Impact of Marketing Strategies on Customer Buying Behavior in Indian Passenger Car Industry (with reference to Northern India)
NOIDA INTERNATIONAL UNIVERSITY
FOR THE AWARD OF DEGREE OF
Supervisor: Submitted By:
Prof. (Dr.) Saurabh Joshi Mrinalini ChoudharyProfessor
Swami Rama Himalayan University
CERTIFICATE OF SUPERVISOR AND CANDIDATE
This is to certify that work embodied in this thesis entitled “Impact of Marketing Strategies on Customer Buying Behavior in Indian Passenger Car Industry (with reference to Northern India)”, has been carried out by Ms. Mrinalini Choudhary, under my supervision and guidance.
No part of this thesis has been submitted for any other Degree or Diploma. The work included in this thesis is original and is own work of the candidate.
The candidate has put the required attendance as per the ordinance of NOIDA INTERNATIONAL UNIVERSITY, GREATER NOIDA
Signature and Seal of the Supervisor Signature of the Candidate
With great pleasure, I take this opportunity to acknowledge and express my gratitude to all who were instrumental in one way or another in completion of my Ph.D. research.
Foremost, I am grateful to God Almighty for his grace and blessings who turned my dream into a vision and helped me fulfil it by his grace.
My sincere thanks to Prof. (DK) Chauhan, Director Technical, NIU, for his guidance and incessant help during the dissertation work, and for providing all support in facilitation and completion of research.
I am extremely grateful and indebted to my learned supervisor, Prof. (Dr.) Saurabh Joshi, Professor, Swami Rama Himalayan University, for his encouragement, inspiration and guidance in enabling me to focus on the completion of this research work. I felt very privileged to get an opportunity to work under his supervision. It was an enriching experience.
My sincere gratitude to my parents for their trust and belief in me, and for their constant support.
My sincere appreciation to my friend Dr. Latika Chaudhary for her encouragement, motivation, time and extra- ordinary support during the Thesis work.
I appreciate and thank the dealer and respondents for the authentic cooperation and information provided during the survey.
Finally, a special thanks to my family and children for enduring love and care, support and drive during the course of the study. This work wouldn’t have been possible without their love and support over the years.
The auto industry has undergone on-going and dynamic transformation over recent years. Changing trends in consumer shopping behaviour, connected technologies, digital and mobile channels, longer vehicle lifespan, are all impacting how the automotive industry must respond to the changing climate.
Competitive pressures and increasing complexity have led automotive companies to look for an edge wherever they can find it. Improved consumer insight into vehicle shopping and buying behaviour can provide that valuable advantage.
Vehicle manufacturers and dealers develop and execute more effective strategies in areas such as sales, advertising, after sales service, customer /relationship management with the manufacturer and dealer collaboration.
This thesis is an exhaustive research to identify the consumer behaviour for the purchase of cars in the passenger cars segment of automobile industry in Northern part of India. Furthermore, based on the behavioral aspect of the consumer, the study shows how the marketers can make strategies with various marketing mix to influence the buying decision.
Capturing the opportunity related to buyer’s behavior depends upon the marketer’s ability to identify, understand and effectively connect with buyer’s need and desires and developing marketing strategies that connects the right consumers with the right automotive brand.
People often consider their cars as an extension of their personality.
Car companies toil endlessly to establish their individual brand images and build up their personalities in the minds of consumers. To target these various audiences, car manufacturers market their products in specific ways, catering to the emotions, desires, and needs of the typical consumer.
As far as consumer behaviour for passenger car in India is concerned an attempt has been made to study the consumer behaviour through two types of questionnaire. One questionnaire is for car dealers for their feedback on the customers visit to the showroom, key selling points of car and finance schemes provided by the dealer. Another questionnaire has been used for assessment of consumer behaviour of passenger car owners over various parameters.
The result shows various variables of consumer behaviour that can be used by the marketers at different levels of customer’s car purchase process.
Step 1: At the awareness stage, when customer looks for various source of information for purchasing the car, the marketers should pitch on the most effective ways of advertising and communication including the referrals such as word of mouth from the existing customers.
Step 2: During the research phase of buyers, the marketers can emphasize on the product and the finance schemes available.
Step 3: When the customer visits the showroom, it is pertinent of sales person to know the buying motives, hence should showcase the product, pitch the price, and conduct demonstration drives before closing the sale. The marketing strategy can be formed on various factors that motivates the buyers and upon identifying the need, key selling point of the product should be highlighted. Test Drive campaigns are also considered as very effective marketing strategy.
Step 4: When the customer decides upon a model of car, the pricing and promotional strategies should be implemented to attract customers and negotiate the deal.
Step 5: The post purchase factor is important in any purchase cycle which leads to higher customer satisfaction. Hence a proper loyalty program should be planned. A satisfied customer through a positive word of mouth will drive more customers to the particular brand and attain incremental sale.
The thesis has been written for a general Indian reader. The language used, the interpretation, the methodology and the layout of the chapters etc. has kept their needs in mind. I will be privileged if the readers feel benefited with the results provided in the study.
TOC o “1-4” h z u 1. Introduction PAGEREF _Toc488229795 h 121.1 Global Current Scenario of Auto Industry PAGEREF _Toc488229796 h 151.1.1 Macroeconomic forces PAGEREF _Toc488229797 h 171.1.2 New age of Personal Transformation PAGEREF _Toc488229798 h 171.1.3 Stricter regulations PAGEREF _Toc488229799 h 181.2 Current scenario of Indian Auto industry PAGEREF _Toc488229800 h 201.2.1 Market Size PAGEREF _Toc488229801 h 201.2.2 Investments PAGEREF _Toc488229802 h 211.2.3 Government Initiatives PAGEREF _Toc488229803 h 221.2.4 Road Ahead PAGEREF _Toc488229804 h 231.2.5 Sectors of Auto Industry PAGEREF _Toc488229805 h 231.2.6 Employment Opportunities PAGEREF _Toc488229806 h 251.2.7 Employment Trends PAGEREF _Toc488229807 h 261.2.8. Future Trends in the Automobile Industry PAGEREF _Toc488229808 h 261.2.9. Impact of Demonetisation: PAGEREF _Toc488229809 h 281.2.10. Vehicular Sales: PAGEREF _Toc488229810 h 281.2.11. Introduction of Voluntary Vehicle Fleet Modernisation Plan: PAGEREF _Toc488229811 h 281.2.12 Reduced incentive for R;D: PAGEREF _Toc488229812 h 291.2.13 Recalls: PAGEREF _Toc488229813 h 291.2.14 Evolution of the Indian Automotive Industry: From Statics to Dynamics PAGEREF _Toc488229814 h 311.2.15 Chronology and typology of India’s automotive growth PAGEREF _Toc488229815 h 321.2.16 Growth Dynamics of Automotive Segment: Past and Recent Trends PAGEREF _Toc488229816 h 341.3 SWOT Analysis of Auto Industry PAGEREF _Toc488229817 h 361.3.1 Here are the strengths in the SWOT analysis of Automobile industry PAGEREF _Toc488229818 h 361.3.2 Weaknesses in the SWOT analysis of Automobile industry PAGEREF _Toc488229819 h 371.3.3. Opportunities in the SWOT analysis of Automobile industry PAGEREF _Toc488229820 h 371.3.4. Threats in the SWOT analysis of Automobile industry PAGEREF _Toc488229821 h 38Profile of Some Automobile Companies PAGEREF _Toc488229822 h 392.1 Overview of Indian Auto mobile industry PAGEREF _Toc488229823 h 402.1.1 Pre-Independence era PAGEREF _Toc488229824 h 402.1.2 Post-Independence era PAGEREF _Toc488229825 h 402.2 About Some Car Manufacturing Companies PAGEREF _Toc488229826 h 412.2.1. About Maruti Suzuki India Ltd. PAGEREF _Toc488229827 h 412.2.2. About Toyota PAGEREF _Toc488229828 h 442.2.3. About Tata Motors PAGEREF _Toc488229829 h 472.2.4. About Hyundai Motor Company PAGEREF _Toc488229830 h 562.2.5. About Ford PAGEREF _Toc488229831 h 572.2.6. About Mahindra PAGEREF _Toc488229832 h 602.2.7. About Honda Motors Ltd. PAGEREF _Toc488229833 h 682.2.8. About Nissan Motors Company PAGEREF _Toc488229834 h 71Literature Review PAGEREF _Toc488229835 h 80Chapter 4 PAGEREF _Toc488229836 h 103Research Design and Methodology PAGEREF _Toc488229837 h 1034.1 Objective of study PAGEREF _Toc488229838 h 1044.2 Research Design PAGEREF _Toc488229839 h 1044.3 Data Sources PAGEREF _Toc488229840 h 1044.4 Sample area PAGEREF _Toc488229841 h 1054.5 Procedures for Developing a Questionnaire PAGEREF _Toc488229842 h 1064.6 Scope of the study PAGEREF _Toc488229843 h 1064.7 Limitations of the study PAGEREF _Toc488229844 h 1074.8 Hypothesis PAGEREF _Toc488229845 h 107Chapter 5 PAGEREF _Toc488229846 h 108Consumer Buying Behaviour PAGEREF _Toc488229847 h 1085.1 Customer Purchase Process before Purchasing the Car PAGEREF _Toc488229848 h 1105.1.1 Establish your budget PAGEREF _Toc488229849 h 1105.1.2 Determine your needs PAGEREF _Toc488229850 h 1105.1.3. Decide what you want PAGEREF _Toc488229851 h 1105.1.4. Select a vehicle PAGEREF _Toc488229852 h 1105.1.5. Get insurance quotes PAGEREF _Toc488229853 h 1115.1.6. Arrange your financing PAGEREF _Toc488229854 h 1115.1.7. Negotiate your deal PAGEREF _Toc488229855 h 1115.2 Automobile Industry Statistics PAGEREF _Toc488229856 h 1115.3. Performance of Auto industry PAGEREF _Toc488229857 h 1125.3.1. Export PAGEREF _Toc488229858 h 1125.3.2.. Gross turnover of automobile industry PAGEREF _Toc488229859 h 1125.4 Analysis of Data from the Consumer Questionnaire PAGEREF _Toc488229860 h 1135.4.1 Choosing Car models PAGEREF _Toc488229861 h 1135.4.2 Category Wise Details (Petrol & Diesel) of Car Owners PAGEREF _Toc488229862 h 1155.4.3. Number of Respondents Gender Wise PAGEREF _Toc488229863 h 1185.4.4. Number of Respondents Age Wise PAGEREF _Toc488229864 h 1195.4.5 Number of respondents Occupation Wise PAGEREF _Toc488229865 h 1205.4.6. Number of Respondents Qualification Wise PAGEREF _Toc488229866 h 1215.4.7.Number of car in a family PAGEREF _Toc488229867 h 1215.4.8.Details Analysis of Vehicle Based on Car fuel Preferences PAGEREF _Toc488229868 h 1225.4.9.. Analysis from First time Buyer PAGEREF _Toc488229869 h 1235.4.10.Analysis from Re-Purchase Vehicle PAGEREF _Toc488229870 h 1245.4.11. Analysis from price paid by Consumer for a Car PAGEREF _Toc488229871 h 1255.4.12.Mode of Payment Used by Consumer PAGEREF _Toc488229872 h 1265.4.13. Sources of information about car before purchasing Car PAGEREF _Toc488229873 h 1275.4.14. Motivations for Purchasing New Car PAGEREF _Toc488229874 h 1285.4.15. Analysis of Factors Influencing Brand preferences PAGEREF _Toc488229875 h 1295.4.16. Analysis of Pre- Purchase Strategies PAGEREF _Toc488229876 h 1315.4.17. Role of Reference Groups in Making Purchase Decisions PAGEREF _Toc488229877 h 1325.4.18. Customer Satisfaction level with the dealers PAGEREF _Toc488229878 h 1335.4.19. Analysis of Customer’s satisfaction level with the owned/ purchased brand of car PAGEREF _Toc488229879 h 1345.4.20. Analysis of Future Preferences for the Brands of Car PAGEREF _Toc488229880 h 1355.4.21. Dislikes/Problem faced by the Car Consumers Related to their Car PAGEREF _Toc488229881 h 1365.4.22. Analysis from the dealer’s question PAGEREF _Toc488229882 h 1375.4.23. Analysis of financing facilities provided by the car dealers PAGEREF _Toc488229883 h 1385.4.24. Analysis of average number of footfalls in a week in the dealer’s showroom PAGEREF _Toc488229884 h 1385.4.25. Percentage Increase of Footfalls during Festive Season PAGEREF _Toc488229885 h 139Chapter 6 PAGEREF _Toc488229886 h 141Marketing Strategies to Influence Consumer PAGEREF _Toc488229887 h 1416.1 Marketing Strategy PAGEREF _Toc488229888 h 1426.1.1. Market Size PAGEREF _Toc488229889 h 1426.2 Challenges faced by the automotive industry PAGEREF _Toc488229890 h 1436.2.1 Modularization PAGEREF _Toc488229891 h 1436.2.2. Increasingly regulatory requirements PAGEREF _Toc488229892 h 1436.2.3. Prominence given to electronics and software PAGEREF _Toc488229893 h 1436.2.4. Data management and IoT connectivity PAGEREF _Toc488229894 h 1436.2.5. Analysis of market strategies of different Companies and its effectiveness to their customer PAGEREF _Toc488229895 h 1446.2.6. An Automotive Marketing Strategy Analysis Solution PAGEREF _Toc488229896 h 1446.2.7. Finding the answer of Tough Business Questions: PAGEREF _Toc488229897 h 144Chapter 7 PAGEREF _Toc488229898 h 149Summary and Conclusion PAGEREF _Toc488229899 h 1497.1 FINDINGS PAGEREF _Toc488229900 h 1527.1.1 Findings of Analysis of Role of Sources of Information PAGEREF _Toc488229901 h 1527.1.2. Findings of Analysis of Variables Motivating New Car Purchase PAGEREF _Toc488229902 h 1537.1.3. Findings of Analysis of Factors influencing consumers brand preferences PAGEREF _Toc488229903 h 1537.1.4. Findings of Analysis of Pre-Purchase Strategies adopted by the Customer PAGEREF _Toc488229904 h 1547.1.5. Findings of the analysis of the role of reference groups in influencing their car purchase decisions. PAGEREF _Toc488229905 h 1567.1.6. Findings of Analysis of customer satisfaction level with the dealer pertaining to Sales/Services PAGEREF _Toc488229906 h 1567.1.7. Findings of Analysis of customer post purchase satisfaction PAGEREF _Toc488229907 h 1577.1.8Finding analysis future preferences for the brands of passenger PAGEREF _Toc488229908 h 1587.1.9. Findings of Analysis of Dislikes/problems faced by the car consumers in their car PAGEREF _Toc488229909 h 1607.1.10. Findings of analysis of key selling points of cars PAGEREF _Toc488229910 h 1607.2. SUGGESTIONS ; RECOMMENDATIONS PAGEREF _Toc488229911 h 1627.3. Suggestions from the customers: PAGEREF _Toc488229912 h 1637.4 CONCLUSION PAGEREF _Toc488229913 h 1637.5. SCOPE FOR FURTHER RESEARCH PAGEREF _Toc488229914 h 164References PAGEREF _Toc488229915 h 166ANNEXURES No. 1 PAGEREF _Toc488229916 h 174QUESTIONNAIRE (FOR CONSUMERS) PAGEREF _Toc488229917 h 174ANNEXURES No. 2 PAGEREF _Toc488229918 h 180QUESTIONNAIRE (FOR DEALERS) PAGEREF _Toc488229919 h 180
List of Figures
Serial No. Details Page
Fig 1.1 Total production of automobiles in India
Fig 1.2 Influence of Govt. Policies on India’s Automotive Industry 16
Fig 1.3 Growth of marketing world wide 17
Fig 1.4 Global Auto sale 19
Fig 2.1 A pre-Independence car showroom in Secunderabad 40
Fig 4.1 Procedures for Developing a Questionnaire
Fig 5.1 Steps for purchasing a Car
Fig 5.2 Gross turn over Source: SIAM
Fig 5.3 Number of Respondents Gender Wise
Fig 5.4 Number of respondents Age wise
Fig 5.5 Number of Respondents Occupation
Fig 5.6. Number of car in a Family
Fig 5.7 Car fuel Preferences
Fig 5.8 Analysis from first time Buyer
Fig 5.9 Analysis from Re-Purchase Vehicle
Fig 5.10 Analysis from price paid by Consumer for a Car
Fig 5.11 Mode of Payment Used by Consumer 126
Fig 5.12 Sources of information about car before purchasing Car
Fig 5.13 Motivation for car purchase
Fig: 5.14 Factors influencing brand preference
Fig: 5.15 Pre-purchase strategies
Fig: 5.16 Role of reference groups
Fig 5.17 customer satisfaction with Dealer
Fig: 5.18 customer brand satisfaction
Fig: 5.19 Brand preference for future purchase of cars
Fig 5.20 Reason for dislikes/problems in the car
Fig 5.21 Key selling point of the car
Fig 5.22 Customer visiting showroom in a week.
Fig 5.23 Increase of footfall during festive season 140
Fig: 7.1 Six steps of Global Retail cycle
List of Tables
Serial no. Detail Page no
Table 5.1 Number of Respondents Gender Wise
Table 5.2 Number of Respondents Age Wise
Table 5.3 Number of respondents Occupation Wise
Table 5.4 Number of respondents Qualification Wise
Table 5.5 Number of car in a family
Table 5.6 Car fuel Preferences
Table 5.7 Brand preference of first time buyers
Table 5.8 Brand preference for re-purchase
Table 5.9 Price paid by Customer
Table 5.10. Preferred mode of payment
Table 5.11 Source of Information
Table 5.12 Factors influencing Brand preferences
Table 5.13 Reference groups influencing purchase decision
Table 5.14 Customer satisfaction with the Dealer
Table 5.15 Customer brand satisfaction
Table 5.16 Brand preference for future purchase
Table 5.17 Dislikes/Problems faced related to car
Table 5.18 Finance options provided by dealer
Table 5.19 Average number of footfalls in a week in the dealer’s showroom
Table 5.20 Increase in footfall during festive season.
Table 6.1 Automobile Production Trends 142
1. IntroductionAutomobile industry is very well known industry of India which fulfils the basic demands of Indian crowd. For economic growth of the country automobile industry plays a very important role. It is the industry which is also highly involved in the foreign trade, increases the demands of vehicle and invites the international investors in the India and populates the business on international platform. This industry has been also recognized as a core manufacturing sector to increase the economic growth and become the emerging market for world-wide auto giants.
Form the past 10 years The Automobile Industry has been in the booming phase, The Indian Government permits Foreign Joint Ventures in the Automobile industry since early 1990. Subsequently, the Indian Government permit Foreign Direct Investment with an equity cap in the industry, which saw many automobile manufactures entering the Indian market with too many varieties of models, all time available, without waiting for the delivery. This entry of manufacturer has made the Indian auto industry very competitive, and automobile industry of India provides dual advantage of ready market and low cost manufacturing base. With this sudden advancement of the automobile industry, and its globalization and liberalization, car manufacturers introduced very innovative and technological advancement in their models. Customers also started to think about the change over to the new models of cars, with related ease than in the past, to suit their changing life styles 1.
Automobiles play a very crucial role in daily life of every person, which makes most interesting topic in many academic fields. However, customers or buyer make their own choice or selection and decision based on their own priorities and personal requirements; the challenges to dealers and manufacturers are to recognize the preference factors for such selection models (Momeni ; Nazemi, 2010) and Guessing or measuring the consumers attitude (Bheri, 2004).
The Indian automotive industry categorized into four different sectors, which are the passenger vehicles, two wheelers, commercial vehicles and three wheelers.
Passenger’s vehicle and commercial vehicle manufacturing industry has sixth number in the world. It has developed as a greater contributor to GDP (gross domestic product) of India. Two wheelers vehicle having the variety of motor cycle, scooters, mopeds. Passenger vehicle having the variety of utility vehicle, passenger cars, and multi-purpose vehicle. Commercial vehicle having variety of light and medium heavy vehicle. Three wheelers segment include goods carriers and passenger carriers. One of the main factor for increasing the economic growth of the country is automobile industry.
Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country.
Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the US and Mahindra & Mahindra have set up manufacturing bases in India. Furthermore, according to internal projections by Mercedes Benz Cars, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe.
As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the total FDI inflows in terms of US $. The production of compact superbikes is also expected to take place in India. The country has a mass production base of 16 million two-wheelers and the several global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.
Fig 1.1 Total production of automobiles in India
The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is as follows:
Largest three-wheeler market
Second largest two-wheeler market
Tenth largest passenger car market
Fourth largest tractor market
Fifth largest commercial vehicle market
Fifth largest bus and truck segment
However, the year 2013-2014 has seen a decline in the industry’s otherwise smooth-running growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with economic slowdown are the major reason for the downturn of the industry.
Except for the two-wheelers, all other segments in the industry have been weakening. There is a negative impact on the automakers and dealers who offered high discounts in order to push sales. To match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which capacity utilization for most automakers remains at a dismal level.
Despite the comprehensive market being under extreme burden, the luxury car market has observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at compelling lower price points. Further, with the measured increases in the price of diesel, the overall market continues to shift towards petrol-fuelled cars. This has led to the growth in sales of the ‘Mini’ segment of the PV market by of 5.5%.
There is a list of top and major manufacturers of automotive industry; this list includes Maruti Udyog Ltd., General Motors India, Ford India Ltd, Eicher Motors, Bajaj Auto, Daewoo Motors India, Hero Motors, Hindustan Motors, Hyundai Motor India Ltd, Royal Enfield Motors, telco, TVS Motors, DC Designs, Swaraj Mazda Ltd.
The achievements of Indian automobile industry is incomplete without mentioning the legend Mr. J.R.D. Tata perform a lead role in establishing a research centre in 1965 with a high standard to increase technological advancement.
1.1 Global Current Scenario of Auto IndustryFor the auto industry, 2015 is on average year by any measure. By Record sales in the U.S. gave the sector a with too much benefits, but growing economic Trends in much of the rest of the world, particularly in growing markets, overall define a flat year, on-going prospects for global auto manufacturers and suppliers.
Furthermore, Auto industry is equipped with new technologies and with new concepts of vehicle, manufacturing is done in design rooms and on factory floor, this advancement transforms the transportation and auto industry in a drastic way.
From the very beginning we are seeing pieces and parts of what the so-called connected car with fully automated functions will look like — having a fully digitized vehicle with Wi-Fi; advanced infotainment systems and apps; vehicle-to-vehicle communications that enable cars to talk each other on the road, sharing basic safety measures data such as speed and position; real-time location services and routing based on traffic conditions; and networked Web links that facilitate vehicle diagnostics and repairs.
Meantime, the intelligent car is moving very fast from the parking to the streets.
With the advancements of vehicle, autonomous vehicles are emerged, this vehicle gives a new experience to consumers, as they operating vehicle by releasing or relinquishing the control of vehicle, automated functions that is, self-braking, self- parking, automatic accident avoidance features, automated power-steering, engine control etc. this advancement impress the consumer with their feature.
Above is the experience of consumers, But for manufacturers, it’s very challenging to provide such advancements to their consumers. This advancement with technology gives various opportunities to automotive industry. They faced the challenge of designing, manufacturing, upgrading for traditional model to advanced model and so on.
As an executive at an OEM or an auto equipment supplier, your strategy, your ability to place your company in the graph of product trends without running afoul of ever more stringent environmental rules — will surely be tested.
The three dimensions that we have to consider which is divided into three categories: A new age of personal transformation, macroeconomic forces, stricter regulations.
Fig 1.2 (Source: Ranawat and Tiwari (2007), Influence of Govt. Policies on India’s Automotive Industry, p. 14)
Fig 1.3 Growth of marketing world wide
1.1.1 Macroeconomic forcesLong product cycles and deep capital investments make planning in the auto industry a complex endeavour. For the past 10 years, OEMs and suppliers have generally chased global sales growth while hoping to improve margins by leveraging automobile platforms in multiple regions and striving for scale wherever possible. The results of this strategy have been decidedly mixed.
According to the OEMs, in 2015, the global economic condition is too worse. This situation creates new challenge to country to improve the market conditions and that has been very risky one.
1.1.2 New age of Personal TransformationAs described earlier, connected and intelligent cars are just initiated to make inroads in the auto industry, and already they having a wonderful impact on the manufacturers as they adjusting organizationally.
Companies are updating towards a different decade or too earlier. Two different worlds are melding in order to design, develop and build these cars: the traditional automotive company and software outfits. The industries bring with them conflicting cultures, product development models, and business operations. For example, car companies design their cars once, in a five-year-long development cycle.
Car companies follow a development cycle to manufacture a car. Software companies also follow this development process to provide advancement, so, the consumers are attracted towards the new vehicle that is lensed with the new technology. This is not only fully automated car but also about the traditional cars.
In those consequences, newer vehicles will be identified primarily by their innovative technology involving both assisted driving and global connectivity. In a recent research, 56 percent of new car buyers told that they would switch or change to a different brand if the one they were considering didn’t offer the technology and features they wanted. Similarly, 48 percent of car buyers told that they would walk away from a vehicle they liked if the technology was difficult to use.
For making connected and intelligent cars the technology is necessary, specifically, Web networking, sensors, and software that is not in the traditional car products for most automobile makers.
The main cons is to an opportunities to high profile software companies such as Apple and Google, which are involving to develop the technology with critical components of networking, communication features of automobile cars. Presence of technology firms and auto industry cannot be denied or ignored by OEMs. By their outstanding skills and performance these companies have to be proving their talent and their skills on regular basis. They are authorized to provide such a domain for the consumers, like information, entertainment, efficiencies and experiences they have to share.
1.1.3 Stricter regulationsAuto manufacturing companies have to focus on lensed their transport vehicle with advance technology and new features of their vehicle, stricter regulations for fuel economy are to be close by 2025. Such as, Auto manufacturers in Europe and in U.S. have a goal that is too much challenging, which is; provide the best facility with low price, consumer interest, efficient. These requirements are too necessary for step by step improvements in auto industry and within very short time span; the technologies have to be applied to traditional vehicle such as internal combustion engine and powertrain. According to the experts, this improvement also benefit to economy by petrol vehicle as they also increase the engine efficiency, decreasing the formation of emissions within engine cylinders; exhaust after treatment technologies that further reduce emissions; and the recovery of energy from waste heat.
Furthermore, by improving overall powertrain performance, auto manufacturers will have to take risks in product development, a trend that we are already witnessing. For example, in 2014, Ford replaced the steel in its popular and highly profitable F-series truck with aluminium in order to reduce weight and enhance fuel efficiency, a move that could have scared off customers who believed that the lighter material was less rugged. So far, this approach has paid off. The best mileage of 2015 F-150 had the any gasoline pickup and held its position by a large margin as the best-selling vehicle of any kind in the U.S.
Honda is taking a similar chance with its recent adoption of continuously variable transmissions (CVTs) across the bulk of its car line-up. Instead of cycling through fixed gears, these transmissions operate on pulleys that constantly adjust gear ratios to provide optimal performance in transferring power to the automobile’s wheels. CVT technology provides much better fuel economy because it removing inherent inefficiencies in fixed-gear transmissions that result in wasted energy. However, CVTs are not sold to customer yet; some complain that these cars are listless, especially during acceleration, because they lack the rhythmic higher revs and forward movement felt during traditional transmission up-shifting.
Some other auto manufacturer, including BMW, Mazda, and Fiat Chrysler, are trying to meet stricter fuel economy standards through a combination of improved aerodynamics, for better performance using turbo engines, and lighter manufacturing materials, among other tactics.
Fig 1.4 Global Auto sale
The mutual impact of these three parameters (macroeconomic forces, a new age of personal transportation, and stricter regulations), which have taken to middle stage in the auto industry, is not easily managed or manufactured. As an top executive leading an automobile manufacturer or a supplier, we have too familiar with the urgency needed to confront each of these unavoidable aspects of the auto business and their effect on to company, although you may not yet have a plan to do so. We recommend that you consider these steps as the basis of your strategic plan:
Step 1. Launch, learn, and adapt faster than ever — but not rashly.
Step 2. Prioritize your market
Step 3. Any strategy that you implement going forward should be predicated on capturing value29.
1.2 Current scenario of Indian Auto industryOne of the largest auto industries in the world is Indian auto industry. The industry accounts for 7.1 per cent of the country’s Gross Domestic Product (GDP). The Two Wheelers segment with 81 per cent market share is the leader of the Indian Automobile market owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has 13 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near future. In April-January 2016, exports of Commercial Vehicles registered a growth of 18.36 per cent over April-January 2015. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.
1.2.1 Market SizeSales of passenger vehicles increased by 16.7 per cent to 258,000 units in August 2016 driven by better-than-expected monsoon and strong buying sentiment*. Sales of commercial vehicles grew by 1.53 per cent to 52,996 units.
The two-wheeler industry also performed well. Motorcycle sales grew 22 per cent to 1 million units, while overall two-wheeler sales grew 26.3 per cent to 1.64 million units.
