Market analysis and potential marketsize for taco autocomponents aftermarket and study of its pot
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Market analysis and potential marketsize for taco autocomponents aftermarket and study of its pot

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  • 1. A PROJECT REPORT ON MARKET ANALYSIS OF AUTO-COMPONENT AFTERMARKET AND STUDY OF ITS POTENTIAL MARKET SIZE IN PUNE FOR TATA AUTOCOMP SYSTEMS LIMITED (TACO) IN PARTIAL FULFILLMENT OF MASTER IN BUSINESS ADMINISTRATION UNIVERSITY OF PUNE BY CHINMAY OAK M.B.A. (2005 2007) GUIDED BY MR. RAJESH CHAWLA (TACO) PROF. MAHESH HALALE (VIM) VISHWAKARMA INSTITUTE OF MANAGEMENT, PUNE
  • 2. Acknowledgement At the outset I wish to thank Mr. Sudhansu Misra, Manager HR, TACO for giving me opportunity to do this project in Tata Autocomp Systems Ltd. I wish to express my sincere and heartfelt gratitude towards my guide Mr. Rajesh Chawla of Tata Autocomp Systems Ltd., without whose support and guidance completion of this project would not have been possible. I am extremely grateful to Prof. Mahesh Halale of Vishwakarma Institute of Management of his wholehearted support and guidance at every stage of this project. I am very thankful to other faculty members and Dr. Sharad Joshi, Director, VIM for their guidance. Last but not the least , I also wish to appreciate all my friends and well wishers who have in one way or the other helped me to complete my project.
  • 3. Contents Sr. No. Topic Page No. 1 Executive Summery 1 2 Purpose .. 3 3 Objective 4 4 Scope of Project .. 5 5 Company Profile .. 6 6 Theoretical Background 30 7 Research Methodology .. 32 8 Data Analysis and Interpretation . 34 9 Findings . 58 10 Limitations 63 11 Conclusions 64 12 Recommendations .. 65 13 Bibliography . 66 14 Annexure ... 67
  • 4. Executive Sum m ery
  • 5. Purpose, Objective and Scope
  • 6. Com pany Profile
  • 7. Theoretical Background
  • 8. Research Methodology
  • 9. Data Analysis and Interpretation
  • 10. Findings
  • 11. Lim itations
  • 12. Conclusions
  • 13. Recom m endations
  • 14. Bibliography
  • 15. Annexure
  • 16. 1 Executive Summery The project topic was chosen as per requirements of Tata Autocomp Systems Ltd. (TACO). TACO was interested in finding out the potential market size for marketing its auto-components in aftermarket. Also analysis of current status of aftermarket with respect to existing players, their market shares, their relative strengths and weaknesses was required to be found out. Due to limited resources only Pune market was selected for the study. The project was done during the months of June and July 2006. To find out details about various suppliers of auto-components, retailers were selected to be surveyed as they are aware about many suppliers, stock many auto-components and are aware about customer preferences. As per MCCIA (Mahratta Chamber of Commerce, Industries and Agriculture) industrial and commercial dictionary there are 150 retailers of 4 wheeler auto- components. A sample of 30 retailers was chosen for the survey. The survey was done through a questionnaire in which the questions were open ended. It was more like a data sheet. Retailers were asked to name various vehicle models for which they sell spares. For each auto-component how many suppliers are in market, fro which vehicle models they supply parts, what are their prices and their strengths and weaknesses as per customer preferences were collected. To find out potential market size of aftermarket, approximate sales of these retailers for various models was found out. This data was extrapolated for approximately 150 retailers to get the total market size in Pune. By tabulating the data market share in terms of Number of parts sold per month and their monetary value for different suppliers of each auto-component was found out. Also total sales of each auto-component for each vehicle model were tabulated. Assuming minimum 150 retailers in Pune, potential market was calculated. Observations regarding the preferences of customers and retailers and insights from discussion with retailers are also included in the report.
  • 17. 2 The facts and figures itself talk about he market structure and potential market for auto-components in Pune. There is substantial retail market for auto-components. Also Tata original auto-components have large market share for most of the components and is in top two in market shares. TACO can use this strength to enter in the auto-component aftermarket
  • 18. 3 Purpose Auto component manufacturers supply to two kinds of buyers original equipment manufacturers (OEM) and the replacement market or aftermarket. TACO is already supplying components to every automaker in India and has strong relationships with all its customers in India. It reaches its aftermarket customers for Tata Motors through authorized dealerships and service centers. It is currently not supplying auto-components for vehicles other than Tata vehicles in aftermarket. TACO has proven technical and manufacturing capabilities to enter into this auto-component aftermarket. However, before taking the decision of entering this market it is important to find out the potential market size of this auto-components aftermarket. In addition, information about the current market players, their market share, strengths and weaknesses was required for strategic planning for TACO s entrance in the market. For this purpose this project was undertaken. Though the study was conducted only in Pune, similar studies can be conducted for whole Maharashtra and across India for taking the right decision.
