This document provides an overview of the passenger car industry in India. It discusses the history and evolution of the market structure from a duopoly post-independence to an oligopoly today. It analyzes key players like Maruti Suzuki, analyzing their models, pricing strategies, and SWOT. It also discusses entry barriers and competitive threats in the industry.

1. Market Structure of Passenger Cars
Industry
A Project Report On
Market Structure of
Passenger Car Industry
SUBMITTED TO: SUBMITTED BY:
Dr. c. s. shylajan Aishwarya tomar
harshdeep singh

2. Market Structure of Passenger Cars
Industry
Acknowledgement
It is a great pleasure and privilege for us to present this project on
“Passenger car Industry”. We express our sincere sense of
gratitude towards our professor Dr. Shylajan, under whose
fruitful guidance, encouragement and support the project was
completed. We would also like to thank our professor for letting
us take this diverse topic and giving us necessary suggestions to
make it a better report.

3. Market Structure of Passenger Cars
Industry
Index:
History of passenger cars industry
Market share post Independence
Concentration & Herfindahl Index during Post independence
Market Share of today’s Market
Concentration ratio
Herfindahl Index
Evbolution of market structure
Entry Barriers
Competitive threat in the Industry
MARUTI SUZUKI
- Introduction
- Cars Produced
- Pricing and Non-Pricing Strategy
- Pricing Behavior& Variants
- SWOT Analysis & Porter’s Five Force Model
- 800 vs Nano
Mahindra And Mahindra
- Introduction
- Cars Produced
- Pricing and Non-Pricing Strategy
Hyundai
- Introduction
- Cars Produced
- Pricing and Non-Pricing Strategy
Honda
- Introduction
- Cars Produced
- Pricing and Non-Pricing Strategy
TATA
- Introduction
- Cars Produced
- Pricing and Non-Pricing Strategy
Some Important comparison
Conclusion

4. Market Structure of Passenger Cars
Industry
History
It is on record that the first motorcar on the streets of India was seen in 1898.
Mumbai had it’s first taxi-cabs by the turn of the century and in 1903, an American
company began to operate a public taxi service with a fleet of 50 cars.
The import of vehicles grew consistently after the 1920s, crossing 30,000 units by 1930.
It was towards the end of the war that the importance of establishing an indigenous
automobile industry in India was realized when Premier Automobiles Ltd. (PAL) and
Hindustan Motors (HM) set up factories in the mid 40s for progressive manufacture
rather than assembly from imported components.
HM was established in 1942 for the manufacture of certain auto components, but it was
only in 1949 that the company actually begun making cars.
While Pal and HM focused on passenger cars at the time of independence, the
Mahindra brothers, Kailash Chandra and Jagdish Chandra founded Mahindra &
Mahindra in 1945 with the objective of making utility vehicles. The three decades
following the establishment of the passenger car industry leading up to the broad
banding period of the yearly 1980s were the dark ages for the consumer whose choice
throughout this period was limited essentially to two models the ambassador and the
Padmini. Car ownership was usually a bitter experience, thanks to the indifference of
car companies and the shabby quality of their product indeed, the cars being churned
out of the factories were so bad it took up to ten days to the pre delivery inspection.
First winds of liberalization in the early 1980s a series of liberal policy changes were
rapidly introduced marking a crucial turning point for the automobile industry. The
change of attitude on the part of the government coincided with the state taking a direct
interest in the auto business, with 74% stake in Maruti Udyog Ltd. (MUL) and the joint
venture between SUZUKI of Japan and the Indian government. This was revolutionary
departure from the government restrictions, previous policies on the foreign equity and
technology..
1993-till now:
The de-licensing of the industry in 1993 opened aluice gates a flood of international
7auto-makers that rushed into what they saw as the last remaining untapped market –
the largest democratic market of the world. The next couple of years saw an
unprecedented growth in the industry with the assembly lines working overtime to meet
demand. However India was a much tougher market than they had imagined.
Till today the industry has grown enormously, bringing in a number of new companies
ending up into a highly competitive industry

5. Market Structure of Passenger Cars
Industry
Market Share Post Independence:
Concentration Ratio:
As there are two major firms in the market, PAL with the share of 42% and HM
with the share of 48%.
Concentration Ratio = 42% + 48%= 90%
Herfindahl Hirschman Index:
(42*42)+(48*48)+(10*10) = 4168
Herfindahl index of 4168, which is near 5000 shows that the market is majorly
divided between two major firms. And that the market Structure can be
considered as Duopoly.
42%
48%
10%
Passanger Car Sales during Post Independence
period
PAL
HM
Others