1.2.2 InvestmentsIn order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI) worth US$ 15.06 billion during the period April 2000 to March 2016, according to data released by Department of Industrial Policy and Promotion (DIPP).
Some of the major investments and developments in the automobile sector in India are as follows:
Jaguar Land Rover, the UK-based automotive company, plans to manufacture Land Rover SUV for the local market and as well as for export, most probably at its plant in Pune.
Italian automobile manufacturer Fiat has announced its plans to start local production at Ranjangoan plant in Pune from the second quarter of next year at the launch of its two sports utility vehicles (SUVs), namely Jeep Wrangler and Grand Cherokee.
MV Agusta, the Italy-based premium motorcycle manufacturer, has entered India through an exclusive partnership with Pune-based Kinetic group with the launch of three luxury bikes, which will be sold through the ‘Motoroyale’ chain in Pune.
Sweden-based electric vehicle maker Clean Motion plans to invest US$ 10 million in India over the next three years in order to expand operations including setting up of an assembly unit for its Zbee three-wheelers in the country.
Isuzu Motors, the Japan-based utility vehicle manufacturer, has inaugurated its greenfield manufacturing unit in SriCity, Andhra Pradesh, at a cost of Rs 3,000 crore (US$ 450.94 million).
Japanese two-wheeler manufacturer Honda Motorcycle and Scooter India (HMSI) has opened its fourth and world’s largest scooter plant in Gujarat, set up to initially produce 600,000 scooters per annum to be scaled up to 1.2 million scooters per annum by mid-2016.
American car maker Ford has unveiled its iconic Ford Mustang in India and will make its debut in second quarter of FY2016 within the price band of Rs 45 lakh (US$ 66,146) and Rs 50 lakh (US$ 73,496) in the Indian market.
Nissan Motor Co. Ltd is in discussion with Government of India to bring electric and hybrid technologies to India as the government plans to reduce air pollution caused by vehicles.
Global auto Major Ford plans to manufacture in India two families of engines by 2017, a 2.2 litre diesel engine codenamed Panther, and a 1.2 litre petrol engine codenamed Dragon, which are expected to power 270,000 Ford vehicles globally.
The world’s largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and Toyoda Gosei Co are setting up plants and increasing capacity in India.
General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$ 513.5 million) in Maharashtra, to manufacture Jeep Grand Cherokee model.
Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has doubled its India assembly capacity to 20,000 units per annum.
Germany-based luxury car maker Bayerische Motoren Werke AG’s (BMW) local unit has announced to procure components from seven India-based auto parts makers.
Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based Peugeot Motorcycles (PMTC).
1.2.3 Government InitiativesThe Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route.
Some of the major initiatives taken by the Government of India are:
Mr Nitin Gadkari, Minister of Road Transport, Highways & Shipping has announced plans to set up a separate independent Department for Transport, comprising of experts from the automobile sector to resolve issues such as those related to fuel technology, motor body specifications and fuel emissions, apart from exports.
Government of India aims to make automobiles manufacturing the main driver of ‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
In the Union budget of 2015-16, the Government has announced to provide credit of Rs. 850,000 Crore (US$ 124.71 billion) to farmers, which is expected to boost the tractors segment sales.
The Government plans to promote eco-friendly cars in the country i.e. CNG based vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent ethanol blending in petrol.
The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the country.
The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector.
1.2.4 Road AheadIndia’s automotive industry is one of the most competitive in the world. It does not cover 100 per cent of technology or components required to make a car but it is giving a good 97 per cent, as highlighted by Mr. Vicent Cobee, Corporate Vice-President, Nissan Motor’s Datsun.
Leading auto maker Maruti Suzuki expects Indian passenger car market to reach four million units by 2020, up from 1.97 million units in 2014-15.
The Indian automotive sector has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s Gross Domestic Product#.
Exchange Rate Used: INR 1 = US$ 0.0149 as on September 27, 20163031
1.2.5 Sectors of Auto IndustryThe automobiles sector is compartmentalized in four different sectors which are as follows:
Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-wheelers.
Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose vehicles.
Commercial Vehicles that are light and medium-heavy vehicles
Three Wheelers that are passenger carriers and goods carriers.
The automobile industry is one of the key drivers that boost the economic growth of the country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country.
Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the US and Mahindra ; Mahindra have set up manufacturing bases in India. Furthermore, according to internal projections by Mercedes Benz Cars, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe.
As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the total FDI inflows in terms of US $. The production of compact superbikes is also expected to take place in India. The country has a mass production base of 16 million two-wheelers and the several global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.
However, the year 2013-2014 has seen a decline in the industry’s otherwise smooth-running growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with economic slowdown are the major reason for the downturn of the industry.
Except for the two-wheelers, all other segments in the industry have been weakening. There is a negative impact on the automakers and dealers who offered high discounts in order to push sales. To match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which capacity utilization for most automakers remains at a dismal level.
Despite the comprehensive market being under extreme burden, the luxury car market has observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at compelling lower price points. Further, with the measured increases in the price of diesel, the overall market continues to shift towards petrol-fuelled cars. This has led to the growth in sales of the ‘Mini’ segment of the PV market by of 5.5%
Factors determining the growth of the industry
Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products.
Sturdy legal and banking infrastructure
Increased affordability, heightened demand in the small car segment and the surging income of the Indian population
India is the third largest investor base in the world
The Government technology modernization fund is concentrating on establishing India as an auto-manufacturing hub.
Availability of inexpensive skilled workers
Industry is perusing to elevate sales by knocking on doors of women, youth, rural and luxury segments
Market segmentation and product innovation
1.2.6 Employment OpportunitiesThere are a wide range of jobs available in the automobile industry in 2016. With the number of vehicles available on the road today, the need and requirement for people who can fix these machines is fast increasing. Careers like automobile technician, car or bike mechanics are a great option. Becoming a diesel mechanic is also a significant alternative. Diesel mechanics are responsible for repairing and servicing diesel engines. As they are also required to repair engines of trucks and buses, other than cars, they are provided with hefty wages.
If communication with people instead of repairing cars is what interests you, then you have the opportunity of becoming a salesperson or sales manager in an automobile company. Career opportunities in automobile design, paint specialists, job on the assembly line and insurance of vehicles is also available.
1.2.7 Employment TrendsThe Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a global automotive hub. The idea is to make India as the destination choice for design and manufacture of automobiles and auto components, with outputs soaring to reach US$ 145 billion which is basically accounting for more than 10% of the GDP. This would also provide further employment to over 25 million people by 2016 making the automobile the sunrise sector of the economy.
According to the Confederation of Indian Industry, the automobile sector currently employs over 80 lac people. An extension in production in the automobile industry is forecasted, it is likely to rise to Rs. 600000 crore by 2016.
1.2.8. Future Trends in the Automobile IndustryAs the auto-shows starts in February 2016, the industry promised a blend of technology and automotive. With the recession trend breaking its leashes form the past two years, 2016 is expected to get back on track with the sales of automobiles in the country.
Almost Self-governing cars are predicted to be on the streets by 2020
More than half the cars on the streets are going to be powered by diesel by 2020
Industry watcher Gartner indicates that 30 percent of motorists want parking info. The facility is likely to come up after glitches in the infrastructure catch up.
High Performance Hybrid cars are likely to gain greater popularity among consumers.
The Indian automobile industry has a prominent future in India. Apart from meeting the advancing domestic demands, it is penetrating the international market too. Favoured with various benefits such as globally competitive auto-ancillary industry; production of steel at lowest cost; inexpensive and high skill manpower; entrenched testing and R ; D centres etc., the industry provide immense investment and employment opportunities32.
The Indian auto industry is yet again looking forward to a new year with renewed optimism amid challenges of new regulations after a bumpy ride in 2016.
2016 begins with Auto Expo in February:
Despite beginning the year with a bang- with 108 product launches and unveilings at the biennial Auto Expo in February – the industry found that its wish for a third consecutive year of growth was not going to be a cruise.
Far from a smooth drive, 2016 turned out to be a journey with major speed breakers and blind corners as the industry became the favourite whipping boy in the fight against pollution.
Ban on registration of diesel vehicles over 2000cc in Delhi-NCR:
It bore the brunt of the ban on diesel cars and SUVs with big engines of 2,000 cc and above in Delhi-NCR for eight months, and according to SIAM, this resulted in a loss of Rs 4,000 crore for the industry.
Besides, the industry had to start getting ready for leapfrogging to BS VI emission norms from 2020 from the current BS IV, three years earlier than they had been envisaged.
Not just that, come October 2017, all the new car models will have to pass a mandatory crash test as the government has decided to introduce stringent safety norms. For upgrades of the existing models, the deadline will be from October 2018.
“A lot is expected to happen in 2017 on the regulatory front and with introduction of GST… With so many policy-level developments all through the year, the auto industry is surely expected to face a challenging, yet interesting year,” Society of Indian Automobile Manufacturers President Vinod K Dasari told PTI.
While he refrained from commenting on the outlook for 2017 stating that “the current situation is a bit difficult” for a forecast, Dasari said,”…with demonetisation, the economy currently is facing a temporary disruption in domestic demand. The situation is likely to continue till March 2017, post which the economy should bounce back to normal.”
1.2.9. Impact of Demonetisation:In 2016, the auto industry saw sales counter ticking for the better part of the year till the sudden announcement of demonetisation that brought sales to a screeching halt.
The blow in November immediately followed a bountiful festive season and made showrooms wear a deserted look in the wake of the recall of old Rs 500 and Rs 1,000 notes.
“The industry witnessed de-growth of 5.5 per cent in wholesale sales in November 2016. The drop in retail sales was worse while the footfall at showrooms has dropped dramatically,” Dasari said, adding that November 2016 was a difficult month for the whole economy and the auto industry due to demonetisation.
1.2.10. Vehicular Sales:Putting things into perspective, he said total automobile domestic sales in January- November 2016 grew by 11.4 per cent compared with the year-ago period. In January- October 2016, the industry had grown by 13.1 per cent against the corresponding period a year earlier.
Dasari, however, said, “This situation should be looked against the background of good monsoon and expectations of revival of the rural market after three years. The optimistic outlook continued despite the infrastructure cess introduced on passenger vehicles in the Union Budget by the Finance Minister.”
He termed the year 2016 as “quite eventful”. The year saw the government mooting a vehicle scrappage policy even as the Delhi government ordered removal of diesel vehicles in Delhi/NCR that are older than 15 years
1.2.11. Introduction of Voluntary Vehicle Fleet Modernisation Plan:The proposed ‘Voluntary Vehicle Fleet Modernisation Plan (V-VMP)’ provides incentives worth 8-12 per cent of the cost of a new vehicle in lieu of surrendering the old ones and looks to get nearly 28 million over-11-year-old polluting vehicles off the road.
The National Green Tribunal (NGT) was also at the forefront of the fight against pollution, ordering around 1.9 lakh diesel vehicles that are more than 15 years old to be taken off. It had earlier ordered plying of diesel vehicles that are older than 10 years.
1.2.12 Reduced incentive for R;D:A development that disappointed the auto industry was the reduced incentive from the government on research and development.
“A huge sum of R&D expenses has been earmarked for development of technology for BS VI. However, in the Union Budget 2016-17, the benefit available on weighted deduction on R&D expenses was reduced from 200 per cent to 150 per cent from the current financial year and the entire benefit will be eliminated from 2020. This was a disappointing announcement for the industry,” Dasari noted.
With an aim to make eco-friendly vehicles, he said SIAM members have been working on developing hybrid and electric vehicles in all segments – two wheelers, cars and even buses.
“Once the market starts accepting these vehicles in large numbers and economies of scale reached, this effort should become self-sustaining and should have huge potential in not only domestic market but also exports,” Dasari added.
1.2.13 Recalls:Like the previous ones, the year also saw major carmakers Maruti Suzuki India, Hyundai, Honda and others recall some of their models for fixing faults. Over two million vehicles have been recalled by various automakers in India ever since the auto industry body SIAM started voluntary vehicle recalls on safety-related issues in July 2012.
What does the future hold for the automobile industry?
Optimistic of the growth story of Indian automobile industry in the long term, he said, “The strong economic foundation and the current steps to combat black money would make the economy stronger and it will bounce back and so would be demand for vehicles.”
Expressing similar views, Price Waterhouse Partner and auto expert Abdul Majeed said while in short to medium term the growth is not going to be consistent; the long-term perspective for the automotive industry is quite bright.
“Going forward, the government will push its agenda in bringing stricter emission, safety norms etc. The auto industry will have to cope with these changes. Hopefully, more incentives will be offered by the government on environment friendly vehicles,” he said.
One of the repercussions will be that vehicles will become costlier due to extra inputs required to make them compliant with the rules.
“Industry is in no position to absorb extra cost,” Maruti Suzuki India (MSI) Chairman R C Bhargava said.
Even before the new norms kick in, many automobile manufacturers, including Hyundai, Toyota, Renault, Nissan, Tata Motors and Mercedes-Benz, have already announced that they would hike prices from January to offset rising input costs and impact of adverse foreign exchange fluctuations.
The temporary blips notwithstanding, Bhargava said that for the country’s largest carmaker MSI, the expectation is for a double-digit growth in 2017.
“We expect to achieve the double-digit growth that we set for the year. Next year, if there are no production constraints, we would like to achieve a double-digit growth,” he said.
According to Honda Cars India Ltd (HCIL) Senior Vice-President Jnaneshwar Sen, demonetisation has changed a bit the situation for the auto industry which was showing some “decent growth during the beginning of the year”.
“We will have to see how good the recovery would be in December and coming few months. There has been postponement of purchases. Bookings are not happening, but enquiries are going on. So, one thing is interest is there. We expect people to come back to market as general sentiment improves,” Sen said 33.
In the early 21st century, with the original four Asian Tigers at or near to fully developed status, attention has increasingly shifted to other Asian economies such as China and India, which are experiencing rapid economic transformation at the present time and are thus leading a sort of redistribution of the epicentre of global innovative activities. Not only so, it is also being widely contended that these emerging new economies that have already shown capacities to alter the balance of the international division of labour in their favour i.e. demonstrated capabilities which might drastically change the world’s technological map. The apparent tendency is conjectured to have risen from some substantial amount of cumulative deepening and technological upgrading of the enterprises (at least in some industries, if not all) within these economies.
India initiated economic reforms, beginning in the 1980’s, which became comprehensive in the early 1990’s. The reforms included significant liberalizations of the external control regime, opening up for increased imports and for foreign investments. The manufacturing industry has evolved; being chiselled by India’s liberalizing trade and investment regimes on the one hand, and the structural readjustments from within (propelled mostly by the changes in global industry), on the other. Several authors have documented the technological learning processes in Indian firms in a spectrum of industries (e.g., Kale and Little (2007) in pharmaceuticals, Arthreye (2005) in software industry, Parhi (2006) in the automotive industry).
The broad aim of this section is to discuss the changing forms of innovation in Indian automotive firms over the last few years. Starting with a broader contextual view of the automotive sector, to give a flavour of the general industrial environment, we will analyse the specific case of auto components industry which has shown remarkable success over the last two decades. The chapter will build on two distinct but inter-dependent parts: a historical analytical part (drawing mostly on existing literature) to understand the genesis and development path of the industry through the changes in policies/institutions; and an econometric analysis of quantitative and qualitative data to understand the nature and extent of capability building processes at the firm level in the automotive industry.
1.2.14 Evolution of the Indian Automotive Industry: From Statics to DynamicsThis section presents an evolutionary analysis of Indian automotive industry’s growth over the four decades since independence. The evolution of India’s automotive industry from a fairly static/slow-paced growth (from 1940s till 1980s) to the recent impressive showing of dynamism owes formidable precedence to history. If one fishes through the not-so yet impressive documentation of Indian automotive industries’ wholesome development since independence in 1947, one would most certainly huddle with either political surmise of industrial developments or a development (or sometimes industrial) economists explanation of the industry’s evolutionary characters. So far, most of the prologues on India’s automotive industry’s development story have been written by economists with industry as specialization or by development thinkers with a political economy bent of mind. I do not have specific preference for either as I would choose to borrow the economic historian’s eye and combine both political and economic/industrial development policy angle to describe Indian automotive industry’s growth trajectory.
As will become clear from the ensuing discussions, India’s industrial development is characterized by more complex processes than one can find in other transition economies and industrialized nations. If one keenly observes the differences in industrial development of some transition economies (for instance, Republic of Korea) with India, among many distinct observations (e.g., a clear and favourable state patronage to liberalization at the initial phase of development), an interesting aspect would emerge, which to my knowledge has flayed the probing eyes of industrial economists or political scientists. The state of development and its sustainability in any economy is contingent upon the stock and accumulation of human capital. The number of educated people among young generations during 1960s and 1970s could make the key difference between the paces of industrial development in the comparable nations. This may appear anecdotal, but it has interesting political economy evolutionary outcome which I believe has shaped the economic and industrial policies in the next decades.
1.2.15 Chronology and typology of India’s automotive growthIndian automotive industry’s building up characteristics from the pre-independence period till date shows distinct phases. It all started in 1940s for the first embryonic automotive industry to emerge in the pre-independent India. Almost after a decade and a half since then, leading entrepreneurs and the government in the independent India have extended efforts to create a manufacturing industry to supply the automotive industry with components in 1953. This was the beginning of the take-off phase of Indian economy. In the next three decades, the growth in the automotive industry did not really kick-start as the national economic growth was constantly following the Hindu rate of growth – an annual growth that stagnated between 3.5 percent over 1950-1980. Despite the sluggish growth of the economy during that time, the automotive industry began to witness a relatively fast growth during 1970-1980 mainly due to the leading production role of Telso, Ashok Leylands, Mahindra ; Mahindra, Hindustan Motors, Premier Automobiles, and Bajaj Auto. Having experienced several decades of colonial power, openness to risk of admission in the global automotive production were severely checked by the Indian government by introducing several licenses, trade restrictions and barriers. However, the growing demand for more cars since 1980s has changed the whole growth scenario. During 1980-1985 the first major change was sighted as Japanese manufacturers began to build car and commercial vehicle factories in India in partnership with Indian firms. At the same time, component manufacturers also entered the joint-venture scenario with European and US firms.
From the mid period of phase 3 and the beginning of phase 4 of economic reforms (that is during 1985-1990) the industry marked the entry of Maruti Udyog into the production of passenger car segment as persistent high import tariffs were relaxed to a great extent, and with lesser import cost adding to the overhead production cost, higher productions were possible leading to the start of growing exports. This period (the phase 4 of economic reforms: 1988-2006) registered the triumph of liberalization which kick-started the much awaited reform for the automotive sector paving the way for the firms which were genuinely waiting for joint-ventures, private investment with duty-free technology transfer indirectly through FDI and directly by importing the new technologies. It is during 1990-1995, Hero Honda emerged as a major operator in the motorcycle market while Maruti Udyog established itself as the leading passenger car maker. During 1995-2000, leading international car makers entered the Indian market, a trend that continues to accelerate till this date. During this time advanced technology was introduced to meet competitive pressures, and environmental and safety imperatives. The automobile companies started investing in service network to support maintenance of on-road vehicles and auto financing started emerging as an important driver for demand.
Since 2000, significant trade and investment restrictions were removed to speed up the momentum of liberalization of the automotive industry. Indigenous production of cars started since then with an eye to the domestic and international market needs. Increasing efficiency was achieved with growing investment in research and development while satisfying the strictest environmental standards. As a result, an influx of overseas technology know-how has improved the impetus for improvements in quality and productivity, to a point where many global companies now view India more favourably than China as a source point for components. It seems that global Tier 1s are increasingly confident about India’s ability to build more complex parts, and are relocating more complicated systems work to India rather than simply building basic parts there.
1.2.16 Growth Dynamics of Automotive Segment: Past and Recent Trendsi. The automobile industry in India has long been recognized as a core manufacturing sector with the potential to drive national economic growth and foster the development of technological capabilities through its powerful backward and forward linkages, and the localization of high value added manufacturing processes within domestic economies (Humphrey, 2000; Shapiro, 1994). In recent years, for instance, the contribution of the automotive industry to GDP has risen noticeably – from 2.77 percent in 1992-93 to 4 percent in 2003-2004.
The automotive industry in India comprises of all vehicles, including 2-3 wheelers, passenger cars and multi-utility vehicles, light and heavy commercial vehicles, and agricultural tractors and other earth moving machineries, besides the component segment for all these categories (see Genre Chart for the various types of vehicles produced in India). The vehicles segment and the allied components segment are sometimes alternatively termed as automotive industry. The industry is characterized by a very high percentage (about 80%) of 2-3 wheelers production. To mention, India ranks as the largest manufacturer of motorcycles and second largest in manufacturing of scooters in the world.
ii In tractor manufacturing also India is the second largest producer in the world.
It was noted in the preceding section that the auto industry witnessed a radical transformation in terms of competition with de-licensing and liberalization in the 1990s. Following this, two major developments took place. First, there was an upsurge in the volumes of vehicles produced. And secondly, there was a flux of entry of global auto manufacturers into India and in some cases, also along with their parts suppliers.
iii The major contributions came from the passenger car segment, followed by the Multi Utility Vehicles (MUVs). As a result, the 4-wheeler segment (including tractors), for the first time, crossed the million marks in 1996-97, registering a growth of about 12.2 percent in the 1990-97 period (Intecos-cier, 2001). The 2- and 3- wheeler segments also showed good performance during the same period with a growth rate of nearly 9 percent (Intecos-cier, 2001).
Some of the more recent trends of production are presented in the Figure 1a, which depicts that starting from a meagre 0.5 million (in number) in 1970s, the total production of vehicles has gone up to as high as 6.5 million in 2002. The production accelerated after 1980s when partial decontrol was introduced. The result is notable – from a modest 1 million during 1980s it became three fold in 1991. The effect of complete decontrol took time to exert an all-round impact on the economy as it shows there was a short recessionary period 1991–1994, after which there was sign of revival. Towards 1998-99, the industry again showed an upward trend reaching a record high in 2002. The production of vehicles in terms of value also shows a positive growth in the more recent periods.
Particularly, there has been a considerable growth in the passenger car segment in comparison to the MUVs / jeeps during the same period as shown in Figure 2. Combining with the information from preceding paragraph it is evident that the major contribution to the growth of the total volume is from the car segment. This segment registered a consistent growth while others suffered a decline in production in the recent years. However, following an overall up-trend in the economy towards 1998-99, the industry showed signs of revival and as a result, in the year 2000, the production in the non-tractor segments of the auto industry recorded a growth rate of 15 percent. In 1998-99, the industry produced a total of 4.5 million vehicles (including 2- and 3- wheelers), and reached a turnover of Rupees 420 billion (equivalent to US$ 104 billion), thus making India as the fifth largest auto producer among emerging markets (ACMA, 2001).iv With continuous policy support and rapid expansion of the domestic market, the competitiveness in the industry intensified thus fuelling a high growth rate (with a CAGR of 12 percent, see Table 1) in the nineties. The detailed production trend for the last 3 decades is presented in Table 1.
The notable performance of MUL in the industry contributed significantly to the growth and dynamism of the industry. With the establishment of India’s first modern assembly plant, MUL initially started producing small passenger cars that were fuel-efficient and cheaper (about 21 percent) than the existing domestic cars (Humphrey et al., 1998). In fact MUL dominated the domestic passenger car market (with a market share of about 83 percent) till 1996-97 and moved into the production of middle-sized cars in the 1990s. The domestic market continued to expand markedly and the competition within the industry intensified with the growth of middle class consumers, and diversified consumer preferences (D’Costa, 1995, 1998; Okada, 2004). In the same period other domestic car producers also diversified their product ranges. For instance, TELCO, which had traditionally accounted for about 70 percent of the commercial vehicle market (Kathuria, 1996), started to produce multi-utility vehicles and small passenger cars in the 1990s.
The increase in the production volumes in the automotive industry was in fact led by the growing domestic demand for the vehicles. This is very much distinct if we look at the trend of automobile sales in India in the post liberalization period.Annual compound growth rate of about 9 percent was observed in the sale of all vehicles in the period 1995. Notably, the demand for 2-3 wheelers overtook that for the 4 wheelers segment.
1.3 SWOT Analysis of Auto IndustryIn this section we are going to discuss about the strengths, weaknesses, opportunities and threats in the automobile industry. As Automobiles any four wheeler, two wheeler or three wheeler like Cars, bikes and public transport systems are one of the most important building blocks for Society. Cars can be status symbol, they can be necessary transport, and they can be for sport.
1.3.1 Here are the strengths in the SWOT analysis of Automobile industry1. Evolving industry: Automobiles represent freedom and economic growth. Automobiles allow people to live, work and travel in ways that were unimaginable a century ago. Automobiles provide access to markets, to doctors, to jobs. Nearly every automobile trip ends with either an economic transaction or some other benefit to the quality of life.
2. Continuous product innovation & technological advancement: With the advent of E-vehicles & alternative fuel such as Shell gas, CNG and others, Automobile Companies are increasing R & D expenditure to drive the next phase of growth through use of renewable sources of energy which may be solar, wind etc.
3. Growth shifting to Asian markets: Although American & European market is the pulse of this Industry, but the focus is shifting to developing markets like China, India & other Asian nations because of the rise in disposable income, changing lifestyle & stable economic conditions.
4. Increasing demand of VFM vehicles: Intense competition in the matured/developed markets has forced automobile manufacturers to target developing economies. But these developing economies have high demand for VFM products (value for money). In the automobile industry, VFM products would be fuel efficient, high mileage vehicles because majority of customers in these nations prefer vehicles for commuting. On the other hand, developed nations need is of vehicles for interstate travelling and high speed vehicles suitable for long route with high engine power.
5. Increase in demand of luxury commercial vehicles: Companies like VOLVO, Daimler/Chrysler, and Bharat Benz are betting high & are targeting the developing nations due to increase in demand of Luxury public transportation system.
6. Manufacturing facilities in Asian nations to control cost : In order to control cost & to manage shrinking margins automobile companies like Harley, Volvo, Bharat Benz etc. are building their manufacturing facilities in developing nations like India, China because these nations have cheap workforce, are high in resources & are nearer to developed economies. These are classic conditions of an emerging market.
1.3.2 Weaknesses in the SWOT analysis of Automobile industry1. Cars recalled: Controversies relating to recalling vehicles on account of some technical dis-functionality or non-abidance to govt. led rules is becoming very common.
2. Bargaining power of consumers: Over the last 3-4 decades the automobile market has shifted from demand to supply market. Availability of large number of variants, Stiff competition between them, and long list of alternatives to choose from has given power to customers to choose whatever they like.
3. Growth rate of Automobile industry is the in the hands of the government due to regulations like excise duty, no entry of outside vehicles in the state, decreasing number of validity of registration period & volatility in the fuel prices. These factors always affect the growth of the industry.
1.3.3. Opportunities in the SWOT analysis of Automobile industry1. Introducing fuel-efficient vehicles: Optimization of fuel-driven combustion engines and cost efficiency programs are good opportunities for the automobile market. Emerging markets will be the main growth drivers for a long time to come, and hence fuel efficient cars are the need of the hour.
2. Strategic Alliances: Making strategic alliances can be a smart strategy for Automobile companies. By using specialized capabilities & partnering with other companies, they can differentiate their offerings.
3. Changing lifestyle & customer groups: Three powerful forces are rolling the auto industry. Shift in consumer demand, expanded regulatory requirements for safety and fuel economy, and the increased availability of data and information. Also with the increase in nuclear families there has been increase in demand of two-wheelers & compact cars and this will grow further.
4. Market expansion: Entering new markets like Asian & BRIC nations will result in upsurge in demand of vehicles. After these markets, other markets are likely to emerge soon.
5. OEM priorities: Given the increase in electronic content, OEMs need to collaborate with suppliers and experts outside the traditional auto industry. Accomplishing this will require changes in the way OEMs function. OEMs will be looking to their top suppliers to co-invest in new global platforms & this will be the driving force in the future.
1.3.4. Threats in the SWOT analysis of Automobile industry1. Intense Competition: Presence of such a large number of players in the Automobile industry results into extensive competition, every company eating into others share leaving little scope for new players.
2. Volatility in the fuel Prices: At least for the passenger segment fluctuations in the fuel prices remains the determining factor for its growth. Also government regulations relating the use of alternative fuels like CNG. Shell gas is also affecting the inventories.
3. Sluggish Economy: Macroeconomic uncertainty, Recession, un-employment etc. are the economic factors which will daunt the automobile industry for a long period of time.
4. High fixed cost and investment in R & D: Due to the fact that mature markets are already overcrowded, industry is shifting towards emerging markets by building facilities, R & D centres in these markets. But the ROI out of these decisions is yet to be capitalized.
Profile of Some Automobile Companies2.1 Overview of Indian Auto mobile industry2.1.1 Pre-Independence eraIn 1897, the first car ran on an Indian road. Through the 1930s, cars were imports only, and in small numbers. An embryonic automotive industry emerged in India in the 1940s. Hindustan Motors was launched in 1942, long-time competitor Premier in 1944, building Chrysler, Dodge, and Fiat products respectively. Mahindra& Mahindra was established by two brothers in 1945, and began assembly of Jeep CJ-3A utility vehicles. Following independence in 1947, the Government of India and the private sector launched efforts to create an automotive-component manufacturing industry to supply to the automobile industry. In 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted 58.
