of becoming R&D hub for Suzuki Motor Corporation. At present Maruti has a 55% market share, and is planning to invest Rs. 6500crores Car market leader Maruti Suzuki sold 792,167 vehicles in 2008-09. This marks a growth of 3.6 per cent over last year. The annual sales in 2008-09 is the highest ever by the company, in its 25 year history. The previous highest annual sales were 764,842 units in 2007-08. The company's sales included exports of 70,023 units in 2008-09, up by 32.1 per cent over sales of 53,024 recorded in 2007-08. The 2008-09 export numbers, the highest ever by the company was led by A-star, the fuel efficient compact car launched in Europe during the year. The export tally includes around 19,000 units of A-star exported to Europe including United Kingdom, France, Germany, Italy, Netherlands, Denmark and Switzerland. 2008-09 marked Maruti Suzuki's Silver Jubilee year in India. Over these 25 years the company has sold over 7 million (70 lakh) cars in the domestic market. Additionally, over half a million cars made by Maruti Suzuki have been exported world-over. During the year, the company continued its focus on long term initiatives, despite the challenging market situation. These include:  Focus on R&D: Manpower strength to 730 engineers from 460 in end March 2008. Company plans 1,000 engineers in R&D by 2010.
  •  New technology engine: Brand new facility for K10B engine launched on schedule.  Launching new models: A-star launched. Introduced Maruti 800 Duo ¿ an alternate fuel option that runs on LPG and petrol.  Capacity to manufacture expanded from 800,000 to a million units (Gurgaon plus Manesar plants) annually.  Reached out to new segments of customers through innovative programs: among government employees and rural customers  Export of A star (as Alto) to Europe commenced as per schedule.  Dedicated export port facilities for cars at Mundra completed, used for A-star shipment. Network expansion: Sales: from 600 sales outlets (in 393 cities) last year to 681 outlets (in 454 cities); Service: from 2628 service outlets (1220 cities) last year to 2767 (in 1314 cities); True Value: from 265 outlets (in 166 cities) last year to 315 outlets (181 cities). Increased Pre-owned car sales from 1.01 lakh units in 2007-08 to 1.23 lakh units in 2008-09. National Road Safety Mission launched - a nation-wide Social responsibility (CSR) initiative to train 500,000 people in safe driving in three years. The network of Maruti Driving Schools further expanded and crossed 50 schools. Accolades : During the year, the company, its products and services received many awards and accolades instituted by independent expert groups, media houses and research agencies. These include:  A-star as the "Car of the year"  A-star as the "Best small car of the year"  K10B Engine as the "Automotive technology of the year"
  •  Maruti Suzuki as the "Manufacturer of the year" The company was rated No. 1 for a record 9th consecutive year in the JD Power Customer Satisfaction Index Study Sustainability at Maruti Suzuki refers to sum total of all the actions and initiatives undertaken by the company for its long-term survival and growth. To achieve long-term sustainability and prosperity the company has nurtured a socially responsible behaviour towards its various stakeholders. Since inception, the company has proactively taken care of the needs and sustainable growth of its stakeholders and they in turn, have supported the company in achieving its vision and business results year after year. As a result, sustainability has become an integral part of the company's approach to business and decision making. Milestones: 2009 – MSIL adopts voluntary Fuel Disclosure 1st shipment of A-star leaves Mundra port – Jan 10 A-star bags, Zigwheels “car of the year award” A-star rated best small car of the year Autocar – UTVi 2008 – World premiere of concept A-star at 9th Auto expo, New Delhi 2007 – Swift diesel launched New car plant and the diesel engine facility commences operations during 2006-2007 at Manesar, Haryana SX4-Luxury Sedan launched with the tag line “Men are Back” Maruti launches Grand Vitara 2006 – Awards & achievements (2005) J. D. Power Survey award for the 6th year MSIL has changed its EMS 4m ISO 14001:1996 to ISO 14001:2004 version w.e.f. 1st July 05 MSIL was recertified in 2005 as per ISO 14001:2004 standards 2005 – Swift launched first ever world strategic model from Suzuki Motors Corporations
  • March Till March Segment Models % % 2009 2008 2008-09 2007-08 Change Change A1 M800 2430 6353 -61.8% 49383 69553 -29.0% C Omni, Versa 6021 8041 -25.1% 77948 89729 -13.1% Alto, Wagon-R, A2 55415 41869 32.4% 511396 499280 2.4% Zen, Swift, A-star A3 SX4, Dzire 8595 7536 14.1% 75928 493335 53.9% Total Passenger Cars 72461 63799 13.6% 714655 707897 1.0% MUV Gypsy, Vitara 1394 622 124.1% 7489 3921 91.0% Domestic 73855 64421 14.6% 722144 711818 1.5% Export 11814 5875 101.1% 70023 53024 32.1% Total Sales 85669 70296 21.9% 792167 764842 3.6% Maruti Suzuki India Limited achieved its highest ever domestic and total sales in January 2009. In January 2009, the company sold 67,005 units, in the domestic market, up 5.6% over corresponding month last fiscal. The previous highest monthly domestic sales were 65,216 units in November 2007. In January 2009, the company exported 4774 units.In all, the company sold 71,779 vehicles in January 2009, up 5.4% over corresponding month last fiscal. The previous highest Total Sales were registered in March 2007 (71,772 units) Contributing to the bulk of sales will be the strong performances of the Swift, A-Star, Dzire and the evergreen Alto. The Sx4 will receive a huge boost if it gets the brilliant 90bhp 1.3 Multijet which has not found its way under the Sx4’s bonnet yet. Expect a premium edge when the Kizashi comes in later this year or in 2010.