  • 19. 4 Objectives Primary Objectives 1. Find out current market shares of available brands in auto-component aftermarket. 2. To find out the current market size for auto-components aftermarket. Secondary Objectives 1. Find out various brands available for auto-components in the retail market in Pune 2. To find out responses / preferences of retailers and customers for specific brands 3. Strengths and weaknesses of TACO auto-components with respect to other brands.
  • 20. 5 Scope The project was limited to Pune market only. The survey was limited to 4 wheeler vehicles in all segments i.e. cars, utility vehicles to commercial vehicles. Not all auto-components but only 10 components are covered in the study. The selection of these components was done according to requirements of TACO. These auto-components include o Bumpers o Coil Springs o Control Cables o Coolant tank o Head lamp o Oil chamber o Radiators o Rear view mirror o Shock absorbers o Tail lamp As not all the retailers in Pune city could be covered due to shortage of resources sample is taken. 30 retailers from different areas of Pune are surveyed.
  • 21. 6 Company Profile Tata Group The Tata Group is India's best-known industrial group with a turnover of US$ 17.6 billion (equivalent to 2.9 per cent of India's GDP). Known for its adherence to business ethics, it is India's most respected private business group. With more than 220,000 employees across 91 major companies, it is also India's largest employer in the private sector. The Tata Group operates businesses in seven key industry sectors. Business sectors - Tata Group Founded by Jamsetji Tata in the 1860s, the Tata Group pioneered several firsts in Indian industry including India's first private sector steel mill, first private sector power utility, first luxury hotel chain and first international airline. In more recent times, the Tata Group's pioneering spirit continues to be showcased by companies like Tata Consultancy Services (TCS), Asia's largest software and services company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up. The business operations of the Tata Group currently encompass seven business sectors engineering, materials, energy, chemicals, consumer products, services, and communications and information systems. The scale of the Tata Group's operations is increasingly turning global. Tata Tea was the first Indian MNC in the global tea industry; Tata Steel is one of the world's lowest cost producer of steel;
  • 22. 7 Tata Chemicals is one of Asia's largest manufacturers of soda ash; Titan is one of the world's top six manufacturer-brands in the watch segment and Tata Motors is amongst the top six commercial vehicle manufacturers in the world. The Tata Group is increasingly focusing on new technology areas, and has the largest footprint in the information technology and communication sector in India. Besides being the largest software services provider in the country, it is also one of the leading private sector telecom service providers and is also India's largest international long distance and Internet services provider. By combining ethical values with business acumen, globalisation with national interests and core businesses with emerging ones, the Tata Group aims to be the largest and most respected global brand from India whilst fulfilling its long standing commitment to improving the quality of life of its stakeholders.
  • 23. 8 TACO Tata Autocomp Systems Ltd. TACO is part of the Tata Group -- India's best-known industrial group. It was established in 1996 to serve Indian and Global Auto Industry. TACO serves every OEM in India, provides complete programme management capabilities and is focused on building exports and being a system supplier. TACO's 14 manufacturing partners and 3 engineering partners from the US, Europe, Japan, Korea and Asia-Pacific, bring the latest technology to its customers. The company has built strong manufacturing facilities in partnership with global and Indian companies to supply auto components to the Indian and global automotive industry. It also offers automotive companies in India and abroad capabilities in processes and systems to ensure world-class design skills at competitive costs besides providing supply chain management capabilities TACO has demonstrated the power of alliances to build the automotive components business. Beginning with one joint venture for seating equipment, with Johnson Controls of the US, the TACO group now has 14 manufacturing joint ventures offering a range of automotive components and three engineering joint ventures offering their services at locations across India. Their partners from the US, Europe, Japan, Singapore and Korea are bringing the latest technology to their customers. TACO is already supplying components to every automaker in India and has strong relationships with all its customers in India. With every programme for each customer, our relationships have deepened. Our management processes and support have ensured that each joint venture is profitable. TACO s joint ventures in India have provided strong support to our partners' global operations.
  • 24. 9 Given that India is becoming a global automotive location, both as a market and as a base for global manufacturing and engineering, TACO is believed to be the best partner both to bring India's strengths to business, establish leadership in the India market for the product range and to use low-cost Indian engineering and manufacturing to support global business.