Fig 2.1 A pre-Independence car showroom in Secunderabad Source: Wikipedia
2.1.2 Post-Independence eraIn the meantime, the constitution of India effectively came into force in January 1950. Subsequently, the planning commission was set up in March 1950 to oversee the formulation and implementation of five-year-plans (FYP) in India. With respect to the automotive industry, the commission planned the total number of vehicles thatwere to be produced in the given plan period depending upon country’s need and the resources at disposal. For instance, the first FYP (1951-1956) introduced in April 1951, targeted to raise the population of vehicles in the country from 4,077 in 1951 to 30,000 in 1956 (GOI 1951). Accordingly, the ministry of Industry administered the capacity licences to the automobile firms. In March 1952, Government of India decided to replace it’s hitherto “gut-reaction” policy for the automotive industry with a more studied and comprehensive approach to the industry 59.
2.2 About Some Car Manufacturing Companies2.2.1. About Maruti Suzuki India Ltd.Maruti Suzuki started out in 1982 in Gurgaon, Haryana. Little did the then quiet suburb of New Delhi know, that it was going to become the epicentre of the automobile revolution in India. The year marked the birth of the Maruti Suzuki factory. India turned out 40,000 cars every year. The new Maruti Suzuki 800 hit the streets to begin a whole new chapter in the Indian automobile industry.
They set out with an obsession for customer delight, one that was unheard in the corridors of automobile manufacturers then. It was about a commitment to create value through innovation, quality, creativity, partnerships, openness and learning. It created a road that was going to lead the world in to a whole new direction, laid out by Maruti Suzuki.
Today, Maruti Suzuki alone makes 1.5 million family cars every year. That’s one car every 12 seconds. We drove up head and shoulders above every major global auto company. Yet, the story was not just about making a mark. It was about revolutionary cars that delivered great performance, efficiency and environment friendliness with low cost of ownership. That’s what is called true value. A story was build with a belief in small cars for a big future.
The story of Maruti Suzuki encouraged millions of Indians to make driving a way of life. India stepped up with the vision to take on the fast lane. A team of over 13200 dedicated and passionate professionals turned 15 car models with over 150 variants. The drive was backed up by a nationwide service network spanning over 1500 cities and towns and a sales network that spreads across 1471 cities, 2 state of art factories, which together turn out 15 lakh cars annually. And a commitment to make Indian roads safer through a network of training infrastructure that imparts driving skills.
Finally, the inspiration comes from one place – India’s hopes, dreams and aspirations. The Maruti Suzuki journey began nothing less than spectacular.
MARUTI SUZUKI INDIA LIMITED
Predecessors(s): MarutiUdyog Limited
Founder: Sanjay Gandhi
Headquarters: New Delhi, India
Chairman: R. C. BhargavaProducts: Automobiles
Staff Strength: 6903 (2011)
Product range of the company includes:
It offer full range of cars– from entry level Maruti 800 ; Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.
Maruti Alto 800
Zen EstiloWagon R
2014: Maruti Suzuki announces global debut of ‘Celerio’ with revolutionary Auto Gear Shift
2013: Maruti Suzuki introduces stylish Stingray
2012: India’s favourite car Maruti Suzuki Alto crosses the 20 Lakh sales mark
2011: Maruti Suzuki India unveiled its much awaited sportier and stylish car, the all new ‘Swift’.
2011: On March 15, Maruti Suzuki India rolled out its 1 Crore (ten millionth) car. The historic 1 Crore car, a Metallic Breeze Blue coloured WagonR VXi (Chassis No 243899) rolled out from the Company’s Gurgaon plant.
2010: Maruti Suzuki has been ranked India’s most Trusted Brand in Automobile Sector by India’s leading Business newspaper The Economic Times.
2009 – MSIL adopts voluntary fuel disclosure. First shipment of A–star leaves Mudra Port–Jan 10.A–star bags,Zigwheels”car of the year award “A”–star rated best small car of the year–autocar–UTVi.
2008 – World Premiere of concept A–star at 9th Auto Expo, New Delhi.
2007 – Swift diesel launched. New car plant and the diesel engine facility commences operations during 2006–07 at manesar,Haryana.SX4–Luxury Sedan Launched with the tag line “Men are black”.Maruti launches Grand Vitara.
2006–J.D.Power Survey award for the sixth year.MSIL has changed its EMS from ISO 14001:1996 version to ISO 14001:2004 version w.e.f.1st July
2005– MSIL was re–certified in 2005 as per ISO 14001:2004 standards.
2004 – A new esteem launched –second successful facelift by Maruti engineers.
2003 – Maruti gets listed on BSE and NSE.IPO(issue oversubscribed 11.2 times)New zen launched–first facelift by Maruti engineers.
2002 – Divestment –Suzuki Motor Corporation (SMC) acquires majority stake in MUL.Maruti Finance & Insurance launched.
2001 – Turn around with profits Rs104.5 crore. Four new business–True value,Insurance,Finance.Maruti Versa launched.Maruti True Value launched.
2000 – Maruti alto launched.First Car Company in India to launch call centre.IDTR launched jointly with the Delhi government to promote safe driving habits 61.
2.2.2. About ToyotaToyota is one of the largest manufacturers of cars in the world, with scores of factories in dozens of countries. Its standing in the automotive world as the most successful and most profitable carmaker is unquestioned.
In sharp contrast, Australia has one of the smallest car industries in the world and while it is one of the oldest, it has never spread its manufacturing wings across the oceans.
And yet Australia has played an important role in the development of the world’s largest carmaker over a 50 year period, a length of association no other country outside Japan can match.
It was Australia where today’s world car industry leader first tasted success beyond its Japanese domestic market. It was through Toyota Australia that the Japanese company learned many lessons which have underpinned its global success, and it was Toyota Australia that achieved many breakthroughs within the group: first successful Land Cruiser exports, first successful production outside Japan, first finance arm to fund dealers’ inventory and first exporter of the Camry apart from the parent company itself. It is a proud record which has earned Australia a special place in Toyota’s history.
Toyota Australia’s origins go back to 1958 when Thiess Brothers began importing the first Land Cruiser models for work on the Snowy Mountains Hydro-electric scheme and sold the first Toyota Land Cruiser in 1959. Assembly of Toyota cars began in the Melbourne factory of Australian Motor Industries (later AMI-Toyota) in 1963 and within a decade the Corolla and Corona (replaced by Camry in 1987) were well established in the market.
The commercial vehicle business became Thiess Toyota in 1971 and achieved commercial leadership in 1979. Meantime AMI Toyota began investing in an engine and stamping plant to consolidate its position as a high local content vehicle manufacturer.
In 1988 Toyota’s local operations were unified to form Toyota Motor Corporation Australia and work began on restructuring and strengthening the group as a major step towards achieving international competitiveness and building vital export business. Toyota in 1994-95 consolidated vehicle production at its new world-ranking Altona plant in Melbourne.
So after 50 years in Australia, Toyota has grown to be one of Australia’s leading automotive companies. In just five decades, this proud organisation has grown from a patchwork of import, sales, distribution and assembly activities into a major force. In doing so, it has overcome great difficulties, brought forth strong leaders, fostered the talents of many Australians and contributed to the social and economic development of this country. It has been supported by loyal employees, customers, dealers, suppliers and has earned the commitment of governments, and many other organisations and individuals in Australia and throughout the world62.
Founder: Kiichiro Toyoda
Headquarters: Toyota, Aichi, Japan
Chairman: Takeshi UchiyamadaProducts: Automobiles
Staff Strength: 331,876 (2012)
Parent: Toyota Group
Website: www.toyota.com, www.toyotabharat.com
2011New Generation Camry launched
2010Camry Hybrid, the first Australian built Hybrid is released
20093rd generation Prius is launched
2008Toyota announces Australian Camry Hybrid production from 2010
Toyota Australia achieves all-time sales record – 238,983 vehicles
2007New TRD Aurion launched in Australia
Tenth-generation Corolla launched in Australia
New export record – 97,688 vehicles
2006New Generation Camry is launched in Australia
Presenting partner 2006 Commonwealth Games
Shipped 500,000th export vehicle
2005Toyota Australia builds the world’s 10 millionth Camry
The Yaris is launched in Australia, Replacing the Echo
2004Two millionth locally built Toyota produced
New corporate headquarters in Port Melbourne opened
2003Toyota Australia’s 300,000th vehicle exported
Toyota overall Australian market leader with industry record sales of 186,370 vehicles
2001The hybrid petrol/electric Prius launched in Australia
100,000th Camry exported to Saudi Arabia
2000Avalon production commences at AltonaToyota Australia appointed as national Daihatsu distributor
New National Sales and Marketing headquarters opened in Sydney
1999Victorian Parts Distribution Centre opened at Altona1998Altona plant receives ISO 14001 certification (Environmental Management)
1996First Camry export shipments to the Middle East
1995Camry enters production at Altona1994Corolla is first car built at the new Altona Assembly Plant
Camry is the last car built at Port Melbourne
1992One millionth locally-built Toyota produced
1991Toyota becomes Australian overall market leader
1990Lexus LS 400 launched in Australia
1987Camry replaces Corona at Port Melbourne Assembly Plant
1981Altona begins volume production of body panels
1978First engines built at Altona1968Corolla assembly begins at Port Melbourne
1967Crown assembly starts
1964Corona assembly begins
1963Toyota Tiara assembly starts
1959First Toyota LandCruiser sold in Australia
1958First 13 LandCruisers imported for use on Snowy Mountains Scheme
2.2.3. About Tata MotorsTata Motors was established in 1945 as Tata Engineering and Locomotive Co. Ltd. to manufacture locomotives and other engineering products. It is India’s largest automobile company, with standalone revenues of Rs. 25,660.79 crores (USD 5.5 billion) in 2008–09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer.
The company’s 23,000 employees are guided by the vision to be ‘best in the manner in which they operate best in the products they deliver and best in their value system and ethics.’
Tata Motors’ presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is establishing a new plant at Sanand (Gujarat). The company’s dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.
Tata Motors, the first company from India’s engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two–thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano’s presence is being expanded in other markets. In 2006, it formed a joint venture with the Brazil–based Marcopolo, a global leader in body–building for buses and coaches to manufacture fully–built buses and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company’s pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand at the Bangkok Motor Show 2008.
Tata Motors is also expanding its international footprint, established through exports since 1961. The company’s commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal.
The foundation of the company’s growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer–desired offerings through leading edge R&D. With over 2,000 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India’s first fully indigenous passenger car. Within two years of launch, Tata Indica became India’s largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India’s first indigenously developed mini–truck.
In January 2008, Tata Motors unveiled its People’s Car, the Tata Nano, which India and the world have been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. The standard version has been priced at Rs.100, 000 (excluding VAT and transportation cost).
Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono–volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two–wheelers being manufactured in India today. The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.
In May 2009, Tata Motors ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life–cycle cost.
The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focussing on environment–friendly technologies in emissions and alternative fuels.
Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high–precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations.
True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in community and social initiatives on labour and environment standards in compliance with the principles of the Global Compact. In accordance with this, it plays an active role in community development, serving rural communities adjacent to its manufacturing locations.
Founder: JRD Tata
Headquarters: Mumbai, India
Staff strength: Over 60,000 employees
Parent: Tata Group
Subsidiaries: Jaguar Land Rover, Tata Daewoo, Tata Hispano
Product range of the company includes:
Indica Vista, Indica V2, Indica V2 Turbo, Indica V2 Xeta, Indica V2 Dicor., Aria, Zest and Bolt
Indigo XL, Indigo, Indigo Marina Indigo CS.
Medium & Heavy Comm. Vehicles, Tata Novus.
Intermediate Comm. Vehicles.
Light Commercial Vehicles, TL 4×4, Small Commercial Vehicles.
Commercial Passenger Carriers:
Subsidiaries of the company:
Jaguar Land Rover.
Tata Technologies Ltd. (TTL) and its subsidiaries.
Telco Construction Equipment Co. Ltd. (Telcon).
HV Axles Ltd. (HVAL).
HV Transmissions Ltd. (HVTL).
TAL Manufacturing Solutions Ltd. (TAL).
Sheba Properties Ltd. (Sheba).
Concorde Motors (India) Ltd. (Concorde).
Tata Daewoo Commercial Vehicle Company Ltd (TDWCV).
Hispano Carrocera S. A. (HC).
Tata Motors Insurance Broking & Advisory Services Ltd (TMIBASL).
Tata Motors European Technical Centre plc.
Tata Motors Finance Limited.
Tata Motors Thailand.
Tata Marcopolo Motors Ltd (TMML).
Tata Motors (SA) Proprietary Ltd (TMSA).
TML Distribution Company Ltd (TDCL).
1945 Tata Engineering and Locomotive Co. Ltd. was established to manufacture locomotives and other engineering products.
1948 Steam road roller introduced in collaboration with Marshall Sons (UK).
1954 Collaboration with Daimler Benz AG, West Germany, for manufacture of medium commercial vehicles. The first vehicle rolled out within 6 months of the contract.
1959 Research and Development Centre set up at Jamshedpur.
1961 Exports begin with the first truck being shipped to Ceylon, now Sri Lanka.
1966 Setting up of the Engineering Research Centre at Pune to provide impetus to automobile Research and Development.
1971 Introduction of DI engines.
1977 First commercial vehicle manufactured in Pune.
1983 Manufacture of Heavy Commercial Vehicle commences.
1985 First hydraulic excavator produced with Hitachi collaboration.
1986 Production of first light commercial vehicle, Tata 407, indigenously designed, followed by Tata 608.
1989 Introduction of the Tata mobile 206 – 3rd LCV model.
1991 Launch of the 1st indigenous passenger car Tata Sierra. TAC 20 crane produced. One millionth vehicle rolled out.
1992 Launch of the Tata Estate.
1993 Joint venture agreement signed with Cummins Engine Co. Inc. for the manufacture of high horsepower and emission friendly diesel engines.
1994 Launch of Tata Sumo – the multi utility vehicle. Launch of LPT 709 – a full forward control, light commercial vehicle. Joint venture agreement signed with M/s Daimler – Benz / Mercedes – Benz for manufacture of Mercedes Benz passenger cars in India. Joint venture agreement signed with Tata Holset Ltd., UK for manufacturing turbochargers to be used on Cummins engines.
1995 Mercedes Benz car E220 launched.
1996 Tata Sumo deluxe launched.
1997 Tata Sierra Turbo launched. 100,000th Tata Sumo rolled out.
1998 Tata Safari – India’s first sports utility vehicle launched. 2 millionth vehicles rolled out. Indica, India’s first fully indigenous passenger car launched.
1999 115,000 bookings for Indica registered against full payment within a week. Commercial production of Indica commences in full swing.
2000 First consignment of 160 Indicas shipped to Malta. Indica with Bharat Stage 2 (Euro II) compliant diesel engine launched. Utility vehicles with Bharat 2 (Euro II) compliant engine launched. Indica 2000 (Euro II) with multi point fuel injection petrol engine launched. Launch of CNG buses. Launch of 1109 vehicle – Intermediate commercial vehicle.
2001 Indica V2 launched – 2nd generation Indica. 100,000th Indica wheeled out. Launch of CNG Indica. Launch of the Tata Safari EX Indica V2 becomes India’s number one car in its segment. Exits joint venture with Daimler Chrysler.
2002 Unveiling of the Tata Sedan at Auto Expo 2002. Petrol version of Indica V2 launched. Launch of the EX series in Commercial vehicles. Launch of the Tata 207 DI. 2,00,000th Indica rolled out. 5,00,000th passenger vehicle rolled out. Launch of the Tata Sumo’+’ Series Launch of the Tata Indigo. Tata Engineering signed a product agreement with MG Rover of the UK.
2003 Launch of the Tata Safari Limited Edition. The Tata Indigo Station Wagon unveiled at the Geneva Motor Show. On 29th July, J. R. D. Tata’s birth anniversary, Tata Engineering becomes Tata Motors Limited. 3 millionth vehicles produced. First CityRover rolled out 135 PS Tata Safari EXi Petrol launched Tata SFC 407 EX Turbo launched
2004 Tata Motors unveils new product range at Auto Expo ’04. New Tata Indica V2 launched Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment agreement Indigo Advent unveiled at Geneva Motor Show Tata Motors completes acquisition of Daewoo Commercial Vehicle Company Tata LPT 909 EX launched Tata Daewoo Commercial Vehicle Co. Ltd. (TDCV) launches the heavy duty truck ‘NOVUS’ , in Korea Sumo Victa launched Indigo Marina launched Tata Motors lists on the NYSE
2005 Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility in Pune The Tata Xover unveiled at the 75th Geneva Motor Show Branded buses and coaches – Starbus and Globus – launched Tata Motors acquires 21% stake in Hispano Carrocera SA, Spanish bus manufacturing Company Tata Ace, India’s first mini truck launched Tata Motors wins JRD QV award for business excellence. The power packed Safari Dicor is launched Introduction of Indigo SX series – luxury variant of Tata Indigo Tata Motors launches Indica V2 Turbo Diesel. One millionth passenger car produced and sold Inauguration of new factory at Jamshedpur for Novus Tata TL 4X4, India’s first Sports Utility Truck (SUT) is launched Launch of Tata Novus Launch of Novus range of medium trucks in Korea, by Tata Daewoo Commercial Vehicle Co. (TDCV).
2006 Tata Motors vehicle sales in India cross four million mark Tata Motors unveils new long wheel base premium Indigo & X–over concept at Auto Expo 2006 Indica V2 Xeta launched Passenger Vehicle sales in India cross one–million mark Tata Motors and Marcopolo, Brazil, announce joint venture to manufacture fully built buses & coaches for India & markets abroad Tata Motors first plant for small car to come up in West Bengal Tata Motors extends CNG options on its hatchback and estate range TDCV develops South Korea’s first LNG–Powered Tractor– Trailer Tata Motors and Fiat Group announce three additional cooperation agreements Tata Motors introduces a new Indigo range.
2007 Construction of Small Car plant at Singur, West Bengal, begins on January 21 New 2007 Indica V2 range is launched Tata Motors launches the longwheel base Indigo XL, India’s first stretch limousine Common rail diesel (DICOR) engine extended to Indigo sedan and estate range Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and market pickup trucks. Roll out of 100,000th Ace Tata–Fiat plant at Ranjangaon inaugurated Launch of a new Upgraded range of its entry level utility vehicle offering, the Tata Spacio. CRM–DMS initiative crosses the 1000th location milestone Launch of Magic, a comfortable, safe, four–wheeler public transportation mode, developed on the Ace platform Launch of Winger, India’s only maxi–van Fiat Group and Tata Motors announce establishment of Joint Venture in India Launch of the Sumo Victa Turbo DI, the new upgraded range of its entry–level utility vehicle, the Sumo Spacio Tata Motors launches Indica V2 Turbo with dual airbags and ABS Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L Direct Injection Common Rail (DICOR) engine. Rollout of the one millionth passenger car off the Indica platform.
2008 Ace plant at Pantnagar (Uttarakhand) begins production. Indica Vista – the new generation Indica, is launched. Tata Motors’ new plant for Nano to come up in Gujarat. Latest common rail diesel offering– the Indica V2 DICOR, launched. Indigo CS (Compact Sedan), world’s first sub four–metre sedan, launched. Launch of the new Sumo –– Sumo Grande, which combines the looks of an SUV with the comforts of a family car. Tata Motors unveils its People’s Car, Nano, at the ninth Auto Expo. Xenon, 1–tonne pick–up truck, launched in Thailand. Tata Motors signs definitive agreement with Ford Motor Company to purchase Jaguar and Land Rover. Tata Motors completes acquisition of Jaguar Land Rover. Tata Motors introduces new Super Milo range of buses. Tata Motors is Official Vehicle Provider to Youth Baton Relay for The III Commonwealth Youth Games Pune 2008. Indica Vista – the second generation Indica, is launched. Tata Motors launches passenger cars and the new pick–up in D.R. Congo.
2009 Tata Marcopolo Motors’ Dharwad plant begins production. Tata Motors launches Nano – The People’s Car Introduction of new world standard truck range. Launch of premium luxury vehicles – Jaguar XF, XFR and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from Jaguar and Land Rover in India.
2010: Tata Ace becomes India’s first 1–lakh brand in goods commercial vehicles. Jaguar Land Rover announces opening of its Dealership in New Delhi. Tata Motors to construct heavy truck plant in Myanmar under Government of India’s Line of Credit. The company’s Passenger Car Division launches ‘Tata Motors Service Edge’ for leading edge customer service.
2011: Tata Motors unveils Assembly Plant in South Africa. Jaguar Land Rover inaugurates new vehicle assembly plant in Pune India. Jaguar celebrates 50 years of iconic E–Type. Jaguar c–x75 scoops Louis Vuitton award in Paris. Tata Pixel, new city car concept for Europe, displayed at the 81st Geneva Motor Show. Tata Motors displays Tata Nano EV at the 80th Geneva Motor Show.
Tata Venture launchedLaunch of Tata Divo Luxury Coach and Tata Starbus UltraLaunch of Tata Nano 2012Tata Sumo Gold introducedRange Rover Evoque launched in IndiaNew Tata Indica Vista launchedTata Magic IRIS and Tata Ace Zip launchedTata Indica eV2 introduced with 25 kmpl mileageTata Pixel, a city car concept for Europe, displayed at the Geneva Motor ShowRefreshed Tata Indigo Manza introducedTata Prima ConsTruck range launchedTata Motors unveiled assembly plant in South AfricaTata Nano began international journey with Sri LankaTata Motors completes 50 years of its International BusinessJaguar Land Rover inaugurated its vehicle assembly plant in PuneTata Nano launched in NepalHVTL amalgamates into HVAL renamed as TML Drivelines Ltd.Tata Motors (Lucknow) produced & dispatched the first Hybrid Chassis to SpainTata Motors (Dharwad) rolled out the first Tata Ace ZipTata 407 celebrated its silver jubilee yearJaguar celebrates 50 years of iconic E–Type
2012: Tata Motors enters Bangladesh’s new car marketTata Ace races through the one–million mark in just 2,680 days Tata Safari Storme, the Real SUV, hits the road Launch of PT Tata Motors Indonesia Tata Motors plant at Dharwad comes on stream Tata Motors enters into distribution agreement in Myanmar Launch of Tata Ace in South Africa
2013 :Tata Nano becomes the first Auto Brand in India to cross 3 million fans on FacebookThe Tata Indigo eCS enters Limca Book of RecordsTata Motors’ Jamshedpur plant rolls out its two millionth truckTata Nano offered industry first phenomenon – Swipe your credit card and drive home NanoTata Motors launches the world–class range of Tata PRIMA trucks in Sri Lanka63
2.2.4. About Hyundai Motor CompanyHyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company (HMC). HMIL is the largest passenger car exporter and the second largest car manufacturer in India. It currently has ten car models across segments – Eon, Grand i10, Elite i20, Active i20, Xcent, Verna, Creta, Elantra, Tucson and Santa Fe. HMIL’s fully integrated state-of-the-art manufacturing plant near Chennai boasts advanced production, quality and testing capabilities.
HMIL forms a critical part of HMC’s global export hub. It currently exports to around 87 countries across Africa, Middle East, Latin America, Australia and the Asia Pacific. HMIL has been India’s number one exporter for the last 10 years consecutively. To support its growth and expansion plans, HMIL currently has 475 dealers and more than 1,226 service points across India. In its commitment to provide customers with cutting-edge global technology, Hyundai has a modern multi-million dollar R&D facility in Hyderabad. The R&D centre endeavours to be a centre of excellence in automobile engineering 64.
Founded: December, 1967
Founder: Chung Ju-yungHeadquarters: Seoul, South Korea
Products: Automobiles, commercial vehicles, engines
Area served: Worldwide
Staff strength: 57,105 (2011)
Parent: Hyundai Motor Group
Website: www.hyundai.com, www.hyundai.co.in
2.2.5. About FordFord manufactures and exports vehicles and engines made at its integrated manufacturing facilities in Chennai, Tamil Nadu and Sanand, Gujarat.
Since its entry in India in 1995, Ford has invested more than US$ 2 billion to expand its manufacturing facilities and sales & service footprint to meet the demand in one of the world’s fastest-growing auto markets. Ford India’s integrated manufacturing facility at Maraimalai Nagar, near Chennai, produces its award-winning range of products including the Ford EcoSport and all-new Ford Endeavour.
As part of its overall commitment, Ford inaugurated its US$ 1 billion state-of-the-art integrated manufacturing facility in Sanand, Gujarat in March 2015. With Sanand being operational, Ford India has doubled its annual installed manufacturing capacity to 610,000 engines and 440,000 vehicles. The sub-four-metre compact sedan, Ford Aspire, became the first car to roll out from the new Ford Sanand plant. The plant also manufactures Next-Gen Figo hatchback.
Ford’s biggest-ever product line-up in India today offers a vehicle to suit the needs of nearly every consumer. In 2016, Ford has also given Indian consumers their first opportunity to own the iconic Ford Mustang. Debuting ahead of the Delhi Auto Expo 2016 and set to hit Indian showrooms later this year, the new Mustang is all set to bring the world-class performance and refinement of Ford’s iconic pony car to India’s roads.
As part of its strategy to make in India for India and the World, Ford continues to strengthen India as a center of excellence for small cars and low displacement engines. The company has embarked on an accelerated export strategy and presently, exports Next-Gen Figo, Aspire, and EcoSport to over 40 markets around the world.
Along with introducing new products, Ford continues to grow closer to customers with the continued expansion of its nationwide dealership network as well as world-class after-sales offerings. Presently, Ford has more than 376 sales and service outlets in 209 cities across India. To enhance affordability and accessibility, Ford has introduced many pioneering initiatives that reduce the cost of ownership including the Sub-assembly of parts, Pan-India Roadside Assistance, and Mobile Service Support. To ensure total transparency in service costs, Ford also introduced a unique Service Price Promise, which allows customers to calculate the vehicles’ periodic maintenance costs even before booking the service at the dealership.
Ensuring customer convenience, Ford has expanded the availability of Ford Genuine Parts with the appointment of distributors in Maharashtra, Goa, Karnataka, Kerala, Delhi, Tamil Nadu, AP, and Telangana.
Ford’s presence in India includes Ford Credit India, which started dealer wholesale inventory and retail financing in 2015 as a non-banking financial company. With five decades of global experience, Ford Credit’s operations span in as many as 100 countries where it has emerged as a preferred automotive financier for both Ford customers as well as dealers.
Ford Credit is known for its reliable and transparent loan products at competitive rates, flexible terms, and outstanding customer service.
Continuing to generate employment and help the economy, Ford’s operations currently employ more than 14,000 hard-working, dedicated men and women across its operations in India which also include Global Business Services, with offices in Chennai, New Delhi, and Coimbatore.
Registered as Ford Motor Pvt Ltd. (FMPL) as a legal entity, Global Business Services provide innovative solutions to nearly every Ford locations around the world in areas of Information Technology, Product Engineering, Finance and Accounting, Automotive Financing, Material, Planning & Logistics, Marketing Sales and Service, Analytics, and Purchasing.
Driving innovation from India, Ford recently announced plans to build a new global engineering and technology centre in Chennai. Besides the establishment of a global engineering and technology centre, the new Ford campus spread across 28 acres will host operations of Ford Global Business Services in areas of IT, Product Engineering, Finance and Accounting, Data Analytics, Manufacturing among others.
Ford’s commitment to India is not just business centric. At the heart of our business plans are people and communities. Going further with its Better World philosophy, Ford India in association with Ford Motor Company Fund announced ‘Operation Better World,’ with the endeavour to address issues related to Education, Sustainability and Auto Safety around communities where it operates 65.
Type : Public
Industry : Automotive
Founded : 1903
Founder : Henry Ford
Headquarters : Dearborn Michigan, US
Products : Automobiles
Area served : Worldwide
Staff strength : 171,000 (2012)
Website : www.ford.com, www.india.ford.comCompany Logo:
2.2.6. About MahindraMahindra & Mahindra was established on October 2, 1945 when K.C. Mahindra visited the United States of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged ‘general purpose vehicle’ or Jeep and had a flash of inspiration: wouldn’t a vehicle that had proved its invincibility on the battlefields of World War II be ideal for India’s rugged terrain and its kutcha rural roads. Swift action followed thought. The Mahindra brothers joined hands with a distinguished gentleman called Ghulam Mohammed. And, Mahindra & Mohammed was set up as a franchise for assembling jeeps from Willys, USA.
Two years later, India became an independent nation and Mahindra & Mohammed changed its name to Mahindra & Mahindra. Ghulam Mohammed migrated to Pakistan post–partition and became the first Finance Minister of Pakistan.
