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A project report on marketing mix of automotive sector


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A project report on marketing mix of automotive sector

A project report on marketing mix of automotive sector

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  • 3. AUTOMOTIVE ACKNOWLEDGMENTSWords fail us to express our deep sense of gratitude to our revered supervisor,……………………………… University Business School, whose erudite guidanceand supervision have made this work possible. We are very thankful for this valuableguidance and constant encouragement during the preparation of this project.We are highly thankful to all other members of department of UBS (PURC) for theirsuggestions and kind co-operation in this project work.We would like to thank all the respondents whose responses were of great importancefor the project. 3
  • 4. AUTOMOTIVE OBJECTIVE OF THIS STUDYThis study is done in keeping following objectives in view:  To find out the present status of the automobile industries in India.  To study the market research of the automobile industries.  To study the distribution and marketing strategy adopt by automobile industries.  To enhance our analytical skills in the field of practical application of Marketing “The marketer’s watchwords are quality, service, and value.” PHILIP KOTLER 4
  • 6. AUTOMOTIVE OVERVIEW OF AUTOMOTIVE SECTORThe industry is estimated to be a US$ 34 billion industry with exportscontributing 5 per cent of the revenues. The growth of the Indian middle classwith increasing purchasing power along with the strong growth of theeconomy over the past few years has attracted global major automanufacturers to the Indian market. Moreover, India provides trainedmanpower at competitive costs making India a favoured global manufacturinghub. The Indian automobile industry is going through a technological changewhere each firm is engaged in changing its processes and technologies tomaintain the competitive advantage and provide customers with the optimizedproducts and services. The de-licensing of the sector in 1991 and thesubsequent opening up of 100 per cent foreign direct investment (FDI)through the automatic route marked the beginning of a new era for theIndian automotive industry. Since then almost all the global majorautomobile players have set up their facilities in India taking the level ofproduction of vehicles from 2 million in 1991 to 10.83 million in 2007–08.Stagnation of the auto sector in markets such as Europe, US and Japan on theother, have resulted in shifting of new capacities and flow of capital to theIndian auto industry. The Indian automobile industry has been growing at therate of 15–27 per cent over the past five years. In two wheelers industry,Indian companies are the largest manufacturers in the world. Bikes are a majorsegment in the industry, the other two being scooters and mopeds. Moreover,Indian car makers are earning acclaim worldwide. The home-grownautomaker, Maruti Suzuki has emerged as the fourth most reputed amongauto companies in the world, even ahead of its parent Suzuki Motor Co ofJapan, according to the Global 200: The Worlds Best CorporateReputations list, compiled by US-based Reputation Institute. 6
  • 8. AUTOMOTIVE Pre1983 1983-1993 1993-2007• Closed market• Growth of marketlimited by supply• Outdated modelsPlayers• Hindustan Motors• Premier• Telco• Ashok Leyland• Mahindra &Mahindra• Suzuki, Japan andGOI joint venture toform Maruti Udyog• Joint ventures withcompanies incommercial vehiclesand componentsPlayers• Maruti Udyog• Hindustan Motors• Premier• Telco• Ashok Leyland• Mahindra &Mahindra• De-licensing of thesector in 1993• Global major OEMsstart8assembly in India
  • 9. AUTOMOTIVELEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATEManufacturer SegmentsAshok Leyland LCVs, M&HCVs, BusesAsian Motor Works M&HCVsAtul Auto Three wheelersBajaj Auto Two and Three WheelersBMW India Cars and MUVsDaimler Chrysler India CarsEicher Motors LCVs, M&HCVs, BusesElectrotherm India Electric Two WheelersFiat India CarsForce Motors Three Wheelers, MUVs and LCVsFord India Cars and MUVsGeneral Motors India Cars & MUVsHero Honda Motors Two WheelersHindustan Motors Cars, MUVs and LCVsHonda Two Wheelers, Cars and MUVsHyundai Motors Cars and MUVsKinetic Motor Two WheelersMahindra & Mahindra Three Wheelers, Cars, MUVs, LCVsMajestic Auto Three WheelersMaruti Suzuki Cars, MUVsPiaggio Three Wheelers, LCVsReva Electric Car Co. Electric CarsRoyal Enfield Motors Two WheelersScooters India Three WheelersSkoda Auto India CarsSuzuki Motorcycles Two WheelersSwaraj Mazda Ltd. LCVs, M&HCVSs, BusesTata Motors Cars, MUVs, LCVs, M&HCVs, BusesTatra Vectra Motors M&HCVsToyota Kirloskar Cars, MUVsTVS Motor Co. Two WheelersVolvo India M&HCVs, BusesYamaha Motor India Two Wheelers 9
  • 10. AUTOMOTIVE MARKET RESEARCHMarket research often refers to either primary or secondary research. Secondaryresearch involves a company using information compiled from various sources, whichis about a new or existing product.. Primary market research involves qualitativeresearch (such as focus groups or one-on-one interviews) and quantitative research(such as surveys) as well as field tests or observations conducted for or tailoredspecifically to that product. Primary research, which is also called field research ororiginal research, is useful for finding new information and getting customers viewson products.SCORPIOHaving defined the competitive framework, the next task undertaken was that ofanalyzing the consumer. Consumer segments of B and C category car buyers wereanalyzed in terms of their expectations from a car, their perceptions about cars andtheir relationship. Proprietary techniques of research, of the advertising agencyInterface Communications, like Mind & Mood, ICON and VIP were used tounderstand this consumer. The findings were:* Size matters- big size stands for status* Consumers seek latest technology* Imagery but at affordable prices* The sheer thrill and passion of driving an SUV* Power of the vehicle makes a statement* But along with the others, luxury was a very important parameter* International vehicles define imagerySUVs like Pajero, Land Cruiser and Prado are seen as urban vehicles for the rich and 10
  • 11. AUTOMOTIVEfamous consumers aspire to own these vehicles as the imagery of these vehicles hasbecome very desirable.“Consumers want to consume premium imagery at prices affordable to them” The Marketing EnvironmentMarketing environment consists of the actors and forces outside marketing that affectmarketing management’s ability to build and maintain successful relationships withtarget customers. The marketing environment offers both opportunities and threats.The environment continues to change rapidly. The marketing environment is made upof Micro-environment and Macro-environment.The Micro environment consists of the actors close to the company that affect itsability to serve its customers. These actors are: the company, suppliers, marketingintermediaries, customer markets, competitors and publics. The Macro environment consists of the larger societal forces that affect themicroenvironment. These forces are: demographic, economic, natural, technological,political and cultural forces.GM STUXXTHE DEMOGRAPHIC ENVIRONMENTThe demographic position will be on the United States. Since, the target market is forthe middle class; it will provide a boost for the 32% of the total population. Thisproduct will produce a superior value to customers who always value the brand. Also,it will keep the popularity of the product at their trend. In this case, more and morecustomers will be able to keep this product if it satisfies their condition. Additionally,the middle class group will be loyal to this product brand and as generation goes by;this product will be there forever. On the other hand, this product is also designed forstudents, and working class people. This is due to the fancy and environmental design. 11
  • 12. AUTOMOTIVEStudents will be so grateful to have fancy car while the working class group will tendto afford such an affordable environmental car design.THE NATURAL ENVIRONMENTThis product is basically designed to reduce the carbon emission from fuels and helpto preserve our environment. It is very important to design such car to help decreasethe rate of carbon dioxide from the air and provide a better condition to tackle globalwarming. This car will provide a boost to the natural environment because it is saferand has an image to be friendlier to the environment itself. In this case, more andmore people will tend to buy such car to protect the environment by reducing thecarbon emission to the air.THE ECONOMICAL ENVIRONMENTThe world is facing a shortage of fuel and it has become an economical crisis toeverycountry. This is evidence as the price of fuel is increasing and the probability ofthe price of a barrel to increase at any day is very high. Therefore, this product willhelp customers to save money because it consumes less fuel. The fuel consumption isone of the best criteria based on this product. On the other hand, customers will beable to satisfy with this kind of product because it is not too expensive and everybodyhas the privilege to afford one. This product will satisfy the superior value of alldifferent customers since it has a very good design to solve to fuel shortage, lessexpensive, and can be affordable to anyone.THE TECHNOLOGICAL ENVIRONMENTThe fastest growing of information technology helps this product to be at its best. Itsdesign is basically provided with the help of information technology. Looking at itsdesign, this product benefits a lot from the technological sectors. This proves that thisproduct is favourable to the environment. Also, this product can be modified or evenupgraded to the standard where it will be suitable at any environmental condition. The 12
