indian car industry introduction

8/13/2019 Indian Car Industry Introduction

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MAYANK GOEL 12MBA0003

GAURAV SHARMA

12MBA0039


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OVERVIEW ON THE INDIAN SMALL

CAR INDUSTRY

One Market that is forcing the global auto majorsto think small is Indian Market.

There were as many as five players in the mid carsegment and Just one - the Rs 7956cr Maruti Udyogltd in the small car segment.

Daewoo Motors India and Hyundai Motors India--are changing lanes midway, making the small carmarket as their marketing strategy in India.

Two domestic manufacturers--the Rs 10,074-croreTata Engineering & Locomotive Co. (TELCO) andthe Rs 223-crore Kinetic Engineering--are readywith similar indigenously-designed products tocompete in this market.


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This perceptual change was because of two reasons.- The clutter in the large and midsize segment due to entry of

many international players.

- The small segment grew faster than the mid-size one,driven by the price-sensitive customer.

Today there are 10 global auto majors--including

- the $13-billion Suzuki Motor (Japan),

- the $65-billion Daewoo (South Korea),

- the $147-billion Ford (US),

- the $47-billion Fiat (Italy),and

- the $168-billion General Motors (US) operating in IndianMarket


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The Pre 1997 Car Market

As late as 1997, the auto market in India wasclearly segmented.

- At the entry level were MUL's 800-cc car--pricedbetween Rs 2.10-lakh and Rs 2.45 lakh--and theOmni, at Rs 1.75 lakh.

- At the next level were the 993-cc Zen--priced atRs 3.70 lakh--and the 999-cc Fiat Uno (Rs 3.62lakh).


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- Then came the 1,300-cc Esteem models--priced between Rs 4.69 lakh and Rs 5.95lakh the 1,498-cc Cielo (Rs 6.20 lakh), andthe 1,598-cc Opel Astra (Rs 7.52 lakh),

- followed by premium cars like Mercedes-Benz's E-220 (Rs 22 lakh).


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Changing Lanes

Two events have upset the equations in the price-segmented car

market.

Daewoo has Changed the lanes with the Cielo, which is now

priced at Rs 4.90 lakh, and competes with the Zen's top-end model

(Rs 4.40 lakh) and the Esteem's lower-end version (Rs 4.69 lakh).

Hyundai Motors India, a subsidiary of the $27-billion Hyundai of

South Korea launched its 999-cc Santro at the Auto Expo 1998 in

Delhi. The model comes in five variants, with the non-air-

conditioned, manual transmission model priced at Rs 2.80 lakh, and

the semiautomatic, air-conditioned GLS model priced between Rs

3.15 lakh and Rs 4 lakh. Clearly, Hyundai's strategy is aimed at

taking on the market leader, Maruti Udyog Limited.


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-TELCO's positioning of its 1,400-cc Indica car--launched in November, 1998 and priced close to Marutis

800-cc model as a small car;

and

- Hondasneaking its 1,300-cc City into the segmentvacated by the Cielo.

The two key inhibiting factors for the poor response to

the auto war fare in Indian Car Market are basically the low per capita income at $350 (Rs 14,000 at current

prices)

the high manufacturing costs.


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MAURTI UDYOG Ltd.

Maruti Udyog Ltd. is a joint venture betweenGovernment of India and Suzuki motors of Japan.

Maruti entered the Indian car market, it sought to

provide high quality, fuel-efficient, low-cost vehicles

with a motto of total customer satisfaction. Market share

economy car segment =70%

luxury car segment = 38%

Maruti was highly publicized as the peoples car

and a technologically advanced, fuel efficient car.


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Pre-liberalization Scenario

With the Japanese production anddesign technology Maruti offered sleekerdesigned cars at affordable prices.

Hindustan Motors, Premier Padmini,Standard Motors have formed alliancesand forged partnerships in technologywith many multinational firms.

Government of India had passed aspecial bill giving duty concessions forthe import of engines with less than1000cc, for which only Maruti was

eligible.


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Post-Liberalization

Scenario Maruti also faceing stiff competition The new players like Daewoo, Hyundai,

GM, Honda, Ford etc have started eatinginto Marutismarket share.

Maruti is not successful in capturing theincreasing market base.

MUL's share in passenger cars slipped

from 84 % to 69 %. Sales and export grew by 14%.