Mahindra & Mahindra is the only Indian company among the top three tractor manufacturers in the world. The Group has a leading presence in key sectors of the Indian economy.The Group employs over 50,000 people and has several state–of–the–art facilities in India and overseas.
Mahindra & Mahindra has comprehensive manufacturing facilities with high level of vertical integration. Catering to the Sector’s diverse customer base spanning rural and semi urban customers, defence requirements and luxurious urban utility vehicles or SUVs. These manufacturing plants keep abreast with the latest technology to meet the growing market expectations. These manufacturing facilities have some of the best technologies and equipment in India and provide for a very challenging and satisfying work environment. Its plants in Mumbai and Nasik manufacture multi–utility vehicles and engines are produced at the Igatpuri plant. Utility Vehicles, Light commercial vehicles and 3 wheelers are manufactured at the Zaheerabad plant in Andhra Pradesh and three–wheelers at the Haridwar plant.
The business area of the company spreads to:
The company manufactures & markets utility vehicles, light commercial vehicles that includes three wheeler vehicles, namely; Scorpio, Bolero, Champion and many more. The company also exports its products to several countries in Europe, Africa, South America, South Asia and the Middle East. M&M has a tie up with Renault for production & marketing of Logan. Mahindra International is into producing trucks and buses. The company has entered into a joint venture with Navistar for production of diesel engines & trucks.
M&M’s farm equipment segment has presence in six continents and has a worldwide network of 800 dealers .Its total combined production capacity is 1,50,000 tractors a year from countries like India, USA, China and Australia. The company is also into agri business.
Trade, Retail & Finance
Mahindra’s Inter-trade Division provides steel & steel related services. It offers steel raw materials, metals, ferro alloys, etc. It also processes Cold Rolled Grain Oriented (CRGO) and Cold Rolled Non Grain Oriented (CRNGO) steels that are required for transformers &compressors. Mahindra Retails is into distribution business and has tie up with big names like Lego, Disney, Mattel and others. Mahindra Finance is into financing of tractors and other vehicles and is also into Insurance broking.
M&M has also entered Infrastructure development that operates in real estates, SEZs, hospitality, project engineering and design. Under this it has created Mahindra Holiday & Resorts, Mahindra Lifespaces & Mahindra World City.
Tech Mahindra provides solutions & services to telecommunication majors namely Alcatel, AT&T, BT, Convergys, Ericsson and O2, among others. It is also into business process and technology consulting services through Bristle.
SystechIt is into supply of automotive components. It produces forged and forged / machined components, gears and composites.
Under this division it has companies like Mahindra Defence, engaged in manufacturing defence related vehicles & Mahindra Ashtech.
Products and services offered by the company:–
Bolero Camper DLX
Champion range of Three Wheelers.
Agri inputs and services
Loans and Mutual Fund
Insurance and Risk Management Services
Trade, & Retail and Logistics Retail – Mahindra Retail Ferro Alloys and Metal Scrap Steel and Steel Related Services Technical Products and Services Toys and Apparel Corporate People Movement Supply Chain Management Service Centre for Automotive and Electrical Steels
Development of Infrastructure Projects
Integrated Business Cities
Living Spaces and Working Spaces
Sourcing of Auto Components
Stampings and Steel
Ash Handling Equipment for Power Plants
Information Security Consultancy
1945: 2nd October, Mahindra & Mohammed established.
1948: The Company was renamed Mahindra & Mahindra Limited (M&M).Steel trading business commenced, in association with suppliers in UK.
1949: Jeep assembly commenced.
1950: The first business with Mitsubishi Corporation commenced and 5000 tons of wagon–building plates from Yawata Iron & Steel were supplied.
1953: Otis Elevator Company (India) was established.
1954: Technical and Financial Collaboration with Willys Overland Corporation to assemble Jeep–type vehicles.
1956: Shares listed on the Bombay Stock Exchange. Dr. Beck & Company established – a joint venture with Dr. Beck & Company, Germany.
1957: Mahindra Owen established – a joint venture with Rubery Owen & Company Limited, UK.
1958: Machine Tools Division commenced operations.
1960: Mahindra Sintered Products Limited established – a joint venture with Bir Field (GKN Group, UK).
1962: Mahindra Ugine Steel Company established – a joint venture with Ugine Kuhlmann, France
1963: International Tractor Company of India established – a joint venture with International Harvester Company, USA.
1965: Manufacture of light commercial vehicles commenced. Vickers Sperry of India Limited established – a joint venture with Sperry Rand Corporation, USA.
1969: The Company entered the world market with export of utility vehicles and spare parts.
1970: Mahindra Engineering & Chemical Products Limited commenced operations.
1971: International Harvester collaboration ended.
1975: Mahindra Engines developed an indigenous diesel engine for its vehicles to beat the fuel crisis.
1977: International Tractor Company of India merged with Mahindra & Mahindra to become its Tractor Division.
1979: License from Automobiles Peugeot, France, for manufacture of XDP 4.90 Diesel Engines.
1982: Mahindra brand of tractors launched. Siro Plast Limited established.
1983: Mahindra & Mahindra became market leader in the Indian tractor market, a position it has retained till date.
1984: Mahindra Hellenic Auto Industries S.A. established – a joint venture in Greece to assemble and market utility vehicles in Europe.
1986: Tech Mahindra (formerly known as Mahindra British Telecom) established – a joint venture with British Telecommunications Plc (BT), UK, leading the way for the Group’s entry into Information Technology.
1987: Acquired International Instruments Limited.
1989: Automotive Pressing Unit (now Mahindra Ugine Steel Company Limited) acquired from GKN.
1991: Introduction of Commander Range of vehicles. Mahindra Financial Services Limited established as a wholesale fund provider.
1992: Merged diverse activities of Steel, Machine Tools and Graphics into Intertrade Division.
1993: Incorporation of Mahindra British Telecom International Inc., USA, a wholly owned subsidiary of Mahindra British Telecom.
Mahindra Steel Service Centre Limited established in association with Mitsubishi Corporation and Nissho Iwai Corporation of Japan.
Mahindra Acres Consulting Engineers Limited established – a joint venture with Acres International Limited(Canada) to provide multidisciplinary engineering consultancy services.
Armada range of vehicles launched.
1994: Reorganisation of the Group creating six Strategic Business Units: Automotive, Farm Equipment, Infrastructure, Trade & Financial Services, Information Technology (earlier known as Telecom and Software) and Systech(earlier known as MSAT). Mahindra Realty & Infrastructure Developers Limited established. Mahindra USA Inc. established for distribution of tractors in the USA. EAC Graphics (India) Limited established in collaboration with The East Asiatic Company Limited A/S, Denmark. Mahindra Allwyn Nissan Limited merged with the Company.
1995: Mahindra Holding & Finance Limited became a subsidiary of Mahindra & Mahindra to carry out business as an investment company.
Technical collaboration with Mitsubishi / Samcor to manufacture the Mitsubishi L300.
1996: Mahindra Ford India Limited established – a joint venture with Ford Motor Company, USA, to manufacture passenger cars.
The Company made a Foreign Currency Convertible Bond (FCCB) issue of US$ 115 million.
Mahindra Holidays & Resorts India Limited established.
Mahindra Consulting (now Bristlecone) established.
1997: Inauguration of the Mahindra United World College of India. Mahindra World City Developers Limited established to set up integrated townships.
1999: Launch of Bijlee, a battery–operated, environmental–friendly 3–wheeler.
The largest online used vehicle website in India launched by Mahindra Network Services.
The Company acquired a major stake in Gujarat Tractors and renamed it Mahindra Gujarat Tractors Limited.
Mahindra & Mahindra Financial Services Limited became a subsidiary of Mahindra & Mahindra.
Mahindra Logisoft Business Solutions Limited established.
Mahindra Intertrade Limited established as the trading arm of the Group.
2000: The Company adopted a new logo.
Mahindra Auto Specialties Limited established – a new 100% subsidiary.
Mahindra & Mahindra set up its first satellite tractor plant at Rudrapur.
A new age tractor, Mahindra Arjun 605 DI (60 HP), launched.
Bolero GLX (a utility vehicle) launched in response to the needs of urban consumers.
2001: Champion, a 3–wheeler diesel vehicle, launched.
Mahindra MaXX launched, a multi–utility vehicle positioned with the caption ‘Maximum Space, Maximum Comfort’.
Mahindra & Mahindra tied up with Renault for Petrol Engines.
A separate division established to provide Defence Solutions.
Mahindra Special Services Group established to provide Information Security.
Mahindra Infrastructure Developers Limited established for development and management of infrastructure projects.
Mahindra Lifespaces Developers Limited established for development of corporate property.
2002: Scorpio launched, a new generation, world–class sports utility vehicle that redefined the SUV market and lived up to its positioning: ‘Nothing else will do’.
2003: Invader launched – a sporty open top vehicle.
A second tractor assembly plant set up in USA.
MaXX Pik Up launched.
India’s first Turbo tractor launched – Mahindra Sarpanch 595 DI Super Turbo.
Mahindra & Mahindra ventured into Industrial engine business.
An alliance formed between Mahindra Defence & Lockheed Martin Information Systems, UK, for defence products.
Mahindra Engineering Services established.
2004: Mahindra World Tractor(75 HP) launched in the International market.
Systech (earlier known as MSAT) established, to focus on developing components as well as offering engineering services.
Bolero and Scorpio launched in Latin American, Middle East and South African markets.
Signed MoU to enter into joint venture with Jiangling Motor Company Group (JMCG) of China, to acquire tractor manufacturing assets from Jiangling Tractor Company, a subsidiary of Jiangling Motor Company Group.
Mahindra & Mahindra became the first Indian company to achieve sales of one million tractors.
2005: Acquired 51% stake in SAR Transmission Private Limited, a company engaged in manufacture of gears and transmission shafts.
Farm Equipment Sector launched operations in Australia.
Mahindra & Mahindra became the first Indian auto manufacturer to launch the Common Rail Diesel Engine (CRDe), offering it in the Scorpio.
Acquired 80% stake in the joint venture with Jiangling Motors i.e. in Mahindra (China) Tractor Company.
Mahindra Renault Limited established – a joint venture with Renault to manufacture and market Logan, a mid–sized sedan, in India.
Mahindra International Limited established – a joint venture with International Truck and Engine Corporation to manufacture trucks & buses in India 66.
2006: Announced plans to set up a 3000 acres Special Economic Zone in Jaipur.
The Mahindra United football team won the Federation Cup trophy.
Mahindra & Mahindra’s fifth full–scale automotive plant opened in Hardiwar Industrial Estate to manufacture three–wheeler.
The Scorpio Hybrid was unveiled at the Delhi Auto Expo along with 9 other prototype vehicles.
Mahindra & Mahindra acquired the Stokes Group of UK, the largest automotive forgings company in the UK.
Mahindra Finance became the first Mahindra Group Company in 23 years to be listed publicly and was oversubscribed 27 times.
BMW entered Mahindra World City, Chennai.
The All New Scorpio with 43 new features was launched.
Mahindra Life spaces announced plans to set up a Special Economic Zone spreading over 3000 acres in Pune.
Scorpio was chosen for the Gondwanaland Expedition – a landmark assignment for the vehicle.
Mahindra Holidays & Resorts India Limited (the ‘Company’), a leisure hospitality provider offering quality family holidays and part of the Mahindra Group of Companies.
Mahindra & Mahindra’s Farm Equipment Sector (FES) showcased India’s first bio–diesel
Mahindra & Mahindra launched the Scorpio V–series.
On Nov. 1, 2007, a wholly owned affiliate of Navistar International Corporation (Other OTC: NAVZ), signed a joint venture agreement with Mahindra & Mahindra to produce diesel engines for medium and heavy commercial trucks and buses in India.
Logan was the highest selling sedan and Scorpio the highest selling UV in July 2007.
Mahindra launched the Mahindra Pik–Up (double cab) in Chile in July 2007.
2008: Mahindra enters into JV with TMI Pacific in Australia
Project Ingenio is now Mahindra XYLO
Mahindra introduces FuelSmart system in Bolero and Scorpio SUVs
Tech Mahindra receives the Frost and Sullivan 2008 Growth Excellence Award
Anand Mahindra receives Harvard Business School Alumni Achievement Award
Mahindra launches first Sustainability Report with highest GRI Rating
Mahindra First Choice Services launches first CarXSpace outlet in Chennai
Mahindra to enter the two–wheeler industry.
Mahindra Tractors launch India’s first bio–diesel tractor
Mahindra Intertrade inaugurates a world–class Electrical Steel processing plant in Vadodara2009: Mahindra launches the Xylo – January 13
Mahindra launches the New, Mighty Muscular Scorpio– March 6
Tech Mahindra declared highest bidder for Satyam – April 14
2013: Mahindra XUV500 sets a new record in the Limca Book of Records
Mahindra launches its innovative customer care initiative, Mahindra QWIK
2014– Mahindra Group expands its footprint in the United States
Mahindra Two Wheelers debuts in Uganda
Mahindra signs MoU with Government of Bhutan to promote usage of Electric Vehicles in the country
2.2.7. About Honda Motors Ltd.The MNC “Honda Motor Company Limited” of Japan was primarily known for its manufacturing in the field of motorcycles and automobiles. Since 1959, Honda has been the largest manufacturer of motorcycles around the world, measured by volume; Honda is the largest internal combustion manufacturer around the world, each year it produces 14 million numbers of internal combustion engines. Honda became the 2nd largest manufacturer of automobile of Japan in the year 2001. In 2011, after Volkswagen, General Motors, Toyota Motor Corporation, Hyundai Motors, Ford Motors, Nissan Motors and PSA, in the world the was the eighth largest manufacturer of automobiles. Honda was Japanese first manufacturer of automobile to unveil a luxury dedicated brand car called “Acura” in the year 1986. Apart from its core motorcycles and automobiles manufacturing business, amongst others Honda also involved in the manufacturing of marine engines, garden equipment, power generators and personal watercraft. Honda had released “ASIMO” robot in the year 2000, with their involvement in robotics research/artificial intelligence since 1986. After the “GE Honda Aero Engines” establishment in the year 2004, Honda has also entered into aerospace and scheduled launch of “Honda HA 420 Honda Jet” in the coming year 2012. The 5% of its revenues, Honda invests it in department of “Research and development”.
From the young age itself, Soichiro Honda, the founder of Honda had so much of interest in motorcycles and automobiles. At the Art Shokai garage, he was working as a mechanic, where he turned the cars to participate in races. With the finance from acquaintance in the year 1937, Kato Shichiro Honda founded the “eastern sea precision machine company” (Tokai Seiki) which made 4 piston rings working at the garage. Tokai Seiki got the contracts to supply the rings for pistons to Toyota after some initial failures, but the contract lost due to its products poor qualities. Without being graduated, after attending the school of engineering, and to understand better about the about the processes of control for quality of Toyota, he visited many factories around Japan; by 1941 using automated process which could employ wartime unskilled laborers, Honda was successfully able to produce mass piston rings accepted by Toyota. At the starting of World War II, soon after the company getting 40% stake of Toyota, the ministry of industry and commerce, was given to Tokai Seiki and Soichiro Honda as the senior director of management, by getting denominated from company’s president. By assisting in the production automating of propellers for military aircrafts of other companies, Honda also aided the efforts of war. The cultivated personal relationship with the Toyota, Japanese Imperial Navy and the Nakajima Aircraft Company would be the post war period’s instrumentation. After war, on the month of October in the year 1946 the “Technical Research Institute” of Honda was founded with the working of 12 men in an area of 172 square feet shack, they built the 500 engines of Tohatsu surplus war radio with the engine specification being two stroke 50 cc and sold the improvised motorized bicycles. Honda started to build their own copy of Tohatsu engine, when the engines ran out and supplied them to their customers for attaching to their bicycles. With both engine and frame, the complete motorcycle of Honda came in the year 1949 with the Model D. By the end of 1964, Honda Motor Company in becoming largest manufacturer of motorcycles in world, it took short period of time for its transition.
Honda’s first automobile production was the mini pickup truck T360, which went for sale on the month of August in 1963. This truck’s engine was powered by a 356 cc displacement gasoline engine of straight four. The first sports car production of Honda was the S 500, which comes with rear chain wheel drive points to motorcycles origins of Honda. Honda expanded its product line over the next few decades and expanded its exports and operations to various countries around the world. Honda introduced the Acura brand in the year 1986 to the American Market in gaining the ground in the market of luxury vehicle. The first all-aluminium monocoque Honda super NSX supercar was unveiled by Honda in 1991, which incorporated V 6 mid-engine with variable valve timing.
Corporate divisions and profile
The headquarters of Honda is at Minato, in Tokyo, Japan. The New York Stock Exchange and Tokyo Stock Exchange holds Honda’s shares trade, including in London, Switzerland, Paris, Fukuoka, Kyoto, Osaka, Sapporo and Nagoya. Around the globe, the company has its assembly plants. These plants are located in the United States, China, Pakistan, England, Canada, Japan, Brazil, Belgium, New Zealand, Indonesia, Malaysia, Mexico, Peru, Taiwan, Turkey, and Thailand and in India. Honda’s Acura, which was built up in North American Plants, procured 89% of sale as of 2010’s July in the United States.
Other operating revenue and net sale of Honda by topographical regions in the year 200767
Type : Public
Industry : Automotive, Aviation
Founded : 1948
Founder(s) : Soichiro Honda, Takeo Fujisawa
Headquarters : Minato, Tokyo, Japan
Area Served : Worldwide
Staff strength: 179,060 (2012)
Website: www.honda.com, www.hondacarindia.com
2.2.8. About Nissan Motors CompanyNissan’s challenge is to enhance its corporate value and to build a corporate foundation that will enable the Company to win out in the competitive environment of the 21st century. The management team is also keenly aware of its responsibility to meet the expectations of shareholders by reinstating dividend payments as soon as possible. We will do our utmost to achieve a new corporate consciousness and to implement sweeping improvements in our corporate structure. We look forward to the continuing support and guidance of our shareholders as we strive to attain these goals 68.
Type : Public
Industry : Automotive, Financial Services
Founded : December, 1933
Founder(s) : Masujiro Hashimoto, Kenjiro Den, RokuroAoyama, Meitaro Takeuchi, YoshisukeikawaHeadquarters : Nishi-Ku, Yokohama, Japan
Products : Automobiles
Area served : Worldwide
Staff strength : 155,099 (2011)
Parent : Renault Nissan Automotive India PrivateLimitedWebsite : www.nissan-global.com
In 1911 Masujiro Hashimoto, a U.S.-trained engineer, founded the Kwaishinsha Motor Car Works in Tokyo. Hashimoto dreamed of building the first Japanese automobile, but lacked the capital. In order for his dream to come true, he contacted three men–Kenjiro Den, Rokuro Auyama, and Keitaro Takeuchi–for financial support. To acknowledge their contribution to his project, Hashimoto named his car DAT, after their last initials. In Japanese, ‘dat’ means ‘escaping rabbit’ or ‘running very fast.’
Debuting in 1914, the first DAT was marketed and sold as a ten horsepower runabout. Another version, referred to as ‘datson’ or ‘son of dat,’ was a two-seater sports car produced in 1918. One year later, Jitsuyo Jidosha Seizo Company, another Nissan predecessor, was founded in Osaka. Kwaishinsha and Jitsuyo Jidosha Seizo combined in 1926 to establish the Dat Jidosha Seizo Company. Five years later, the Tobata Imaon Company, an automotive parts manufacturer, purchased controlling interest in the company. Tobata Imaon’s objective was to mass-produce products that would be competitive in quality and price with foreign automobiles.
In 1932, ‘Datson’ became ‘Datsun,’ thus associating it with the ancient Japanese sun symbol. The manufacturing and sale of Datsun cars was taken over in 1933 by the Jidosha Seizo Company, Ltd., which was established in Yokohama that year through a joint venture between Nihon Sangyo Company and Tobata Imaon. In 1934 the company changed its name to Nissan Motor Co., Ltd., and one year later the operation of Nissan’s first integrated automobile factory began in Yokohama under the technical guidance of American industrial engineers.
Datsun cars, however, were not selling as well as expected in Japan. Major U.S. automobile manufacturers, such as General Motors Corporation (GM) and the Ford Motor Company, had established assembly plants in Japan during this time. These companies dominated the automobile market in Japan for ten years, while foreign companies were discouraged from exporting to the United States by the Great Depression of 1929.
With the advent of World War II in 1941, Nissan’s efforts were directed toward military production. During wartime, the Japanese government ordered the motor industry to halt production of passenger cars and, instead, to produce much needed trucks. Nissan also produced engines for airplanes and torpedo boats.
Postwar Recovery and Overseas Expansion
After World War II, the Japanese auto industry had to be completely recreated. Technical assistance contracts were established with foreign firms such as Renault, Hillman, and Willys-Overland. In 1952 Nissan reached a license agreement with the United Kingdom’s Austin Motor Company Ltd. With American technical assistance and improved steel and parts from Japan, Nissan became capable of producing small, efficient cars, which later provided the company with a marketing advantage in the United States.
The U.S. market was growing, but gradually. Nonetheless, Nissan felt that Americans needed low-priced economy cars, perhaps as a second family car. Surveys of the U.S. auto industry encouraged Nissan to display its cars at the Imported Motor Car Show in Los Angeles. The exhibition was noticed by Business Week, but as an analyst wrote in 1957, ‘With over 50 foreign car makers already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market for itself.’
Nissan considered this criticism as it struggled to improve domestic sales. Small-scale production resulted in high unit costs and high prices. In fact, a large percentage of Datsun cars were sold to Japanese taxi companies. Yet Kawamata, the company’s new and ambitious president, was determined to increase exports to the United States. Kawamata noted two principal reasons for his focus on exports: ‘Increased sales to the U.S.A. would give Nissan more prestige and credit in the domestic markets as well as other areas and a further price cut is possible through mass producing export cars.’
By 1958 Nissan had contracted with two U.S. distributors, Woolverton Motors of North Hollywood, California, and Chester G. Luby of Forest Hills, New York. Nevertheless, sales did not improve as quickly as Nissan had hoped. As a result, Nissan sent two representatives to the United States to help increase sales: Soichi Kawazoe, an engineer and former employee of GM and Ford; and Yutaka Katayama, an advertising and sales promotion executive. Each identified a need for the development of a new company to sell and service Datsuns in the United States. By 1960 Nissan Motor Corporation, based in Los Angeles, had 18 employees, 60 dealers, and a sales total of 1,640 cars and trucks. The success of the Datsun pickup truck in the U.S. market encouraged new dealerships.
Datsun assembly plants were built in Mexico and Peru during the 1960s. In 1966 Nissan merged with the Prince Motor Company Ltd.–gaining the Skyline and Gloria models–and two years later Datsun passenger cars began production in Australia. During 1969 cumulative vehicle exports reached one million units. This was a result of Katayama and Kawazoe’s efforts to teach Japanese manufacturers to build automobiles comparable to U.S. cars. This meant developing mechanical similarities and engine capacities that could keep up with American traffic.
The introduction of the Datsun 240Z marked the debut of foreign sports cars in the U.S. market. Datsun began to receive good reviews from automotive publications in the United States, and sales began to improve. Also at this time, the first robotics were installed in Nissan factories to help increase production.
1970s and 1980s: From Economy Cars to Luxury Sedans
In 1970, Japan launched its first satellite on a Nissan rocket. Only five years later, Nissan export sales reached $5 million. But allegations surfaced that Nissan U.S.A. was ‘pressuring and restricting its dealers in various ways: requiring them to sell at list prices, limiting their ability to discount, enforcing territorial limitations,’ according to author John B. Rae. In 1973 Nissan U.S.A. agreed to abide by a decree issued from the U.S. Department of Justice that prohibited it from engaging in such activities.
The 1970s marked a slump in the Japanese auto industry as a result of the oil crisis. Gasoline prices started to increase, and then a number of other difficulties arose. U.S. President Richard Nixon devalued the dollar and announced an import surcharge: transportation prices went up and export control was lacking. To overcome these problems, Nissan U.S.A. brought in Chuck King, a 19-year veteran of the auto industry, to improve management, correct billing errors, and minimize transportation damages. As a result, sales continued to increase with the help of Nissan’s latest model, the Datsun 210 ‘Honeybee,’ which was capable of traveling 41 miles on one gallon of gas.
In 1976 the company began the production of motorboats. During this time, the modification of the Datsun model to U.S. styling also began. Additions included sophisticated detailing, roof racks, and air conditioning. The new styling of the Datsun automobiles was highlighted with the introduction of the 1980 model 200SX.
During the 1980s Nissan established production facilities in Italy, Spain, West Germany, and the United Kingdom. An aerospace cooperative agreement with Martin Marietta Corporation also was concluded, and the Nissan CUE-X and MID4 prototypes were introduced. In 1981, the company began the long and costly process of changing its name from Datsun to Nissan in the U.S. market.
The new generation of Nissan automobiles included high-performance luxury sedans. They featured electronic control, variable split four-wheel drive, four-wheel steering, an ‘intelligent’ engine, and a satellite navigation system, as well as other technological innovations. Clearly, the management of Nissan had made a commitment to increase expenditures for research and development. In 1986 Nissan reported that the company’s budget for research and development reached ¥170 billion, or 4.5 percent of net sales.
During the late 1980s, Nissan evaluated future consumer trends. From this analysis, Nissan predicted that consumers would prefer a car with high performance, high speed, innovative styling, and versatile options. All of these factors were taken into account to form ‘a clear image of the car in the environment in which it will be used,’ said Yukio Miyamori, a director of Nissan. Cultural differences also were considered in this evaluation. One result of this extensive market analysis was the company’s 1989 introduction of its Infiniti line of luxury automobiles.
The use of robotics and computer-aided design and manufacturing reduced the time required for computations on aerodynamics, combustion, noise, and vibration characteristics, enabling Nissan to have an advantage in both the domestic and foreign markets. The strategy of Nissan’s management during the late 1980s was to improve the company’s productivity and thus increase future competitiveness.
Sustained Difficulties in the 1990s
By the start of the next decade, however, Nissan’s fortunes began to decline. Profits and sales dropped, quelling hopes that the 1990s would be as lucrative as the 1980s. Nissan was not alone in its backward tumble, however: each of the major Japanese car makers suffered damaging blows as the decade began. The yen’s value rose rapidly against the dollar, which crimped U.S. sales and created a substantial price disparity between Japanese and U.S. cars. At the same time, the United States’ three largest automobile manufacturers showed a surprising resurgence during the early 1990s. According to some observers, Japanese manufacturers had grown complacent after recording prolific gains to surpass U.S. manufacturers. In the more cost-conscious 1990s, they allowed the price of their products to rise just as U.S. manufacturers reduced costs, improved efficiency, and offered more innovative products.
In addition, the global recession that sent many national economies into a tailspin in the early 1990s caught Nissan with its resources thinly stretched as a result of its bid to unseat its largest Japanese rival, Toyota Motor Corporation. Toyota, much larger than Nissan and possessing deeper financial pockets, was better positioned to sustain the losses incurred from the global economic downturn. Consequently, Nissan entered its ninth decade of operation facing formidable obstacles.
The first financial decline came in 1991, when the company’s consolidated operating profit plummeted 64.3 percent to ¥125 billion (US$886 million). Six months later, Nissan registered its first pretax loss since becoming a publicly traded company in 1951–¥14.2 billion during the first half of 1992. The losses mounted in the next two years, growing to ¥108.1 billion in 1993 and ¥202.4 billion by 1994, or nearly US$2 billion. To arrest the precipitous drop in company profits, Nissan’s management introduced various cost-cutting measures–such as reducing its materials and manufacturing costs–which saved the company roughly US$1.5 billion in 1993, with an additional US$1.2 billion savings realized in 1994. Nissan also became the first Japanese company to close a plant in Japan since World War II and cut nearly 12,000 workers in Japan, Spain, and the United States from its payroll. Nissan also was staggering under a debt load that reached as high as US$32 billion and threatened to bankrupt the company. Only intervention from Nissan’s lead lender, Industrial Bank of Japan, kept the company afloat.
There were some positive signs in the early 1990s to inspire hope for the future. Nissan’s 1993 sales increased nearly 20 percent, vaulting the car maker past Honda Motor Co., Ltd. to reclaim the number two ranking in import sales to the all-important U.S. market. Much of this gain was attributable to robust sales of the Nissan Altima, a replacement for its Stanza model, which was introduced in 1992 and marketed in the United States as a small luxury sedan priced under $13,000. To the joy of Nissan’s management, however, the Altima typically was purchased with various options added on, giving the company an additional $2,000 to $3,000 per car. Nissan also was encouraged by strong sales of its Quest minivan, which was introduced in the United States in 1992 and had been developed jointly with Ford Motor, which marketed its own version, the Ford Windstar.