  • 25. 10 TACO Vision To become customers first choice, in the global automotive domain, by focusing organisational energy on understanding and delivering on their need for state-of- the-art technology, cost and quality benchmarks, and overall relationship, which they expect from a world class supplier. TACO Mission Exceed the expectations of our customers Excellence in technology and engineering Our Core Values : Simplicity, Frugality, Integrity, Respect and Harmony Teamwork, training, transparency, emphasis on performance and merit Protection of environment and service to society
  • 26. 11 Organisation chart
  • 27. 12 Customers TACO has customers in all segments cars, trucks, tractors and two wheelers. TACO serves every OEM in India and offers complete program management capabilities. TACO is consistently recognised by their customers for their performance. Domestic Customers Araco Behr Delphi Escorts Gabriel Hindustan Motors Kinetic New Holland Tata Motors Ashok Leyland Cummins Eicher Fiat General Motors Honda Siel L&T John Deere Piaggio Toyota Kirloskar Bajaj Auto DaimlerChrysler International Customers Albion Ficosa GM (Opel) John Deere Peugeot Valeo Volkswagen Faurecia Ford GM SAAB Lotus Cars Rising Sun Visteon Fiat General Motors MODENAS Slater Yendall Volvo Yazaki Honeywell
  • 28. 13 Engineering Division TACO offers automotive companies in India and across the globe world-class design skills at competitive costs. It has proven capabilities in CAD, CAE, engineering design, analysis, testing and homologation and prototype development and has a well-established offshore model. TACO has the critical ability to understand customer expectations and requirements, review designs and execute engineering projects within cost, quality and delivery targets. It offers its customers reduced engineering costs and a faster development cycle with round-the-clock development. Quality certifications like ISO-9000:2000 and Six Sigma ensure customer satisfaction, project monitoring, performance assessment and resource management. Range of services offered by TACO Engineering SBG.
  • 29. 14 Infrastructure and technology TACO business units use modern state-of-the-art, computer-aided design tools; computer-aided engineering analysis tools and world-class communication infrastructure. The business units have knowledge of all the applied sciences necessary to meet the requirements of its customers. Software Styling: Alias, ICEMsurf CAD / PDM: Catia, Ideas, UGS, PTC, and Metaphase CAE software: Hypermesh, LS Dyna, MSC software, Moldflow Skills Product design: Styling, class ACAD, CAE, PDM, and KBE reverse engineering Scalability of technology TACO can scale up its skills, manpower, software, hardware and space to meet spurt requirements and higher customer demand levels by utilising the abundant resources of the group or by having committed resources wherever they can be fully utilised on a continuous basis Manpower A team of well-qualified engineers support TACO's engineering services. The engineers are trained to think analytically, learn quickly and communicate well. Their skills are constantly updated to help them stay at the cutting edge of technological change. Facilities TACO has three state-of-the-art engineering offices at Pune, India.
  • 30. 15 Engineering SBG Offers Cost Reductions o Reductions in engineering costs (50% as compared to USA, Europe and Japan) Faster Development Cycle o Two shift operations in TACO Engineering. o Possibility of round the clock development (24/7 development). Availability of Quality Engineers o Academic curriculum based on British system. o Extensive internal training in TACO Engineering. o English language is medium of instruction Engineering businesses established Johnson Controls o 290 engineers TACO Engineering Centre o Customers include Yazaki, Valeo Sylvania, Visteon. o 90 engineers Yazaki Engineering Centre o Being set-up TACO FAURECIA Design Centre o Planned for 150 engineers in 18 months TACO Tooling Business Unit (TTBU) o Customers include Toyota, Honda, Ford, Cummins o US$ 5.5 mln
  • 31. 16 TACO Tooling Business Unit TACO undertakes complete Tool Management Program Some of the recent Tool design and development projects undertaken by TACO are: Toyota Kirloskar Motors Ltd.: Skin panel tooling for the Rear door of Qualis. Honda Siel: Tooling for the new car. Toyota : Tooling for Indonesian project Nucleon, USA : Tool design Cummins, UK : Dies for Rotor Laminations and Stator Lamination Magnetti Marelli: Instrument cluster in Plastic. Besides these projects, several other customer programs which include both development of Tooling (Sheet Metal, Plastics and Composites) and components have been undertaken by TACO Manufacturing Joint Ventures
  • 32. 17 Supply Chain Management SBG (SCM SBG) Objective To offer cost effective Total Procurement Service and Solutions to Indian and Global Automotive OEMs Tier I suppliers Select Tier II suppliers Products and Services Principal Offering o Auto-components o Sub-assemblies o Aggregates Allied Services o Logistics Techno-commercial Services o Supplier Technical Assistance (STA) o Process Stream Improvement (PSI) o Localization Complementary Services o Engineering Services, Tooling and Prototyping Capabilities of SCM SBG Powerful Vendor Base o Vendor identification and selection system (Via TACO) o Commodity-wise Trained Buyers o Certified Assessors as STA s Process Improvement Capability o 6 Sigma o Lean Manufacturing
  • 33. 18 Logistics Service o Partnership with international logistics companies IT and Program Management Capabilities Sourcing Business Established GM-SAAB o Gear shift Rails Honeywell-Garrett o Machined Castings, Sintered Parts, Bearings American Axle and Manufacturing o Axle Components Lotus Cars o Steering gear, Wiper Assemblies, Ball Joints UFI and Unimacts o Aluminum Die Castings Modenas o Carburetor, Brake Discs, Clutches Tata Motors o Logistics responsibility for CKD exports
  • 34. 19 MANUFACTURING CAPABILITIES TACO has built strong manufacturing facilities in partnership with global companies to supply auto components to the Indian and global automotive industries. The key intent of the business unit is to become the leader in the domestic space and achieve global competitiveness in quality, cost and delivery capabilities and to become the outsourcing base of choice for the global automotive industry. In each of its joint ventures, TACO has focused on: Integrating the partner's best practices and absorbing its processes, technologies and skills. Building product development and program management capabilities; Building a strong vendor base that can contribute to the global ambitions of the joint venture; Developing world-class quality, cost and delivery capabilities; Continuously benchmarking the joint venture with partner locations and with global supplier evaluations by OEMs.