  • The sales figures for January 2009 are given below January Till January % April’07 - Segment Models 2009 2008 Change 2008-09 2007-08 % Change March’08 A1 M800 5571 5470 1.8% 42878 57455 - 25.4% 69553 C Omni, Versa 7759 8861 - 12.4% 64286 74420 - 13.6% 89729 Alto, Wagon-R, A2 Zen, Swift, A-star 46899 45957 2.0% 405650 413352 - 1.9% 499280 SX4, Esteem, A3 Dzire 6590 2939 124.2% 59290 39841 48.8% 49335 Total Passenger Cars 66819 63227 5.7% 572104 585068 - 2.2% 707897 MUV Gypsy, Vitara 186 232 - 19.8% 5560 3024 83.9% 3921 Domestic 67005 63459 5.6% 577664 588092 - 1.8% 711818 Export 4774 4648 2.7% 49644 42638 16.4% 53024 Total Sales 71779 68107 5.4% 627308 630730 - 0.5% 764842 Marketing strategy prior to recession:  Undisputed leader until 1998  In response to the liberalization – it redesigned and introduced new models, shifted focus to customers  Covers all price points – caters to every passenger car customers  One stop shop , different revenue stream  Brand facelifts  Cost leadership , operational efficiency and productivity
  • Market segment analysis: Based on the economic strata, the Indian auto consumer segment can be sub divided into 5 categories:  Economy  Mid range  Luxury  Premium  Super premium Segment Wise market share in 2008 Impact of recession:  Severe impact on C segment and A2 segment. Banks are reluctant to finance car purchases in the wake of sub-prime crisis.  Partial impact on A1 segment ( sales of M800 has been declining for the past few years on account of other reasons as well)  Very less or no impact on A3 segment cars
  •  SX4 lauched in May 2007 and DZire in March 08. Both the cars are runaway success ever since they have been launched in India and they have kept the A3 segment unaffected.  Overall, recession has adversely impacted the passenger car segment as A2 category comprises a significant part of the passenger car segment. Response to recession by Maruti:  Deferred buying by customers  Focus on untapped potential of rural market  Provision of discounted purchase  Targeting the government employees General changes in marketing practices across the sector:  More emphasis on rural market  Financial assistance  After sales services Some more measures in recession:  1 component 1gram  Tapping export market – launch of A star model  Cost effective channels of marketing:  Internet (b) social network & promotional event (c) video sharing services Maruti now plans to tap the rural market, 60 per cent of which runs on cash. Worldwide, sales in the car industry have reduced by 40 per cent. But the Indian market is still performing well. The rural market has a lot of potential. Maruti has appointed
  • 2,000 sales executives to target customers in the rural areas and started special schemes for village panchayats, rural teachers and rural officers. A mobile van has been put on standby to provide car servicing at the villagers’ doorstep. Also, the company is offering discounts ranging from Rs 3,000 to 8,000 on various models in the rural market. Besides, the car manufacturer also plans to provide several incentives to the urban market BANK LOAN SCHEMES: Oriental Bank of Commerce(OBC), one of the leading PSU banks in India, has signed a memorandum of understanding(MOU) with India's leading car manufacturer Maruti Suzuki India Ltd. to publicize the loan scheme offered by Oriental Bank of Commerce. As per MOU, the exclusive car dealers of Maruti Suzuki will publicize the loan scheme among the prospective car buyers and link them to the Bank for credit support for hassle-free process CONCLUSION: Indian car industry is one of the most promising car industries across the globe. It has gradually strengthened its foothold in the international arena as well. The country is dealing with many car manufacturers, dealers, and associations in various different countries including U.S. From some countries, India imports cars and car components and to some India exports. With this, the global recession is obvious to have its impact on the Indian car industry. Though India has witnessed a growing customer base, it has not inoculated them from the global crisis. The crippling liquidity and high interest rates have slowed down the vehicle demand. However, the fall down started in July with a decline of 1.9% and thereafter the industry saw a major slowdown in October 2008.