Nissan’s losses continued through the fiscal year ending in March 1996, cumulating to US$3.2 billion over a four-year span. The company’s return to profitability in fiscal 1997 came about in part because of the cost-cutting program and in part from the yen’s dramatic depreciation against the dollar. Despite the return to the black, Nissan remained a troubled company. From its 1972 peak of 34 percent, the company’s share of the Japanese auto market had fallen to 20 percent by early 1997. Competition from the more financially stable Toyota and Honda played a factor in this decline, but Nissan also hurt itself by failing to keep pace with changing consumer tastes both in Japan and in overseas markets. For example, Nissan was behind its rivals in adding minivans and sport utility vehicles to its product line-up, having for years dismissed these sectors as passing fads. Meanwhile, minivans, sport utility vehicles, and station wagons accounted for half of all passenger car sales in Japan by early 1997, up from just more than ten percent in 1990. In the U.S. market, the Altima lost ground to two midsized rivals, the Honda Accord and the Toyota Camry, because Nissan’s model was smaller and thus less desirable. In the luxury car sector, Toyota’s Lexus line became the hot brand in the United States, triumphing over the Infiniti. Because of these and other factors, Nissan returned to the red for fiscal years 1998 and 1999. Although the losses were not as large as earlier in the decade, the company’s continued sky-high debt load–which stood at US$19.7 billion in late 1998–did not bode well for Nissan’s future.
1999 and Beyond: The Renault Era
The late 1990s was a period of intense consolidation in the auto industry, stemming from rapid globalization, the increasing cost of developing ever more sophisticated vehicles, and worldwide automotive production overcapacity. The November 1998 merger of Daimler-Benz AG and Chrysler Corporation that formed DaimlerChrysler AG was the largest partnership created in this period, but there were a number of smaller mergers, acquisitions, and strategic alliances as well. Both Nissan and Renault S.A. of France were eagerly looking for a partner in order to compete in the 21st century. Nissan was rebuffed by both DaimlerChrysler and Ford and Renault was turned away by other Japanese automakers, before the two companies reached an agreement on a global alliance in March 1999. The combination of Nissan and Renault made strategic sense in that the companies’ main sales territories and production locales were complementary. In vehicle sales, Nissan was strongest in Japan and other parts of Asia, the United States, Mexico, the Middle East, and South Africa, while Renault concentrated on Europe, Turkey, and South America. The production side followed a similar pattern. On a global basis, the two companies held just more than a nine percent market share, which would position the combination number four in the worldwide auto industry.
As part of the agreement, Renault pumped US$5.4 billion into cash-hungry Nissan in exchange for a 37 percent stake in Nissan Motor and a 22.5 percent stake (later raised to 26 percent) in Nissan Diesel Motor Co., a heavy truck unit. Although it did not secure complete control of Nissan, Renault gained veto power over capital expenditures and installed Carlos Ghosn (rhymes with ‘bone’) as Nissan’s chief operating officer (he became president as well in 2000). The Brazilian-born Ghosn was an executive vice-president at Renault and had engineered a rapid turnaround there after joining the company in 1996. French newspapers tagged him with the nickname ‘le cost killer’ because of his tenacious approach to cost cutting–his Renault restructuring slashed US$3.5 billion in costs over a three-year period.
The capital injection from Renault quickly reduced Nissan’s debt load to ¥1.4 trillion (US$13 billion). Ghosn rapidly began implementing a massive restructuring of Nissan. Nonautomotive operations began to be divested, including mobile and car telephone operations and the aerospace division. Nissan’s forklift unit was likely to be sold and Nissan Diesel was a candidate for sale as well, given that Nissan Motor had declared that making cars and light trucks was its core business. In early 2000 Nissan sold a stake it held in Fuji Heavy Industries Ltd. As for the automotive operations, Ghosn in October 1999 laid out a tough cost-containment program slated to be completed by 2002. The program included: a 14 percent workforce reduction–representing 21,000 jobs, primarily in Japan–through attrition, early retirement, and noncore business spinoffs; the closure of five production plants in Japan in 2001 and 2002; the slashing of ¥1 trillion (US$9.5 billion) in annual costs, including a 20 percent reduction in purchasing costs and a 20 percent cut in overhead, the latter to include the elimination of one-fifth of Japanese Nissan dealers; and a 50 percent reduction in debt, to ¥700 billion (US$6.5 billion). Ghosn also began tackling the crucial need for a revitalization of Nissan’s bland line of vehicles by substantially increasing capital spending, toward a goal of speeding new products to market four times faster than before. Although such a restructuring was by this time routine in the United States and becoming more commonplace in Europe, Ghosn’s plan ran counter to many established business practices in Japan. The biggest question was whether Ghosn could implement the plan without resorting to large-scale layoffs in Japan, which would likely face fierce opposition from workers and labor unions and even from leaders of other Japanese firms.
Literature ReviewKusuma P in her paper title “A Study on Impact of Consumer Behaviour Pattern on Buying Decision of Small Cars in Karnataka” describes Liberalization, Privatization and Globalization Policy of India influenced many international automobile companies trading & manufacturing in our country. The availability of many brands in Karnataka provides various alternatives to the customer. These manufacturers offer similar value proposition, and provide highly customized products. Engine performance is not considered very important for customers now, rather they look for those differentiating parameters. The main objective of her paper is to identify the possible parameters that influence the consumer buying behaviour patterns of passenger car owners in the State of Karnataka, with aimed to develop a theoretical model, which influence the consumer buying patterns of passenger cars, so that further research could be done, based on the model and the identified parameters 1.
NATARAJ S, DR. N.NAGARAJA, in their paper “CUSTOMER SATISFACTION IN AUTOMOBILE INDUSTRY – AN INDIAN ONLINE BUYERS’ PERSPECTIVE OF CAR MANUFACTURERS’ WEBSITES” defines online bookings and online purchases are the current wave in Indian car industry. Internet is gradually hitting the core of every industry including the car industry. It creates a greater awareness of the vehicle and influences the buyer to purchase. Internet is believed to have a greater impact on the sales process and will definitely give higher level of sales satisfaction. They analyses consumer attitudes towards Internet-based car manufacturers? websites. Their aim was to obtain a theoretically and empirically grounded initial reference position, against which later research can examine and interpret the role played by changes in the variables representing consumer preferences and shifts in these preferences, and thus helps the car manufacturers learn in depth the ways to enhance customer satisfaction. Regression analysis shows that the two independent variables significantly affect the satisfaction of Indian car buyers on the Internet. Moreover, through appropriate interpretation of parametric change in the regression analysis, we can explore the consequences of possible (future) changes in Manufacturer’s website over Internet, especially with respect to maximising the quality and easy navigation of website in order to retain a loyal customer. Generalising, they suggest that Internet based car manufacturers can effectively maximise level of satisfaction of the existing and prospective customers by adopting the suggested model 2.
Vikram Shende in his paper title “Analysis of research in consumer behaviour of automobile passenger Car customer” define the automobile industry today is the most lucrative industry. Due to increase in disposable income in both rural and urban sector and availability of easy finance are the main drivers of high volume car segments. Further competition is heating up with host of new players coming in and global brands like Porsche, Bentley, and Ferrari all set to venture in Indian market. Their research is helpful for the existing and new entrant car manufacturing companies in India to find out the customer expectations and their market offerings. Indian Automobile car business is influenced by the presence of many national and multinational manufacturers. Their paper presents analysis of research in the area of Consumer Behaviour of Automobile Car Customer. Proper understanding of consumer buying behaviour will help the marketer to succeed in the market. All segments in Indian Car industry were studied and found that buyer has different priority of behaviors in each segment, whereas main driver for car purchase is disposable income. Value for money, safety and driving comforts top the rank in terms of customer requirement; whereas perceived quality by customers mainly depends on brand image. For this research, methodology adopted was to study the research papers in the area of Passenger Car segment, study the purchase decision process and its interaction with behaviour parameters across all the segments of car such as small & Hatch Back segment, Sedan class segment, SUV & MUV segment and Luxury Car segment. The objective of their study is the identification of factors influencing customer’s preferences for particular segment of cars. Their paper also attempts to consolidate findings & suggestions to overcome present scenario of stagnancy in sales and cultivate future demand for automobile car market 3.
Hossein Mirzaei, Mehdi Ruzdar in their paper title “The impact of social factors affecting consumer behaviour on selecting characteristics of purchased cars” examined the impact of social factors on consumer behavior in selecting traits of the purchased car in Tabriz (Iran). A one sample T-test was used to test the hypotheses of this study. In line with complementary findings of research using error bar diagram, the first component of the social factors affecting the consumer behavior was tested. In selecting car traits, based on every component, every feature of car was ranked. Their research findings show that traits of family and social status affect selecting the traits of the purchased car. Reference groups factor; however, does not influence the vehicle traits. These findings indicate that social factors influence the selection of characteristics in purchased cars 4.
Mousavi (2006) in a study titled “Cultural factors affecting buyers decision to purchase Iran khodro cars” considered factors such as income, location, age, sex, number of car buyers family members and their jobs. Shoppers in this study are selected based on personal characteristics, social, economic, and behavioural factors. The relationship between these factors and purchasing the products of Iran khodro has been studied. In a systematic classification, 96 samples were selected randomly from owners of vehicles from different gas stations in Tehran. The results of this study show that at present factors such as income and its changes, occupation, gender, income resources are more affecting than other variables on the purchase of Iran khodro cars5.
Tan Wee Lee, Santhi Govindan in their study titled “Emerging Issues in Car Purchasing Decision” describe the automotive industry is an important segment of the economy in any country as it links industries and services. It is the key driver of any growing economy. It plays an important role in growing the economy in each country and one way to strengthen the industry is to improve consumer insight into vehicle buying behaviour. Besides, competitive pressure of automotive companies arising in Malaysia has led the companies to look for an edge to be competitive in automotive industry. Both the local and foreign cars are competing to get attention from the consumers. Therefore, the objective of their study is to identify the factors influencing consumer buying behaviour towards national automobiles in the Malaysian perspective. The independent variables in their study consist of four dimensions, namely reliability, safety, fuel economy, and price. The sample sizes of their study are 171 out of 200 targeted respondents through online questionnaire with 85.5% return rate. The unit of analysis for this research consists of individual potential car buyers in Kuala Lumpur. In addition, their study focused on the determinant of consumers buying behaviour towards national cars in Kuala Lumpur with their rapid growth in car ownership. It is clear that the rapidly-expanding car market in the Federal Territory of Kuala Lumpur is a direct product of the spectacular economic performance of these areas. The car markets in Kuala Lumpur plays a huge economic role towards the general development of Malaysia. The result is tested by using descriptive (frequency analysis) and statistical analysis (reliability analysis, and simple linear regression analysis). The result indicates that the three independent variables of car’s reliability, safety, and price significantly influence consumer buying behaviour towards national cars in Kuala Lumpur. The result can assist the Malaysian automotive companies to increase their sales by focusing on those important factors 6.
R. Akila with their co-authors define in their research paper titled BRAND PREFERENCE AND PURCHASE BEHAVIOUR OF B – SEGMENT PASSENGER CARS IN VELLORE CITY” Yesterday’s luxuries are today’s necessities. Cars once considered as a luxury now takes a part of one’s day to day life and it has become a necessity. Several research works have been done on impact of brand preference among B-segment Cars and Buying Behavior of Customers at various cities in India. Such a research was not done in Vellore District. Hence this study was intended to scrutiny the customers brand preference among B-segment cars and their buying behavior with special reference to Vellore City. Their study was based on both primary and the secondary data. The primary data was collected by using a structured questionnaire. The researcher met the customers in three main regions of Vellore district and collected data by interviewing personally. The statistical tools like Chi square test, ANOVA test has been used to analysis the primary data7.
Amita Girdhar with their co-author defines in her paper title “a study of consumer behavior considering various attributes towards purchasing a car” Cars became a need rather than a choice. It is a need of everyone to purchase luxurious commodity for their comfort. Moreover added features attract the consumer attention. As a result, it is important that individuals gather more information to purchase a car. The present paper has empirically investigated two objectives: first, to find out the major factors that affect consumer perception towards different brands of car and second to develop a model framework for various decision areas of consumers while purchasing a car. The study is mainly primary data based with a sample of 300 respondents from Hisar district of Haryana state and applied statistical tools of factor analysis and Discriminant analysis to achieve the objectives of the study. They find the results of factor analysis reveal five factors named as: product strategies, technology know-how, and level of satisfaction, workshop features and lastly service orientation. Factor analysis discloses that consumers are more influenced by product strategies, technology know-how and level of satisfaction. Hence consumers need USP of a commodity that makes a difference. Further results of discriminant analysis reveals that consumers are more influenced by product strategies, followed by technology know how and up to some extent level of satisfaction and service orientation. On the other hand consumers are least influenced by the factor workshop features 8.
Santosh Kumar Pandey, Swati Jaiswar in their paper titled “An Analysis of Buyer Behaviour for Small Car in India” define Automobile Industry is one of the fastest growing sectors in our country. Cars were once considered as a luxury and now it has become a necessity. They have become a part and parcel of today’s life and most of the car manufacturers target the middle class segment to a great extent. The introduction of small cars is a classic example for this. Today’s Buyer has plenty of options available to him. We are in a Buyers’ market where the marketers do not merely satisfy a need but try to achieve Buyer delight. The decision to purchase a car is not a one man decision. The purchase is normally influenced by many including their own perceptions and behaviour. Hence it is as complicated as human mind. It becomes imperative for the marketers to understand the Buyer behaviours and perceptions before formulating a marketing strategy. Strong competition in the market has also resulted in many companies fighting for a place in the Buyer’s mind. So it is important that we study the Buyer perceptions and behaviour of the car owners which will give us feedback on how marketing strategies can be worked. Bangalore City is a cosmopolitan city, which is a progressive and growing market for cars was selected for this study. Suitable statistical tools have been used to identify the Buyers with similar tastes and Behaviours with respect to purchase of car. The study throws light on various features that the manufacturers should concentrate on to attract the prospective buyers. Indian Automobile small car business is influenced by the presence of many national and multi-national manufactures after liberalization in 1991. The presence of the many manufacturers and variants within the city provides several decision options to the customers as they supply similar product proposition, creating the passenger automotive small car market highly competitive Customers now search for those differentiating parameters, which may help them to choose among the alternative products available in the market9.
Nikhil Monga, Dr. Bhuvnender Chaudhary, Saurabh Tripathi in their paper titled “car market and buying behaviour- a study of consumer Perception” define the automobile industry today is the most lucrative industry. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 38% per annum in June 2005-06 over the corresponding period in the previous year. Further competition is heating up in the sector with a host of new players coming in and other like Porsche, Bentley, Audi, and BMW all set to venture in the Indian markets. One factor that could help the companies in the marketing of their product is by knowing and creating a personality for their brands. This research attempts to answer some of the questions regarding brand personality of selected cars in India by conducting the market research. This personality sketching will help in knowing what a customer (or a potential customer) thinks about a given brand of car and what are the possible factors guiding a possible purchase. Similarly, the idea of measuring the customer satisfaction will serve the same purpose of determining the customer perception. Thus, by measuring the” willingness of existing users of a car to recommend it to others” will help the car manufacturers to chalk out the entire Customer Buying Behavior. Their research will be helpful for the new car entrant companies in India to find out the possible gaps between the customer expectations and the present market offerings. It will be mainly a primary research and the information will be gathered from both primary and secondary research. The research will analyze the applicability of existing research concepts, theories, and tools for evaluating consumer satisfaction 10.
Ms.A.Josephine Stella, Dr.K.Rajeswari, in their paper titled “Consumer Behaviour towards Passenger Cars – A study with reference to Virudhunagar District of Tamilnadu” defines and identifies different sources of information used by the buyers and their role in taking purchase decisions, to evaluate the purchase behaviour of the consumers, to examine the factors influencing the brand choice and choice of dealership. After from this they also identify the growth of consumerism and recent consumer legislations have created special interest in the study of buyer behaviour and the formulation of marketing mix so as to gain positive buyer response in the market place. Marketing success or failure depends on target consumers, the individual and group reactions expressed in the form of buying pattern. Buyer behaviour is a complex and not easily predictable phenomenon as changes in buying pattern are taking place at a dismaying speed. In the highly competitive marketing environment, the marketers have to basically understand the factors governing buyer behaviour as it is necessary for the long-run existence of the organization 11.
Arpita Srivastava and Mitu Matta in their paper titled “Consumer Behavior towards Passengers Cars -A Study in Delhi NCR” explore the consumer behavior towards passenger cars in Delhi NCR. The scope of the study is limited to certain important behavioural aspects like information search and evaluation, brand preference and brand loyalty and factors of motivation. Understanding the customer’s satisfaction of the product will help the automobile manufacturer in developing their products to meet customer’s needs and designing the proper marketing programs and strategy. Their study is to identify different sources of information used by the buyers and their role while making a purchase decision 12.
Pinki Rani in her paper titled “Factors influencing consumer behaviour” describe Consumer Buying Behaviour refers to the buying behaviour of the ultimate consumer. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior, the brands he buys or the retailers he goes. A purchase decision is the result of each and every one of these factors. An individual and a consumer is led by his culture, his subculture, his social class, his membership groups, his family, his personality, his psychological factors, etc. and is influenced by cultural trends as well as his social and societal environment. By identifying and understanding the factors that influence their customers, brands have the opportunity to develop a strategy, a marketing message (Unique Value Proposition) and advertising campaigns more efficient and more in line with the needs and ways of thinking of their target consumers, a real asset to better meet the needs of its customers and increase sales13.
Sachin Borgave and Chaudhari J.S in their paper titled “Indian Auto Component Industry: Challenges Ahead” describes Indian Automobile industry is flourishing its twigs worldwide and is close to a fruition of triumph in the global competition. The spine of the industry is its suppliers of auto components and accessories which is also an exclusive industrial segment. Today auto industry is enjoying the benefits while the auto component sector is in its gloom despite of hard efforts of survival. The factors making the differences are unavailability of resources like skilled labour and technology, high cost of production due to inflation and Government policies of indirect taxes such as customs and excise. They highlights the challenges faced by Indian auto component industry in domestic and global market 14.
Dr.M.A.Lokhande, Vishal Sunil Rana in their research paper titled “Marketing Strategies of Indian Automobile Companies: A Case Study of Maruti Suzuki India Limited” In today’s competitive era the word ‘Strategy’ is very crucial for all business organizations. Presently organizations started realizing that customer centric and aggressive marketing strategies plays vital role to become successful leader. Though globalization has opened the doors of opportunities for all, the market is still crowded with some unknown risks and lot of competition. Because of this competition, a marketing strategy must aim at being unique, differential-creating and advantage-creating. To obtain unique and differential advantage, an organization has to be creative in its marketing strategy. Today due to innovative marketing strategies Maruti Suzuki has become the leading ; largest seller of automobiles in India. Company has adopted various Brand positioning, Advertising, Distribution strategies to capture the market. Maruti’s few unique promotional strategies include Teacher Plus Scheme, 2599 scheme, Change your life campaign. The objective of this paper is to focus on various marketing strategies of Maruti Suzuki India Ltd16.
Krati Sharma in her paper titled “pre-owned car market in india: a study of marketing strategies of car makers” define From the singsong rhythm of the bullock cart to the jet air India has travelled a long way. It was in 1898 that the first motor car rode down India’s roads and until the First World War, about 4000 cars were directly imported to India from foreign countries. The Hindustan Motors was set up in 1942, to manufacture automobiles in India. This new trend of pre-owned car market has started a long back but recently with the introduction of the branded showrooms in our state also has increased the demand for pre-owned cars in our region also. The marketing strategies are the main source to attract any customer. In their research they study the marketing strategies of car makers in pre-owned car segment. As the before and after sales services are the main goal of the companies through which they can make their customers loyal with their company. They also find the reasons that why this sector is booming fast these days 17.
Ekta Chakravarty in her research paper titled “Separation -A Better Tomorrow-Economy” A Study of Marketing Strategies on Automobile” Automobile is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognized as one of the drivers of economic growth. During the last decade, well directed efforts have been made to provide a new look to the automobile policy for realizing the sector’s full potential for the economy. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group. This study is been conducted to know the different strategic implementation done for the sale increase in automobile company. The study is been scoped to north eastern region comprising of Jorhat, Sibsagar, Kolkata, Dharmanagar, Agartala, Silchar, Shillong, Umsnai and Guwahati City for Hero Moto Corp and Bajaj. The data followed with primary as well as secondary means. The researcher seeks for the betterment of sales of these bikes and also initiates recommendation related to marketing strategies to help increase their sales 18.
Zakia Binte Jamal in her research paper titled “cross-cultural impact on Marketing Strategies: A Study on Automobile Industry” define era of Globalization companies are expanding their business activities in different countries. In this process business faces different challenges where cultural barriers play an important role. Businesses need to understand the new market’s culture and its cultural elements which really matter for business to design marketing strategies. This research has described the cultural elements that affect automobile business around the world 19.
Ketan Kamra in his research article “Influence of Social Media on the Indian Automotive Consumers: Primary Study in National Capital Region” define the reasons like increase in paying capacity and higher living standards leading to substantial growth in the automotive sector each year, the automotive OEM’s cannot afford to lag behind in social media marketing. The objective of this paper is to identify and investigate the extent of influence of social media in the Indian Automotive Consumers by conducting a thorough primary research. The study looks towards social media’s influence on consumers at multiple stages involved during the buying process as well as the impact of consumer activism through social networks on brand loyalty. The need of the hour is for the automotive OEM’s to recognize the importance through social networks marketing phenomenon. A simple random sampling technique is adopted in the paper to select the sample respondents. The primary data is collected from the NCR region from 131 respondents. Analytics is used as a statistical tool to infer the results and come to a conclusion. The results reveal a strong influence of social media in influencing the consumer over multiple buying processes parameters. Influence of Social Media on vehicular research, suggestions, connected vehicle technologies, finance calculator and Facebook page marketing showed a significant share in impacting a consumer before buying an automobile 20.
Teena Bagga, Deepak Gupta, in their paper “Internet Marketing by Automobile Industry: Special Reference of Indian Counterparts” define The central idea behind this paper is to ponder on the fact that how is Internet Marketing is being widely used as a tool in the Automotive sector in India for imparting mass scale knowledge of their products and for large scale promotions. These days’ automotive companies face survival challenges in the market, especially India with quite a large number of potential buyers. Thus Internet Marketing comes handy when it comes to selling of brand ideas and concepts. The paper deals with statistical study enlisting information about vigorous promotional activities on social media by different Automobile manufacturers. It focuses on how three different automobile companies with different origins practice Internet Marketing for sales and promotions of their product. It shows the comparison between German manufacturer Volkswagen, South Korean manufacturer Hyundai and French manufacturer Renault. The main reason for choosing these companies is because of all the three having different origins. So to learn how the three different originating companies practice Internet Marketing in India, the German, French and South Korean Manufacturers were chosen. Moreover these three companies are quite popular in India as a large volume of their vehicles can be seen on the roads. These companies product are in a good demand too. Hence it was a good selection to find how three different nation based companies use social media sites like Facebook, Twitter and Google+ and the data was collected first week of January 2014 to the end of second week of February 201428.
Velury Vijay Bhasker, in their paper titled “Foreign Direct Investment (FDI) in Indian Automobile Industry: Impact on Employment Generation” describe that Indian Automobile Industry is globally one of the largest industries and a key sector of the Economy. Indian Government policies resulting in the Foreign Direct Investment (FDI) infusion in Auto Sector has had a significant impact on job creation. It is therefore most important to see how various policies enunciated at various times have created employment opportunities directly and indirectly in this fast changing Automobile sector. Their research paper attempts to understand the inventory of policy responses of the government especially related to FDI in automobile sector. Foreign Direct Investment (FDI) has been considered as a major catalyst in promoting sustainable development in developing countries. FDI has the potential to generate employment, raise productivity, transfer skills and technology, increase incomes, enhance exports and contributes to the long-term economic development of the world’s developing countries. Evidence presented in the form of (available) empirical data with its interpretation suggests there has been significant impact of FDI in Auto Sector in Employment Generation – both in quantity and quality. It can be construed that with further infusion of FDI in this sector as envisaged in Automotive Mission Plan (2006-16) and 12th five year plan (2012-17) of the Government of India; the potential for employment generation is expected to show the same CARG estimated for the Automobile Industry – Automobile manufacturers (OEMs), Auto Component sector and in related enabling services34.
Prof. Sarbapriya Ray, in their paper titled “Economic Performance of Indian Automobile Industry: An Econometric Appraisal” describe Indian automobile industry embarked on a new journey in 1991 with delicensing of the sector and subsequent opening up for 100 percent FDI through automatic route. In view of this, the study attempts to estimate the economic performance of Indian automobile industry in terms of capacity utilization at an aggregate level. It estimates econometrically rate of capacity utilization in the industry at aggregate level and analyses its trend during the post liberalization period, 1991-92 to 2005-06.The study also tries to assess the impact of various factors influencing capacity utilization. In this paper, optimal output is defined as the minimum point on the firm’s short run average total cost curve and the rate of capacity utilization is merely ratio of its actual output to capacity output level. We use an econometric model to determine the optimal capacity output. Our result shows that capacity utilization has been improved after the path breaking economic reforms initiated in 1991 at the rate of around 5 percent per annum but capacity grows more rapidly than output growth. In view of identifying several factors that influence capacity utilization, result suggests that coefficient of export-intensity variable, import penetration ratio are negative which indicate that capacity utilization was relatively lower in firms belonging to industry characterized by high export-intensity and import penetration. A positive relationship is found between size and capacity utilization and similarly between market share and capacity utilization 35.
Dr. Govind P. Shinde, Dr. Manisha Dubey in their paper titled “Automobile Industry and Performance of Key Players” describes The study represents the figures of Indian Automobile Industry during the period 2005 to 2010. The study has been conducted considering the segments such as passenger vehicle, commercial vehicle, utility vehicles, multi-purpose, two wheelers and three wheelers. Each section concisely explains the current and future market trends, and developments in the Indian automobile market. The methodology used to find the trends and the market share of the Indian automobile industry. The research takes into account the past and current trends in an economy, and more specifically in an industry, to bring out an objective market analysis. Despite economic slowdown, the Indian automobile sector has shown high growth. The economic sustainability and increasing living standards and purchasing powers of the Indian customer’s automobile sector has a bright coming future. The Industry is recording increasing growth rate in sales, but still there are loop holes in the automobiles industry and these needs to be considered by the auto mobile industry to overcome.
Dr. P. Sankaran in his paper titled “Indian Automobile Industry Vision “2020” “describes India’s automobile market is one of the fastest growing auto markets in the world. The global automotive industry is currently dominated by seven large automobile producing countries. India is one of the seventh largest global automobile manufactures, producing 12.7 million vehicles per year .India trail behind China, Japan, Germany, USA, South Korea and Brazil and followed by India and biggest automobile market in the world. The motor vehicle industry has attracted the attention of economists the world over. But the Indian motor vehicle industry was impartial growth starting from mid-twentieth century to last quarter of the twentieth century. The 21st century the industry to produce all type of vehicles produced and assembling. The structure of the assembling segment of the industry at one level covered by the regulatory policy at more fundamental level, the crucial factor is technology, diversification and collaboration has governed and promote strength the segment of the firm. The automobile company in India is one of the key contributors to GDP in the country. In recent year, automobile industry in India has grown by leaps and bounds. This Phenomenal growth rate is owing two factors, mainly which are better standard of living of the Indian middle class people and a subsequent rise in their disposal of income which in turn increasing the purchasing of power adding to the growth of automobile industry as a whole37.
Sakshi Modi, Dr Tapasya Jhulka, in their research paper titled “Rising Indian Automobile Industry: Looks do Matter!” reports a part of an ongoing investigation in Indian Automobile Industry. Indian Automobile Industry is under continuous reforms so, an attempt has been made to examine the 5 features of a car namely uniqueness, luxury, looks, technical superiority and car accessories which attract customers the most while purchasing a car. A systematic random sampling from five residential areas of urban Jaipur was done to select 50 car consumers. An investigator-constructed questionnaire was used to collect data on these factors. The data analysis using chi-square test was done to describe the nature of the sample and to test the null hypothesis that the choices for purchase of car is equally distributed on five features. Data Analysis has been done by using non parametric chi-square test. It was analyzed that features of car effect car purchasing decision 38.
Jatinder Singh, in his paper titled “India’s automobile industry: Growth and export potential” describes It may sound truism to understand the influence of changing policy set-up on the growth and development of automobile industry in India and to explore its export potential in context of the process of liberalization and globalization of the industry. Policy changes influence the competitive advantages through their effects on economic environment in which the industry operates. The study at hand finds that the changing policy environment during the last three decades in the country has eventually contributed to the growth and export intensity of automobile industry. The influence of changing economic environment is also visible across subsectors of the industry. Passenger vehicles segment seems to be the only segment which has experienced considerably high growth and improvement in export intensity as well. The share of this segment in total exports of automobile industry is reported to have doubled over the years. The paper examines the implications and also raises issues for further research 39.