  • 13. AUTOMOTIVEInformation technology is very effective in letting this product to be very efficient. Inthis case, it helps customers to satisfy this kind of product in this technologicalenvironment.THE SOCIAL AND CULTURAL ENVIRONMENTIt is believed that protecting the environment is a great concern. Therefore, thisproduct is purposely designed to be environmentally friendly. As a result, most peoplein the United States and elsewhere are willing to offer such kind of product to save theenvironment. If more and more people are keen to buy such kind of product then theenvironment would be safe at any cost. Consequently, people will be more supportiveto save what is best for the communities and the environment. SEGMENTATIONA market segment consists of a group of customers who share a similar set of wantsThe marketer does not create the segments; the marketer’s task is to identify thesegments and decide which one(s) to target. Segment marketing offers severalbenefits over mass marketing. The company can create a more fine-tuned product orservice offering and price it appropriately for the target segment. The company canmore easily select the best distribution and communication channels, and it will alsohave a clearer picture of its competitors, which are the companies going after thesame segment.In the context of automotive sector, we would be classifying it in the following ways-:  BASED ON THE PRICE OF THE CAR  BASED ON THE LENGTH OF THE CAR 13
  • 14. AUTOMOTIVE  BASED ON THE USER SEGMENTBASED ON THE PRICE OF THE CAROn the basis of price of car we can segment the car in following ways-:  Economy Segment o The economy segment of car ranges up to Rs. 2.5 lacs. The products in ths segment are Maruti 800, Alto and the newly launched product of TATA motors i.e. NANO.  Mid- Size Segment o The mid-size segment of car ranges from 2.5 lacs to 4.5 lacs. It includes the products like Hyundai santro, Maruti zen, Tata Indica etc.  Luxury car segment o The luxury segment of car ranges from 4.5 lacs to 10 lacs. It includes the products like Honda city, Hyundai Verna, Mahindra Scorpio etc.  Super luxury car segment o The super luxury segment of car ranges above 10 lacs. This segment satisfies the elite class of the society. It includes the products like Skoda Laura, Honda Accord, BMW, Mercedes, Audi etc.BASED ON THE LENGTH OF THE CAR  A segment- Cars that are less than 3.5 meters long (800, omni)  B segment- Cars between 3.5 meters to 4 meters long( Zen, SX4, Santro)  C Segment- Cars between 4 meters to 4.5 meters long (Verna, Honda city, ford fiesta) 14
  • 15. AUTOMOTIVE  D segment- Cars that are more than 4.5 meters long( Mercedez, Sonata, Accord, Skoda)BASED ON THE USERSegmentation of automotive sector is also based on the user of the products. Like theexample of TATA Motors, when it observed that their product ‘INDICA’ is usedextensively by the taxi operators, it came up with a new model of the car havingRound Tail Lights to distinguish it from the car having vertical tail lights used by theindividual buyers.  Individual Buyers  Taxi operators -:  Government /non-government institutions TARGET MARKETSThe segment that gives the greatest opportunity to the marketer is called targetmarketing.VOLVO MOTORSVolvo Motors develops its cars for buyer to whom automobile safety is a majorconcern. Volvo therefore positions it’s as a safest a customer can buy. 15
  • 16. AUTOMOTIVE.HYUNDAI MOTORSHyundai marketing strategy is differentiated marketing. Its primary consumer targetis middle to upper income professionals who need true value for their money andcomfortable ride in city conditions. Its secondary consumer target is college studentswho need style and speed. Its primary business target is midsized to large sizedcorporate that want to help their managers and employees by providing them a car forease of transport. Its secondary business target is entrepreneurs and small businessowners who want to provide discounts to managers buying a new car.Each of the four marketing strategies conveys Hyundai differentiation to the targetmarketing segments identified above.Hyundai Santro is targeting middleprofessionals Accent was launched to target corporate clients 16
  • 17. AUTOMOTIVE NICHE MARKET A niche is a more narrowly defined group seeking a distinctive mix ofbenefits. Marketers usually identify niches by dividing a segment into sub segments. BMW is targeting high class people but it is mainly targetingthe young people who earn a lot of money up to the age of 35-40 years and want tohave a stylish saloon. Mercedes is also targeting high class people but it is mainlytargeting the CEO’s, chairmen, etc of age group of 50-60 years. 17
  • 18. AUTOMOTIVE MARKETING MIXA Marketing mix is the division of groups to make a particular product by pricing,product, branding, place, and quality. Although some Day1 marketers have addedother Ps, such as personnel, packaging and physical evidence, the fundamentals ofmarketing typically identifies the four Ps of the marketing mix as referring to:"Marketing Mix" is set of correlated tools that work together to achieve companysobjectives, they are: product, price, promotion, place.The set of controllable tactical marketing tools, product, price,place and promotion -that the firm blends to produce the response it wants in the target market: • Product - A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are often service based like the tourism industry & the hotel industry. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. • Price – The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customers perceived value of the product. The business may increase or decrease the price of product if other stores have the same product. • Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. • Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any 18
  • 19. AUTOMOTIVE communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards. One of the most notable means of promotion today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation attached. This category has grown each year for the past decade while most other forms have suffered. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations19
  • 20. AUTOMOTIVE PRODUCTMARUTI SWIFTEuropean Styling. Japanese Engineering. Dream-Like Handling.The new Swift is a generation different from Suzuki design. Styled with a clear sense ofmuscularity, its one-and-a-half box, aggressive form makes for a look of stability, a sensethat it is packed with energy and ready to deliver a dynamicdrive. Its solid look is complemented by an equally rooted road presence and class-defining ride quality. New chassis systems allow for the front suspension lower arms,steering, gear box and rear engine mounting to be attached to a suspension frame. Youget lower road noise, and a greater feeling of stability as you sail over our roads withfeather-touch ease.TATA INDICAThough a late entrant, the Indica quickly established itself as the benchmark for thesegment. By offering exciting features, the car changed the rules of the category inSpace, Power, Style, Safety and Economy for international market. The Indicaensured a pleasant ride and handling experience as it had features like wide largetyres, generous leg room and independent front and rear suspension. It developed anew segment of diesel small cars along with its petrol offering. The luggage spacewas also the best in its class. 20
  • 21. AUTOMOTIVEThe rigid 980 kgs steel body of the car was rigorously tested at Indias first and onlycrash test facility. A collapsible steering wheel, impact absorbing bumpers, anti-submarine seats, crumple zones and side impact beams are just a few of the featuresthat make the Indica one of the safest cars on the roads today. Savings are ensuredwith the fuel-efficient 1.4L diesel engine, while the 1.4L petrol engine is optimizedfor performance.Indica features for international market: • Collapsible steering column • Side-impact beam • Energy-absorbing crumple zones in the front • Anti-submarine seats • Child-safety locks on rear doors • Laminated front and rear windshield glassSCORPIORational benefits: World class vehicle, good looks, car like comfort, great valueEmotional benefits: Ownership experience of thrill, excitement and powerRelational benefits: Young modern, premium, city companion / extension of lifestyle.PRODUCT, SERVICES AND BRANDING STRATEGY 21
  • 22. AUTOMOTIVEWhat is a Product?Product is anything that can be offered to a market for attention, acquisition, use, orconsumption that might satisfy a want or need. Products include more than justtangible goods. Broadly defined, products include physical objects, services, events,persons, places, organizations, ideas or mixes of these entities. Services are a form ofproduct that consists of activities, benefits or satisfactions offered for sale that areessentially intangible and do not result in the ownership of anything.Example: banking, hotel and airline.Products, Services and Experiences:Today, companies are creating and managing customer experiences with theirproducts.Levels of Products and Services:Product Planners need to think on three levels:1. Core Benefit: This addresses the question “What the buyer is really buying?”. Atthis level, marketers must define the core: problem-solving benefits or services thatconsumer seeks.2. Actual Product: At this level, the core benefits must be turned into actualproducts. Product planners need to develop product and service features, design,quality level, brand name and packaging.3. Augmented Product: Finally at this level, the product planners must bundle theproducts with services. They must build an augmented product by offering additionalconsumer services and benefits.Hyundai Santro 22
  • 23. AUTOMOTIVECORE PRODUCTCore Product is the problem solving services or benefits that consumers purchase theproduct for, and by applying this concept to Santro you can state that the core productis speed, transportation, and freedom to go anywhere, easy traveling, andconvenience.ACTUAL PRODUCTActual product meaning the product’s parts, quality, features, design, brand name andother attributes received. Now, if we use these things and combine it with Santro wecan state that the actual product is: Santro, as the brand name, it matters little aboutthe name, because HYUNDAI is very famous already, people will recognize thebrand in an instance, and features such as the fact that the car is fully customizable, soyou can add most things to your car, i.e. Stereo, big speakers, rims for the tires, TV inseat etc., also design, where you can choose between a lot of colours, seat colour, andfabrics, all the things you can imagine. And of course the quality, the car will beregular HYUNDAI standard, meaning quality will be the same as for any other carmade by HYUNDAI, which is high quality.AUGMENTED PRODUCTAugmented product is the additional consumer services and benefits built around thecore and actual product, as well as add value and differentiate the product from itscompetition. The augmented product for Santro is after-sale services such as freeyearly check up, as well as a free oil check after 2 years, free installation of additionalfeatures when you customize your car, and help with car insurance, and quick repairservices.PRODUCT CLASSIFICATIONSGM STUXX 23