  • Business Analysts reported that Indian car market had recorded a continuous growth of about 17.2% over the last few years but this year the recession has brought the growth to about 7-8%. Be it Tata Motors or Maruti Suzuki or even Mercedes-Benz, the car market has gone down to a tremendously negative terrain. In the recent months, banks and car financers have disbursed the approved loan because of the cash crunch. Payments from the OEMs (Original Equipment Manufacturer) have also been delayed and in most cases banks have deferred or disbursed the approved loan. OEMs take this loan from banks and financers for establishments, capacity expansions, or even for the requirement of high-end equipments for car designing and production. In addition, the uncertain exchange rate and a sudden increase in dollar value against Indian Rupee have contributed to the slowdown. Increasing dollar value has raised the landed cost of imported machine tools and even raw materials required for production by about 14%. Alloy and steel prices have also not shown any reduction in their prices and this high price has actually forced the car manufacturers to hike the car prices. To make the matter worse, it is believed that steel manufacturers across the country are looking for re-imposition of custom duty on steel. Increased cost of raw materials directly affects the cost of the car rolled out, eventually tagging a particular car model with a higher price tag. The conclusion is that the present global recession has hit hard on the Indian car industry. BIBLIOGRAPHY:  Newspapers  www.tatamotors.com  www.marutisuzuki.com  Blogs  Personal Contacts  SIAM (Society of Indian Automobile Manufactureres)
  • INTERVIEWS ATTACHED: Questionnaire  Personal Information: Name : Mr. Sudhish Chatterjee Company : Tata Motors Designation : Product Development Manager E-mail : http://toostep.com/profile/sudhish_chatterjee Address : India, Pune 1. How was the growth before the recession set in? How exactly has the recession hit the automobile market? What change have you personally seen over the past 14-18 months? Before recession Indian Automobile Industry had tremendous growth like 6-7 years straight it had seen growth, so the recession has not impacted very badly as it is in the case of US and European Countries. The Indian automobile industry declined 4.7% to 96.48 lakh units in 2007-08 against 1.01 crore units in the previous financial year. Not only recession the automobile industry was also plagued by high interest rates affecting local consumer demand, credit squeeze and rising input costs, but interestingly it reported a robust growth in exports. According to figures released by the Society of Indian Automobile Manufacturers (Siam), the total production also declined 2.29% to 1.08 crore units against 1.11 crore units as demand remained low. But in the recent reports suggests that in India, there is increase due to the stimulus packages, and with cheap fuel available, one is seeing rise in sales, where Maruti, Hyundai and Mahindra have increased sales in both India and overseas. And with Nano coming up with Automobile sector fighting in the price range to woo the consumers one may see the growth in the coming quarters. 2. Being one of the market leaders how do you look forward to doing things in the short and long term keeping in mind the current market scenario?