  • 35. 20 Lets have a look at various manufacturing facilities in partnership with the following global companies: 1. Tata Johnson Controls Tata Johnson Controls Automotive Limited (TJCAL), is a 50:50 joint venture between TACO and JCI. It is one of the largest seating systems suppliers in India with products spanning passenger cars, commercial vehicles, utility vehicles, earth-moving equipment and two-wheelers. TJCAL has one of the largest offshore engineering centers in India, dedicated to servicing the global automotive seating, interior and electronics design needs of Johnson Controls Inc (JCI). Product: Automotive Seating Systems, Seating components Partner: Johnson Controls Inc., U.S.A Facilities: Complete Design and Manufacturing facilities Production facilities Pune, Chennai & Lucknow. Sales Office in Jamshedpur Largest Design centre in India for seating system development. Access to latest design and technology through JCI. Prototype & trim development capability Robotized metal welding plant Highly Efficient Cut-&-Sew Operations o CNC fabric cutter first seating company with this facility o Micro-processor based Sewing machines Foam Plant with robotic foam pouring and air circulation system Low cost testing capability. TJC testing lab certified for ISO/IEC 17025 Well-entrenched Mfg-Pro ERP system
  • 36. 21 Quality Systems Conformance to international quality standards TS16949, QS9000, ISO14001, OHSAS 18001 Follows JCI BOS, TBEM and Six Sigma in its operations Domestic Customers Araco, DaimlerChrysler, Fiat, Ford, John Deere, Royal Enfield, Tata Motors Overseas Customers Export of Seating Systems components to JCI, John Deere 2. Tata AutoPlastic Systems This facility offers high quality products with cost effective design and manufacturing capabilities in automotive plastic interior and exterior products to meet the growing demands of the global automotive industry. Present Products: Dashboards, Bumpers, Package Tray, Door Modules, Air Vents Future Products: Headliners, Boot trim + Insulation, Acoustic Package Technology partner: Faurecia (Sommer Allibert Industries) Facilities: Injection Moulding Machines - 60 to 2700T Woodstock press with Infra red heating systems Assembly lines equipped with Ultrasonic welding and designed to achieve Cockpit Approach . Modern paint shop as per Sommer Allibert Standards. Complete Tool Design and Development Program Tie up with Tool Makers from Europe and Far East for large size tools
  • 37. 22 Air Ventilation Nozzles Capabilities Endurance Test facilities (for life of product) Quality Systems: QS 9000 and ISO14000 certification achieved Customers: Bajaj Auto, Fiat, Fiat - South Africa, Ford India, Ford of Europe, General Motors, L&T John Deere Tractors, M&M, Tata Motors, TKML, Volvo. 3. Tata Yazaki AutoComp Product: Wiring harness Partner: Yazaki corporation, Japan Facilities: An International Production Centre for customers, worldwide (QCDF+QS9000+ISO 14001) Conveyorised Wiring Harness assembly line. Plant capacity : 1000 car sets/day Customers :Behr India, Behr Germany, Escorts , General Motors, Honda Siel, Piaggio Vehicles, Mahindra & Mahindra , Tata Motors, Toyota, Yazaki (Japan and Europe).
