The automotive industry in India has grown significantly over the last 5 years. Vehicle sales reached around 9 million in 2005-06, with growth of 14% annually. India has emerged as the 2nd largest two-wheeler market, 4th largest commercial vehicle market, and 11th largest passenger car market. Major global and domestic players operate in the highly competitive Indian auto industry. The future of the industry looks promising with rising incomes, availability of financing, and government support through policies like lowering duties on smaller cars.

1. 1
Passenger Cars

2. 2
Profile of the Automotive Industry
Vehicle sales in India in 2005 - 06
(in million)
1.14
0.35
7.05
0.36
0 2 4 6 8
Cars CVs Two wheelers Three Wheelers
Size of around USD 34
billion in 2006
 The industry has grown at a CAGR of 14% p.a over the last 5 years, with total sales of vehicles
reaching around 9 million vehicles in 2005-06
 The Indian auto industry has the potential to emerge as one of the largest in the world.
Presently, India is
– 2nd largest two wheeler market in the world
– 4th largest commercial vehicle market in the world
– 11th largest passenger car in the world and is expected to be the 7th largest market
by 2016
 The industry has emerged as a key contributor to the Indian economy

3. 3
Players in the Auto industry
Global
OEM
Domestic
OEM
Domestic
Suppliers
Global
Suppliers
Engineering
&
Development
Companies
Auto
Industry
•GM
•Toyota
•Ford
•Hyundai
•Maruti Suzuki
•Honda
•Skoda
•Volvo
•Mercedes
•Tata Motors
•Mahindra &
Mahindra
•Bajaj Auto
•TVS Motors
•Hero Honda
•Bajaj Tempo
•Ashok Leyland
The auto industry is highly competitive with a number of
global and domestic auto companies present in the country.

4. 4
Current Scenario
 5th largest commercial vehicle manufacturer in the world
 4th largest car market in Asia - crossed the 1 million
mark
 Unlike the USA, the Indian passenger vehicle market is
dominated by cars (79%)
 India became the fastest growing car market in the world
in 2004, growth rate of 20%
 India is the second-biggest market for small cars after
Japan

5. 5
Automobile Production Trends
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 500301 557410 782562 960487 1045881
Utility Vehicles 105667 114479 146325 182018 196371
MPVs 63751 51441 60673 67371 66661
Total Passenger Vehicels 669719 723330 989560 1209876 1308913

6. 6
Automobile Domestic Sales Trends
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 509088 541491 696153 820179 882094
Utility Vehicles 104253 113620 146388 176360 194577
MPVs 61775 52087 59555 65033 66366
Total Passenger
Vehicles
675116 707198 902096 1061572 1143037
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 49273 70263 125320 160670 170193
Utility Vehicles 3077 1177 3049 4505 4486
MPVs 815 565 922 1227 1093
Total Passenger Vehicles 53165 72005 129291 166402 175772
Automobile Exports Trends

7. 7
Key Players in the Indian Auto Industry -
Passenger Cars
The largest player in the Indian industry. Plans to launch new and
exciting products in the Indian markets, including the ‘1 – lacs’ car
MUL is the largest passenger car manufacturer in India
The third largest passenger car manufacturer in India and one of the
largest exporters of vehicles. Has established India as one of its
manufacturing bases in the world. Is planning to invest heavily to
boost exports from India.
Has vision of capturing 10% share of the Indian passenger car
market by 2010
One of the leading players in the Indian premium cars segment
One of the leading players in the Indian premium cars segment

8. 8
Key Players in the Indian Auto Industry -
Passenger Cars
One of the leading players in the Indian premium cars segment.
Plans to enter the small car segment by relaunching the Matiz
One of the largest domestic players in the UV / MUV segment
Tata Motors manages the marketing and distribution of the Fiat
branded cars through selected Tata outlets throughout India
E, C and S Class passenger cars are assembled in India,
other models are imported as completely built units
(CBUs) and retailed in India.
One of the original three car manufacturers in India, founded in
1942, it was a leader in car sales until the 1980s, when the industry
was opened up from protection HM has a joint venture with
Mitsubishi, producing versions of the Lancer & Pajero.

9. 9
Passenger Vehicle Clusters in India
Mumbai-Pune-Nasik
Aurangabad
Pithampur
Rajkot-Halol
Chennai-Bangalore-
Hosur
Hyderabad
Jamshedpur
Kolkata
Delhi-Gurgaon-Noida-Ghaziabad
Hindustan Motors
Honda SIEL
Maruti Suzuki
Tata Motors
North/Central
Daimler Chrysler
FIAT
GM
M & M
Skoda
Tata Motors
West
Ford
Hindustan Motors
Hyundai
Mahindra & Mahindra
Toyota Kirloskar
Volvo
South
Tata Motors
Hindustan Motors
East