  • The Cost of new vehicle has to come down for markets, with less delivered price. Professional has to work with lean management and cost effective sources. Vehicle manufacturers have to work to sell out vehicles, with aligned sources and concepts. Moreover, automotive manufacturer should look at exploring new markets in Southeast Asia and South America, to boost revenues. There is a huge demand of fuel efficient cars. 3. Recession would must have slowed down all processes including sales, how important is branding at such times? "Well bribe them, her I mean to say: give them a discount coupon for free service or discount on service after free service.... Give them complimentary hotel stays etc... Bribe and Sell Cars. :)" The cost of new cars should be reduced in order to increase the sales. In this current scenario, in the marketing field instead of innovation realistic processes are required , peoples always like a traditional thing & also peoples wants to co-relate the things that touches their hearts. 4. According to you, how can automobile industries can beat recession? "I feel Automotive manufacturer should look at exploring new markets in Southeast Asia and South America, to boost revenues. There is a huge demand of fuel efficient cars...." In times like this an industry need to be flexible enough to quickly change their strategies to meet the customer expectations. One way for automobile industry to combat recession is to reduce the prices of their cars 5. Being one of the market leaders how do you look forward to doing things in the short and long term keeping in mind the current market scenario? Tata Motors is introducing Air Car - the next big thing. Tata Motors is taking giant strides and making history for itself. First the Land rover-Jaguar deal, then the world’s cheapest car and now it is also set to introduce the car that runs on access card. It is scheduled to hit the Indian Street in 2009 – 2010
  • Questionnaire  Personal Information: Name : Mr. Komal Saini Company : Maruti Designation : Product Development Manager E-mail : http://toostep.com/profile/komal_saini Address : India, New Delhi / NCR 1. What’s the current size of the automobile sector in India? The current size of the automobile sector in India is 5% of the GDP. 2. How much is the value of this sector? Value is approximately $45 billion taking in account the whole Indian market. 3. It is not uniformly spread over the nation, what are the high and low sale areas? Which areas do you think would see a change? High sales areas are the metropolitan cities and other townships. To be more specific the urban areas are the areas where the sales are usually high. Low sales areas are the rural market and suburbs are as. 4. How was the growth before the recession set in? In India it has increased from 9.3 lakh units in 02-03 to 23lakh units in 07-08 reporting a CAGR of 20%. Over the last five years, LCV & M/HCV segment have grown at CAGR of 27% & 17%. 5. How exactly has the recession hit the automobile market? Examples The overall sales have slowed down and people are looking for cheaper and smaller cars. After recession people are much more sensitive and skeptical about the vehicles they are
  • going to buy. Most of the people withdraw themselves from investing their money into automobile. As a result the sell takes a plunge down. 6. What change have you personally seen over the past 14-18 months? Data released by SIAM confirmation that the auto industry is in a recession with passenger cars dipping by 19.38 per cent and commercial vehicles recording a sales slump of 49.52 per cent in November that is when the recession hit hard on every sector and this was mostly due to the wayward lending of loans from banks, so this was the unknown demand created by the banks for the consumers with all those loans and when the recession hit it was the worst ever decline in the past eight years. Car market leader Maruti Suzuki India sales saw a decline of 24.84 per cent, whereas Hyundai Motor India Ltd (HMIL), the country's second largest carmaker also witnessed a fall of 23.32 per cent in its sales. Two-wheeler sales slipped by 14.68 per cent at 5, 67,502 units from 6,65,181 units in the same period last year, with motorcycle sales declining 20.24 per cent at 4,31,171 units as against 5,40,553 units in the corresponding month a year ago. Market leader Hero Honda registered a 1.41 per cent decline in bike sales at 2, 67,424 units in November as compared with 2,71,251 units in the year-ago period. While Bajaj Auto's sales plummeted by 52.96 per cent at 82,283 units against 1,74,936 units in the corresponding month last year, SIAM said. The government on Sunday had announced a major fiscal stimulus package to boost exports, Small and Medium Enterprises, housing and infrastructure projects, while slashing CENVAT rate by four percentage points across the board and providing for an additional spending of Rs 20,000 crores in the current fiscal. 7. How does communication ‘play a major role in your business? What are the strategies and patterns? It’s the backbone of any business. Communication among members, staffs, employees are just the most vital part of my business. It helps me to maintain a transparency & healthy working environment in my business. 8. Recession would must have slowed down all processes including sales, how important is branding at such times? It is important. The better you brand or market your business or product the better you enjoy the advantages over your competition.
  • 9. Your views on the immediate future of the 4 wheeler automobile sector in India. Electronics media, Print media, Internet etc. 10. According to you, how can automobile industries can beat recession? In times like this an industry need to be flexible enough to quickly change their strategies to meet the customer expectations. One way for automobile industry to combat recession is to reduce the prices of their cars and TATA and many other companies have already taken the initiative. They should think from the customer's perspective and change accordingly. But reducing the price will definitely reduce the additional features a company provides in their car, and then will the customers accept this? 11. What are the challenges faced by the sector in the future? Largest challenges facing the auto manufacturing industry is to produce vehicles which are lightweight (use of higher strength steels, Aluminium, magnesium and titanium), fuel efficient (Hybrid technology), cheap and desirable (multitude of choice).The business model which is based mostly on volume is sound if you can produce cars for the third world consumers, however the first world countries are spoiled for choice - thus lower the number of models and derivatives on the market - limit choice, reduce cost on tooling and manufacturing. Automation of manufacturing has to increase even more. 12. What are the current issues of concern in the automobile industries? Global meltdown, emission norms imposed by govt. inventing new technology and advanced frugal engine, hybrid-battery driven cars, -fuel and other pollution free cars to introduce in the market.