6. Market Structure of Passenger Cars
Industry
Market Share Today:
Concertration ratio:
As there are 5 major firms, concentration ratio of 5 major firms is the addition of their
market share that is 44.24+10.59+13.88+5.11+6.97=80.79
Herfindhal index :
Addition of each firms squared market share.
=2706.5821
Now we can see that our herfindhal index has decreased from 4168 to 2706.5821
,this tell us that the competition in the market has increased which has lead to
decrease in the market share of each firm. It also tell us that the market structure
is oligopoly.
44.24%
10.59%
13.88%
5.11%
6.97%
19.21%
Passenger Car Sales in march 2013
Maruti
Mahindra
Hyundai
Honda
Tata
Others

7. Market Structure of Passenger Cars
Industry
Evolution of market structure:
By comparing the Herfindahl Index of the two time period we can say that the
market structure can become oligopoly from duopoly.
ENTRY BARRIERS IN CAR INDUSTRY
1. The amount of capital required to start a car company is enormous.
2. Limited capacity of parts suppliers. Many have downsized their operations to the
point that they do not have excess capacity.
3. Competition. There are already significant well established competitors.
4. Government regulations regarding safety design, emission standards and fuel
efficiency.
5. Patent protection laws may prevent the use of certain innovations.
6. Marketing a new brand can be difficult and very expensive.
Competitive Threats In The Industry:
The Porter's analysis for the LCV and the M and HCV segments show strikingly similar
results except for the threat of new entrants. In the LCV market there exist a small
number of large companies between whom there is a high degree of competition. To
gain market share companies are focused on innovation and strong marketing
strategies. The companies are usually not diversified beyond automotive manufacture.
As a result, if the automotive sector is in a downturn, it could raise exit barriers. Hence
the overall rivalry is strong in this market

8. Market Structure of Passenger Cars
Industry
Maruti Suzuki

9. Market Structure of Passenger Cars
Industry
Introduction:
It is a leading four-wheeler Automobile Manufacturing in South Asia. Suzuki Motor
Corporation of Japan holds a majority stake in the company. It was the first company in
India to mass-produce and sell more than a million cars. It is largely credited for having
brought in an automobile revolution to India. It is the market leader in India. On 17
September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The
company's headquarters remain in Gurgaon, near Delhi. The company annually

10. Market Structure of Passenger Cars
Industry
exports more than 50,000 cars and has an extremely large domestic market in India
selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling
compact car ever since it was launched in 1983. More than a million units of this car
have been sold worldwide so far. Currently, Maruti Alto tops the sales charts.
Cars under Maruti Udyog Ltd.:
Pricing Strategy:
-Caters to all segments and has a product offering at all price points
-Their pricing strategy is to provide an option to every customer looking up for a car.
Non- Pricing Strategy:
-Its focus is mainly on the export market, it is looking to make India an exclusive base
for manufacturing small cars
-It would design small cars suitable for Indian conditions as a strategy to beat the stiff
competition with the global car makers
-It would be launching compact cars with more features to meet the needs of the
customer.
Price Behavior:
2009- Rs. 3,31,700/- As we can see the price has been growing at almost a constant
2010- Rs. 3,45,500/- rate we can say price behavior is not volatile as it is not very
2011- Rs. 3,59,000/- fluctuating rather it is constantly growing.
2012- Rs. 3,76,500/-
2013- Rs. 3,91,600/-
Variants:
omni Alto 800 Eeco Alto WagonR A-star Ritz
Swift Swift DZire Gypsy Ertiga SX4 Kizashi
Grand
Vitara

11. Market Structure of Passenger Cars
Industry
Top End: 15-30 Lac
Second End: 5-10 Lac
Third End: 3-5 Lac
Low End: < 3Lac
SWOT Analysis:
Grand,
Vitara
SX4,
Kizashi,
Swift DZire
WagonR,
Swift, Estilo,
Eeco
Alto 800,
Alto, Omni
STRENGHTS
1. Established distribution and
after sales network
2. Understanding of the Indian
Market
3. Brand Image
4. Experience and know how in
technology
WEAKNESSES
1. Lack of experience with
foreign markets
2.Comparitively new to diesel
cars.
3.People resistant to upper end
models
4.Heavy import tariffs on fully
imported models
OPPORTUNITIES
1. Increased purchasing power of
indian middle class families
2.Government subsidies
3. Tax benefits
4.Prospective buyers from two
wheeler segment
THREATS
1. Competition from
second hand cars and tata
nano.
2.Threat from chinese
manufacture