  • 38. 23 4. Tata Ficosa Automotive Systems Ltd. Tata Ficosa Automotive Systems Limited (TF) offers complete solutions for parking-brake, automotive command-and-control, rod-and-cable gear-shifting and washer systems and rear-view mirror products. Products : Rear view mirror systems, Command and Control Cables, Windshield Washer Systems, Gear Shifter Systems, Parking Brake Systems Partner: Ficosa International, Spain Facilities: State of the art assembly lines for Rear-view mirror, Gear shifter systems and Washer system Prismatic Glass Line and Moulding Machine Compatible CAD systems Integrated solution - modeling, CAM, DoE, Mould flow Quality System: QS 9000 and ISO14000 certified Customers: Ford (India and Europe), GM, Mitsubishi Lancer, Mahindra & Mahindra, Tata Motors, Toyota, Honda, Ficosa International, Fiat, BROSE 5. T C Springs Present products: Hot coil springs, Torsion bars, Stabilizer bars Partner: Chuo Spring Company Ltd., Japan (CHKK)
  • 39. 24 Facilities: Production Facilities :Hot Coiling , Torsion Bar Setting, Induction Heating, Heating and Tempering Furnace, Shot Peening System, Powder Coating, Coil Scragging, End Forming Testing Facilities: Metallurgical Laboratory, Chemical Laboratory, Measurement Facility, Functional Testing, Product Life Testing Facilities Design Facility: By using high stress technologies we design low-cost high-performance springs. All validation tests done locally. Quality System: QS 9000 certified Domestic customers: Toyota Kirloskar Motor, Tata Motors , Ford India, General Motors India, Mahindra & Mahindra , Eicher Motors , Fiat India,, Honda Motorcycle and Scooters India,, Gabriel India 6. Tata Toyo Radiator Products: Aluminum brazed Radiator, Intercooler, Heater Cores Engine Cooling Module comprising of Fan, motor and shroud along with radiator Partner: Toyo Radiator Company, Japan; Mitsubishi Corporation
  • 40. 25 Facilities: Local design capabilities Vibration, external corrosion, pressure cycle, heat cycle, plastic impact, heat performance Additional test facilities available at Toyo, Japan C Press Line,Brazing Oven, Core Assembly,Tube Mill and Fin Rolling, Leakage Testing. Quality System: QS 9000, ISO 14001 Customers: 30% share of Indian market (by volume) Ashok Leyland, Bajaj Tempo, Cummins, Eicher Motors, GMI, HSCIL, Mahindra & Mahindra, TAFE - Massey Fergusson, Tata Motors, Swaraj Mazda, Eicher, Rising Sun Taiwan (Exports), L &T, John Deere 7. Automotive Composite Systems International Automotive Composite Systems International Limited (ACSI) provides total composite solutions to the automotive and electrical equipment industries Products: Sheet Moulded composites: Exterior body panels foot steps, Hoods, Fenders, Doors, Side panels, Roof, Spoilers, Sill Vallence Cover Structural parts - Integrated front end Under the hood parts - Engine valve covers, Oil sumps, Push Rod Cover, Noise Shield Partner: Owens Corning, U.S.A Quality System: QS9000 and TS 16949 certification achieved
  • 41. 26 Customers : Ashok Leyland, Eicher Motors, L&T John Deere, New Holland tractors , Tata Motors, Punjab Tractors, TVS, Cummins India 8. Tata Yutaka AutoComp Products: Exhaust Systems for four wheelers & two wheelers Brake discs for two wheelers, Catalytic Converters (Canning) Partner: Yutaka Giken, Japan Quality System: TS169 Certification Domestic Customers: Tata Motors (Exhaust System), Hero Honda (Brake Disc), Honda Siel. 9. Automotive Stampings and Assemblies Ltd Automotive Stampings and Assemblies Limited (ASAL) provides a complete range of sheet metal components and welded assemblies to leading automotive companies through its three large manufacturing facilities in India. Products: Steel stampings including Skin Panels, Welded assemblies. Facilities: Plants at Pune (2 Plants), Vadodara 4 Press lines ; No. of Presses Installed 22 1000 Tons Hydraulic Press. Double action presses-1000Tons and 1500 Tons Single action presses upto 800 Tons Bed size of presses ranging from 3500 X 2200 MM to 1800X1200 MM Weld shop consisting of SPMs, Portable, Projections & CO2 welding machines Powder Coating facilities
  • 42. 27 Die spotting press, CMM inspection machine Quality System: QS 9000, TS169 for All plants Customers: DaimlerChrysler, Fiat, General Motors, Kinetic Engineering, L&T John Deere, Mahindra and Mahindra, Piaggio Vehicles, Tata Motors, Volvo 10.JBM SungWoo Products: Stampings and assemblies Partner: SungWoo Hi-Tech, South Korea Facilities: HPS and LPS mechanical press lines. Total 20 presses. 5 Press lines (3 Heavy and 2 Light) ; Presses ranging from 1000T to 200T Weld Shop (CO2 , Projection, Spot Welding) Die Maintenance facility Quality Systems: TS16949, ISO14000 and OHSAS 18001 Awarded 100 PPM status award by HMI Rated as one of the best vendors by HMI Customer : Hyundai Motor India Ltd
  • 43. 28 11.Knorr Bremse Systems for Commercial Vehicles India Ltd. Knorr Bremse Systems for Commercial Vehicles India Private Limited (KBSCV) offers comprehensive state-of-the-art solutions for air-brake systems to the medium and heavy commercial vehicles segments of the automotive industry. Scope: The manufacture and sale - together with the providing of support services of modern air braking systems for commercial vehicles in the Indian subcontinent. Location: Green field site in Pune for the assembly and testing of braking system components together with engineering and sales teams to provide customer support. 12.TACO MobiApps Telematics Vehicle tracking system: Product: VTS hardware (vehicle mounted units) GPS based location tracking systems GSM and CDMA based communication Services: Web, SMS, phone and paper based system to Continuously track vehicles for location and status Monitor parameters like off-route movement, unscheduled stops and over speeding. Alerts on the web and SMS Generate reports periodically, trip wise or exception Two way communication with the driver Emergency messaging in case of accidents and delays Critical vehicle data to be communicated Fuel level, coolant temp., battery charging voltage etc.