  • Questionnaire  Personal Information: Name : Ms. Bhavya Doshi Company : Dobro Toyota / Dobro Suzuki Designation : Chief Executive Officer (C.E.O) E-mail : bhavya@doshimotors.com 1. What’s the current size of the automobile sector in India? 32% of GDP 2. How much is the value of this sector? Around 9000 crores 3. It is not uniformly spread over the nation, what are the high and low sale areas? Which areas do you think would see a change? High sale AREAS remain with Metros and Capital Cities and low sale areas are District level markets. Currently the district markets are showing good trend in sales as per latest R.T.O records recently published in all newspapers. 4. How was the growth before the recession set in?(Sales figure/charts) Growth before recession is-17.2 % and after recession is between 7-8 % 5. How exactly has the recession hit the automobile market? Examples. Almost 50 % down in terms of sales and service. The international car brands are planning, to introduce small budget cars by 2010, itself is an example. 6. What change have you personally seen over the past 14-18 months? In terms of sales – The market went as low as it can till Feb-2009 and slight improvement noticed in the month of March-2009, in spite of the credit squeeze existing to continue.
  • In Terms of Service- Since most of the transport service providers jobs are cut especially in outsourcing and other IT industries, no of vehicles coming for service reduced to almost to 60 % Advantage to Employers, the manpower market is twisting, favoring currently the “Employers Bargaining”, since many qualified who found heaven in IT sector are now coming for jobs at lesser C.T.C 7. Being one of the market leaders how do you look forward to doing things in the short and long term keeping in mind the current market scenario? 1. Plan for maintaining existing business through customer retention programs and follow customer first principle vigorously with multiple brands availability including the associated product /service facilities. 2. ADOPT policy of “Saving a rupee is also profit”, without affecting the needed customer relationship, which is vital for long-term trust, quality and reliability. 3. More inputs for focused concentration on any brand assuring short-term goals. (Reduction of Wastage at all levels and improves upon express maintenance facilities). 8. How does communication ‘play a major role in your business? What are the strategies and patterns? All efforts to retain mouth-mouth promo by customers will be maintained and all communications to reach the target customers closely monitored with improved strategies. “More Benefits, Less Cost, Speedy Services and choice to choose reliable brands at one point will be designed and promoted. 9. Recession would must have slowed down all processes including sales, how important is branding at such times? Basically this type of recession do not affect Upper segments of society to such an extent, the main segment (middle Class) are affected. SO branded products if made available at affordable price may improve sales to considerable extent to retain the business flow required for survival, rather than pressurizing customers as their confidence in branded products help them for positive Buying decisions when compared to new ventures catering same needs.
  • 10. What are different media tools used for branding & advertisement? How successful has it been in comparison to the past (before recession)? Today, approaching buyers through suitable media “Television” is the choice with reality shows that can kindle emotions to rely brands associated with the endorsed products. Announcing special discounts suitable to occasions using newspaper media and FM media are the other choices as the next positive option. 11. Your views on the immediate future of the 4 wheeler automobile sector in India. Positive aspects are the 10th Automotive Mission Plan introduced by Government including the reduction of obstacles in the way of competition, to bring down the cost of fuel and price (which accounts for 6 % of the manufacturing cost in the auto sector), Captive power generation must be encouraged to enable industry to achieve cost effective plans. 12. According to you, how can automobile industries can beat recession? By introducing small cars like NANO at affordable price with maximum features, making today’s customer to feel proud about the association with “Quality Ownership Experience” providing automobile brand, in all respects. 13. What are the measures taken to eliminate or minimize risk? Through well-planned strategies, implementation of the same with focused promotional strategies, reaching buyers (decision) in the best possible manner confirming reliability, quality and durability, with provision of inputs wherever necessary to retain customers is the solution for anytime, irrespective any recession as recessions are temporary and caused many times by inflation of market for short term goals. 14. How do you monitor and review control measures? Follow P.D.C.A and should go by systems with necessary corrections required, without bending to temporary obligations and attractions for profits. 15. What are the current issues of concern in the automobile industries? People in all levels take advantage of recession including those not much affected. Mainly the credit squeeze that affects sales & service from originally buying segments is one of concern needs attention. And Most of the supporting plans for automobile industry by the government also require speedy approval and implementation for providing cost effective vehicles for affordability.