Its competitors are growing faster.


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HYUNDAI MOTORS

Hyundai is one of the top mostmanufacturers of world class cars and

a leading Korean giant.

Hyundai acceptable as one of theleaders in replacement market of

automotive parts.

Hyundai is a leader in thetechnological front and to meet the

challenges of the 21st century.


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Birth of Santro

The Hyundai Santro was born to meetthe typical Indian environment includingroad condition, extremely hightemperature, tough weather, heavy traffic

and difficult driving conditions. Santrostarget customer segment

includes all those who believe in the

value-for-money concept. Hyundai realized that unsettling the core

Maruti 800 market may be difficult,without achieving the economies of

scale.


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Customer Care Centres

Its a big challenge to build a dealer andservice network.

the company wants to consider factorslike convenient location.

Hyundai is trying to build one-stop-shops, calling it Hyundai Motor Plaza.looking at the possibility of company-

owned dealer-cum service centres. So far Hyundai is starting with a spread

of 70 dealers in 55 cities.


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Daewoo Motors India

Daewoo Motors India commenced itsoperations in India with the production

of Cielo in July1995. It started

manufacturing in its state of the artplant at Surajpur, Uttar Pradesh.

The company has invested Rs 4000

crores in setting up the stateof-the-artmanufacturing plant and research &

development facilities.


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Daewoo has primarily 3 brandscompeting in the Indian market; Matiz,Cielo and Nexia.

Matiz is available in four models:Standard (SS), Deluxe (SD), Executive(SE) and Premium(SP).

Daewoo cars have achieved a very high

level of localization. While Matiz is morethan 70 percent localized, the CieloExecutive and Nexia have achieved theindigenisation level of 80 percent.


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Reason for failure cielo

Daewoo misjudged the growthpotential of the small segment that

grew faster than the mid-size one.

Also customers are price sensitive. It could not visualize the strengths of

its potential competitors that would be

entering the market like Honda City,Ford and Opel.


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Matiz

Daewoo introduced Matiz, and it tried tocreate a new category between Maruti

800 and Zen.

Declining profits, lower volumes, andlower realizations due to increasing

discounts had made Daewoo's

management more cautious about the

pricing of the Matiz.

It found that Indian customers are not

only price sensitive but also value-

sensitive.


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Change of strategy

It learned and started understandingthe Indian market and took efforts to

deal with the competition.

Daewoo began leveraging its strengthin technology to increase its market

share.

To increase sales it startedconcentrated on a better pricing

strategy, focus on exports and efforts

to increase customer service,


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A better Pricing Strategy

The company was forced to rework itsstrategy.

It introduced 3 models: a stripped-

down standard model (Rs 2.67 lakh),a deluxe model (Rs 3.04 lakh), & an

executive model (Rs 3.48 lakh.)

The new strategy started working andthe demand for the brand has gone

high.


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Efforts to improve customer

service Daewoo took a host of initiatives to

improve the after sales and pre salesservices.

Daewoo Motors India formed a dealerpanel to get market feedback and alsosuggestions for better customer service.

To increase its share in the competitive

market, it has come up with warrantyprogram from 2 to 4 years whereascompetitors offer only 1 year warrantyprogram.


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TELCO-Tata Engineering and

Locomotive Company

Telco is one of India's largest privatesector companies, it is the country'sleading commercial vehicle manufacturerand worlds sixth largest automobile

company. TELCO was Incorporated in 1945 to

manufacture steam locomotives and the

company diversified into automobilemanufacturing, through a collaborationwith Daimler-Benz for the manufacture ofcommercial vehicles.

They covered both HCVs and LCVs.


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TELCO added machining, press andassembly capacities and virtually

created the countrys automobile

ancillary industry to sustain its growth. TELCO domestic market share

MCV/HCV segment-68%

LCV segment-64%Multi-utility segment-32%


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Launch of Indica

Promotions-The Indica advertising madeinterest for the car go into overdrive

Pre launch Campaign-Indica used the catchlines like More car per Car More dreams

per car. Launch Campaign-Its first advertisement

carried the following catch line 50cc moped,100cc bike 800cc car. Time you asked for

more. Post Launch Campaigns-post launch

advertisements focused on the superior aftersales service and longer warranty periods

offered by Indica.


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THANK YOU

indian car industry introduction

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