12. Market Structure of Passenger Cars
Industry
Porter’s Five Force Model:
Forces Threat of
New
Entrants
Bargaining
power of
buyers
Bargaining
power of
suppliers
Threat of
substitute
products
Rivalry
among
competitiors
Result
-Government
policies
-patents and
proprietary
knowledge
-asset
specificity
-Economies
of scale
-Product
differentiation
is high
-Buyers get
incentives in
the form of
cost
discounts
& better after
sales
services
-Presence of
substitute
inputs is high.
-switching
costs of
suppliers is
high.
-Intense
players
-better
Technology
-industry
concentration
-High fixed
costs
-Diversity
-Low cost
Switching
MARUTI 800 AND TATA NANO
The Maruti 800 was the real people’s car in India. Significantly, at the time it was
launched it was priced above the Fiats and the Ambassadors. Yet a generation, sick of
the poor quality of the existing cars with their antiquated features, couldn’t get enough of
the 800 which always seemed to be appropriately priced but overwhelmingly reliable.
The Nano’s positioning as the “upgrade-from-scooter” may have built a romantic aura
around its creation but defies the basic theory of pricing which contends that “the price
for any specific good/service is the relationship between the forces of supply and
demand.” The Rs.1 lakh tag was based neither on demand nor on supply.
Consequently, the tag of the “lowest priced car in the world” may have been great for
garnering media eyeballs but did little to satisfy real consumer needs.
Successful products normally follow one of three approaches to pricing. A simple “cost-
plus” strategy or one derived after researching how much a consumer is willing to pay.
Finally, of course, there is competitive pricing, whereby a company figures out what its
competitors are charging, then pegs its own prices accordingly. Rs.1 lakh was an
arbitrary figure fixed somewhere between the cost of a two-wheeler and the then lowest
priced car in the Indian market. Following none of the existing canons of pricing, it
needed something special in the product or its positioning if it had to succeed. The

13. Market Structure of Passenger Cars
Industry
failure of the Nano proves it had neither of those virtues
MAHINDRA &
MAHINDRA

14. Market Structure of Passenger Cars
Industry
Introduction:
The Company was Incorporated and converted into Public Limited in 1955 at Mumbai..
Mahindra & Mahindra, branded on its products usually as 'Mahindra', it produces SUVs,
saloon cars, pickups, commercial vehicles, and two wheeled motorcycles and tractors.
Mahindra started making passenger vehicles firstly with the Logan in April 2007 under the
MUVs, LCVs and three wheelers. It manufactures over 20 models of cars including larger,
multi-utility vehicles like the Scorpio and the latest XUV 500.

15. Market Structure of Passenger Cars
Industry
Cars under Mahindra and Mahindra:
Pricing Strategy:
-Provides the customer with SUVs in a price much lesser than imported cars
-cuts cost by incurring greater profits by using best material
Non- Pricing Strategy:
-Concept of “Reverse Engineering” is implemented.
-Partnering with local university for new technology developing.
-more focus on global market in spite of only 2.5% domestic market share.
HYUNDAI
Mahindra
Axe
Mahindra
Bolero
Mahindra
Legend
Mahindra
Maxx
Mahindra
Armada
Mahindra
Verito
Mahindra
Thar
Mahindra
Scorpio
Mahindra
Quanto
Mahindra
Xylo
Mahindra
XUV 500

16. Market Structure of Passenger Cars
Industry
Introduction:
Hyundai Motor India Limited is a wholly owned subsidiary of the Hyundai Motor
Company in India. It is the 2nd largest automobile manufacturer in India. When Hyundai Motor
Company entered the Indian Automobile Market in 1996 the Hyundai brand was almost
unknown throughout India. For more than a decade till Hyundai arrived, Maruti Suzuki had a