  • Questionnaire  Personal Information: Name : Rajeev Singh Age : 32 Sex: Male Company : Sings automobile sales Designation : Director Contact : 093393 71250 E-mail : rajv_ta@hotmail.comc Address : 28D, Alm Avenue, Kolkata – 700 019 1. What’s the current size of the automobile sector in India? Growing 2. How much is the value of this sector? Can’t put the amount exactly 3. It is not uniformly spread over the nation, what are the high and low sale areas? Which areas do you think would see a change? The middle and upper middle class 4. How was the growth before the recession set in? Steady 5. How exactly has the recession hit the automobile market? Examples Everything has got affected, then how can the vehicle industry remain aloof. The motor vehicle industry mirrors the slowdown in the economy. Taking you all thought the facts,
  • between 2006-07 and 2007-08, growth in sales of passenger cars came down from 22 to 12 per cent. Car sales are stimulated by people abandoning two-wheelers and buying safer four-wheel vehicles. But obviously, the decline in overall growth hurt the fortunes of the upward-mobile middle class. Yes, the effects of recession has already been seen in Indian Automobile Industry, with sales figures dropping down even in the months of October when Indians consider the best time to buy new cars...Also the layoffs happening due to decline in production units 6. What change have you personally seen over the past 14-18 months? Steady 7. How does communication ‘play a major role in your business? What are the strategies and patterns? Reaching out to the consumers through an effective ad campaign and media plan. 8. Recession would must have slowed down all processes including sales, how important is branding at such times? The relevance of any brand is in its presence and visibility to directly connect. 9. Your views on the immediate future of the 4 wheeler automobile sector in India. Growing and getting better 10. According to you, how can automobile industries can beat recession? The Cost of new vehicle has to come down for markets, with less delivered price. Professional has to work with lean management and cost effective sources. Vehicle manufacturers have to work to sell out vehicles, with aligned sources and concepts.
  • Questionnaire  Personal Information: Name : Ritesh Janee Age : 29 Sex: Male Company : P. J. Janee & Co. Ltd Designation : Owner Contact : 093393 71250 E-mail : ritesh.janee@gmail.com Address : Asansol 1. What’s the current size of the automobile sector in India? How much is the value of this sector? The industry is estimated to be a US$ 34 billion industry. 2. How was the growth before the recession set in? There was tremendous growth prior to the recession for almost 6 – 7years. 3. How exactly has the recession hit the automobile market? Examples Though recession has affected Indian economy somehow but still there is some stability in Indian economy compared to European or American economy. We Indians like to do more saving than spend money for purchasing anything which we do not need. We know the difference between "nice to have" and "need to have". We do not shop till we drop. There is a great potential market for automobiles in India (No of consumers is increasing steadily thanks to the economic growth). The great automobile companies are heading for Indian market. Indian car market had recorded a continuous growth of about 17.2% over the last few years but this year the recession has brought the growth to about 7-8%.
  • 4. What change have you personally seen over the past 14-18 months? The fall down started in July with a decline of 1.9% and thereafter the industry saw a major slowdown in October 2008. 5. How does communication ‘play a major role in your business? What are the strategies and patterns? Aggressive Campaigning by offering Special offers/Discounts 6. Recession would must have slowed down all processes including sales, how important is branding at such times? It is very important. Use of internet, social networking & proper marketing can help a lot. 7. According to you, how can automobile industries can beat recession? The Cost of new vehicle has to come down for markets, with less delivered price. Professional has to work with lean management and cost effective sources. Vehicle manufacturers have to work to sell out vehicles, with aligned sources and concepts. 8. What are the challenges faced by this sector in future? Automotive industry undergoes significant structural changes in an uncertain world economic climate, manufacturers face a new set of challenges to their business models and cost structures, despite the fact that the automotive sector is growing Largest challenges facing the auto manufacturing industry is to produce vehicles which are lightweight (use of higher strength steels, Aluminium, magnesium and titanium), fuel efficient (Hybrid technology), cheap and desirable (multitude of choice).The business model which is based mostly on volume is sound if you can produce cars for the third world consumers, however the first world countries are spoiled for choice - thus lower the number of models and derivatives on the market - limit choice, reduce cost on tooling and manufacturing. Automation of manufacturing has to increase even more.