Sangeeta Gupta, in her paper titled “A Study of Buying Decision Influencers for Passenger Car Segment in New Delhi” describes Indian Automobile passenger car market is witnessed by the presence of many national and multi-national manufactures post liberalization 1991. The availability of many alternatives within the city provides an opportunity to the consumers to make a rational decision after considering all the options. Today is an era which is characterised by a consumer’s market where the manufacturers and marketers not only takes into consideration the consumer orientation to make them satisfied but goes one step ahead of achieving consumer delight. Consumers look for those differentiating parameters, which may help them to make a best decision and can be proved as value to money proposition for them. It makes more important to analyse the consumer perceptions and behaviour of the passenger car owners which will give the feedback pertaining to designing the marketing strategies. The objective of this paper is to investigate those differentiating parameter and effect of reference group that influence the consumer buying behaviour of car owners within the city of New Delhi. The primary data was collected from 191 respondents, located in New Delhi using convenience sampling. The results revealed the strong influence of attributes like price, fuel efficiency in buying decision and importance of reference group 41.
Dr.Vishal S.Rana ,Dr.M.A.Lokhande in their research paper titled “A Study of Consumer Preferences & Attitude towards Passenger cars of Maruti Suzuki & Hyundai Motors in Marathwada Region of Maharashtra” describes Companies today are becoming customer centric ; highly focusing on satisfying their customers as they realized that in present cut throat competition, satisfying ; delighting the customers is very crucial. Because of the constant change in needs, expectations and lifestyle of customers, most of the companies are in dilemma that how to satisfy the customers and which strategy should be adopted. The same problems have witnessed by Indian automobile industry. Even Maruti Suzuki and Hyundai Motor- the two leading automobile giants in India are very much conscious about understanding the needs ; expectations of the customers. The present study throws light on various factors related to consumer behavior ; satisfaction. The objective of this research paper is to know the preferences and opinions of Maruti ; Hyundai customers regarding after sales service, resale value, and fuel efficiency along with customer preferences while buying Maruti ; Hyundai brands. The present study is descriptive in nature ; convenient sampling technique has been adopted for selecting the consumers. The primary data has been collected with the help of structured questionnaire. The study reveals that the customer’s preferred Maruti cars on parameters like fuel efficiency, after sales service, resale value, availability of spare parts whereas in view of Hyundai customers they preferred vehicles on parameters like comfort & convenience, exterior, technology etc. The study concludes that proper customer care strategy plays vital role in satisfying & delighting the customers 42.
Saurabh Kumar, Devika Singh, in their research paper ” The effect of Recession on the buying behavior of consumers in new Delhi during the economics lowdown of 2013″ descrices The research scouts out on the influence of recession on the purchasing deportment of consumers. The study was conducted in the West Delhi region. The purpose of this study was to examine the effect of recession on buying attitude of consumers, taking into consideration differences in spending in their goods consumption on different food, convenience and luxury items. With further expounding into the enquiry of change in shopping patterns of customers due to increase in prices or decrease in income and to analyze whether decrease in purchasing capacity of the customers have adulterated their preference for branded products. The results were checked in accordance with whether recession affects the buying behavior or not. Therefore, an attempt was put to find out the outcomes of the research that, which factors get affected in recession by a consumer 43.
Prof. Rajesh Nair in his research paper titled “CONSUMER PERCEPTON AND ATTITUDES TOWARDS GREEN CARS” describes the consumer perception and attitudes towards green cars. A questionnaire was designed with a sample size of 157 in area of Mumbai. The objectives of research is to determine perception of Green Cars in the minds of the average Indian Consumer, to ascertain the attitudes of people towards alternatively fueled vehicles and to ascertain the qualities that consumers look for in a green car . The analysis was done keeping parameters like Age, Sex, Education, Annual Family Income and Car usage. The research shows some interesting facts which could have a great importance to the manufacturer of a green car. Most of the respondents agree that green cars would replace conventional cars but the age group which felt the most was the age group of 33-43 years of age group. People with higher education such as post graduates understood the relevance of green cars more than other people 44.
Dr. Shriram Shimpi, in his research paper titled “A STUDY ON CONSUMER BUYING BEHAVIOUR FOR USED CARS IN PUNE CITY” describes and investigates and explores the relationship between variables which affect consumer buying behaviour for used cars in Pune city. It also attempts to understand used car market in India. Questionnaires were distributed to respondents living in Pune city who have purchased the used car. The total sample consists of 84 respondents. Chi-square was used to test the hypotheses. The result of this study provides evidence and insights about the relationship between the variable which affects consumer buying behaviour for used cars. The study reveals the significant relationship between family income and make of the car; gender and colour of the car; family income and selling price. Apart from that, the study also provides valuable insight toward the understanding on how different factors provide the base for purchase intention and affects the consumer buying behaviour of used cars45.
Gomathi Letchumananin his research paper titles “A Study on the Influence of Brand Name on Purchase of Automobile in Malaysia”, investigates the impact of brand name on purchase of automobile in Malaysia. A theoretical framework is used to analyse the hypothesis: “A brand name has a significant influence on consumers’ decision making in purchasing a car”. A survey questionnaire was designed to explore the relations between branding and consumers’ decision making process. Their study find revealed that branding has a strong influence on consumers’ buying decision. The respondents indicated their preference for known/branded car. It can be concluded that branding possesses much influence in affecting consumers’ purchasing decision. Originality/value: Much have been written about the value of brands. This paper collects responses to ascertain the importance of brand names with particular reference to the automobile industry in Malaysia 46.
Shailesh K. Kaushal in his research paper titled “Confirmatory factor analysis: An empirical study of the four- wheeler car buyer’s purchasing behavior” an attempt to examine the buyer behavior in reference to car purchase intentions and automobile marketing strategies in Uttar Pradesh. 400 car buyers completed self-administered surveys regarding their attitudes toward car purchasing in Uttar Pradesh. The paper first uses both exploratory and confirmatory factor analysis to examine the factor structure and psychometric properties of these items. The car purchasing behavior of the buyers were identified by 39 items and captured in five dimensions by conducting exploratory factor analyses. Structural Equation Modeling (SEM) using AMOS version 16 was utilized for model testing and to verify the five dimensions of car buyers purchase intentions. Confirmatory factor analyses successfully validated the items used to measure five dimensions of car buying intentions. This research study identified five dimensions of car buyers’ purchase intentions are labelled as safety ; security, quality, performance, value and technology. The car buyers purchase intention influenced by several factors. This study will help the automobile manufacturer and car dealers to understand the buyers buying behavior and help them to make their marketing strategies accordingly. The study validates the usefulness of five factors such as safety ; security, quality, performance, value and technology and these dimensions are better predictor of buyers’ purchase intention towards cars47.
Wenming Cheng in his research paper titled “Research on the Decision Making Model of Purchasing Second-hand Car” describes In recent years, with China’s rapid economic growth the price of cars constantly falls and people’s mature idea of consumption as well as higher requirement for life ignite sky rocketing consumption for cars. The second-hand car market, as one of the automotive aftermarkets ushers an unprecedented golden age. Consumers are the key for the survival of second-hand car market, therefore, correctly mastering the basic principle of consumer decision-making, and which factors shall influence their purchasing are helpful to make market strategy and management strategy. This paper firstly reviews relevant researches on consumer decision-making and take second-hand car consumers as the research objectives based on existing research to carry out questionnaire. What’s more, based on data analysis on effective questionnaire with Engel’s model theory, this paper analyzes five influential factors such as the problem recognition, information search, solution evaluation and selection, purchase decision implementation, and post-purchase behavior to finally come up with the decision making model for second-hand car consumers48.
Sagar, Ambuj, D. & Chandra & Pankaj in their Research Entitled Technological Change in the Indian Passenger Car Industry) Sagar et al. (2004), discussed, as to how the Indian car industry has advanced technologically driven by a confluence of factors such as intense competition, demanding consumer preferences, Government policies (especially tightening emission standards), and the global strategies of the various players. They elaborated that car manufacturers in India are based on designs, incorporating advanced technologies, that are often comparable with those available globally and Indian car exports are also growing rapidly 49.
Shahir Bhatt and Amola Bhatt in their research paper titled “With the rapid growth experienced in the Automotive market in India, it becomes imperative for car manufacturers and dealers to understand the buying process followed by consumers and the factors which the consumers weigh while making purchase of a car, which is a capital decision for individuals. With the advancement in technology, these factors also keep on changing. Hence, identifying these factors on a periodic basis becomes important for improving the sales figures. Moreover, there is a dearth of such studies in the context of Ahmedabad city in Gujarat. Given that Ahmedabad is a growing market as indicated by various reports, it makes a case to undertake the present research 50.
Dr. S. Subadra, Dr. K. M. Murugesan, Dr. R. Ganapathi In their research “Consumer Perceptions and Behaviour: A study with reference to car owners in Namakkal District” S. Subadra et al. (2007), postulates the changing perceptions and behaviour of the consumers with special reference to the car owners. Through this research paper the authors discussed how India is witnessing a change in consumerism. Market has now become predominantly consumer-driven. The focus has now been shifted from product based marketing to the need based marketing. Consumer is given many options to choose. This paper discussed the consumer perceptions and behaviour of the car owners which was supposed to give a feedback on how marketing strategies work. This study throws light on various features that the manufacturers should concentrate on to attract the prospective buyers. The authors trace the factor-analysis – factors influencing purchase. The general purpose of this is to find a method of summarizing the information contained in a number of original variables into a smaller set of new composite dimensions with minimum loss of information. It derives out of several variables which are identified as the influencer in purchase decision and satisfying the consumers. Some 14 variables under the sub-head, factors influencing purchase? have been discussed. Hence, an understanding of the consumer behaviour enables a marketer to take marketing decisions which are compatible with its consumer needs. There are four main classes of consumer behaviour determinants and expectations i.e., cultural, socio-economic, personal and psychological. The manufacturers and marketers who study the behaviour of consumers and cater to their needs will be successful 51.
Balakrishnan Menon, Dr. Jagathy Raj V. P. in their Research Entitled “Determinant Mean percentage score factors of the consumer purchase behaviour of passenger cars”, Through this paper the researchers discuss the main purpose hat is to come up with the identification of possible parameters and a framework development, that influence the consumer purchase behaviour patterns of passenger car owners in the state of Kerala, so that further research could be done, based on the framework and the identified parameters. With the multiple choices available to the Indian passenger car buyers, it drastically changed the way, the car purchase scenario in India. It transformed the automobile scenario from a sellers? market to buyers? market. Passenger car customers started developing their own personal preferences and purchasing patterns, which were hitherto unknown in the Indian automobile segment. Researchers conceptualized a consumer purchase behaviour model with major parameters influencing the behavioural patterns of the passenger car owners. In this model it is represented that the consumer behaviour is a blend of Economic, technological, political, cultural, demographic, and natural factors as well as his own characteristics which is reflected by his attitude, motivation, perception, personality, knowledge and lifestyle. The study benefits the stakeholders of car manufacturers, dealers, financing agencies, to formalize and sterilize their policies towards an effective marketing strategy. All the parameters developed in this paper and the model which has been conceptualized was tested through an extensive research and quantitative analysis to establish its acceptability. It is concluded that marketers can rationalize their existence only when they are able to understand consumer behaviour 52.
Renganathan, R. in his Research Entitled: “Consumer Markets and Buyer Behaviour of Cars” Renganathan (2005) analysed the consumer markets and buyer behaviour of cars in Chennai area. The sample size for the study was 135 comprising of people who own a car and those who are willing to upgrade from a two wheeler to four wheelers. Results indicated that 39% of the surveyed respondents expect a car to be luxurious and mid-sized. It makes clear that, the style and appearance of a car also influence a customer?s intention to buy a car. Hyundai has got a substantial market share in the urban areas. It could also conduct some campaigns and road shows in rural areas and cater to the respective markets. Further, he suggests that when a company need an effective advertising to persuade the consumers, it should first concentrate on selection of celebrity endorsers. The brand managers must identify the right celebrity by keeping the long-term impact in their minds, a celebrity advertisements are not only to build powerful brand but also assist to increase the recall level coupled with higher sales53
Badri Narayan G., Pankaj Vashisht in their Research Entitled: “Determinants of competitiveness of the Indian Auto Industry” As in all other countries, the Indian automobile industry is also one of the key drivers of industrial growth and employment, which will further gain in importance in the coming years. Its? recent records of rapid growth of output, productivity improvements and expanding share in global market has perhaps not been so well documented. This study fills that gap. The study helps us understand how the industry?s success is quite directly linked to the trade and industrial policy reforms initiated in the early 1990s. more importantly, this study identifies the critical constraints that prevent the industry from further expansion in the global share and emerge as one of the major production and export hubs in the coming years. According to this study, the major advantage of the Indian economy is educated and skilled workforce with knowledge of English language. So, our disadvantages include poor infrastructure, complicated tax structure, inflexible labour laws, interstate policy differences and inconsistencies. This study analyses the determinants of competitiveness in the Indian automobile industry. The effective rate of protection on automobiles is much higher than on components. With the higher countervailing duty and other cesses/levies, the effective rate of protection for automobile sector would be even higher. The differential rate of effective protection distorts resource allocation and investment pattern in the industry. The import tariff for the assembled vehicles is 60%. Given the low level of protection both for the auto components and CKD/SKD kits, this reflects a policy base in favour of auto assembles. These are few of the recommendations provided by the authors. It has been emphasised to work out for the several constraints, e.g. to strengthen R&D and design capacity, skill shortages, India’s current levels of tariff on capital goods, higher material goods, infrastructure deficit, for strengthening of the anti-dumping mechanism and lack of credit availability etc. At last, the authors opine that, the recommendations provided in this paper, if accepted and implemented, could contribute to India?s emergence as one of the major automobile producing economics in the world. Given our domestic demand and the entrepreneurial talent, this would be a natural outcome54.
Mahipat Ranawat, Rajnish Tiwari in their Research Entitled: “Influence of Government Policies on Industry Development: The case of India’s Automotive Industry” According to this research, the evolution of India’s automobile industry is identified to have occurred in four phases. In the first (1947-1965) and second phase (1966-1979), the important policies identified were related to protection, indigenisation and regulation of the automotive industry. On the one-hand, these policies helped India to build an indigenous automotive industry. While on the other it led to unsatisfactory industry performance. In the third phase (1980- 1990), the single most important policy identified was the one with regard to relaxation in the means of technology acquisition. The foreign competition inducted into the industry transformed its dynamics. Lastly, in the fourth phase (1991 onwards), the liberalization with regard to foreign investment had a significant influence on the Indian automotive industry as we see it today. This work traces the evolution of the automotive industry from its inception to present day and identifies the important policies made by the Indian Government. This work also studies the influence of important policies on the development of the industry. It is also of interest to understand the considerations made on the part of the Indian Government that underlie such policies and to explore the role played by the Government in the development of the industry. With every major shift in policies made by the Indian Government, the automotive industry has come out stronger and better. While the shift in policies seems to have mostly been brought by choice events, theIndian Government has at least to be credited for making the right decisions and implementing them correctly. It’s paradoxical that the Indian middle class, the most attractive features for foreign investment in the liberalization phase, was a outcome of the statist ideologies in the regulatory phase. Author has made a detailed historical account to provide the context and considerations under which the policies were formulated by the Indian Government55.
Shyamala Mathan Sankar “Research Entitled: Consumer Perception of Global vs. Local Brands: The Indian Car Industry”, Shyamala Mathan Sankar (2006), through this research study examines consumer perception of global brands vs. local brands in the Indian car industry. Consumer brand perception is having substantial implications in Marketing. This study explores and helps in understanding consumer perceptions of global and local car brands in India by accomplishing the secondary objectives. The secondary objectives were achieved by highlighting the factors that affect consumer preferences for global brands, by examining the effects of country of origin on consumer perception for global brands and local brands, and by studying the effects of consumer ethnocentrism towards global brands. The findings of this particular study advised that the consumers who possessed global car brands preferred their car brands due to factors such as global presence, worldwide reputation, and quality of being a foreign make. It was found the prestige of status had a very little or no influence in their preference for global car brands consumers made favourable perceptions of the country, wherein they tend to associate factors such as superior quality, technical advancements modernization etc., to the country from which the brand had taken its origin. Consumers who owned a local car brand evaluated the local brand in a favourable manner, wherein they tend to associate the brand to India’s strong automobile sector that makes quality and technically efficient cars. The study found to have both non-ethnocentric consumers and consumers who were low on CET. Most of the study results show, the local brands to be good in India, but not as good as the global ones in quality, technical expertise and designs of the cars56.
York, Richard in his Research Entitled: “Cross National Variation in the size of Passenger Car Fleets: A study in Environmentally Significant Consumption” York (2003) presented a study on cross national variation in size of passenger car fleets. Further, he studied multiple factors (e.g., demographics, economic and socio-political) that potentially influence motorization. Least square regression technique had been used to assess the influence of different factors. For the said purpose sample was collected from 138 nations. The findings of the study suggested that economic development appears to increase motorization and globalization of individualistic social and political structures lead to expansion of car fleets57.
Chapter 4Research Design and MethodologyIn this chapter we are going to explain about the objectives of the study and what research methodology is used to meet the objectives. Following are the objectives of the study:
4.1 Objective of studyBuying Behaviour of a consumer in automobile products.
To identify new marketing strategies for automobile companies.
To identify new trends in marketing to attract the consumer towards the automobile products.
4.2 Research DesignTo meet the objective, an empirical study of consumer behaviour and its effects on marketing strategies was taken in the area of Northern part of India. This study proposed to understand the prospects and position of Indian car industry. This research is based on the parameters like customer choice, their satisfaction, their budget, their demand, their buying behaviour in all context such as social, personal, cultural etc. and the trend of marketing strategies.
Therefore, this research is done in two ways which is ‘explorative’ cum ‘descriptive’ in nature. The study is explorative in the sense that various studies have already been done by the researchers of car industry. So the main focus is on finding out the marketing strategies of car industry in the present era as well as in past days. As many multinational automobile manufacturers have entered in the Indian automobile industry, their marketing strategies are changing day by day according to the present scenario. In the context of first objective, as already mentioned, multinational companies have entered in the industry and they provide so many technological advancements in their vehicle. Hence, the research has been done to find out the consumer buying behaviour according to these advancements.
This research is also descriptive in nature as it involves questionnaire designed to gather, organize and tabulate data about the current scenario of Indian automobile sector as well as global automobile sector.
4.3 Data SourcesThis research work is based on both primary and secondary data sources. The information from which is used to meet the objectives. As secondary sources, data is collected through many sources as online article, web sites, research papers, e-books, journals, newspapers, online reports, statistical reports, and records of automobile companies.
Questionnaire was the main source of colleting the primary data which included marketing strategies and their impact on brand preference, satisfaction and loyalty. Data collection also included collecting information on demographic information of respondents, and their preferred brand of car and car manufacturers. It also included some open ended questions to give the chance to respondents for expressing their view point on various other aspects. However, personal interviews were also conducted of the subjects in the light of same questionnaire.
4.4 Sample areaThe data has been collected from 239 respondent from the Northern part of India (Delhi, Haryana, UP)and 25 car dealers were selected from the highly populated society area. This population is very heterogeneous with various types of people from varied religions, caste, customs, traditions, education, occupation, income etc.
4.5 Procedures for Developing a Questionnaire
Figure 4.1 Procedures for Developing a Questionnaire
4.6 Scope of the studyNowadays, car has become a necessity and forms an important part of human life. Therefore, there is a significant scope to examine the perception and purchase behaviour of the consumers of passenger cars. The study is restricted to Northern part of India. Being economically sound, these areas attract the global car companies along with the national brands. Due to their increasing purchasing power, the people of India are purchasing car for their personal or business purpose or to maintain their social status. Knowledge of the buying behaviour of the different market segments helps a seller to select their target segment and implement marketing strategies to increase the sales. Advertisers and marketers have been trying to discover why consumers buy cars and what other features do they look for in a car for fulfilment of their requirements. And, also what brand they choose or prefer over others. This study tries to analyse the influence of perception of the consumers’ mind and how this information can be used successfully by marketers to change the consumer’s minds. The scope of this research can give good insights to marketers in forming better strategies.
4.7 Limitations of the studyThe study and research will be limited to the Northern part of India only and its results can be used in other states with slight modifications in the demographics, due to socio-cultural and economic differences.
The sample is taken on convenience basis. The respondents are selected as per the passenger car owners only and other segments are ignored. Therefore, result may not be valid for other segments.
Dynamic nature of consumers may make this study invalid over time. Findings of today may become void at other points of time.
Time & budgetary constraints.
4.8 HypothesisBehaviour of buyer is always influenced by social and economic status, family requirements and their primary necessity of transportation.
Buyer is mostly satisfied with Sale/Servicing provided by the dealers.
Buyer is mostly satisfied with the post-purchase experience of car.
There is an association between demand of vehicles and technological advancement.
Prospective buyer behaviour remains unchanged for the future purchase of a passenger car.
No. of footfalls increase in the dealer’s showroom during festive season by more than 5%.
Chapter 5Consumer Buying BehaviourEstablish your budget
Human nature is never satisfying by the availability, his/her wants are very high and always expecting more and more. Also the models of car available in the market, has no exception in this behaviour. So there is a need of constantly modify the models of car and also its features. Now a days, In every 3 months, automobile sector having a new model of car in the market . Therefore, it’s very important to study and understand the behaviour of the consumer towards the products. The present market of India is the best place to understand the behaviour of the consumer. The Companies always monitor the perception of the customer towards brand/product, needs and requirements of the customer. After analysing and understanding the requirements of the customer, company decide what to do in order to meet the requirement of the customer. On the basis of this analysis, companies can also figure out their weakness, strength, position in the market, future progress and improvement in the work practices and operations followed by the company. When product purchased and used by the customer, the regularly using the product decided the satisfaction and dissatisfaction of the customer, which further decide the rejection or repeating purchase of the product. Being a durable and luxury good, Car buying process is not as simple as for other products. According to the J.D. Power research, now the people who want to buy a car use internet to search information about new vehicle. They spending an average of 14 hours and take around one month to make decision and to buy a model.
Determine your needs
Decide what you want
Select a Vehicle
Get Insurance Quotes
Arrange your Financing
Negotiate your Purchase
Fig 5.1 Steps for purchasing a Car
5.1 Customer Purchase Process before Purchasing the CarBefore going to purchase a new car, a customer should go through the following process:
5.1.1 Establish your budgetAnytime when customer wishes to buy any luxury thing, they must know how much money they can spend. You must also decide whether you will pay cash or finance or lease. Decide it according to your suitability.
5.1.2 Determine your needsOnce you fix your budget, just differentiate between your needs and your wants. A bachelor person, a married person, a business man or a salary earning person, a student or an older person, a contractor or a small shopkeeper, every person has its own requirement. Select the best one from the set of products that could meet your requirement as a long term satisfaction with your purchase.
5.1.3. Decide what you wantAs you decide your need according to available budget, now you have to decide what you want in your new car. Wants related Factors are-: Styling, Image, Colour, Reliability, fuel economy, Safety, Technology, Convenience, Comfort, and Capacity Etc.
5.1.4. Select a vehicleAs you decided your needs and your wants, now spend your time to select a car or a vehicle that just suit your needs as well as your wants. First of all, select few cars then compare them. Go to the dealership, Conduct test drives, Evaluate acceleration, ride, handling properties, determine comfort levels, use in-vehicle, select a colour etc. you have to perfectly decide specific item(brand and model) and dealer(from where to buy).
Once all these things have done, your determined budget, your needs, your wants, conduct through research, taken test drives, then you make the best possible decision on a new car.
As you done with all these things, you have to go through these steps before making a deal.
5.1.5. Get insurance quotesWhen you done with your purchase decision, now you have to analysis what the insurance is going to cost.
In Indian market there are too many companies that provide insurance for a vehicle or a car. They consider too many factors when going to fix premium of insurance.
To make prediction about risk, they review statistics. For example younger people are less experienced driver is more likely to get into accident. Single people are more likely than married people to be involved in a crash or damaged or stolen in cities rather than in villages or hill areas.
They also consider the manufacturer, model and type of vehicle you plan to insure. Cost of insurance are also based on how many miles you drive and your credit rating.
You can also compare the quotes of multiple companies through search engine and many web sites.
5.1.6. Arrange your financingKnowing how much a new car will cost to insure and arranging for vehicle financing in advance, are critical tasks to perform before making a deal.
Find out your credit rating
After that, find out car financing options; prepare to pay more per month or to long term the period of the loan in order to keep payments affordable.
After that, find great loan rates, after once you set a loan, then apply for a pre-approved loan and interest rate as a baseline.
5.1.7. Negotiate your dealNow the customer has to decide, what you are going to pay for the new car, how you will buy the new car and where to buy the new car. Before negotiating a deal, check the auto manufacturer’s web site to make sure you are informed about current rebates, lease specials and financing deals.
5.2 Automobile Industry StatisticsOne of the largest auto industries in the world is Indian auto industry. The country GDP is 7.1 percent in industry accounts.
Two wheeler segments is the leader of Indian automobile market with 8.1% market share and also growing through middle class and young population.
The passenger vehicle segment has 13 percent of market share.
A growth of 18.36 percent in April-march 2016 of registered commercial vehicle as compared to April-march 2015.
242,060 units sale of passenger vehicle that is increased by 11.04 percent in April 2016
162,566 unit’s sale of passenger car that is increased by 1.87 percent in April 2016.
62,170 units’ sale of utility vehicle that is increased by 43 percent in April 2016.
468,368 units’ sale of scooter that is increased by 35.86 percent in April 2016.
1,024,926 units’ sale of motor-cycle that is increased by 16.24 percent in April 2016.
5.3. Performance of Auto industryA total of 23,960,940 vehicles manufactured and delivered to customer by automobile industry. These vehicles include Passenger vehicle, commercial vehicle, three wheeler, two wheeler and quadricycle in April 2015-16 as compared to 23,358,047 units in April- march 2015.
5.3.1. ExportOverall Automobile export grew by 1.91 percent in April march 2016. Three wheeler, two wheeler, commercial vehicle, passenger vehicle registered a growth of 0.78 percent,0.97 percent, 16.97 percent, 5.24 percent respectively.
5.3.2.. Gross turnover of automobile industryYear 09-10 2010-11 2011-12 2012-13 2013-14 2014-15
In USD in million 43,296 58,583 66,264 67,607 55,212 58,909
(USD Conversion Rate) 47 46 47 50 60 61
Fig 5.2 Gross turn over Source: SIAM
5.4 Analysis of Data from the Consumer Questionnaire5.4.1 Choosing Car modelsNowadays, there are various new models of car in the market lensed with latest technology and variant. Selection of the car model is randomly based on frequent owner of car in society either by personal use or by profession. A list of car manufacturers given below (Table):
List of Car Manufacturers
Name of the Company Model Name Fuel type
Tata Motors IndicaYes Yes
Indigo yes Yes
Sumo Gold Yes Yes
Safari Strome SUV No Yes
Zest Yes Yes
Vista No Yes
Indigo eCSYes Yes
Indigo XL Yes Yes
Accent Yes Yes
I10 Yes No
I20 Yes Yes
Verna Yes Yes
Eon Yes No
Grand i10 Yes Yes
Fiat PalioYes Yes
Uno Yes Yes
Linea Yes Yes
MarutiMaruti 800 Yes No
Alto K10 Yes No
Omni Yes No
Wagon R Yes No
Swift Yes Yes
Swift DzireYes Yes
Ritz Yes Yes
Honda Brio Yes No
Amaze Yes Yes
New Honda City Yes Yes
Mobilo MPV Yes Yes
CRV SUV Yes No
Chevrolet Beat Yes Yes
Capita No Yes
Sail Sedan Yes Yes
Ford Classic Yes Yes
SUV No Yes
Fiesta No Yes
Mahindra Bolero No Yes
Reva(Electric Car) Scorpio No Yes
Thar Jeep No Yes
Verito Sedan Yes Yes
Verito Vibe No Yes
SUV XUV-500 No Yes
MPV XyloNo Yes
Duster Yes Yes
Pulse Yes Yes
Seadan ScalaYes Yes
Nissan MicraYes Yes
Sunny Yes Yes
SUV TerranoYes Yes
Volkswagen Polo Yes Yes
Vento Yes Yes
So, the research is taken on these cars available in Indian market and people owning the same. Furthermore, Next section presents the profile of research sample taken in this research respectively.