10. 10
Segmentation (based on car prices)
Under Rs. 3 Lakhs Maruti 800 Alto Omni Reva
Rs. 3-5 Lakhs Ambassador Fiat Palio Hyundai Santro Getz Chevrolet Opel Corsa Maruti Zen Wagon R Versa
Esteem Gypsy Ford Icon & Fiesta Tata Indica Indigo Mahindra Bolero
Rs. 5-10 Lakhs Chevrolet Swing Optra Tavera Hyundai Accent Elantra
Mahindra Scorpio Maruti Baleno Toyota Corolla Innova
Tata Safari Mitsubishi Lancer Lancer Cedia Honda City
Rs. 10-15 Lakhs Ford Mondeo & Endeavour Chevrolet Forester Skoda Octavia Classic & Combi Honda Civic &
CR-V
Rs. 15-30 Lakh Maruti Suzuki Grand Vitara Hyundai Sonata Embera Terracan & Tucson Mitsubishi Pajero Audi
A4 Opel Vectra Honda Accord Mercedes C Class Toyota Camry
Rs. 30-90 Lakhs Audi A6 A8 & TT BMW X5 5 Series & 7 Series Mercedes E Class, S Class, SLK, SL & CLS-Class
Porsche Boxster Cayenne 911 Toyota Prado
Above Rs. 1 Crore Bentley Arnage Continental GT & Flying Spur
Rolls Royce Phantom Maybach

11. 11
Regulations - Auto Policy
 In 2002, the Central Government formulated an auto policy that
aimed at promoting an integrated, phased, enduring and self-
sustained growth of the Indian automotive industry.
 The Auto Policy allows automatic approval for foreign equity
investment upto 100% in the automotive sector and does not lay
down any minimum investment criteria.
 The auto policy lays emphasis on R & D activities carried out by
companies in India.
• Weighted tax deduction of upto 150% for in-house research and R & D
activities.
 Formulation of an appropriate auto fuel policy to ensure availability
of adequate amount of appropriate fuel to meet emission norms.
 The auto policy confirms the government’s intention on harmonizing
the regulatory standards with the rest of the world.

12. 12
Automotive Regulations
 Indian automotive regulations are closely aligned to the ECE regulations.
The table below shows the level of alignment of the Indian regulations with
the ECE regulations.
Status of Indian Regulation Number of regulations
Fully / Partially aligned 43
In process of being aligned 32
Items / Regulations to be covered 39
Total 114
The key regulations that are likely to impact the auto industry in the future are:
 Crash-related regulations
 Introduction of Bharat Stage IV norms
Source: IMaCS Analysis

13. 13
Future Regulations
Regulation Road Map Targets
Industry challenges to development
Better vehicles: more safer and
environmental friendly
Approach
Harmonization with ECE
standards
Homologation and
certification testing
agencies and centres
Crash requirements aligned with EU
Mandatory airbags
Emission standards: Bharat Stage IV
in Metros and Bharat Stage III in rest of
the country
2009
Presently, Bharat Stage III ( Equivalent to Euro III) is mandated in Metro and other
large cities and Bharat Stage II ( Equivalent to Euro II) is mandated for rest of the
country
Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced in the large
Metros around 2009 and Bharat Stage III in the rest of the country

14. 14
Demand Drivers
 The growth in domestic demand is driven by a number of
factors including:
• Overall economic growth
• Rising income levels
• Low cost of finance and easy availability of finance
• Increased consumer awareness
• Closer linkages with global auto trend leading to introduction of
contemporary models
• Government’s specific policy initiatives such as lower excise duties on
smaller cars
• Increased job demands
• Growth of satellite towns
• Onset of consumerism and travelling culture
• Completion of Golden Quadrilateral project

15. 15
Key Success Factors – Market Leaders
 Presence across segments - Manufacturers with presence across
various segments can ensure higher volumes and better capacity
utilization by using common manufacturing facilities.
 Cost-competitive operations - Higher localization, reduction in the
vendor base, use of common components, manufacturing a larger
number of models on a single platform have helped bring down prices.
 Wide dealer network - After sales service and access to original spare
parts act as distinct advantages in the marketing of a model.
 Easy availability of finance - MUL tied up with State Bank of India
(SBI) in June 2003 to offer finance to its rural and semi-urban
customers through the latter's 13,000 plus strong branch network.
 Strong support from parent companies:
• Strong brand
• Strong financial and technological support
• Access to latest technology for launching new models, enhanced export capability

16. 16
Customer Segmentation (by car ownership and use)
Individual customer
segment
Self employed persons Corporate Commercial
Common people who don't
fall under any specific
category/not covered by any
corporate scheme.
Car is purchased in the
name of the company -use
could be personal, official
or both.
Car is registered in the
name of the company at
the time of purchase.
Includes taxi and tourist
(TT) segment and the lease
rental segment.
Share
Around 55% in the overall
car demand - being the
highest in the mini and
compact segments.
Around 15% in the
overall car market sales -
relatively large share in
the executive and
premium segment.
15% to the overall car
sales - 28% of the sales in
the mid-size segment with
a greater presence in the
HMS.
12% share in the overall car
sales with a greater share in
the compact and mid-size
segment.
Demand Driver
Cost of ownership-price,
taxation, running cost
,finance cost (highest
sensitivity)
Promotional efforts
-discounts, advertising
New model launches
Running cost instead of
financing cost
 New models and
variants with improved
technology (improved
diesel technologies –
CRDi & TDi)
Business expansion or
stagnation
Changes in depreciation
and tax rules
Marketing schemes
Brand image of the car
manufacturer
 Fuel cost per km, driven
by fuel efficiency (km per
litre) and cost of fuel (Rs
per litre) drives demand, as
well as model preference