  • 24. AUTOMOTIVEFrom the 4 product classifications, convenience, shopping, specialty and unsought,the Stuxx is classified as a specialty good, since specialty goods are purchasedinfrequently, and most of the times, buyers make special purchasing effort. By listingsome of the characteristics for specialty products we can say that substitutes are notaccepted, and that the product is infrequently purchased, and since our Stuxx is a GMwe know that there are some brand loyalty as well. And if we look at the strategy, wecan note limited distribution, and consumers “might” seek our product regardless oflocation,STAGES IN DEVELOPING PRODUCT AND SERVICEATTRIBUTESPRODUCT ATTRIBUTESProduct attributes consist of several categories, such as Product quality, Productfeatures, Product style and design. For Stuxx product quality is the performancequality, because it can be used a lot and still last for a long time (Durability). And asfor Product style we know that Stuxx offers many colours and many styles used toattract attention from trendy consumers, and general consumers, the style howeverdoes not contribute to better performance. For Product design, the car has a veryspecial chassis that allows many changes, making this a fully customizable car, whereyou are free to alter appearance, features, construction, such as adding items on theback of the car, lowering the car making it look more stylish like a race car.BRANDINGThere are several advantages for buyers when talking about branding, first of allproduct recognition, everyone knows GM, so if they know GM, then they know Stuxxas well. Quality on Stuxx is same standard as the rest of GM‘s cars. There are. But not 24
  • 25. AUTOMOTIVEonly buyers have advantages, no, sellers as well. Here are a few examples, basis forproduct’s quality, provides legal protection, helps to segment the markets.BRAND STRATEGYA study of international brand names was done and a classification of brand names ofmidsize cars and SUVs was done into groups. International brand naming trends andstrategies were analyzed. New names were generated. These brand names wereresearched massively first by qualitative techniques and then by quantitativetechniques.The name that emerged as most popular, and which was also the most liked nameinternally at Mahindra was SCORPIO.BRAND ENDORSEMENT STRATEGYThe relation between Scorpio and the mother brand Mahindra was also deliberatedupon. The strategy chosen for Brand Endorsement was - Scorpio from Mahindra -shadow endorsement, one which does not shout “Mahindra.”The Mahindra brand image was not modern and young. There was a need to create astrong distinct modern brand. Hence Mahindra as a Masterbrand could not contributetowards enhancing the Value Proposition. Yet Mahindra had to provide sourcereassurance. Also the distribution would be through Mahindra dealerships. Hence itbecame a shadow endorser.PACKAGING 25
  • 26. AUTOMOTIVESince product is a car, packaging might not be of much importance. Cars usuallydon’t come in a box. However, since Santro is made for students and older, they havedecided to make a big box, free of all charges, if the car is a gift for someone’sbirthday. Santro is a good choice as a “first” car; parents can easily buy it as a gift fortheir young teenagers/students.LABELINGNo labelling, however for curious users, there will be a small brochure about the“ingredients” car parts, so they can see how exactly the car works, and what andwhere the different parts are from.PRODUCT SUPPORT SERVICESAs for product support services, there are 3 things to know: Assess the value ofcurrent services and obtain ideas for new services. Assess the cost of providing theextra services and putting together a package of services that delights the customersand yields profits for the company. All these, are already applied to Santro if we lookat Augmented Product, which I wrote about earlier. Customers would be delightedabout those extra services, and might tell friends about them and in the end makemore profit for the company.PRODUCT LINE DECISIONS (The Product Mix)When it comes to product line decisions, and product mix to be exact; we will findthat there are 3 types, namely width, length and depth. As for Stuxx, it is definitelywidth, because Stuxx is a different product line for GM.PRICEMARUTI SWIFT 26
  • 27. AUTOMOTIVEAfter launching cars for the masses since so many years, India’s largest automobilemanufacturer is now targeting the premium segment with their latest model from theSuzuki’s stable. Pricing of this premium hatchback is start from Rs.4 lakh. This pricerange would practically rip apart Hyundai’s offering in Getz, which is priced at amuch higher tag of Rs. 4.5 lakh. Both the companies are known for their value basedofferings and Maruti with their extensive service network and brand reputation formaking reliable cars should get the customer’s nod over their competition.TATA INDICATata Motors adopted a competitive pricing strategy for Indica in the global market.Prices were fixed on the basis of the norms prevailing in the international market.Also the prices offered by their competitors like Toyota, Ford, Fiat, were kept in mindwhile deciding the prices.SCORPIOPricing Strategy: to be a premium brand yethaving universal appeal .Scorpio was to compete with the midsizecars like Hyundai Accent, Ford Ikon, Opel Corsa, Maruti Suzuki Esteem on the oneside and UVs like Toyota Quails, Tata Safari and the Tata Sumo on the other. Scorpioadopted the penetrative pricing strategy positioned in the psychological price barrierof Rs. 5 -7 Lakhs. PROMOTIONMARUTI SWIFT 27
  • 28. AUTOMOTIVEWhen Maruti Udyog launched the Swift, the automotive industry was agog withexpectation that the car had the makings of a real winner. Three versions werelaunched with the base variant carrying a retail tag of Rs 3.85 lakh, ex-showroom,New Delhi, and this aggressive pricing only reinforced this feeling.Event Organized By Maruti to Promote Swift Fever FM and Maruti Suzuki Swift organize a Night Rally for Delhi-ites On March 24, 2009 In a co-operative marketing initiative, Fever FM and Maruti Suzuki Swift came together to organize a Night Rally in Delhi. The Swift Night Life Rally wasorganized for the Swift Life Club. The brand tied up with the station to extend theexperience to the people who were unable to participate in the activity.HondaRoad ShowsThe company plans to stage road shows, todisplay vehicles in the pavilions during variouscollege festivals and exhibition.Hyundai Television advertisements Advertisements to promote and market our product are shown on leading television 28
  • 29. AUTOMOTIVEchannels. Major music and sports channels promote and they reach out to the youthwill be promoted through Star, Zee, Sony andA TV Commercial by Hyundai doordarshan etc as it has more viewers. .RadioRadio is the medium with the widest coverage. Studies have recently shown highlevels of exposure to radio broadcasting both within urban and rural areas, whether ornot listeners actually own a set. Many people listen to other peoples radios or hearthem in public places. So radio announcements are made and advertisements areannounced on the radio about the product features and price, qualities, etc.Print AdsDaily advertisements in leading newspapers andmagazines are used to promote the product.Leaflets at the initial stage are distributed atrailway stations, malls, college areas and variousother locations. Print ad by BMWWorkshops and SeminarsWorkshops and seminars are held in colleges and big corporate to make people awareabout the companies past performance and product features, its affordability andusage, vast distribution network. 29
  • 30. AUTOMOTIVEBanners, neon signsHoardings, banners, neon signs are displayed at clubs,discs, outside theatres, highways and shops to promote itsbrand car.Booklets and pamphletsBooklets are kept at car showrooms, retail battery outlets, etc for the customer to read.These booklets provide information about its company; the products offered whichsuits the customers need accordingly.TOYOTA COROLLAThe Promotion for Toyota Corolla consists of a blend of activities making itsPromotion Mix. Its Promotion Mix consists of almost all the possible techniques ofPromotion used for any other product. Some of the major elements of Promotion Mixof Toyota Corolla are listed as under:AdvertisingIt uses many different techniques of Advertisement as a partof its Advertising Strategy.Most of the Print Ads of Toyota Corolla are individuallytargeted at one of these factors such as Comfort, Performance,Styling, Power, Leg Room, Design, and Driving Pleasure.One most common feature of almost all the Ads is that in every Advertisement, thefact that it is the World’s Largest Selling Car and its presence across 160 countriesis present. This is done to because the company wants to differentiate the product interms of its Reliability that it is an entrusted brand of 30 Million people across theglobe. The fact that it is present in 160 countries proves that it is a Global Car.There are 3 TV Commercials of this Car in India. The Commercials show that thisCar is targeted mainly at the Indian youth and young Executive. It has been positioned 30
  • 31. AUTOMOTIVEas a little sportier which is the main reason that it is for young people and is also likeby them too.The Brochures, Posters/Leaflets are such designed that shows that Corolla is a car forpeople who demand Performance, Style, Power and Sheer Driving Pleasure. The carbeing a perfect combination of these factors makes it a huge success across itssegment.The Other Sources of Advertisement include Bill Boards, Display Signs, POP,Displays, Symbol/Logo. The company does the Advertising of Corolla by displayingBill Boards and Display Signs at various target places where it feels that prospectivebuyer will come across it. At the showroom also, there are huge amount of Point OfPurchase Displays and also Symbols/Logo which add to it.One of the major sources of Sales Promotion is Trade Fairs like AUTO EXPO,MOTOR SHOW etc. The company used to take part in these types of fairs and usedit for its Sales Promotion. But now the trend is shifting because the company thinksthat if they want to launch a product on a NationalLevel, then there is no need for such kind of shows asnow there are various other powerful sources of mediaavailable to them. Moreover the cost spent on thesekinds of fairs was not justified. So therefore thecompany is now keeping away from fairs. In 1999 Toyota last time participant at theRAC rally in Britain. 31