  • 44. 29 13.TACO Visteon Automotive Private Limited Product range: Automotive lighting systems Engine induction system (including plastic manifold) 14.Tata Hendrickson Suspension System TACO Hendrickson Suspension Systems Pvt Ltd (THSL) offers comprehensive state-of-the-art truck, bus and trailer suspension systems ranging from medium to heavy duty applications, providing air, steel and rubber as the spring media. Products TACO Hendrickson manufactures cost effective solutions in the following categories: Bus suspension systems Front axle long parabolic springs HAS230 Drive axle suspension system HA4 - 4 Bag suspension system Truck suspension systems Tandem bogie suspension Tipper suspension systems Air suspension systems Truck air suspension systems Trailer suspension systems Auxiliary axles systems
  • 45. 30 Theoretical background Indian auto-component industry According to Mr. Ratan Tata, the role of the ancillary industry to mould the mainline auto industry is not only very significant but crucial. The Automotive Components Industry is the backbone of automobile industry. It may not be possible for all automobile manufacturers to produce a complete range of components internally or by establishing their own ancillary units manufacturing different variety of auto components as it may require huge investment. At times, such units may not be economically viable. . It is the component industry which bears the brunt of keeping the vehicles moving. Indian automotive component industry manufactures the entire range of parts required by the domestic automobile industry and currently employs more than 250,000 persons. Auto component manufacturers supply to two kinds of buyers original equipment manufacturers (OEM) and the replacement market or aftermarket. The replacement market is characterized by the presence of several SSI suppliers who score over the organized players in terms of excise duty exemptions and lower overheads. But the demand from the OEM market, on the other hand, is dependent on the demand for new vehicles.
  • 46. 31 Aftermarket After-market refers to any market where the customers who implement one product or service are likely to purchase a related, follow-on product. In automobile industry aftermarket is used as an umbrella term for the collective network of vendors who design and sell auto-components that are intended to replace the stock manufacturer's parts. Any part made by the original manufacturer is considered OEM or original equipment manufacturer. Most performance parts are manufactured by aftermarket companies due to their ability to specialize in particular field. The two main reasons for aftermarket are in order to alter the appearance or performance of the vehicle; or As a straight replacement for a stock item at a lower price, with no intention to cause such a change in appearance or performance.
  • 47. 32 Research Methodology Research can be defined as a scientific and systematic search for pertinent information on a specific topic. Research can be classified in two broad categories basic research and applied research. Basic or fundamental research deals with fundamental problems whereas applied research deals with problems with immediate commercial potential. This project is basically an applied or decisional research. It is a descriptive research including surveys and fact findings. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. Data to be collected Automobile spares retailers in Pune. Various auto-components sold by these retailers. Brands available in the aftermarket for each auto-component. Monthly sales quantity of various auto-components. Retail prices, retailer margin. Reason for demand of particular brand if applicable (price, quality, promotion, brand name) Data collection method Data required is of two types, Primary data and secondary data. The primary data are those which are collected afresh and for the first time and thus happen to be original in character. The secondary data on the other hand are those which have already been collected by someone else and which have already been passed through statistical process.
  • 48. 33 Primary Data This was collected through a auto-component retailers survey conducted in Pune during month of June and July. The survey was done by using questionnaire, which was filled up by personally meeting retailers. Also while filling questionnaire retailers insights about particular brand, their prices, was also recorded. Secondary data Secondary data about automobile retailers in pune region, their addresses etc. was collected through Mahratta Chamber of Commerce, Industries and Agriculture s industrial and commercial dictionary. Also insights about auto-component were gathered from various internet sites. Research Instrument The research instrument used to collect primary data was a questionnaire. The questionnaire was more of a data collection sheet having open ended questions. Researcher personally visited the auto-component retailers and the data was filled in the response sheet. Also by interviewing the retailer insights about the customer and his preferences about a particular auto-component supplier were recorded. Sampling Sample is a small group taken under consideration from the total group. This small group represents the total population. In this project as all the auto- component retailers (150 listed in Mahratta Chamber of Commerce, Industries and Agriculture s industrial and commercial dictionary) could not be covered, only 30 retailers were surveyed based on convenience. These retailers were chosen from all parts of Pune city and in nearby areas like Shivaji Nagar, Chinchwad, Kasarwadi etc.