5.4.2 Category Wise Details (Petrol ; Diesel) of Car OwnersName of the Company Model Name Car Owner Total
Petrol Diesel Tata Motors
Indica1 4 5
Indigo 1 5 6
Sumo Gold 1 8 9
Nano7 – 7
Safari Strome SUV – 2 2
Zest 2 3 5
Vista – 4 4
Manza2 2 4
Indigo eCS2 4 6
Indigo XL 1 2 3
Accent 1 3 4
Santro9 – 9
I10 11 – 11
I20 6 4 10
Verna 2 2 4
Eon 7 – 7
Grand i10 2 0 2
Elantra2 2 4
Fiat Palio2 1 3
Punto2 0 2
Uno 1 0 1
Linea 1 2 3
MarutiMaruti 800 12 – 12
Alto K10 14 – 14
Omni 5 – 5
Wagon R 7 – 7
Swift 6 4 10
Celerio2 – 2
Ciaz1 0 1
Swift Dzire5 5 10
Ertiga4 1 5
Ritz 6 4 10
Honda Brio 2 – 2
Amaze 3 1 4
New Honda City 4 0 4
Mobilo MPV 1 0 1
CRV SUV 1 – 1
Chevrolet Beat 2 1 3
Capita – 1 1
Cruze1 1 2
Sail Sedan 1 0 1
Ford Classic 1 2 3
EcoSport2 2 4
SUV 2 1 3
Fiesta – 3 3
Figo3 1 4
Bolero – 6 6
Quanto- 2 2
Reva(Electric Car) 1 – 1
Scorpio – 3 3
Thar Jeep – 2 2
Verito Sedan 1 1 2
Verito Vibe – 1 1
SUV XUV-500 – 1 1
MPV Xylo- 4 4
Renault Duster 3 5 8
Pulse 1 1 2
Seadan Scala0 1 1
Nissan Micra1 2 3
Sunny 1 1 2
SUV Terrano0 1 1
VolksweganPolo 1 2 3
Vento 1 1 2
Total Number of Petrol Cars 153 Total Number of Diesel Cars 86 Grand Total 239
This list shown that out of total respondents, 153 respondents having petrol cars, 86 respondents having diesel car, so there is total number of respondents is 239.
5.4.3. Number of Respondents Gender WiseS.No. Gender No. of Respondents Percentage
Petrol Diesel Petrol Diesel
1 Male 119 63 77.78 73.25
2 Female 34 23 22.22 26.75
Total 153 86 100 100
Table 5.1 Number of Respondents Gender Wise
The number of male respondents (car users) taken for the study from Northern India area was 119 and 63 for petrol and diesel respectively and number of female respondents (car users) taken from Northern part of India area was 34 and 23 for petrol and diesel respectively. It is clear that there are 77.78% and 73.25% male for petrol and diesel respectively in the survey whereas 22.22% and 26.75% female for petrol and diesel respectively.
Fig 5.3 Number of Respondents Gender Wise
5.4.4. Number of Respondents Age WiseS.No. Age in Years No. of Respondents Percentage
Petrol Diesel Petrol Diesel
1 ; 35 years 48 39 31.37 45.34
2 35-50 67 28 43.79 32.56
3 ;50 38 19 24.84 22.10
Total 153 86 100 100
Table 5.2 Number of Respondents Age Wise
The respondents were classified on the basis of age. Age was classified as Upto 35, 35-50, above 50. Maximum number of the car buyers fall in the category of 35-50 43.79% for petrol and 32.56% for Diesel.
Fig 5.4 Number of Respondents Age wise
5.4.5 Number of respondents Occupation WiseS.No. Occupation No. of Respondents Percentage
Petrol Diesel Petrol Diesel
1 Service 52 29 33.99 33.72
2 Business 66 43 43.14 50
3 Professional 22 10 14.38 11.63
4 Others 13 4 8.49 4.65
Total 153 86 100 100
Table 5.3 Number of Respondents Occupation Wise
Consumer’s occupation was classified as Service class, Professional, Business Class, and others. Maximum number of respondents belongs to Business class (43.14% for petrol and 50% for diesel) where as 14.38% for petrol car and 11.63% for diesel car’s owner respondents were Professional. 33.99% for petrol car and 33.72% for diesel car’s owner respondents belong to Service class and 8.49% for petrol car and 4.65% for diesel car’s owner respondents belongs to other class.
Fig 5.5 Number of Respondents Occupation
5.4.6. Number of Respondents Qualification WiseS.No. Qualification No. of Respondents Percentage
Petrol Diesel Petrol Diesel
1 Non-Graduate 39 42 25.49 48.84
2 Under Graduate 47 20 30.72 23.26
3 Post-graduate 52 12 33.99 13.95
4 Others 15 12 9.80 13.95
Total 153 86 100 100
Table 5.4 Number of Respondents Qualification Wise
Respondents were further classified on the basis of their educational qualifications. Maximum number of the respondents was post graduate i.e. 30.72 for petrol car and Non-graduate for diesel car whereas only 1.60% of the respondents were non-graduate. 24.40% belong to under graduate class and 20.80% respondents were having the professional qualification. Rest 10.80% of the respondents belong to any other class.
5.4.7.Number of car in a familyS. No. Number of Car Frequency Total
1 1 102 42.68
2 2 89 37.23
3 3 31 12.97
4 More than 3 17 7.12
Table 5.5 Number of Car in a Family
The table specifies the number of cars owned in a family. Most of the respondents owns 1 cars which is 42.68%, second is the ownership pf two cars in a family showing 37.23%. Third no. with 12.97% is the 3 cars owned in a family and the lastly only 7.12% of the respondents owns more than 3 cars in a family.
Fig 5.6 Number of Car in a Family
5.4.8.Details Analysis of Vehicle Based on Car fuel PreferencesS.No. Car Fuel Variant Frequency Percentage
1 Petrol 143 59.83%
2 Diesel 86 35.98%
3 Electric Car 0 0%
4 Petrol with CNG 6 2.52%
5 Petrol with LPG 4 1.67%
Total 239 100
Table 5.6 Car fuel Preferences
The table represents that highest preferred car fuel is petrol with 50.83%. Second largest is Diesel with 35.98%. Petrol with CNG and Petrol with LPG is the minimum preferred, whereas Electric car was not preferred by any respondent.
Fig 5.7 Car fuel Preferences
5.4.9.. Analysis from First time BuyerS. No. Brand preference Frequency Percentage Rank
1 Tata Motors 23 18.4 2
2 Hyundai 9 7.2 4
3 Fiat 5 4.0 7
4 Maruti41 32.8 1
5 Honda 13 10.4 3
6 Chevrolet 9 7.2 4
7 Ford 7 5.6 5
8 Mahindra 6 4.8 6
9 Renault 5 4.0 7
10 Nissan 3 2.4 9
11 Volkswagen 4 3.2 8
Total 125 100 Table 5.7 Brand Preference of First Time Buyers
As per the above table it is evident that most preferred brand among Indian customer is Maruti with a 32.8% of respondent owning the same. Second preferred brand is Tata Motors which is owned by 18.4% of the respondents. The least preferred brand among the Indian customers is Nissan which is owned by only 3.2% of respondents.
Fig 5.8 Analysis from First Time Buyer
5.4.10.Analysis from Re-Purchase VehicleS. No. Brand preference Frequency Percentage Rank
1 Tata Motors 14 14.58 2
2 Hyundai 7 7.29 4
3 Fiat 5 5.20 6
4 Maruti32 33.33 1
5 Honda 5 5.20 6
6 Chevrolet 6 6.25 5
7 Ford 4 4.18 8
8 Mahindra 12 12.7 3
9 Renault 5 5.20 7
10 Nissan 3 3.125 9
11 Volkswagen 3 3.125 9
Total 96 100 Table 5.8 Brand Preference for Re-Purchase
The table illustrates that the respondents are brand loyal and the most preferred brand is Maruti (33.33%) and Tata Motors (14.58%) for the re-purchase of car.
Fig 5.9 Analysis from Re-Purchase Vehicle
5.4.11. Analysis from price paid by Consumer for a CarS.No. Price of a Car Frequency Percentage Rank
1 Upto 5 Lakh59 24.69 2
2 5-9 Lakh123 51.46 1
3 9-12 Lakh31 12.97 3
4 12-15 Lakh19 7.95 4
5 15-20 Lakh7 2.93 5
239 100 Table 5.9 Price Paid by Customer
The analysis of the price represents that the customer mostly purchase the car in the range of 5-9 lakh range, whereas the second preferred range is upto 5 lakh rupees. The lowest range of price found was between Rs. 15-20 lakh.
Fig 5.10Analysis from Price Paid By Consumer For a Car
5.4.12.Mode of Payment Used by ConsumerS.No. Mode of Payment Frequency Percentage
1 One Time Payment 56 23.43
2 EMI/ Finance 183 76.57
Total 239 100
Table 5.10. Preferred mode of payment
Table 5.10 reveals that only 23.43% of the sample indicated that their vehicle was not financed. The majority (76.57%) had finance, hence customers prefers credit more than cash payment.
Fig 5.11 Mode of Payment Used by Consumer
5.4.13. Sources of information about car before purchasing CarS.No. Source of Information Percentage Rank
1 Internet/E-mail/Social media 31.39% 1
2 TV Advertisement 11.72% 4
3 Newspaper/Magazine 28.03% 2
4 Friends/Family 18.83% 3
5 Brochures/ Printed Display 2.09% 7
6 Wall Writing 1.67% 8
7 Bill Board 2.51% 6
Table 5.11 Source of Information
Fig 5.12 Sources of Information about Car Before Purchasing Car
On the analysis of the above factors, the result revealed that Internet/emails/ social media are the primary source of information as the maximum number of respondents (31.39%) received the information about the car from the mentioned source.
The second most chosen sourceof information is Newspaper and Magazine with 28.03% respondents receiving information from this source. Third important source of information is Family and Friends (18.83%).
The point to note here is that other communication tools used by the manufacturer like brochures, bill board and Wall writing has received the minimum preferred source of information by the customers, hence the marketers can focus on these source and find out the effective way of reaching the target customers through mentioned source of information.
5.4.14. Motivations for Purchasing New Car
Fig 5.13Motivation for Car Purchase
The above figure presents and validates comprehensive model to explain variables that motivate a buyer to purchase a new car. The variables considered as motivation factor for purchasing new car has been analysed through the weighted average score test and on the basis of the score of Weighted Average, ranking has been done accordingly. The weights are assigned as “3 to Most Important”, “2 to Indifferent “and “1 to Least Important”. (MI- Most Important, ID- Indifferent, LI- Least Important).
As per the ranking “item of necessity” came on the first rank with the weighted average score of 2.872 making it the most motivating factor for purchase of car. It is obvious from the result that the second motivating factor for the purchase is Guarantee/Warranty with a weighted average score of 2.702. The least motivating factor is “Marketing influence” and “Source of convenience” with a weighted average score of 1.852 and 1.636 respectively.
5.4.15. Analysis of Factors Influencing Brand preferencesFactors Frequency Percentage Rank
Marketing influence 85 35.40% 12
Brand reputation or image 205 85.70% 1
Imported technology 162 67.70% 5
Good after sales service 190 79.40% 3
Guarantee/Warranty 194 81.17 2
Technology advancement 169 71.90% 4
Promotional strategies 28 11.70% 14
Friend/Relative Recommendation 105 43.90% 9
Level of satisfaction with old brand of car 98 41% 10
Acquaintance with retailer 3 1.20% 15
Discounts available 97 40.50% 11
Resale value 140 58.50% 7
Pick and serve facility 58 24.20% 13
Spare parts availability 120 50.2 8
Competitive price 145 60.60% 6
Table 5.12 Factors Influencing Brand Preferences
This table explains about the 4Ps of marketing and their influence on the customer for deciding upon the particular brand of car. The respondents were requested to rate the factors that they consider in order of preference to choose a particular brand. Then the percentage was calculated to analyse the importance of those variables and the rank was assigned accordingly.
As per the table the top three factors influencing brand preference is as follows:
Brand reputation or image (85.70%)
After Sales/Service (79.40%)
The least affecting factor for car purchase is the “Acquaintance with the dealer” (1.20%)
From the table is evident that the customer associates the reputation of the brand with the good performance and the satisfaction from the product. The least preferred factor which is “acquaintance with the dealer” represents that when a customer visits the showroom, he has already collected the information from various sources, and the dealers influence contributes least to the purchase.
Figure: 5.14 Factors Influencing Brand Preference
5.4.16. Analysis of Pre- Purchase Strategies
Fig: 5.15 Pre-Purchase Strategies
The above figure represents the pre-purchase strategies used by the customers for purchasing the car. This part of the chapter represents and the technique used to analyse the data related to above variable was to take the Weighted Average Score Test. And the weights are assigned as “3 to Strongly Agree”, “2 to Indifferent” and “1 to Strongly Disagree”.
Based on the Weighted Average Score the variables were ranked in the order of preferred pre purchase strategy. The table clearly shows that the “Collecting data from others ranks first in effective strategy with a weighted average of 2.702 followed by “test drive”, weighted average score 2.701 and “visiting dealers showroom” is third important strategy with a weighted average of 2.604. Due to the rising influence of Internet & social media as shown in the result with the weighted average of 2.396, it has also become an important factor and the marketers’ can also focus on these due to its wide reach in the community.
5.4.17. Role of Reference Groups in Making Purchase DecisionsReference Groups (N=239) Frequency Percentage Rank
Spouse 126 52.70% 1
Children 74 30.9 4
Parents 45 18.80% 6
Siblings/ Dealers 48 20.08 5
Opinion Leaders 37 15.80% 7
Friends 115 48.10% 2
Self-Decision 95 39.70% 3
Any other 15 6.27% 8
Table 5.13Reference Groups Influencing Purchase Decision
The above table explains how essential the role of “Spouse” (52.7%), followed by the “Friends” (48.10%) is in the purchase decision of customer buying the car. The least important is opinion leaders (15.8%) and others.
Fig: 5.16 Role of Reference Groups
5.4.18. Customer Satisfaction level with the dealersRating Frequency Percentage Rank
Excellent 61 25.5% 2
Good 115 48.1% 1
satisfactory 48 20.1% 3
Poor 15 6.3% 4
Total 239 100.0% Table 5.14 Customer Satisfaction with the Dealer
The customers were asked about the satisfaction level with the Sales/Services provided by the dealer. The interpretation of the table clearly states that majority of the buyer experience “Good” sales/services level provided by the dealers with a percentage of 48.1%.
“Excellent” service was experienced by 25.5% of the respondents, whereas poor was 6.3% only.
Fig 5.17Customer Satisfaction with Dealer
5.4.19. Analysis of Customer’s satisfaction level with the owned/ purchased brand of carParameters Frequency Percentage Rank
Very Satisfied 98 41.00% 2
Satisfied 126 52.70% 1
Dissatisfied 12 5.02% 3
Very Dissatisfied 3 1.23% 4
Total 239 Table 5.15 Customer Brand Satisfaction
The above table probes into the post purchase experience and satisfaction of the customer.
The analysis illustrates that 41% of the respondents are very satisfied, 52.7% are satisfied, 5.2% are dissatisfied and 1.2% respondents are very dissatisfied.
Hence overall more than 90% of the respondents falls into satisfied category and approximately 6% of the respondents falls into not satisfied category.
Fig: 5.18Customer Brand Satisfaction
5.4.20. Analysis of Future Preferences for the Brands of CarBuy same brand in Future Frequency Percentage Rank
Yes 125 52.30% 1
No 114 47.69% 2
Total 239 99.99% Table 5.16: BrandPreference for Future Purchase
The above table was aimed at finding the possibility or preference of the buyer to buy same brand of car in future.
As per the response a total of 52.30 % of the respondents said that they prefer to buy the same brand of vehicle. Whereas, 47.69% of the respondents mentioned that they might opt for other established and reputable brand based on their product upgradation, required features in the car, technological advancement, budget suitability, affordability of total cost of ownership in the long run.
Fig: 5.19Brand Preference for Future Purchase of Cars
5.4.21. Dislikes/Problem faced by the Car Consumers Related to their CarParameters Frequency Percentage Rank
Sales & servicing 45 18.80% 4
Maintenance 59 24.60% 2
Spare parts availability 51 21.30% 3
Fuel economy 38 15.80% 5
Breakdown 11 4.60% 9
Outdated styling 65 27.19% 1
Safety 35 14.64% 6
Driving discomfort 30 12.55% 7
Any other 15 6.27% 8
Table 5.17 Dislikes/Problems Faced Related To Car
To analyse this question, the buyers were asked to tick as many parameters they have experienced as the major reason for dislike or the problems pertaining to their car. The frequency was then converted to the percentage and the ranks were allotted to the various parameters.
As per the table the “outdated model” of the car (27.19%) is the major reason for dislike. Due to cut throat competition the car manufacturers are coming up with various technology, state of art design and introduction of new styles, accessories and technology in the car, hence the buyer is tempted to buy the latest model with advance features and trendy and stylish designs.
Fig 5.20 Reason for Dislikes/Problems in The Car
5.4.22. Analysis from the dealer’s questionBelow is the analysis of dealer’s questionnaire pertaining to the key selling points of the cars. The Weighted Average Score test has been used to analyze the data. Further, ranking has been done accordingly. And the weights are assigned as “3 to Strongly Agree”, “2 to Indifferent” and “1 to Strongly Disagree.
The figure reveals that brand reputation and driving comfort with the weighted average score of 2.8800 are the most preferred key selling points of passenger cars followed by “Good After Sales Service”, “Technological Advancement” and “Luxurious Item”.
The least considered point while purchasing the car as per the analysis of mentioned factors are “discounts”, “promotional strategy” and “location of workshop”.
Fig 5.21 Key Selling Point of the Car
5.4.23. Analysis of financing facilities provided by the car dealersFinancing Limit Frequency Percentage
2-5 Lakhs4 16%
5-10 lakhs8 32%
More than 10 lakhs13 52%
Total 25 100%
Table 5.18Finance Options Provided By Dealer
From the Table 5.18, it can be clearly seen that most of the sample fall in the category of More than 10 lakhs with 52%.Least number (12%) of the respondents fall in the category of 2-5lakhs.Banks should pay more attention to this segment considering a large percentage seeks vehicle finance.
5.4.24. Analysis of average number of footfalls in a week in the dealer’s showroomAverage no. of Footfall Frequency Percentage Rank
Upto 100 7 28% 2
100-200 14 56% 1
200-300 4 16% 3
Total 25 1.00 Table 5.19Average Number of Footfalls in a Week in the Dealer’s Showroom
Results in the Table 5.19indicates that maximum number (56%) of the footfalls in a week in the dealers? showroom lies in the category of 100-200 followed by, “Upto 100” with a frequency percentage of 28%. Minimum respondents (16%) fall in the category of “200-300”.
Fig 5.22Customer Visiting Showroom in A week.
5.4.25. Percentage Increase of Footfalls during Festive SeasonPercentage Increase Frequency Percentage Rank
5-15% 5 20% 2
15-25% 11 44% 1
More than 25% 9 36% 3
Total 25 100% Table 5.20 Increase in Footfall During Festive Season.
Table 5.20 clearly shows that maximum number(44%) of the sample lies under the category 15-25% followed by more than 25% (36%). Least number of the respondents (20%) indicates that percentage increase of footfalls during festive season is 5-15%.Though mostly customers make their vehicle purchase in the festive season, it is recommended to the marketer that an attempt should be made to introduce new strategies during festive season which lead to increase in sales.
Fig 5.23 Increase of Footfall during Festive Season
Chapter 6Marketing Strategies to Influence Consumer6.1 Marketing StrategyWorld’s largest automobile industry is Indian auto industry. The industry holds 7.1 per cent of country’s Gross Domestic Product (GDP). The maximum two wheelers vehicle owners are from middle class and young generation that 81% of market share21. While talking about the production, According to the report of SIAM (Society of Indian Automobiles Manufacturers), the industry produced a total number of 23,960,940 vehicles having passenger vehicles, Commercial Vehicles, Three wheelers, two wheelers in April-March 2016.
6.1.1. Market SizeAs per the report of ACMA(Automotive Component Manufacturers Association of India), in past 4 years around $6 billion has been invested. In April 2016, passenger vehicle’s sales upgrade to 11.04% to 242,600 units, sales of passenger cars is increased by 1.87% to 162,566 units, sales of scooters is increased by 17.36% to 53,835 units.
Category 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Passenger Vehicles 29,82,772 31,46,069 32,31,058 30,87,973 32,21,419 34,13,859
Commercial Vehicles 7,60,735 9,29,136 8,32,649 6,99,035 6,98,298 7,82,814
Three Wheelers 7,99,553 8,79,289 8,39,748 8,30,108 9,49,019 9,33,950
Two Wheelers 1,33,49,349 1,54,27,532 1,57,44,156 1,68,83,049 1,84,89,311 1,88,29,786
Grand Total 1,78,92,409 2,03,82,026 2,06,47,611 2,15,00,165 2,33,58,047 2,39,60,409
Table 6.1 Automobile Production Trends: Source SIAM24
The requirement of motorcycles increased by a strong 16.24% to 1,024,926 units.(3)
Further these are the following objectives of this chapter:
Challenges facing by the Indian automotive industry
Analysis of market strategies of different Companies and its effectiveness to their customer.
6.2 Challenges faced by the automotive industry6.2.1 ModularizationIn terms of increasing technology, granularity the car manufactures facing the challenge of modularization. Many different groups require different specific needs, so increasing the demand of customization defines as the challenge of maintain the product lines, multiples features. Car manufacturers have to provide numerous modules on the same vehicle architecture and also within the same cost. Companies have to be advancing themselves to support this modularization.
6.2.2. Increasingly regulatory requirementsFor ensuring the quality of the four wheelers, regulatory requirements are increasing day by day in terms of emissions, fuel efficiency, software, product safety, reliability security and safety features. So, automotive software safety is a most important key concern for the car manufacturers.
6.2.3. Prominence given to electronics and softwareProminence given to electronics and software increasing the some of the cost of vehicle, as well as some new features also provided to the customer by car manufacturers. Embedded devices and software expanded the capabilities of road vehicles such as autonomous parking and driving, think infotainment systems etc.). These new features emphasizes on transferring the attention of car manufacturers from manufacturing and gain knowledge in non-traditional fields.
Manufacturers are continuously expecting the benefits that adequate process, tools and software solutions could bring them.
6.2.4. Data management and IoT connectivityDue to so many new technologies (sensors, microcomputers, etc.) adverted and built in four wheelers, the available data is increasing day by day. Usage statistics and maintenance, data can be gathered and transmitted via the wireless connection as almost every industry having the internet of things(IoT) to change in the working culture and of course to transform the way the industry is being worked on.
Companies have to manage with the issue of gathering, storing, managing, and simply making sense of the huge amounts of customer or vehicle data gathered by sensors and devices inbuilt in cars. Ensuring the security and privacy of this data is and will continue to be of vital importance.
In terms of security, ensuring the speed and reliability of data interchange are also fundamental, and will help to open up new options and ways for autonomous cars. Requirement of self-driving cars is communicating to each other very frequently snd to minimize accidents it should be safe and dependable manner.
According to all these challenges faced by industry, we can say that, 2016, is very special and exciting year for automobile manufacturer. Companies regularly focus on new technology and software, so they can provide regular benefit to their customers and being up in automotive industry.
With all these challenges of automotive industry, they invent new technology, and their development definitely affects the fortune and success of the car manufacturers.
6.2.5. Analysis of market strategies of different Companies and its effectiveness to their customerDefining and understanding the behaviour of customer having the vehicle, or want to have a vehicle is very most challenge for the automotive companies.
6.2.6. An Automotive Marketing Strategy Analysis SolutionAutomotive companies have so many marketing challenges. Incentive programs for Customers and Dealers, Generally taking the form of Financing, Leasing and Cash Back programs, incentives are regularly offered, so making it tough to recognize their ability to drive new versus repeat purchases. The vehicle purchase cycle is also lengthy process than other products. This enhance the value of all type of investments such as short term, product focused, long term and brand focused marketing investments. Other bigger investment is a competitive environment, price of vehicle, and innovation.
6.2.7. Finding the answer of Tough Business Questions:How do I optimize investments to drive consumers along the path to purchase?
Am I accurately targeting nameplate-specific marketing to the right consumers?
What’s the optimal mix of marketing investment across brands, segments in my portfolio?
What is the right balance of national, local and dealer marketing?
Which vehicle perform best in driving traffic? What is unit sales and profitabitlity?
Which incentives perform best at driving traffic? Unit sales? Profitability?
Are dealer incentive programs driving long-term incremental volume?
What is the right balance of brand and retail messaging?
How does my marketing impact brand loyalty and retention?
What is the role of digital media, social media, and other emerging media in driving funnel progression?
How effective are sponsorship, event and experiential marketing tactics?
How can I quantify the impact of public relations, product innovation and reception?
What is the optimal timing and execution of marketing investments to maximize sales?
Am I capturing all available demand signals to accurate gauge funnel health?
Through this study, we found there are three emerging trends that automotive marketers need to consider in their growth strategy.
Finally, all the trends that the automobile industry requires a very much effective approach and strategy.
Strategy 1: Create an Efficient and Attractive Approach for Marketing New and Used Cars
The purchase of any product needs an attractive proposal that attract customers. Purchasing car of specific brand require the cost efficient and attractive proposal for any customer. This proposal defines how to influence consumers as they take decision to purchase your brand car and take a step ahead.
Reasons that influence the car purchasing decisions of different buyer that is, new buyer or existing buyer or a first-time buyer versus an existing owner. According to analysis we found both new and used car buyers were most interested to take a test drive and to receive helpful tips; while used car buyers were far very much showing their interest in taking virtual tour of the model of car, it’s interior, price, security and also compare them with other available options in market.
Knowing about what drives purchase decisions allows you to focus your marketing strategies to address the unique needs of the buyers in your market.
Strategy 2: Focus More on the Parameters as Why They Want To Buy
As auto marketers know, connecting with how people feel as much as how they think can be a powerful motivator. The role the car plays in the consumer’s life is one key to unlocking the drivers of demand.
What matter most for the consumer is also matter for the seller as well as for the manufacturer?
So finding out these parameters at almost 85% is very near about to success to selling a car and they can almost make a customer ready to purchase a car.
If you aware about the consumers driven status, then efforts should be centralized on this demand and it should be priority. Meanwhile, finance-driven consumer or utility minded consumers have to keep focus on consumer desires and their needs.
Strategy 3: Invest In Your Own Online Assets for Maximum Impact
From traditional media outlets—such as TV, newspapers, magazines and radio—to still-developing online and mobile platforms, it can be difficult to know which method is the best way to reach your intended audience. A random survey or advertising show that they has been very helpful when purchasing a new vehicle.
According to survey, for new car buyers, visiting the dealer and using online resources are the lead sources of information during the research phase of the decision-making journey. For used car buyers, online media is the most utilised resource at this stage.
Communication between 2 persons and online available resources are also very helpful for consumers for moving forward their purchasing decisions.
As define in introduction part, the mutual impact of these three parameters (macroeconomic forces, a new age of personal transportation, and stricter regulations), which have taken to middle stage in the auto industry, is not easily managed or manufactured.
As an top executive leading an automobile manufacturer or a supplier, we have too familiar with the urgency needed to confront each of these unavoidable aspects of the auto business and their effect on to company, although you may not yet have a plan to do so. We recommend that you consider these steps as the basis of your strategic plan:
Step 1: Launch, learn, and adapt faster than ever — but not rashly.
You should prioritize in advance, but try to find the ways to take risks without sacrificing sound execution that can specify both customer satisfaction and, more importantly, safety. In short, a company must be true to its DNA while evolving as rapidly as possible. To follow this strategy you should answer the following questions
Determine whether new intelligent and connected vehicle features can be developed in-house.
Does your company have the capability to establishing advanced research unit?
Do your customers expect that your brand will provide unique and distinctive proprietary solutions?
If this route is not the right one for your business, prepare an approach for partnering with companies from outside the traditional automotive sphere, which should include advantageous arrangements involving licensing, revenue sharing, and ownership of intellectual capital.
Furthermore, engineer have to evaluate better vehicle performance by smartly investing in new technologies, such as lightweight materials, advanced transmission and engine solutions, and alternative powertrains, to satisfy emissions rules.
Step 2: Prioritize your market
Like the U.S. and E.U., in assessing the problematic macro market forces, the traditional large markets, are relatively easy to steer through compared to emerging regions? Nonetheless, you need to prioritize growth in Asia and other developing areas because they represent as much as two-thirds of potential sales gains in the coming years. The one of the best way to approach this somewhat perilous economic period is to diligently focus on capacity management using sophisticated inventory and sales data systems to measure supply and demand. Companies that have the best market intelligence and analysis capabilities — and that use these skills to manage production output on a day-to-day basis — will excel in emerging regions, as these countries will undoubtedly go through economic ebbs and flows in their development phase.
Step 3: Invest In advertisements and find the most effective mode of advertisement to reach the target customers.
Any strategy or method you want to implement or apply should be on predicted values. The uncertainty and discontinuity will affect the next decade to the auto industry. If the method are already planned then there is too much improvements over the economics of the auto industry and it will give a better growth and better shape to the industry and features that attract customers and word of mouth (rather than commoditized components, such as yet another dashboard redesign); developing a right sized and efficient factory footprint; healthy collaborative relationships with suppliers; and creating a strong distribution base on customer service 29.
Chapter 7Summary and ConclusionThis thesis is an investigation into consumer perceptions towards passenger cars in Northern part of India. Automobile industry is mixture of petroleum, steel and manufacturing process. This gave an opportunity to work with many peoples and enhance to all entrepreneurs. It justifies the basic needs of people and automobile industry is the backbone industry of the country and also positively affects the economics.
Indian automobile industry is all set to play the same role in Indian economy. The four-wheeler market in India is also one of the fastest growing and most promising. No wonder, it has become a centre of attraction for most of the global automobile players.