17. Market Structure of Passenger Cars
Industry
complete dominance and monopoly over the Passenger Cars segment
becauseTELCO and M&M were solely Utility and Commercial Vehicle Manufacturers. HMIL's
first car, the Hyundai Santro was launched in 23 September 1998 and was a runaway success.
Within a few months of its inception HMIL became the second largest automobile manufacturer
and the largest automobile exporter in India. To cater to rising demand, HMIL commissioned its
second plant in February 2008, which produces an additional 300,000 units per annum, raising
HMIL’s total production capacity to 600,000 units per annum.
Cars under Mahindra and Mahindra:
Pricing Strategy:
-Price of regular has been standardized across all the models, and is the first step towards
standardized service cost.
-Final aspect of the strategy is to increase the average selling price of Hyundai cars all over
India by introducing more premium and higher end products.
Non- Pricing Strategy:
-Educate the customer about Hyundai building a corporate image
-Create hype and expectation about the cars
-Explain the virtues of its products
-To ensure that Indian customers develop a positive association with Korean car makers.
HONDA
Hyundai
Eon
Hyundai i10
Hyundai
Santro Xing
Hyundai i20
Hyundai
Grand i10
Hyundai
Accent
Hyundai
Verna
Hyundai
Elantra
Hyundai
Sonata
Hyundai
Santa Fe

18. Market Structure of Passenger Cars
Industry
Introduction:
Honda Cars India Ltd. (HCIL) is a subsidiary of the Honda of Japan for the production,
marketing and export of passenger cars in India. Formerly known as Honda Siel Cars India
Ltd, it began operations in December 1995 as a joint venture between Honda Motor
Company and Usha International of Siddharth Shriram Group. In August, 2012, Honda

19. Market Structure of Passenger Cars
Industry
bought out Usha International's entire 3.16 percent stake for 1.8 billion in the joint venture.
The company officially changed its name to Honda Cars India Ltd. (HCIL) and became a
100% subsidiary of Honda
Cars under Honda:
Pricing Strategy:
:Honda, over the past month, has made some surprising moves. The brand, which
otherwise commands a premium, sharply re----duced the prices of its bestselling City
and the premium hatchback Jazz.
2.Honda Spiel Cars India (HSCI) has introduced a new and cheaper variant of its
flagship City sedan to boost demand for the model, persisting with its strategy of
offering its cars at lower prices in India.
3.HSCI had recently lowered prices of its models at a time when rivals are planning to
do the opposite.
Non- Pricing Strategy:
1.Superior quality
2.World wide expansion
3. Optimum safety
4. Driving pleasure
5, three joy- joy of buying joy of selling and joy of producing
TATA
Brio Amaze City Accord CR-V

20. Market Structure of Passenger Cars
Industry
Introduction:
The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand),

21. Market Structure of Passenger Cars
Industry
Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Dharwad
(Karnataka) and Sanand (Gujarat). Tata's dealership, sales, service and spare parts
network comprises over 3,500 touch points.
Tata Motors is the country's market leader in commercial vehicles and among the top
three in passenger vehicles.
Passenger cars: The company launched the compact Tata Indica in 1998, the sedan
Indigo in 2002 and the station wagon Indigo Marina in 2004.
Utility vehicles: The Tata Sumo was launched in 1994 and the Tata Safari in 1998.
Cars under Tata:
Pricing Strategy:
1. They aim at keeping their prices low to compete with firms like Maruti.
Non- Pricing Strategy:
1. The four pillars would be enhanced product focus, world class manufacturing,
enhanced sales experience and enhanced service experience
2. Sustainable competition
Tata Nano Indica eV2 Indigo eCS
Manza
Club Class
Aria
Indica
Vista
Safari
Safari
Storme
Sumo
Gold
Sumo
Grande

22. Market Structure of Passenger Cars
Industry
Some Important Comparisons:

23. Market Structure of Passenger Cars
Industry
Conclusion:
This project has given an insight on how the duopoly market converted
into an oligopoly after the liberalization reforms of 1991. It shows us
how Maruti has always been a dominant player in the market and how
it continues to keep it’s position safe. Although there are a number of
firms in the market but major market is taken up by 5-6 firms only.
Marruti’s variants have been in competition with all sorts of cars be it
TATA NANO or be it HONDA ACCORD, it has been fighting every genre
of car manufacturing. It tells us when some company launches it’s
product the competitive firm is already on the path of making a
product to fight it in the market. This project gives us proper
information of how economics work under Passenger Car industry. It
depicts all the information like Concentration Ratio , Herfindahl Index,
Evolution in the market, Pricing strategy etc. It has been one great
Project report to gain knowledge along with hard work.