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  • 73. 58 Findings I. Accelerator cables 1. Out of surveyed 30 retailers, 25 retailers sell accelerator cables. 2. There are many local suppliers of accelerator cables. Even the retailers don t know their names. But their market share is significant 3. MRP printed on accelerator cables for OEM and local suppliers are generally same. But retailers have larger margin in local make. They can even give discounts and still make more profit. The customers expect discounts 4. The market share of Tata is almost half that of Remson for accelerator cables. Remson has lower cost than Tata. Also local suppliers have significant market share, collectively better that Tata. There is opportunity to use Tata brand name and reduction in prices may help in increasing market share. II. Bumpers 1. Only 12 retailers out of 30 retailers surveyed sell bumpers. This is basically because of low demand and high price of bumpers 2. There are local suppliers, which supply the bumpers to retailers, but these were unbranded bumpers. They sell high volumes of about 35% but have low cost and therefore only 11% market share. 3. Local make bumpers for Maruti, Indica and Sumo are popular among customers. They have almost half the price and not much visible difference in these and original parts. These are major threat to Tata, in case their popularity rises and customer are willing to pay a little higher price.
  • 74. 59 III. Clutch cables 1. Out of surveyed 30 retailers, 25 retailers sell clutch cables. 2. There are many local suppliers of clutch cables. Even the retailers don t know their names. But their market share is significant 3. MRP printed on clutch cables for OEM and local suppliers are generally same. But retailers have larger margin in local make. They can even give discounts and still make more profit. The customers expect discounts 4. The market share of Tata is considerably lower than that of Remson for clutch cables. Remson has lower cost than Tata. Also local suppliers have significant market share, collectively better that Tata. There is opportunity to use Tata brand name and reduction in prices may help in increasing market share. IV. Coil Springs 1. Very few retailers sell coil springs (7 out of 30 surveyed). These are not stocked and purchased only if demanded by customers. This is basically due to low demand. 2. Some retailers feel that coil springs of Coventry are better in performance compared to Tata Toyo coil springs. 3. Prices of Tata are only a little higher than that of Coventry but its market share is comparatively much less than Coventry. The reason for this can be due to better quality. V. Coolant Tank 1. 17 retailers out of 30 retailers surveyed sell coolant tanks. 2. Most of the coolant tanks sold are unbranded or are of local make. They sell 41 % of total parts sold which is better than Tatas. 3. These unbranded coolant tanks are manufactured in Pune and in Mumbai. 4. Cost wise the unbranded coolant tanks are much cheaper (cost 50% of branded tanks), but their performance is satisfactory. Their high popularity is because of this price factor. 5. Sale of coolant tanks is more in summer 6. In coolant tanks, Indica coolant tanks are fastest moving due to high running and high population
  • 75. 60 VI. Head Lamp 1. All the 30 retailers covered in the survey sell headlights. 2. Lumax is clear-cut market leader, with Tatas lagging much behind both in volume and value of sales. This may be due to high brand value of Lumax. 3. There are at least 22 smaller suppliers of head lamps in Pune. Most of them are manufactured in Delhi region are much cheaper in price compared to Tata genuine parts. They also eat significant market share. 4. Sale of head lamp, tail lamp is more in monsoon VII. Oil Chambers 1. Only 8 of the 30 retailers surveyed sold oil chambers. 2. Oil chambers are replaced only in case of accident. 3. Most retailers keep local make oil chambers. 4. Tata is clear-cut market leader having no real threat from its competitors. VIII. Radiator 1. Only 12 retailers out of 30 retailers surveyed sell radiators. This is basically because of low demand and high price of radiators. 2. Most radiator sale is in summer when due to high heating radiator problem occur. 3. Radiators are generally repaired and used. They are only replaced on accident. This time mostly original components are preferred due to high cost involved. 4. Very few retailers keep inventory of radiators. They are procured on demand.
  • 76. 61 IX. Rear view mirror (outer) 1. All the 30 retailers covered in the survey sell Outer rear view mirror 2. Lumax is the market leader with Tata lagging much behind in sales volume and sales value as well. 3. Local make have half the price of OEM / branded mirrors. 4. Indica s outer mirror body doesn t get easily damaged. Only the glass breaks and can be changed easily 5. Commercial vehicles owners prefer cheap 5inch or 4 inch round outer rear view mirrors (Rs. 40 50) compared to bigger mirrors from OEM suppliers. (Rs. 200 onwards) X. Shock absorbers 1. Of the 30 retailers surveyed only 13 retailers sold shock absorbers. This is basically due to low consumption and high inventory cost. 2. Many customers instead of changing shock absorbers prefer to repair them. This option though less costly is a temporary solution. 3. Gabriel is the market leader in terms of number of parts sold but has lesser in market share compared to Tata s. 4. Gabriel can be major threat to Tata shock absorbers. XI. Tail Lamp 1. All the 30 retailers covered in the survey sell Tail lamps. 2. Tail lamp of trucks breaks even due to vibrations. Very frequently needs to be replaced, so cheap local suppliers are preferred over OEM suppliers. Thus local suppliers supply as high as 51% of total parts sold in market. 3. Tata s cost is highest, higher than market leader, Also they sell low volumes than market leader Lumax and local players taken together. Thus due to lagging in cost and volume factors, market share of Tata is very less. 4. Sale of head lamp, tail lamp is more in monsoon 7. Tail lamp demand for trucks is substantially more than that of headlamp, in cars this difference is less. Local suppliers for tail lamps are preferred due to price factor.
