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

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

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.

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

Exe c ut ive Sum m e ry

Purpos e , Obje c t ive and Sc ope

Com pany Profile

The ore t ic al Bac kground

Re s e arc h Me t hodo logy

Dat a Analys is and In t e rpre t at ion

Findings

Lim it at ions

Conc lus ions

Re c om m e ndat ions

Bibliography

Anne xure

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.

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

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.

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.

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.

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;

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.

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.

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.

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

11

Organisation chart

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

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.

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.

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

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

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

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

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.

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

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

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).

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)

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

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

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

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

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.

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

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.

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.

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.

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.

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.

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

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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.

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.

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.

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.

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.

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.

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

http://www.acmainfo.com

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

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


No.


Monthly Sales Quantity

Retail price (Rs.)

Price Quality Brand name Promotion

Clutch cables


No.



Retail price (Rs.)


69

Radiator


No.


Monthly Sales



name Promotion

Coolant tank


No.



Retail price (Rs.)


Oil chamber


No.



Retail price (Rs.)


70

Head lamp


No.


Monthly Sales



name Promotion

Tail lamp


No.



Retail price (Rs.)


Rear view mirror ( outer)


No.



Retail price (Rs.)


71

Coil Springs


No.


Monthly Sales



name Promotion

Shock absorber


No.



Retail price (Rs.)


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