  • 32. AUTOMOTIVESome other Sales Promotion technique used by the company is the Festival SeasonOffers it introduces in the market at the time of Diwali, New Year, Christmas,Navratri etc to boost short term sales.Public Relations and Community Building Exercise • Contribution to Tsunami • Toyota Kirloskar Motor wins Best Ornamental Garden award for its landscape • Toyota Kirloskar signs MoU with Bangalore University for promotion of Japanese Language • Toyota observes earth day by supporting local schools • Organizing Drawing/Painting Competition on ‘Me and my Environment’ for kids from Govt. Schools. 32
  • 33. AUTOMOTIVE33
  • 35. AUTOMOTIVEPersonal Selling largely takes place at the Dealers’ End. The way the customer isattended depends mainly on the Dealer as he acts as an interface between thecompany and the Consumer.The various cases in which Personal Selling takes place is Individual Sales, CorporateSales, Sales Presentations, Fair and trade Shows. Mostly in case of Individual Salesthe Customer goes to the showroom and takes a look at the product. There he isattended to by the Sales Personnel of the Dealership. Sometimes the Senior SalesExecutive has to make Sales Presentation to Corporate Buyers. Personal Selling isalso practiced at Trade Fairs and Auto Shows wherein the Company appointed SalesPersonnel attend prospective customers and also book their orders.DIRECT MARKETINGIn the case of Direct Marketing the Company Officials directly contact theProspective buyers with the information available through various sources. Forexample in case of Road Shows, Trade Fairs, Auto shows etc. Sometimes the existingcustomers also provide references of prospective buyers such as their friends orrelatives. Toyota Stall at the Auto ExpoGM STUXX 35
  • 36. AUTOMOTIVEGMI has launched several industry first programs such as Opel Club Card facility,Opel Carnivals, Opel Autobahn newsletter, chauffeur training programmes, mobileroad-show caravan, car exchange programme for Opel customers, OK 5-Star used carprogramme,There is two-year and four-year warranty schemes, 2 year service holiday etc. Suchprogrammes have helped GM in building its brand equity and developing a loyalcustomer base.SCORPIOBrand Promise: ‘Luxury of a car. Thrill of an SUV’this brand positioning addresses the key consumer Insight and the product delivers thepromise. The position is also a unique proposition, which will help the brand have adistinct image in the consumers’ mind. ‘Baseline - “Nothing Else will do”The baseline captures the essence of the brand, which is superiority anduncompromising attitude. It also summarises the spirit behind the making of theScorpio.Media Strategy*Dramatic and high impact launch* High visibility* Push brand image even by the media vehicleBuilding impact through multiple-media* PR, Mass Media, Direct Marketing, Events 36
  • 37. AUTOMOTIVEPublic RelationsPre-launch excitement and buzz was created by a full blown PR program. Mediacoverage on the IDAM process, the people behind the Scorpio, the obsession, theworld class technology, etc set the tone for the hyped up launch. PR was also the firsttool used for launching the Scorpio. The coverage of the launch was massive. It gotfour cover storiesMass Media‘While the media targets would be achieved through the right selection of the mediamix, the Scorpio media posture was to ensure that Scorpio was present on the decidedmedia but ‘with a difference.’ Scorpio would use media innovations to createdifferentiation on the traditional media and do things in a ‘bigger and better’ manner.Customer Relationship Management (CRM)CRM as a tool was used to create positive word-of-mouth, to monitor customerexperiences and generate referrals. A series of CRM activities were implemented withregular direct communication, events and customer research. The CRM plan includeda welcome Pack on filling up Scorpio Club (Top Gear) form, satisfaction surveys,Events, Festive offers, Rewards Program, etc.TATA INDICA‘More car per car’ is the famous tagline of this product. The Indica’s positioning hasremained consistent with the brands offering in an increasingly competitive market.The Indica is now synonymous with the word ‘More, by encapsulating the inherentproduct strengths and marrying them with the customer trait of desiring ‘More’.A promotion strategy for Indica v2 in international market is more or less same as thatof the Indian market. Media innovations have been a key to the success of the Indica. 37
  • 38. AUTOMOTIVETata at 29th Bangkok International Motor Show 2008The positioning was strengthened with the successful launch of the Indica V2, whichassumed the leadership position in the year of its launch.The Indica v2 was launched in the international market only through the pressmedium, with three diesel versions and a petrol version, and this campaign shatteredmany automobile advertising myths. The car was launched without any televisionadvertising, but through high-impact newspaper ads, dominating the medium anddelivering the desired impact. Headlines such as ‘You’ll never have to suffer a smallcar again’ assisted customers in distinguishing between their old choices and theIndica. This, in effect, placed the Indica on the pedestal of leadership, set to changethe rules of the game.A recent campaign for the Indica V2 has helped in building the product on the rationalplatform and adds an emotional layer. Anchored on the insight ‘It’s only human towant more’, the campaign revolves around interesting candid moments in the dailylives of normal everyday people who desire more; be it a boy wanting the other boy’sbigger lollipop, or a baby crying when her parents stop driving her around in theIndica V2. The latest campaign moves to the ‘Even more car per car’ positioning. PLACE 38
  • 39. AUTOMOTIVEMARUTI SWIFTThe car manufacturing company, called Maruti Suzuki Automobiles India Limited, isa joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70per cent and 30 per cent stake respectively.The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per year with acapacity to scale up to 2.5 lakh units per annum. The car manufacturing plant willbegin commercial production by the end of 2006.The engine and the transmission plant has owned by Suzuki Power train India Limitedin which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyogholding the balance. The ultimate total plant capacity is three lakh diesel engines.However, the initial production is 1 lakh diesel engines, 20,000 petrol engines and 1.4lakh transmission assemblies.TATA INDICATata automobile group have a very large distribution network all over the world. TataIndica v2 is exported and assembled in many countries. South Africa has anassembling unit for consumer vehicles. Other places where the company’s products(Tata Indica) are exported and in some assembled also are mentioned below: • Africa :- Algeria , Angola , Ethiopia , Ghana , Kenya , Mauritius , Sudan , Uganda , South Africa , Senegal etc. • Europe: - Greece, Hungary, Italy, Malta, Portugal, Spain, • Switzerland, UK and Ireland. • CIS: - Belarus, Russia, Ukraine. • Asia: - Bangladesh, Malaysia, Sri-Lanka, Nepal, Bhutan. • Australia continent PEOPLE 39
  • 40. AUTOMOTIVEThere are various types of people in any Organization. The various types of people incase of Toyota can be classified as Customers, Sales Executives, Society,Government, Competitors, and Media.The most important out of these is our Customers. A customer can be any person whopurchases the product; he may or may not use that product for himself. A consumer isone who actually uses the product himself. For example a father purchases Corolla forhis son. In this case the father will be the Customer and son will be the Consumer.The main people involved in the purchase decision of the car are the FamilyMembers. In a recent study conducted, it was found out that these days children play amajor role in deciding which car to buy for the family. The company has to seriouslytake into consideration all these factors. Also the factors that whether one uses the carfor travelling, office, shopping or family/personal etc.As this car falls into a segment where price range is between 9-11 Lacs, so thecompany has to target those people who not only have the ability to spend that muchamount of money but are also willing to spend that much amount of money. Dataregarding the purchasing power of different classes of people is also very necessary.Customers’ tastes and preferences have to be taken into consideration.Next comes the Sales Executives who deal with the final customers and finish thesales call. The Sales Executives play a major role. As the people of the organizationthey are a window through which the customers interact with the company. They haveto be trained properly through customized modules designed especially for themtaking into consideration the various factors.Corolla Owners’ Profile• Age : 25-45 40
  • 41. AUTOMOTIVE• Occupation : Business Class or High Level Service Executives• Social Class : These people (Lower Upper to Higher Upper Class) generally have an existing C segment car before they purchase Corolla• Areas : Urban/ Sub Urban, major Cities/Towns• Income Level : More than Rs. 2 lacs p.m. PHYSICAL EVIDENCEThe Physical Evidence is created by displaying physically the product. Along withthat creating an atmosphere for the customers where in they feel the presence ofproduct. Toyota creates a powerful physical evidence for its customers through itsShowrooms, Hoardings, Logo etc. All the showrooms are designed on a commonplatform. The interiors of all the showrooms across India are the same. The designsfor the same are created by a team of Professionals in this field. The designs areprepared very carefully keeping into consideration various factors such as customers’tastes and preferences, likes and dislikes etc. You will always find a Toyotashowroom having the Toyota Bill Board outside with white base and red foreground.This creates a physical presence and people can feel the product.SHOWROOM INTERIOR AND EXTERIOR 41