  • 77. 62 Other important findings 1. Most of the customers of high-end automobiles do not buy from retail market. They prefer to buy directly from service centers. 2. Most auto-component retailers in Pune are located near Dhankawadi Katraj region. Other retailers are scattered in all areas of Pune. 3. Most suppliers, other than OEM suppliers for auto-components are located in Delhi. 4. Most retailers have no idea about potential demand of particular item in Maharashtra. 5. Most retailers could not tell exact monthly sales for auto-components. The data represents minimum figures. 6. Retailers business margin is at least 10 15 %. There is no fixed sales price for auto-components. The selling price varies as per customer awareness about the prices. 7. Retailers promote local suppliers as they have higher margins. Also they can afford to give 10 20 % discount on MRP of local make components and still make profit. Customer expects this discount.
  • 78. 63 Limitations Sample size of 30 retailers was taken for the study. Based on this sample and assuming 150 auto-component retailers in Pune, the potential market size is found out. The study is based on the assumption that the randomly selected retailers represent all the retailers. Many retailers couldn t tell exact sales volume of various auto- components according to specific supplier and vehicle models. The figures given are approximate figures. As the retailers sold auto-components for many vehicle models, only significant sales data was taken.
  • 79. 64 Conclusion The facts and figures itself talk about the market structure and potential market for auto-components in Pune. There is substantial retail market for auto- components. The auto-component aftermarket for Tata vehicles namely Indica, Indigo, Sumo, Safari and Tata commercial vehicles is substantial. There are many competitors in the market. Main competitors are OEM suppliers competing directly in the market. They are popular as customers are aware about the OEM suppliers for auto-component. In addition, these are cheaper to Tata Genuine Spare Parts, so customer prefers these. Other than these, there are local players, which supply cheaper components. These are well promoted by retailers due to high margins. The survey was limited to Pune only. Further similar study is required to be done for complete Maharashtra. Mumbai market is much bigger market compared to Pune market and similar study in that market can give much more insights about the market structure and market potential.
  • 80. 65 Recommendations TACO shall do similar surveys for whole Maharashtra. TACO should enter in the auto-component aftermarket as the Pune market provides a substantial market of at least 1. 25 crores per month. Also Tata is an established brand in automobile industry, so their entry in the market is easy. For accelerator cables the market share of local suppliers is substantial, TACO shall stress on its brand image and quality and do customer education to fight this competition and increase its market share. Prices of clutch cables, coil springs, head lamp, rear view mirror, tail lamp should be reduced to increase Tata s market share with respect to the market leader.
  • 81. 66 Bibliography Research Methodology, Methods and techniques C R Kothari Supply and demand survey on automotive components India India Trade Promotion Organisation TACO manuals www.acmainfo.com The Automotive Component Manufacturers Association of India (ACMA) web site www.tacogroup.com TACO company web site
  • 82. 67 Appendix1: Market research for Auto-components Aftermarket Retailer Name: _____________________________________________________ Address : _____________________________________________________ _____________________________________________________ Contact Number: ___________________________________________________ 1. For which of the following vehicles do you sell Auto components? Cars :1)___________ 2)___________ 3)___________ Utility Vehicles :1)___________ 2)___________ 3)___________ Commercial vehicles :1)___________ 2)___________ 3)___________ 2. Which of the following categories of components do you sell? (Tick mark) Body Parts i. Bumpers Control cables i. Clutch cables ii. Accelerator cables Engine cooling system i. Radiators ii. Coolant tanks Engine components i. Oil chambers Lighting system i. Head lamps ii. Tail lamps Mirrors i. Outer rear view mirror Suspension & Seals i. Coil springs ii. Shock absorbers
  • 83. 68 Auto-components Sales details Bumpers Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Accelerator cables Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Clutch cables Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion
  • 84. 69 Radiator Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Coolant tank Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Oil chamber Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion
  • 85. 70 Head lamp Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Tail lamp Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Rear view mirror ( outer) Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion
  • 86. 71 Coil Springs Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion Shock absorber Reason for demand (Rating 1 4)Sr. No. Vehicle Models Supplier Monthly Sales Quantity Retail price (Rs.) Price Quality Brand name Promotion
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