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
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