  • 42. AUTOMOTIVESCORPIOInfrastructureThirty-five showrooms across the country were redone entirely with the same lookand identity and a décor built around movement, technology and sportiness. Thetheme focused on giving the customer a memorable experience. 42
  • 43. AUTOMOTIVEThe showroom revamp was centered on the intention to provide a uniform customerexperience at all the touch points and to provide the customer with a unique“experience” and not just a “product”. Therefore the back office would remain outsidethe customer’s line of vision because the customer would be concerned with theproduct and not with the paperwork. PROCESSThe various processes involved in getting available the product from the manufacturerto the end consumer are to be efficiently performed by the company. The processesstart when the customer is contacted by the Sales Personnel of the Dealership or thecustomer contacts the Dealership if he is interested to buy a Corolla. The dataregarding the various customers can be had from various sources of data availablethrough different agencies which specialize in providing data. After the call is made,an appointment is fixed. The Sales Executive prepares for the meet. He collects all thepossible information which would be needed for the meeting i.e. data about thecustomer, details about the car, maximum permissible discount structure, financeoptions, delivery terms, free accessories which will be provided to the customer.The sales personnel will find out that what is the present vehicle used by thecustomer, his present buying power, satisfaction level, seriousness in buying etc.Along with that he will also find out his exact needs, desired level of satisfaction,lifestyle patterns etc. Sales personnel also ask certain questions through which hecomes to know about the various factors he wants to know. He asks both open as wellas closed ended questions. With the help of these questions, he can come to know thevarious reasons due to which he is buying that car. These can be Performance, Safety,Comfort, Driving Pleasure, Appearance etc.These processes either lead to completion of sales call or sometimes unfortunatelyleads to unsuccessful sales call which could not be competed.DEALING WITH THE COMPETITION 43
  • 44. AUTOMOTIVE“Poor firms ignore their competitors; average firms copy their competitors; winningfirms lead their competitors” PHILIP KOTLERGENERAL ATTACK STRATEGYFRONTAL ATTACK: the attacker matches its opponent’s product, advertising, price anddistribution.In this advertisement BMW is using frontal attack strategy against its biggest competitorAUDI 44
  • 45. AUTOMOTIVEAUDI is replying the BMW advertisement Along with AUDI and BMW, SUBARU and BENTLEY are using frontal attack strategyagainst each other’s products.DISTRIBUTION CHANNELS 45
  • 46. AUTOMOTIVESCORPIOSince the Scorpio was targeted at an urban clientele it needed a stronger distributionpresence in Metros and urban areas. Hence, the distribution channel had to focus onproviding an appealing experience for modern car buyers and on offeringinternational standards of auto retail.The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi,Bangalore, Chennai. Twenty cities were included over a period of 4 months andwithin a year 50 cities were covered. This ensured attention to main markets and toensure that initial production of the vehicle could match demand. Dealerships wererevamped prior to launch in a particular city.The Marketing Distribution Channel of Toyota Kirloskar Motor India, theManufacturer of Corolla, is a Single Level Channel depicted Manufacturer-TKM India, Bangalore Toyota Flagship Dealer Consumer 46
  • 47. AUTOMOTIVEDISTRIBUTION CHANNEL OF HYUNDAI STOCKIST DEALERS SUB DEALERS BOOKING AGENTSTHE VALUE CHAINThe Value-Chain Network within Stuxx is a significant medium for measuring theproducts quality and performance, from Inbound Logistics-to- Operations-to-Outbound Logistics-to- Marketing/Sales-to-Service. As a manufacturing firm, GMthat produces Stuxx manufactures the vehicle and then distributes it to its store allover USA. The whole team network has a common purpose in operation and that is toproduce and to sell it to make the customer smiling when disembarking. This commonbelief has brought a successful feedback to the overall sales and because providing theservice for selling is considered an important task by the employees at Stuxx, it hasnever failed. Stores are designed so that accommodating a customer is luxurious butkeeping his/her perception to as “not expensive”-sense.SWOT ANALYSIS OFMARUTI UDYOG LTD. 47
  • 48. AUTOMOTIVE STRENGTHS WEAKNESSES OPPURTUNITIES THREATSSTRENGTHSThe Quality AdvantageMaruti Suzuki owners experience fewer problems with their vehicles than anyother car manufacturer in India (J.D. Power IQS Study 2004). The Alto waschosen No.1 in the premium compact car segment and the Esteem in the entrylevel mid - size car segment across 9 parameters.The J.D. Power APEAL Study 2004 proclaimed the Wagon R no. 1 in thepremium compact car segment and the Esteem No.1 in the entry level mid -size car segment. This study measures owner in terms of design, content,layout and performance of vehicles across 8 parameters.A Buying Experience like No OtherMaruti Suzuki has a sales network of 307 state-of -the-art showrooms across189 cities, with a workforce of over 6000 trained sales personnel to guide ourcustomers in finding the right car. Our high sales and customer care standardsled us to achieve the No.1 nameplate in the J.D. Power SSI Study 2004.Quality Service across 1036 Cities 48
  • 49. AUTOMOTIVEIn the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest acrossall 7 parameters: least problems experienced with vehicle serviced, highestservice quality, best in-service experience, best service delivery, best serviceadvisor experience, most user-friendly service and best service initiationexperience.92% of Maruti Suzuki owners feel that work gets done right the first timeduring service. The J.D. Power CSI study 2004 also reveals that 97% ofMaruti Suzuki owners would probably recommend the same make of vehicle,while 90% owners would probably repurchase the same make of vehicle.WEAKNESSESCommodity price riskMUL’s commodity price risk relates to higher cost due to change in price of inputsuch as Ferro-alloys (steel), non Ferro alloys (aluminium), plastic and rubber, whichgo into the production of automobile.In order to mitigate these risks, the company continues to attempt to enter into longterm contracts based on its projection of prices in a volatile commodity market, whereyour company gives top priority to ensuring smooth availability of inputs, long termcontracts are helpful. They also help to minimise the impact of growing input price.Conversely, long term contractor dilute the benefit if any, of a decline in input price.Exchange Rate RiskYour company is exposed to the risks associated with the fluctuation in foreignexchange rates mainly on import of component & raw material and export of vehicles.Your company has a well structured exchange risk management policy. The companymanages its exchange risk by using appropriate hedge instrument depending on theprevailing market condition and the view on the currency.OPPURTUNITIES 49
  • 50. AUTOMOTIVELeading GrowthAs the market leader, your company led the growth in the passenger car sector lastyear. Marutis sales went up 30% to 4,72,000 units. This, as I said earlier, is the highestannual sale since your company began operations 20 years ago. Maruti also gainedmarket share, mainly on account of its performance in the competitive A2 segmentwhere it increased its share from 40.3% in 2002-03 to 47.7% in 2003-04.The record sales performance was reflected in the financials. Net Sales (excludingexcise) grew by 31% to Rs 93,456 million. Operating Profit Margin increased from 0.8% in 2002-03 to 4.7 % in 2003-04. Profit after Tax jumped 270% to Rs 5421 million.Your company is committed to motorising India. Towards this end, your companyspartnership with State Bank of India and its Associate Banks took organised finance tosmall towns to enable people to buy Maruti cars.THREATSIn the course of its business, MUL is exposed to a variety of market and other risksincluding the effects of demand dynamics, commodity prices, currency exchangerates, interest rate, as well as risk associated with financial issues, hazards event andspecific asset risk. Wherever possible, we use the instrument of insurance to mitigaterisk.Business riskThe automotive industry is very capital intensive. Such investment requires a certainscale of operation to generate viable returns. These scales depend on demand. Marutiis still depending mainly on the Indian market. Although 2004-05 was year ofcontinued growth for the Indian economy, whether this growth momentum willcontinue has to be seen.THREATS FROM COMPETITORS 50
  • 51. AUTOMOTIVETata Motors LimitedIn the 2004 fiscal year, Tata Motors generated revenues of $3,542.2 million(INR154,935.2 million). The company made a net profit of $185 million (INR8,103.4million) in the 2004 fiscal year.General Motors CorporationFor the fiscal year ended December 2004, GM generated revenues of $193,517million, an increase of 4.3% from the previous year. The company reported a netincome of $2,805 million for fiscal 2004, down 26.6% from the previous year. PRODUCT LIFE CYCLE 51
  • 52. AUTOMOTIVE52
  • 53. AUTOMOTIVE INTRODUCTIONThe feeling of freedom and being one with the Nature comes only from riding a twowheeler. Indians prefer the two wheelers because of their small manageable size, lowmaintenance, and pricing and easy loan repayments. Indian streets are full of peopleof all age groups riding a two wheeler. Motorized two wheelers are seen as a symbolof status by the populace. Thus, in India, we would see swanky four wheels jostlingwith our ever reliable and sturdy steed: Two wheelers in India are the second largestproducer and manufacturer of two-wheelers in the world. It stands next only to Japanand China in terms of the number of two-wheelers produced and domestic salesrespectively. Indian two-wheeler industry has got spectacular growth in the last fewyears. Indian two-wheeler industry had a small beginning in the early 50s. TheAutomobile Products of India (API) started manufacturing scooters in the country.Bikes are a major segment of Indian two wheeler industry, the other two beingscooters and mopeds. Indian companies are among the largest two-wheelermanufacturers in the world. In the initial stages, the scooter segment was dominatedby API; it was later overtaken by Bajaj Auto. Although various government andprivate enterprises entered the fray for scooters, the only new player that has lasted tilltoday is LML.The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts175cc bike. The two-wheeler market was opened to foreign competition in themid-80s. And the then market leaders - Escorts and Enfield - were caught unaware bythe onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With theavailability of fuel efficient low power bikes, demand swelled, resulting in HeroHonda - then the only producer of four stroke bikes (100cc category), gaining a top 53