17. 17
Changing Dynamics of Segmental
Demand

18. 18
Player-wise Market Share

19. 19
Cars: Sales Trend and Market Share
(key segments)
A1:Mini A2:Compact A3:Midsize A4 Executive A5:Premium A6:Luxury

20. 20
Comparison Tests:
Differences in Marketing

21. 21
Hot Hatch Face-Off
Suzuki Swift versus Hyundai Getz

22. 22
Background
Suzuki Swift
 Esteem in India: known
overseas as ‘Swift’ earlier
 Now Suzuki’s “Global Car”
– All new car launched at
Paris Auto show ’04
 Well appreciated in Europe.
Hyundai Getz
 Not a very well-known
model
 Few awards won here and
there. For example, Budget
car of the year by ‘What
Car?’ (UK, 2003)

23. 23
Marketing: Swift
 Buzz in the industry: Maruti’s first new car in two
decades!
 Differentiating factor: Hot shot looks and also awards
in India (Car of the Year awards)
 USP: Killer Price!
 OTL: TVCs that communicate hardly anything
 BTL:
• Separate sections at showrooms
• Personnel trained specially for “Swift selling”

24. 24
Marketing: Getz
 Initially marketed as feature packed: failed
 Now being marketed as a big, spacious car
 USP: Space
 Price about Rs. 50,000 more than the Swift
 Not as successful as the Swift so far

25. 25
C – Segment Cars Competition

26. 26
Marketing: City
 Fairly advanced stage of the product lifecycle:
Growth/Maturity
• Undergone a full makeover since its launch: all new city
launched 4 years back
 USP: Honda brand name
 Advertising
• Hi tech car: Honda name (esp. VTEC)
• Rising diesel costs in India relative to petrol (so cost saving
due to diesel is unsustainable)
• Quality (good scores on JD Power surveys): lower
maintenance costs overall in comparison

27. 27
Marketing: Fiesta
 Newest in the line of “made for India” Ford cars
 Exists as a hatchback in Europe, suitably modified for
India
 Abhishek Bacchan (movie star in India) was hired as
brand ambassador
 “Go fida” campaign: a car that will bowl you over –
this was the message communicated
 Mileage: 31 kilometers/litre record (published
recently in an auto magazine)

28. 28
Marketing: Verna
 Latest car from Hyundai, India.
 (Originally) Intended as replacement for the Accent –
sandwiched on both sides
 Good features: Diesel economy with high technology
(VGT) and power (110 bhp / 24kgm).
 Market response – time will tell!

29. 29
D – Segment Cars

30. 30
Marketing: Octavia
 Skoda’s first car in India: need to build the Skoda
brand first
 Quality differentiator: “Obsessed with quality, since
1895” – this was the tagline used
 Built on the golf platform – Skoda is part of the VW
group
 USP: Diesel economy (users have reported 19 km per
litre mileage)
 Replacement of the Octavia (Skoda Laura) falls in the
next segment, i.e. competes with Honda Accord

31. 31
Marketing: Corolla
 Best selling car in the world (over the years)
 Not as successful as Toyota would like
 Marketing changed over time
• Initial: Successful people use Corolla
• Now: Trying to cash in on its worldwide acceptance
 Quality niggles (on a Toyota!) in the interior have
been a cause for complaint among owners

32. 32
Marketing: Civic
 One of Honda’s best selling brands worldwide:
eagerly awaited before its launch in India
 Currently outsells the Corolla – in markets abroad,
too.
 Brand communication: “Pure Exhilaration” tagline
used to communicate sporty nature
 Scores on the styling front – especially the interior
 Aggressive salespeople
 Already the leading seller in the segment

33. 33
Future Trends
 Individual buyers, lease rental-based bulk buyers for high volume growth
 More importance to fuel efficiency, adaptability with road condition, heavy traffic
 Not many crave a status symbol  small car is the choice of the hour
 Government regulations favouring manufacturing of small cars
 The development of a vibrant used car market will drive the growth of new car and
UV sales by
• Helping owners: Dispose old car; Upgrade to a new car
• Creating potential customers for new cars: Used car owners upgrade to new models
• Demand from two-wheeler owners who want to upgrade to used cars
 All major players to launch diesel variants and models with increasing frequency.
However, the following player initiatives will have a significant impact on diesel
share:
• Maruti setting up an initial 100,000 diesel engine capacity by the end of 2006, which it
eventually plans to expand to 300,000 units
• Tata Motors' Rs 100,000 car, targeted for launch by mid-2008