India is constantly growing and increasing its flowing rate, and by this making its mark in the world’s automobile industry. This study of consumer behaviour deals with the decision-making process and physical activity, individuals engage in when evaluating, acquiring, using, or disposing of goods and services 69. It is concerned with the understanding of individual’s purchasing and consumption activities. Consumer behaviour is the primary aspects of marketing plan of any manufacturing company 70.
Behaviour of consumer is influenced by cultural factors, social forces like family, reference groups etc. and perceptions 71. Consumption is the key to understand why consumer buys products 72. The study of consumer decision processes has been a focal interest in consumer behaviour forever 30 years. Understanding consumer behaviour is crucial for the following reasons:
(1) The marketing strategy of companies, their chances of success being bigger when decisions are well founded and aren’t made just intuitively,
(2) Policy making from the legal authorities, aiming at diminishing or creating behaviours with a positive impact on individuals and the society in general, and
(3) The information of the consumers, so that they can understand the strategies and tactics used to influence them and be able to set limits for these influences when necessary. Automobile market is of significant interest because of the substantial impacts of automobile production and usage on a variety of public policy concerns including trade flows, business cycles etc. Automobile industry is the symbol of technical marvel by human being. Automobiles are highly differentiated durable goods with variable lifetime 73. The Indian automobile sector has emerged as one of the significantly developing and growing sectors in the last decade. The automobile industry of India has witnessed tremendous growth in all sections, right from two wheelers, three-wheelers and passenger car segment. A number of studies have been conducted on consumer behaviour towards cars74. But this study specifically illustrates the consumer behaviour for the purchase of passenger cars. Uttar Pradesh has become the main avenue with potential for consumption of variety of products and services.
Indian auto mobile industry having different segments that is two wheelers, three wheelers, passenger cars, heavy commercial vehicle, light commercial vehicle, agriculture and farm vehicle. From past 20 years having the positive influence on economics like China, Japan, USA.
Today, the Indian automobile industry is definitely one of the most vibrant, modern and upbeat automobile markets of the globe. With the emergence of financially sound middle- class, the four- wheeler segment is witnessing terrific growth and one can expect more contribution to the economy from this sector in the near future. Indian automobile sector has now become the centre of attraction for most of the global automobile giants the world over. De-licensing in 1991, brought revolutionary changes in the industry and provided well deserved and timely growth impetus to the respective industry. This attracted foreign auto giants to set up their production facilities in the country in a bid to take advantage of several benefits provided by the industry.
With the excellence of too many manufacturers Like Toyota, Ford, Tata, Mahindra and Mahindra etc. Indian automotive industry has drastic change in July 1991, the automotive industry has grown up with the rate of 17% for past few years. The industry has turnover of USD $35.8 billion and investment of USD $10.9 billion.
The employment provided by the industry is about to 13.1 million people directly or indirectly. Automobile industry is currently contributing about 5% of the total GDP of India. The projected size in 2016 of the Indian automotive industry varies between $ 122 billion in exports. This translates into a contribution of 10% to 11% towards India’s GDP by2016, which is more than durable the current contribution. Automobile sales in India have been growing at a fast rate due to easier availability of finance and launch of numerous models instead of the fact that most auto makers raised price thrice in 2010 to offset rise in taxes and input costs. In present aspect, people in India are trying to change their life style and they are disappointed with the public transport system. This has led to the exponential sales of passenger car segment in the domestic market.
The consumer demand function is based on discrete choices and during each market period, every consumer is assumed to choose the optimal vehicle package from among those available 73. The proposed study especially focuses on the analysing consumer behaviour for passenger cars. It would be helpful for various car manufacturers to know about purchase behaviour of the population of Northern part of India and accordingly they conform comprehensive strategies for them.
7.1 FINDINGSThis part of the chapter highlights the main findings of this research.
7.1.1 Findings of Analysis of Role of Sources of InformationInternet/Emails/Social media is the most important source of information considered with maximum frequency of 31.39%. Newspaper/Magazine ranks as the second important variable with frequency percentage of 28.03%. It indicated that the Print media like newspaper and magazine and Broadcast media like Internet and Social media reaches customers quickly and effectively to make them aware of the products in the market. Third effective source of information was friends and family.
The marketers need to understand that the consumer behaviour is evolving and they need to anticipate this evolution in order to be part of, or to be ready to influence the customer.
A multi-channel approach will be required to cover the potential market for online sales. Effective web strategies will be vitally important, as the online landscape evolves rapidly with the emergence of powerful consumer-to-consumer tools like blogs, discussion forums, social networking sites, Instagram and virtual worlds. The need of effective web strategy is indispensable.
These findings help the marketers in understanding the behaviour of customers and help in knowing the role of information sources in deciding the marketing and promotional strategy for launching new models or to inform and persuade customers to buy the particular brand and accordingly strategies can be made for them. As Friends/Family also play a very important role, it is recommended that marketer should target other members also like spouse, friends and children etc. for the word of mouth advertising and influencing buying decision. Manufactures should also focus on keeping the current customer happy as they are also a very important source of information in terms of building the Brand Image.
7.1.2. Findings of Analysis of Variables Motivating New Car PurchaseThe variables that motivate buyers to purchase a new car have been deliberated.”Item of Necessity” is the most important variable with a Weighted Average Score of 2.872.
“Guarantee/Warranty” is the second most important variable with a weighted average score of 2.702.The third important variable was “Family Requirement” accounts for Weighted Average Score of 2.672.From the result it is evident that the necessity and the convenience of the family is the most important motivating factor for the car purchase. To avoid any future troubles and for the safety and security reasons, people gives importance to the Guarantee/warranty.
The marketers need to analyze the importance of these variables in customer’s decision making processes and actions prior to purchasing the car. Further exploring into the emotional, physiological, and social factors influence consumer purchases of car related to these variables would be beneficial for making marketing strategy.
Marketer can focus on the aspect of customer requirement which states that unlike earlier days when passenger car was perceived as extreme luxury, in today’s world it has probably acquired the status of necessity to many state dwellers. More than half of the sample as noted above still sees the purchase of a vehicle as a need to fulfil the primary need of transportation.
Testing of Hypothesis
As the findings demonstrates that one of the important motivating factor for the purchase is primary need of transportation, followed by family requirements, safety and security and economy in terms of the affordability, the Hypothesis no. 1 is proved by Fig 5.13.
Behaviour of buyer is always influenced by social and economic status, family requirements and their primary necessity of transportation.
7.1.3. Findings of Analysis of Factors influencing consumers brand preferencesThe findings elaborated on the marketing mix being used by the consumers to make a purchase decision. The result highlighted the value of a Brand Image (85.70%) and the several activities done by the manufacturers to influence the customer, including the Guarantee/Warranty (81.2%) on the product and “after sales activities” (79.40%). It was evident that a customer needs assurance of the good performance of the product and the value for money. Hence, before going for high end products like a passenger car, the Brand Image, Guarantee/Warranty and the After Sales service was given the high importance to get the assurance about the quality and services related to the product.
Marketers can use this information and make the marketing strategies accordingly to reach the target customer.
7.1.4. Findings of Analysis of Pre-Purchase Strategies adopted by the CustomerThe analysis of pre-purchase strategy can be utilized by the marketers for deciding upon the most effective strategies for reaching the customer. As the study shows two important variables of pre purchase strategy, showing “Collecting information from other” ranking no. 1 with the weighted average of 2.702 and “Test Drive” at no. 2 with the weighted average score of 2.701. It clearly showed that customers believe in doing their own research and finding information about the car before they visit the showroom. Customer may have a perception that the people from inside the company may not give full information about the car and may be tactful in selling the product.
Below are the three primary reasons why a marketer need to analyze consumer buying behavior and the pre-purchase strategies used by them for making purchase decision:
To remain alert and tuned in to consumer reactions to a specific marketing strategy, to find out what types of marketing strategies work with which groups of consumers.
To be more certain that the marketing mix (product, price, place/distribution, and promotion) is satisfactory. By analyzing the what, where, when and how of consumers buying behavior, a company can gain assurance that they are doing all that is possible to satisfy their customers’ needs and wants.
To be better prepared to predict, with greater accuracy, how consumers might respond to future marketing strategies and appeals.
As the second important factor is “Test Drive”, marketing activities pertaining to test drive can be focused by the dealers for attracting customer to visit the showroom.
Third important pre-purchase strategy is “Visiting dealers showroom” with the weighted average of 2.604. These three aspects can be focused by the marketer. While adopting the global retail sales cycle with the 9 steps, the salesman in the showroom can turn the prospective customer to the buyer.
Global Retail cycle
Fig: 7.1 Six Steps of Global Retail cycle
Thereafter, the 9 steps of retail cycle can be used to turn the prospective customer to the buyer.”Reading Auto Magazines” is the least important with Weighted Average Score of 1.948. Respondents do not prefer reading auto magazine for gathering information for their purchase.
7.1.5. Findings of the analysis of the role of reference groups in influencing their car purchase decisions.The study reveals that that the “Spouse” with a frequency percentage of 52.7% and “Friends” with a frequency percentage of 48.10% is the most referred reference group which play a vital role in making car purchase decisions as people are more influenced by them so they take their opinion before purchasing the product.
“Self-decision” is the third most chosen option with frequency percentage of 39.70%. It might be due to the reason that customer does not tend to ask any other before making his purchase. “Any other” with frequency percentage of 6.27% accounts for the least important reference group. “Any other” could consist of neighbour, peer group etc.
The marketers can use this aspect of consumer behaviour to target the influencing group while promoting the product. The other reference groups can also be targeted by the marketers such as children, siblings, opinion leaders which has the possibility of influencing the purchase. This will increase the prospect of reaching the target audience through the broader reference groups
7.1.6. Findings of Analysis of customer satisfaction level with the dealer pertaining to Sales/ServicesAs per the findings from the data, it is evident that 48.1% of the respondents rated the dealer service as “Good”, 25.5% rated “Excellent”, 20.1% rated satisfactory and poor was rated by 6.3% of the respondents.
To keep the trend of customer satisfaction with the dealers, the dealers are increasingly adopting new marketing strategies to reach the customer and reduce the response time to customer queries. For e.g. marketing automation tools to automate and personalize communications with new prospects are widely used by the dealers. So for example, if a website visitor fills out an online form expressing interest in a certain vehicle, an automated email can be triggered with information about that vehicle and an alert can also be sent to the sales team for follow-up. Dealers using marketing automation are 2x more likely to see higher marketing ROI than dealers who do not use marketing automation.
Dealers are also utilizing the data they have on hand prior to contacting a prospect. The most common pieces of consumer data include basic contact details, vehicle interest, and purchase/service history. The data is used to keep connected to the customers and keep them informed about the product and promotions.
Testing of hypothesis
As the combined rating of Excellent, Good and Satisfactory is more than approximately 90%, the hypothesis that Buyer is mostly satisfied with the sales/services provided by the dealer. The post-purchase experience relates to satisfaction or dissatisfaction stemming from confirmation of disconfirmation of actual performance versus expected performance. The majority (97%)confirmed that their vehicle matched their expectations. Hence the Hypothesis no. 2 is proved: Buyer is mostly satisfied with post purchase experience of their car.
7.1.7. Findings of Analysis of customer post purchase satisfactionThe study shows that more than half of the sample 52.7% represents satisfaction with the purchase.41% of the respondents were very satisfied with the purchase. This can be inferred that the satisfied customer are more likely to be brand loyal.
Improving customer satisfaction is a goal sought by many businesses. Measuring customer satisfaction is an important element of customer empowerment. The satisfied customer conveys positive word of mouth. As the satisfaction is related to the expectation, the marketers can use the common saying in business that is”underpromise” and “overdeliver.” In other words, set customers’ expectations a bit low, and then exceed those expectations in order to create delighted customers who are enthusiastic about the product.
Another customer satisfaction strategy involves offering customers warranties and guarantees. Warranties serve as an agreement that the product will perform as promised or some form of restitution to the risk-averse customer as a reassurance of the performance of the brand/product.
Customer’s complaint handling is also a major component of making customers satisfied.The customer’s attitude toward the company is improved, possibly even beyond the level of his or her original satisfaction when the complaints are handled diligently by the company. Following steps can be followed in handling customer complaints:
Listen carefully to the complaint
Acknowledge the customer’s feelings
Determine the root cause of the problem
Offer a solution
Gain agreement on the solution and communicate the process of resolution
Follow up, if appropriate
Record the complaint and resolution
Testing of Hypothesis
As more than half of the sample represented good satisfaction level and overall satisfaction level among respondents was above 90%, which proves the Hypothesis no. 3:
Buyer is mostly satisfied with the post-purchase experience of car.
7.1.8Finding analysis future preferences for the brands of passengerIn this day and age, everyone is seeking validation and positive reinforcement to feel that they have made right decision.
The findings interprets that 52.3% of the sample indicated that they would buy the same brand in future. This suggests that the majority of the sample could be considered to be somewhat brand loyal and is less likely to switch to another brand when they have to go through the process of purchasing a vehicle in future.
The result shows that mostly customers prefer to buy products from a well- known and familiar brand, rather than opting and taking a chance by going for the unknown or new brand. The brand association creates a positive attitude and feeling that makes a connection of the customer with the brand, especially when it comes to decision making. Most of the people are loyal with the specific branded cars, over time they purchase the same branded car because the specific brand has satisfied the customer’s needs and in turn has gained the trust in the brand name. People often purchase a familiar brand because they feel more comfortable and secure while buying a specific brand as they are aware and familiar with the brand name and reasonable trust in the reliability and quality. This can be an essential factor when it comes to the actual purchase decision. If the brand name is superior then the customer is ready to pay the high price, due to the trust in the brand name
Marketers can interpret this information as the customer retention is the key to success in the automotive industry. As per the previous studies it was shown that:
It is 50% easier to sell to existing customers rather than new customers.
Attracting a new customer can cost 6-7 times more than keeping an existing one.
Every car sold with a service package has nearly a 50% increase in retained margin over the customer lifetime (ICDP)
However, it is important to note from marketing prospective that 47.69% have indicated the need to switch brands. It is assumed that product and situational factors such as product up gradation, required features in the car, technological advancement, suitable as per budget, affordability of total cost of ownership in the long run could play an important role in the customer’s need to switch brand.
In this case the company can focus on the first ‘P’ of marketing which is product. As per the current trend customers are opting for hybrid cars due to efficient fuel consumption and due to the ongoing “Go green” campaign. Also customers are shifting from Japanese make car to Korean make cars due to latest trendy designs.
The manufacturer can focus on technological advancement, to attract the customer who is influenced by the latest trendy designing and style of the car.
Certain benefits can also be associated with the car purchase to make the overall package to make the deal look attractive by providing free servicing, insurance, extended warranty, added accessories and benefits for retaining customers in the same brand.
Testing of hypothesis
As more than half of the sample opted to choose same brand for future purchase, hence the hypothesis no. 5 is proved: Prospective buyer behaviour remains unchanged for the future purchase of passenger car.
7.1.9. Findings of Analysis of Dislikes/problems faced by the car consumers in their car”Outdated Styling” is major problem of maximum consumers with frequency percentage of 27.19%, followed by the “Maintenance” (24.60%) and “Spare Parts Availability” (21.30%).
“Breakdown” and “Any Other” (space, interior etc.), secured equal frequency of 4.60%, and 6.70% respectively, are least preferred problems faced by the car users. It may be due to the reason that there is cut throat competition among the car manufacturers and consumer seeks technological advancement as per the need of time.
The manufacturers can focus on the various parameters stated by the buyers for improvisation such as coming up with the better design for the car consumers, updated safety features, driving comfort, better maintenance, easy availability of the spare parts, providing better after sales servicing, as it aids in reducing dislikes for the respective cars.
7.1.10. Findings of analysis of key selling points of carsAs per the analysis from the dealer’s questionnaire, “Brand Reputation” and “Driving Comfort” are the most important key selling points that explained the Weighted Average Score of 2.8800, followed by the “Technological Advancement”, “Good after Sales Services” and “Luxurious Item”, with Weighted Average Score of 2.8400. Discount, promotional strategy and the location of the workshop is the least effecting key selling point of the car.
Hence it can be interpreted less preference should be given to availing discounts as people assigned less weight-age to the “discounts available”. It can be said that people prefer driving comfort, company’s brand image, technological advancement, good after sales service, their social esteem, safety & security features more than any other variable. So, marketer should try to target the customers on the basis of these variables that accounted for convenience of customers. Companies should try to come out with such requirements of the car buyers and try to reflect these in their promotional strategies as much as possible.
Testing of hypothesis
As the technological advancement plays a significant role in the key selling point of car, the hypothesis no. 4 is proved that there is an association between demand of vehicles and technological advancement.
7.1.11. Finding analysis of percentage increase of footfalls during festive season
Dealer’s questionnaire investigated the percentage increase in footfalls during festive season. The analysis clearly shows that maximum number(44%) of the sample lies under the category 15-25% followed by “more than 25%” (36%). Least number of the respondents (20%) indicates that percentage increase of footfalls during festive season is 5-15%.Though mostly customers make their vehicle purchase in the festive season due to religious beliefs or for celebration.
The marketers can utilize this aspect of consumer behavior and introduce new strategies during festive season which lead to increase in sales such as:
Provide extra benefits to the loyal customers like a flat discount for all purchases during a certain period in festive season.
Offer Festive Gifts, specially designed for the particular occasion
By celebrating the festival in the showroom and decorating the showroom with the festive theme like lights and decorations for Diwali, putting a Christmas tree during Christmas time or the or new year.
Simple give away presents to every customer who visits the showroom such as gift vouchers, cinema tickets, simple card with chocolates etc.
Informing customers about the offers during the festive season, through SMS, emails, store announcements, hoardings etc. Informed customer will visit the showroom to get the details and then the prospective customers can be turned into buyers.
Manage the customer footfall in the showroom during the festive season. The showroom should be ready with the facility to handle increase customer footfall and avoid long queues or to reduce customer waiting time.
Testing of hypothesis
As it is evident from the result that customer visits during the festive season increases by 5-15%, hence the Hypothesis no. 6 is proved: No. of footfalls increases in the dealer’s showroom during festive season by more than 5%.
7.2. SUGGESTIONS & RECOMMENDATIONSIn reviewing the results, the followings are the recommendations to the marketer.
1. The automobile industry has undergone a drastic change in terms of consumer perceptions as well technology. Behaviour displayed by the researched group clearly showed that major factors that accounted for pre-Purchase Search Strategies are “Collecting Information from Others”, “Test Driving” and “Visiting Dealer’s Showroom” Marketer should improve on these aspects. Customers rely more on “Collecting Information from Others” for gathering the knowledge about specific cars.
Marketer must focus on displaying car in the showroom, organizing automobile shows in order to attract customers on large scale.
2. In order to maximize the customer base it is recommended that marketer should target other members also like spouse, friends and children etc. in order to increase sales. Marketers have to frame better policies for car consumers as they tend to ask others before purchasing cars in order to attract even more customers. The results can help the marketers in understanding the behaviour of customers and help in knowing the role of information sources in deciding a particular model of the car in India and accordingly strategies can be made for them. The results revealed that deciding the car model decisions are mostly influenced by the Friends/Family followed by customer himself. Marketers have to refresh better policies for car consumers as they tend to ask others before purchasing cars in order to attract even more customers.
3. The results revealed that the most important factor that makeup the brand selection is Brand Reputation or Image followed by guaranty/warranty. And the least important factor is Acquaintance with Retailer.
4. Results of analysis of variables motivating new car purchase reveals that guaranty/warranty, item of necessity and family requirements are the important variables motivate an individual to purchase a car. The results clearly showed that consumers prefer to purchase car for their convenience. They preferably seek Guarantee/warranty, their family convenience etc.
5. Outdated styling, maintenance and spare parts availability are the main problems faced by maximum respondents in their car. Marketer should try overcoming these problems to increase sales.
6. Banks should pay more attention to this segment considering a large percentage has already sought vehicle finance.
7.3. Suggestions from the customers:Skoda’s consumer seeks the technological advancements in their vehicle.
Hyundai is very famous but it should come out with fuel efficient version so that desires of individuals can be satisfied.
Suggestion from the Ford’s consumers, “It must be re-designed and must come with more luxurious in the same price” and “ground clearance should be improved within same range”
Suggestion from the Tata car’s consumer “company should provide variety in models, and it should be more economic and stylish”
Hyundai’s consumers want their car to be more luxurious at affordable price and fuel efficient.
Maruti car’s consumers complain about the weak car body and sometimes disappointed with the after sales services. Other changes include marginally revamped interiors and substantially more space.
Marketer should notice the suggestion and an attempt should be made to introduce new and improved strategies which lead to increase in sales of the company.
7.4 CONCLUSION”The characteristics of the socio-economic and cultural environment in which we have lived and are living – has intimately influenced our resources, tastes, and preferences. It therefore affects our behaviours customers by helping to define what we can and want to use, pay for, and buy.”
-Sheth, Mittal & Newman
After the detailed analysis of this exhaustive study, it is the time to bring it to a meaningful conclusion. The global automobile industry is a key sector of the economy for every major country in the world.
The industry continues to grow, registering a 30 percent increase over the past decade (1995-2005) (Source: OICA). In the post liberalization era consumers experienced a lot of changes in the quality of their life in various product segments, especially in passenger car segment. A number of car brands competing with each other have left the consumer with a large no. of alternatives to choose from. The presence of large number of alternatives in this segment is the important factor in studying the consumer behaviour. The rise in disposable income, wide choice of models and easy availability of finance will drive growth in passenger car segment and future looks even brighter. The data collected and analyzed to bring profitable insights for the marketers.
Various factors and motivators that derive the purchase behaviour of the mass have been compiled through primary data and the changes in the outlook of the consumer’s mindset have to be considered carefully by the marketers. It was concluded that an intensive study is done before hand by the buyer before going for a particular car as most of the respondents made a self-decision for a particular product. The rising disposable income levels, technological advancements have compelling effects on the marketers to now concentrate on a wide variety of factors demonstrated by the target consumers. Marketers have to come out with innovative promotional strategies to attract this segment of the consumers. Pre-Purchase Search Strategies adopted by the consumers have to be carefully tackled by marketers in order to increase profitability. Hopefully the marketer will find the present study useful and logical for tapping the consumers of the India.
The goal is to present the analysis of consumer behaviour so that the marketers can concentrate on the right track to tap the market by keeping in mind the findings of the study. By understanding these underlying factors associated with consumer behaviour, policies can be designed on the desired lines and also implemented them smoothly so that the researched area begin to reap their full potential.
7.5. SCOPE FOR FURTHER RESEARCHThere is engulfing potential for further research in this area. This section suggests these potential avenues for future research, which may be pursued by researchers of their interests.
Since this study is confined to the state of Northern part of India only, the researcher may focus on the other parts of country to generalize the findings of the study.
Inter-State comparison can be made to study the topic in comprehensive way.
Researcher may concentrate on marketing mix to have in depth knowledge of the state.
An examination into the financial implications of purchasing vehicle could be conducted across the state.
Researcher may examine how marketing programme strategies affect consumer perceptions for cars.
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ANNEXURES No. 1(No.1)
QUESTIONNAIRE (FOR CONSUMERS)Dear Respondents,
I solicit your kind co-operation in filling up this questionnaire to be used for my Ph.D. thesis titled, “Impact of Marketing Strategies on Customer Buying Behaviour in Indian Passenger Car Industry (A Case Study in Northern India). I shall be grateful if you kindly spare some of your valuable time to respond the knowing questions. Contents and information provided by you shall be kept absolutely confidential and used only for academic purposes.
Kindly tick where appropriate:
PART – I
1. Name: …………………………………………………………………..
2. Age (years): ………………………………………………………….
3. Gender:i) Male ii) Female
4. State: ………………………………………….
i. Service ii. Professional
iii. Business iv. Others
6. Educational Qualifications:
i. Non-Graduate ii. Under Graduate
iii. Post Graduate iv. Professional
v. Any other (Specify)……………
7. Family Income (Rs. Per month)
i. Below 50,000 ii. 50,000-2,00,000
iii. 2,00,000-5,00,000iv. 5,00,000 ; above
8. Address ; Contact No. /e-mail:……………………………………………
PART – II
9. How many cars are owned in your household?
i. 1 ii. 2
iii. 3 iv. More than 3
10. What kind of vehicle you own
iii. Petrol with CNG
iv. Petrol with LPG
v. Electric Car
11. Which brand(s) of car(s) do you own?
i. ………………………………… ii. …………………………………
iii. ……………………………… iv. …………………………………
12. What is/are the make and model of your car(s)?
i. ……………………………… ………………………………………
ii. ……………………………… ………………………………………
iii. ……………………………… ………………………………………
iv. ……………………………… ………………………………………
13. If this is not your first car, what was the make and model of previous
i. ……………………………… ………………………………………
ii. ……………………………… ………………………………………
14. What Price of the car you may agree upon to pay for a preferred Car of your liking:
i. Upto Rs. 5 Lakhii) Rs. 5-9 Lakhiii) Rs. 9-12 Lakhiv) 12-15 Lakhv) Rs. 5 Lakh15. Mode of payment you did opt for buying the car:
i. One time/Cash Down
16. Source of Information about model before you purchased it: (tick asmany)
i. T.V. Advertisements
vi. Brochures/Printed displays
vii. Wall writing/bill board
ix. Other (Please specify)………
17. A list of variables that may motivate you to purchase a new car, is given below. Tick the appropriate option where MImp. – Most Important, ID – Indifferent, LImp – Least Important
Variables MImp., ID, Limp.
i. Symbol of social status
ii. Time saving device
iii. Discounts during festive seasons
v. Item of necessity
vi. Marketing influence
vii. Luxurious Item
viii. Family requirement
18. Given below is a list of variables that affects an individual in selecting a particular brand of car. Tick the appropriate option(s) you considered while making your purchase: (tick as may)
i. Marketing influence
ii. Brand reputation or image
iii. Imported technology
iv. Good after sales service
vi. Technology advancement
vii. Promotional strategies
ix. Level of satisfaction with old brand of car
x. Acquaintance with retailer
xi. Discounts available
xii. Resale value
xiii. Pick and serve facility
xiv. Spare parts availability
xv. Competitive price
19. What are the pre-purchase strategies adopted by you before purchasing the car. Tick the appropriate option 🙁 Can tick more than one)
Talking to sales persons
Looking at advertisements of cars
Collecting information from others
Visiting dealer’s showroom
Reading auto magazines
20. Who among the following affects you most in making car related decisions? (Tick upto 3)
vii. Solely self
viii. Any other (Pl. specify)……..
21. Your satisfaction level regarding sales and after sale servicing provided by dealers?
i. Excellent ii. Good
iii. Satisfactory iv. Poor
22. How satisfied are your with your current car?
i. Very satisfied ii. Satisfied
iii. Dissatisfied iv. Very Dissatisfied
23. In future if you wish to buy any other car, would you like to buy the preferred car of same company?
i. Yes ii. No.
24. If No, than which brand of car other than yours comes to your mind and why?
25. Dislikes/Problems faced in your preferred car out of the listed ones: (Can tick more than one)
i. Sales & servicing
iii. Spare parts availability
iv. Fuel economy
vi. Outdated styling
viii. Driving discomfort
ix. Any other (Pl. specify)…………………………
26. Any other thing you would like to share about your car?
(Signature of Respondent)
ANNEXURES No. 2(No.2)
QUESTIONNAIRE (FOR DEALERS)I solicit your kind co-operation in filling up this questionnaire to be used for my Ph.D. thesis titled, “Impact of Marketing Strategies on Customer Buying Behaviour in Indian Passenger Car Industry (A Case Study in Northern India)
I shall be grateful if you kindly spare some of your valuable time to respond the knowing questions. Contents and information provided by you shall be kept absolutely confidential and used only for academic purposes.
Kindly tick where appropriate:
PART – I
1. Name: …………………………………………………………………..
2. Age (years): ……………………………………………………………
3. Gender: i) Male ii) Female
4. Address: …………………………………………………………………
5. Mobile No. /e-mail: …………………………………………………….
PART – II
6. How many years of dealer experience do you have in this trade?
i. 0-5 years ii. 5-10 years
iii. 10-15 years iv. More than 15 years
7. What are the key selling points of premium cars? (tick as many)
i. Symbol of social status
ii. Luxurious item
iii. Driving comfort
iv. Safety & security
v. Family requirement
vi. Credit payment
vii. Discounts available
viii. Marketing influence
ix. Brand reputation
x. Technological advancement
xi. Promotional strategies
xii. Good after sales services
xiii. Location of workshop
8. Occupational profile of maximum premium car customers?
i. Business ii. Service
iii. Professional iv. Others
9. Does your company provide financing facilities?
i. Yes ii. No
10. If yes, than to what extent do you provide financing facility?
i. <2 lakhs ii. 2-5 lakhsiii. 5-10 lakhs iv. More than 10 lakhs11. Average No. of footfalls in a week?
12. Percentage increase of footfalls during festive season:
iii. More than 25%
(Signature of Respondent)***