  • 54. AUTOMOTIVEslot.The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki andHero Honda brought in the first two-stroke and four-stroke engine motorcyclesrespectively. These two players initially started with assembly of CKD kits, and lateron progressed to indigenous manufacturing. In the 90s the major growth formotorcycle segment was brought in by Japanese motorcycles, which grew at a rate ofnearly 25% CAGR in the last five years.The industry had a smooth ride in the 50s, 60s and 70s when the Governmentprohibited new entries and strictly controlled capacity expansion. The industry saw asudden growth in the 80s. The industry witnessed a steady growth of 14% leading to apeak volume of 1.9mn vehicles in 1990.In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in adecline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mnvehicles. Barring Hero Honda, all the major producers suffered from recession inFY93 and FY94. Hero Honda showed a marginal decline in 1992.The reasons for recession in the sector were the incessant rise in fuel prices, highinput costs and reduced purchasing power due to significant rise in general price leveland credit crunch in consumer financing. Factors like increased production in 1992,due to new entrants coupled with the recession in the industry resulted in companyeither reporting losses or a fall in profits. 54
  • 55. AUTOMOTIVEKey players in the Two-wheeler IndustryThere are many two-wheeler manufacturers in India. Major players in the 2-wheelerindustry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVSMotor Company Ltd (TVS). 55
  • 56. AUTOMOTIVESEGMENTATION OF TWO WHEELERA Two Wheeler Sector Sub-Segmenting in the three Segments. 1. Motorcycle 2. Scooter 3. Mopeds 56
  • 57. AUTOMOTIVESegment-wise Analysis of Indian Two Wheeler MarketSegment Description share in Share in CAGR 2001-02 2006-07A1 Scooter with 5% 0% 33.99% engine capacity less than 75 ccA2 Scooter with 5% 10% 32.9% engine capacity between 75-125 cc (Scooterette) 57
  • 58. AUTOMOTIVEA3 Scooter with 12% 1% -27.7% engine capacity between 125-250 ccB1 Motorcycle 62% 66% 14.9% with engine capacity between 75-125 ccB2 Motorcycle 5% 17% 44.8% with engine capacity between 75-125 ccB3 Motorcycle 1% 1% 5.7% with engine capacity between 75-125 ccC1 Mopeds 10% 5% -2.7%Growth Prospects and Key Drivers of the Indian Two Wheelers IndustryThe growth witnessed by the Indian two wheeler industry indicates the growingdemand for low cost personal transportation solutions amongst the 300 million Indianmiddle class consumers. Despite this spectacular growth rate, the two wheelerpenetration (number of two wheelers per 1000 inhabitants) in India remains lowerthan other Asian countries. This fact provides an opportunity for continued growth inthe market. India has the lowest Penetration of two wheelers as compared to countrieslike Taiwan, Thailand, Malaysia, Vietnam, Indonesia and China. In the presentscenario, growth in the two wheeler Industry will be driven by several factors:Rise in India’s Young Working Population 58
  • 59. AUTOMOTIVEWith the rising levels of per capita income of people, the Indian two wheeler marketoffers a huge potential for Growth. This growth is relevant in the light of the fact that70 per cent of India’s population is below the age of 35 Years and 150 million peoplewill be added to the working Population in the next five years. The number of womenin the urban work force is also increasing; this will lead to the Growth of gearlessscooters.Rise of India’s Rural Economy and Growth in Middle Income HouseholdsThe growth prospects of the Indian rural economy offer a significant opportunity forthe motorcycle industry in India. The penetration of motorcycles amongst ruralhouseholds with income levels greater than US$ 2,200 per annum has alreadyincreased to over 50 per cent. The current target Segment for two wheelers, i.e.,households belonging to the Income category of US$ 2,200–12,000 is expected togrow at a CAGR of 10 per cent.Greater Affordability of VehiclesThe growth in two-wheeler sales in India has been driven by an increase inaffordability of these vehicles. An analysis of the price trends indicates that priceshave more or less stagnated in the past. This has been part of the marketing strategyadopted by the manufacturers to gain volume, as well as conscious efforts adopted tobring down costs. The operating expenses of leading manufacturers have declined byaround 15 per cent in the last five years. With greater avenues of financing, thecustomer’s capacity to own a two wheeler has improved.Rapid Product Introduction and Shorter Product Life CycleThe last five years have witnessed a sharp increase in new product launches in thetwo-wheeler industry. It is estimated that close to 50 new products have been 59
  • 60. AUTOMOTIVElaunched by manufacturers during this period, filling up all price points and targetedat various consumer segments.Inadequate Public Transport Systems in most Urban AreasThe economic boom witnessed in the country and the increased migration to urbanareas have increased the traffic congestion in Indian cities and worsened the existinginfrastructure bottlenecks. Inadequate urban planning has meant that transport systemshave not kept pace with the economic boom and the growing urban population. Thishas increased the dependence on personal modes of transport and the two wheelersmarket has benefited from this infrastructure gap.Challenges faced by the industryDespite the high growth achieved in the past and the high potential in the future, thetwo-wheelers market faces some challenges.Rising Customer ExpectationsThe growth witnessed by the Indian two wheeler industry has attracted a number ofnew entrants to the market and it is expected that the Indian industry will becomemore competitive in the future. The plethora of products introduced in the past hasalso raised customer expectations with respect to reliability, styling, performance andeconomy.Environmental and Safety ConcernsThe increasing demand for two wheelers will need to be managed to address issuesrelating to overcrowding of roads. Another problem is the insufficient infrastructurefor inspection to ensure adherence to emission norms. As the industry grows, it isimportant to regulate the sale of used two wheelers in a more organised manner forwhich a mechanism needs to be evolved. Unregulated sale of two wheelers, especiallyin the rural areas, are likely to create issues related to emissions and safety of vehicles. 60
  • 61. AUTOMOTIVECreation of Distribution InfrastructureLeading companies need to ensure that on one hand they build adequate infrastructurein terms of dealerships and servicing stations in the urban areas and on the otherensure that their distribution infrastructure also reaches the rural areasCOMPANY PROFILEHero Cycles and Honda Motor Company of Japan linkedtheir joint venture in India in April 1984, few could haveimagined that the two would go on to create history andbecome the subject of a case study at business schools,internationally.But thats the Hero Honda saga. In a little over two decades, the worlds largestmanufacturer of bicycles and the global leader in motorcycles have created not onlythe worlds single largest motorcycle company but also the most endearing andsuccessful joint venture for Honda Motor Company worldwide. The company has 61
  • 62. AUTOMOTIVEsold over 15 million motorcycles and has consistently grown at double digits since itsinception and today, every second motorcycle sold in the country is a Hero Honda.In two decades, Hero Honda has built two world-class manufacturing facilities atDharuhera and Gurgaon in Haryana that now churn out over 3 million bikes peryear. In this period, Hero Honda has set up over 2400 customer touch points,comprising a mix of dealers, service centres and stockists across rural and urbanIndia. Today, Hero Honda is an amalgam of winning networks and relationships withinternal and external stakeholders, including Investors, Dealers, Vendors andEmployees. These relationships have helped the company hold on to the mantle ofWorld No.1 for years in succession.Hero Honda has relied on 3 Rs-- Reach, Research and Reliability as its basicbuilding blocks. Using feedback from the market, a fully-equipped R&D centre hasconsistently created best practices in designing, testing and harmonization, besidesplacing strong emphasis on road safety and ride quality. This emphasis has helpedHero Honda build products that are ahead of their time.In the 1980s, for example, Hero Honda became the first company in India to provethat it was possible to drive a vehicle without polluting the roads. The companyintroduced new generation motorcycles that set industry benchmarks for fuel thriftand low emission. A legendary Fill it - Shut it - Forget it CAMPAIGN capturedthe imagination of commuters across India, and Hero Honda sold millions of bikespurely on the commitment of increased mileage.Hero Honda was also one of Indias first automotive companies to get close to thecustomer. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctlyputs it, "We pioneered Indias motorcycle industry, and its our responsibilitynow to take the industry to the next level. Well do all it takes to reach there.Key Highlights 62
  • 63. AUTOMOTIVE• Hero Honda enjoys a significant brand premium. Its aggressive pricing strategy to take on the competition has helped it in volume growth.• Variant launches in each of Splendor and Passion has helped in stemming the loss in market share in the face of the competition. Hero Honda now plans to launch two new models in the 100cc segment in FY05 on a new platform.• The company has started logging good volume growth after the launch of Passion Plus and Splendor Plus as well as the CD-Dawn, which has also rejuvenated its product range. Volumes should improve further, due to the base effect and improved rural sentiment on the back of higher farm incomes.• Aggressive cost controls and significant economies of scale are expected to aid Hero Honda in retaining margins.• Hero Honda will continue to be an attractive dividend yield play as the company continues to generate significant free cash flows as its capital requirements are limited Marketing MIX PRODUCTProduct Range and New ModelsThe Companys product range includes "Splendour" which is the largest sellingmotorcycle brand in the world with over 6.9 lakhs vehicles sold in 2000-01. Acumulative over 5 million customers are the real foundation of the companysstrength.The identity of Hero Motors in the market has been established through two of itsleading international products - Hero Puch and Hero Winner. When Hero Motorsentered into a technical collaboration with Styr Daimler Puch of Austria, Hero Puchwas born which marked a new chapter in the two-wheeler scenario of the country.Hero Puch, the mini-motorcycle designed by Ferdinand Porsche combined the power(4.15 bhp) and ease of a motorcycle and at 91 km/hr, the economy of a moped. 63
  • 64. AUTOMOTIVECASE STUDY OF HERO HONDA HUNKHero Honda new Bike hunk launched with a new features after the study ofmarket research by company A sure-shot head-turner, the Hunk comes withnever before features and looks:-Product highlights: • 150cc Engine, delivering raw power of 14.2 BHP @ 8500 RPM and a torque of 12.80 N-m @ even at a low RPM of 6500 • Unmatched super acceleration of 0-60 Km ph in flat 5 seconds • New Generation "Advanced Tumble Flow Induction" (ATFI) Technology engine - which delivers the best balance of Fuel efficiency and Power • Advanced Microprocessor Ignition System -"AMI" with Multi Mapping Digital CDI along with "Carburettor controlled Variable Ignition" delivers the optimum Power, quicker throttle response and Fuel efficiency • Unique "Anti-Kick back" device prevents Kick back during starting - convenient, safe and effortless kick start. PRICEFaced with an uncomfortable scenario of Bajaj Auto closing in on Hero HondaMotors in monthly unit sales, managing director Pawan Kant Munjal said thecompany has put in place a strategy to retain its leadership in the Rs 33,000 crore two-wheeler markets. That includes developing new high-performance engines in 100cc,expanding capacity to beyond 5 million units and reducing the price of 100cc bikes, ifneeded.“As confident as they are of upstaging us, we are confident of retaining our leadershipand growing our lead,” Munjal told FE in an exclusive interview. 64
  • 65. AUTOMOTIVEReiterating that unlike Bajaj, which is exiting the 100cc segment, Munjal said HeroHonda intends to strengthen its offerings in the segment. He said the company isdeveloping new engines that will deliver superior performance in the 100cc bikes infuture.To counter Bajaj’s move to offer 125cc bikes at the price of 100cc bikes, Munjal saidHero Honda could reduce prices of its 100cc bikes to nullify Bajaj’s strategy.Bajaj Auto plans to exit the entry-level motorcycle market by August-September nextyear and offer higher capacity bikes in the 100cc price range of Rs 34,000 to Rs42,000. “We have dominated the 100cc segment for many years and will continue todominate. Possibly it may be the reason for Bajaj Auto leaving the segment,” Munjaltold FE.The gap between Hero Honda and Bajaj Auto has narrowed from 92,206 inSeptember, 2005 to 37,833 in September, 2006 PLACEDEALER NETWORKAt Hero essentially they have a completely customer-driven approach. A nation-widedealer network comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and225 franchise holders for motorcycles, ensures convenient access to the Groupsproducts across the country.Strong dealer company relationship with a deep sense of belonging to the Herofraternity, the Groups dealer network has catalyzed growth and acted as a strongbridge between the customers and the Group.Sales agents from Hero travels to all the corners of the country, visiting dealers andsend back daily postcards with information on the stock position that day, turnover,fresh purchases, anticipated demand and also competitor action in the region. 65
  • 66. AUTOMOTIVEThere are more than 1000 committed dealers & service outlets spread across thecountry. The authorized workshop have well laid out standards for motorcycleservicing supported by fully equipped infrastructure in terms of quality precisioninstruments, pneumatic tools & a team of highly trained service technicians. Havingyour motorcycle serviced at an authorized workshop ensures highest standards ofservice quality and reliability PROMOTIONHHML is an organization, which is known for its innovative & AggressiveMarketing. Rs.120 crores was the Annual budget for market for the financial year2002-2003. All the mediums are used extensively, be it print or mass media like T.V& hoardings.HHML also promotes sports in the country. It is also the sponsor of the ICC worldCup 2003 and half of the Indian team represents Hero Honda. Those players areVirender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh, Zaheer Khanand Sourav Ganguly as Brand Ambassadors. Superstar Hrithik Roshan is also aBrand Ambassador for Hero Honda Company. They will endorse the companyproducts, attend corporate and brand events and help promote its "We Care"campaign comprising safety riding, environment and friendliness Also, advertising isdone at a local level by dealers, in which HHML also contributes to help dealerpromote the dealership in the local area.HHML has print ads that the customer gets to see almost every day in newspapers,magazines, etc. This has increased the brand recall by a significant number. They alsohave their bikes featured in various TV programs like top drive on star news andothers which act as a strong reference. 66
  • 67. AUTOMOTIVEADVERTISING STRATEGYHero Honda is currently the number one company in terms of sales and has beendominant in the two-wheeler segment since the past decade. Since the inception ofhero Honda, the company has been using television as a major role for its publicity.Though hero Honda was dominant in sales it lacked the skills of creating a spectacularad till now. Though it had a vast range of mobikes, its advertising strategy was not upto the mark. For its publicity hero Honda has been using many famous celebrities likeSaurav Ganguly, the captain of Indian cricket team, Hritik Roshan and other famouspersonalities as their brand ambassadors. Thus, hero Honda has been spending hugeamounts on its publicity. 67
  • 68. AUTOMOTIVE68
  • 69. Print adds AUTOMOTIVEGlamour 69
  • 70. AUTOMOTIVESome of the Events Sponsored During the Years2000  NKP Salve Challenger Trophy.  Stardust Hero Honda Millennium Honours Award.  Masters Golf Championship.  20th Cinema Express Award.2002  India-England Womens Cricket Series.  Masters Golf Championship.  Second Indian Television Academy Award.  21st Cinema Express Award.  First Indian Television Academy Award 2003  8th Cricket World Cup in South Africa. HERO HONDA ROADIESTo attract young generation Hero Honda sponsored MTV Roadies. It is the one of themost popular Show amongyoungster. A Live reality show inwhich some group of people travelacross the country on the bike.They ride HERO HONDAKARIZMA. This show become thekey factor in promoting the bikekarizma between the youngsterHERO HONDA CAMPUS ROCK IDIOLS 70
  • 71. AUTOMOTIVEIn today scenario in India rock culture is becoming very popular amongyoungster. To capture this young generation, Hero Honda is organizingCampus Rock Idols every year at all over major cities in India.HERO HONDA SA RA GA MA PA CHALLANGEBrand Ambassadors 71
  • 72. AUTOMOTIVECRICKETERSHero Honda promotes his cricketers brand ambassadors as a ‘Team Ambition’ in2003 World Cup. The Team Ambition has many similarities in personality with theHero Honda brand, such as splendor of performance, passion to excel and ambitionto win, signifying their respective desires to lead the way 72
  • 73. AUTOMOTIVEHero Honda, through the advertisements, hopes to communicate the brand identityto its customers in a language and appeal that is well identified and comprehendedby them.FILM STARHero Honda signed bollywood star Hrithik Roshan for hispremium bike Karizma. The customised all-chromeKarizma, a very stylish bike that truly befits his brandambassador and style icon Hrithik Roshan BOLLYWOOD STAR HRITHIK ROSHANHERO HONDA SIGNED MAHESH BABU A SUPERSTAR INANDHRA PRADESH TO CAPTURE MARKET IN AP 73
  • 74. AUTOMOTIVEHero Honda -India‘s number one two wheeler in sales. Now this big company isroping Mahesh Babu as their Brand ambassador for AP. The company is very muchconfident that young Mahesh Babu brings them up in their sale figure and at the sametime Mahesh Babu‘s fan following will be utilized for brand image of Hero Honda. HERO HONDA KARIZMAHero Honda Karizma was the first real sports bike in India. The bike addresses tothose who have a passion for speed and styling and head-turning looks. It has 17 pspower thrust and picks up 0-60 in 3.8 heart-stopping seconds. The bike is based onpower and styling. Disc brakes and Mag wheels makes Karizma the safest jet on theroad.Company Stroke Maximum Power Displacement Hero Honda Motors India Ltd. 4-Stroke 16.8 bhp @ 7000 rpm 232 ccStriking Features:1. Style2. Sporty position of the seat. 74
  • 75. AUTOMOTIVE3. It stands on its feet even at speeds reaching up to 130 kmph.S.W.O.T. ANALYSIS OF KARIZMASTRENGTH• It has a good speed and sporty look.• Karizma is the First bike in India launched under Sports Bike Segment.• Loyal Customer Base: In the past four years, Karizma has been successful inbuilding up a good and loyal base among its customers.• After Sales Service: Till today, customers are satisfied with the after sales serviceprovided by Hero Honda for this particular product.• Refinement, comfort, great handling and that much-sought-after big bike feel are allavailable on the Karizma.• Brand Recall: the name Karizma itself is a metaphor to its success. The brandKarizma has given a good platform to this product in the Sports Bike Segment.WEAKNESS 75
  • 76. AUTOMOTIVE• High Maintenance: The maintenance of Karizma is high as compared to its biggestcompetitor Bajaj Pulsar 200cc and 220cc.• Fuel Efficiency: The pulsar 200cc offers an impressive mileage of 38.3kpl in cityand 42.4kpl in highway against the Karizma offers only 30kpl in city and a decentfigure of 45kpl in highway.• Less Promotion: the promotions and ads of Karizma are very less as compared to itscompetitors.OPPORTUNITIES• If Hero Honda comes up with the idea of changing some features of Karizma, likeself cancelling indicators, soft touch handle bar and digital speedometer, it will helpthem to boost up the sales of Karizma.• If they are able to improvise the fuel efficiency of Karizma, it will be a goldenopportunity to take over the market.THREATS• The major threat faced by Hero Honda Karizma is from Bajaj Pulsar, who hasalways been the market leader in the 150 plus segment with 60% market share.• Karizma’s strong competitors Bajaj and TVS, in 150 cc plus segment, alreadyposses certain features like self-controlling indicators, soft touch handle bar whichKarizma lacks.• The competitor Pulsar 200cc has already come up with oil cooled engine whichdelivers maximum power. This is again a major threat to Karizma. 76
  • 77. AUTOMOTIVES.W.O.T. ANALYSIS OF COMPETITOR(BAJAJ PULSAR 220cc) STRENGTHS• Pulsar 220cc features India’s First Oil Cooled Engine which delivers maximumpower making it most powerful engine offered by Bajaj.• New Pulsar also provides Digital Speedometer, Self Cancelling Indicators which isfor the First time in this segment in India.• Fuel efficiency: Pulsar 220cc delivers an impressive mileage of 38.2 kmpl in city ascompared to Karizma which delivers 30 kmpl in city.• Customer Base: In past decade Bajaj has established a strong base amongst itscustomers. 77
  • 78. AUTOMOTIVEWEAKNESS• Style and Design: PULSAR 200cc and 220cc derives their styling from thereprevious version Pulsar 150 Dts-i and 180 Dts-i.• Pricing; Bajaj 220cc (Rs 82449 basic price) is costlier than karizma (Rs 78000 basicprice)OPPORTUNITIES• Taking into consideration the reviews of the customers regarding the “fairing” of220cc and making the needful changes will be an opportunity to capture an evenlarger share of the 200cc+ segment.THREATS• The biggest threat is faced from the goodwill of Karizma in this segment who is the“Four-Stroke Two Wheeler Ruler” of the Indian bike market.• Certain technical faults in the bike design which are potentially dangerous to therider’s safety can be disastrous to the image of the bike.Brand Image create By BajajBrand image create by Bajaj through his pro bike showroom which display hispremium bikes range such as pulsar 220, Avenger, Pulsar 180 etc. BAJAJ’s Pro Bike Showroom The Bajaj Prebaking showrooms will definitely be one of the integral elements in his overall brand strategy to reinforce the image of Bajaj being a manufacturer of quality performance motorcycles in 78
  • 79. AUTOMOTIVEthe country. Its the retail experience a dedicated biker feels when he or she steps intoa Probiking outlet. Its a new space they have created and theres a lot of work to becompleted.BAJAJ PULSAR ‘DEFINATELY MALE’Bajaj pulsar make an image of that there bike is only for guys. Through his DefinitelyMale Campaign they shows behave of a young guys. This Advertisement helped lotBajaj to create brand positioning.Chatting merrily, three girls Ones dupatta skims over the bikes and then gets stuck...Walk by a line of motorbikes....making her turn in ... The logo, "Pulsar". MVO: Bajaj Pulsar, definitely maleConsternation. She pulls it awaySlowly to reveal... 79
  • 80. AUTOMOTIVE MARKET MIX OF KARIZMAPRODUCTDESIGN, ENGINEERING AND INTERIORSHero Honda has taken a lot of styling cues for this bike from Honda’s old model VFR800, the Japanese giant’s legendary and largest selling superbike. Similarities arevisible in the alloy die-cast wheels, the tailpiece, the front indicators, the fairing, thesilencer unit, seat, panel shapes and instrument binnacle. Even the way Hero Hondahas painted parts of the side panels silver to look like exposed aluminium framesections, reminds one of the genuine thing on the VFR. One cannot help but think thatthe steering column section of the bike looks crude and empty just below thehandlebar mounts. Fit and finish is excellent and no less than the high standards wehave come to respect Hero Honda for. The company has kept with the times, andgrafted an aircraft-type fuel filler cap onto the tank. The tank recesses easilyaccommodated the legs of our tallest testers. The amber backlighting for instrumentsis exciting. Being connected directly to the battery, all lights and instruments workindependently of the rpm of the engine, and are a boon at night. 80
  • 81. AUTOMOTIVEBRANDING:BRAND NAME: KARIZMAIn Hindi, “KARISHMA” means “something inexplicably magical”. In English,“CHARISMA” (pronounced Karizma) means “the ability to inspire followers withdevotion and enthusiasm”. The way this bike has turned out to be, it is probably both.The monogram of Karizma itself is very attractive and eye catchy because of thecolour.In order to overcome the competition faced from its biggest competitor bajaj220 dts-I,the company has tried to attract the customers by changing the graphics of Karizmai.e. an attractive new logo, which represents the bike’s cutting edge imagery of beingracy.International styling graphics with a pronounced `R’ on the tank and an asymmetricalone on the visor in keeping with the latest international trend.PRICINGthe new Karizma will also continue to be priced at almost the same level as theprevious version, with on-road prices for the regular variant working out to Rs79,000-80,000. The special edition variant with red mag-wheels will be costlier byabout Rs 1,000. Bajaj has launched 52 Prebaking outlets – which will house only highperformance bikes. Pulsar 200cc would be available at such Probiking showrooms atselect locations across the country for an attractive price of Rs.65, 497 (ex showroom,New Delhi). 81
  • 82. AUTOMOTIVE PROMOTIONADVERTISEMENT:Hero Honda KarizmaAgency:A fighter plane is on a regular sortie when the pilot notices a moving object. Zoominghis camera, he captures a bike cruising at high speed. Informing the control tower, thepilot dives in for a closer look.The bike gathers speed and enters a tunnel to beat the fighter aircraft. Reaching theair-base, the rider meshes with the staff as they examine the images... ... of themotorcycle, unaware that its owner is amidst them. MVO: "Hero Honda Karizma. JetSet Go." 82
  • 83. AUTOMOTIVEThe all-new-Karizma has been created by the Hero Honda’s research anddevelopment team to mark the company’s highest-ever sales of over 3.03 lakh units inMay 2006.Celebrating its milestone of rolling out 15 million bikes, two-wheeler major HeroHonda, presented a tailor-made ‘all-chrome Karizma’ motorcycle to Bollywood starHrithik Roshan.“This super bike will surely match my super hero image,” Hero Honda brandambassador Hrithik said, as Hero Honda Managing Director Pawan Munjal handedover the keys to the star. HERO HONDA MTV ROADIESIn mtv roadies the all competent use only the Hero Honda karizma bike from the lastsix years. So, by sponsoring the show hero Honda promoting their brand karizmaamong the youngster. 83
  • 84. AUTOMOTIVEThe Hero Honda family is elated to have achieved the landmark figure of 15 millionmotorcycles in the shortest ever time-span. The customized all-chrome Karizma trulybefits our brand ambassador and style icon Hrithik Roshan,” Mr Pawan Munjal said.Group Chairman Brijmohan Lall Munjal said, entertainment and sports are everyone’sfavourites. Though, they are not physically involved in sales, celebrities help inpromoting the product, he said. PLACECHANNELS OF DISTRIBUTIONAs a company, dealers play a major role in serving customers, while growing andsustaining markets. Hero Honda has a network of more than 3500 strong anddedicated Authorized dealers. A network that has helps Hero Honda’s name and itspromise of reliable quality to every part of the country. The power of this highlyefficient and motivated network goes a long way to create goodwill for Hero Hondabrand among countless consumers besides creating availability and after salesservices.The channel of distribution is a direct dealer network. A direct dealer is a dealer whois authorized to purchase the product directly from the company and sell.PHYSICAL DISTRIBUTION:As a company, dealers play a major role in serving customers, while growing andsustaining markets. Hero Honda has a network of more than 3500 strong anddedicated Authorized dealers. A network that has helps Hero Honda’s name and itspromise of reliable quality to every part of the country. The power of this highlyefficient and motivated network goes a long way to create goodwill for Hero Hondabrand among countless consumers besides creating availability and after salesservices.CONCLUSION 84
  • 85. AUTOMOTIVEIndia’s expedition to become a global auto manufacturing hub could be seriouslychallenged by its inability to uphold its low-cost production base. A survey conductedby the research, KMPMG firm reveals that the Indian auto component manufacturersare increasingly becoming skeptical about sustaining the low-cost base as overheadsincluding labour costs and complex tax regime are constantly rising.The survey said many executives believe that India’s cost advantage is grinding downfast as labour costs are constantly increasing and retaining employees is becomingmore and more difficult. Increased presence of global automotive companies in thecountry was cited as one of the reasons for the high erosion rate.Indian auto businesses will only flourish if they boost investments in automation. Inthe longer term, cost advantage will only be retained if Indian capital can be used todevelop low-cost automation in manufacturing. This is the way to preserve our lowcost.Global auto majors are also cynical about India’s low cost manufacturing base. Indiataxation remains a big disadvantage. This is not about tax rates it is just aboutunnecessary complexity. But some companies also believe there is scope for reducingthe cost of doing business.In spite of this there are opportunities to exploit lower costs right across the board. It’strue that labour costs are definitely increasing but they are still five per cent of thetotal operational costs. The labour costs can be further reduced if companies aresuccessful in bringing down other costs like reducing power costs. Low-cost base cannever last long. The company said Indian industry has till now relied on very labourintensive model but it would have to switch to a more capital intensive modelBIBILIOGRAPHY 85