Overview of the automotive industry in India India is emerging as a source of high value and advanced quality engineering products and services for multinational companies. India is set to emerge not only as a large domestic market for automotive manufacturers, but also as a crucial link in the global automotive chain. Among other industries, the automotive industry in India is understood to be the most dynamic. It has been experiencing strong growth rates after delicensing of the industry in 1991, when major economic reforms took place in India. A snapshot of the Indian automotive industry The automotive industry in India produces a wide range of vehicles like passenger cars, utility vehicles, commercial vehicles, two- wheelers, three-wheelers and tractors. Currently, there are approximately 15 manufacturers of passenger cars and utility vehicles, 9 manufacturers of commercial vehicles, 16 manufacturers of two- wheelers and three-wheelers and 14 manufacturers of tractors. The Indian automotive industry is one of the world’s fastest growing automotive industries growing at a Compounded Annual Growth Rate (CAGR) of approximately 17 per cent over the last five years. It is now the eleventh largest manufacturer of passenger cars, fourth largest manufacturer of commercial vehicles and the second largest manufacturer of two-wheelers in the world.1 The automotive industry in India 6 Largest manufacturers in the automotive industry The largest Indian passenger car manufacturers include Tata Motors, Maruti Suzuki, Mahindra & Mahindra and Hindustan Motors. Presence of foreign players such as Mercedes-Benz, Fiat, General Motors and Toyota is also growing in this segment. Recently, the passenger car segment has also seen the entry of other global majors such as BMW, Audi, Volkswagen and Volvo. Major Indian manufacturers of commercial vehicles are Tata Motors, Ashok Leyland, Eicher Motors, Mahindra & Mahindra and Force Motors. Like the passenger car segment, this segment has also seen foreign companies such as MAN, ITEC, Mercedes- Benz, Scania and Hyundai entering the market. Two-wheeler manufacturing is dominated by Indian companies like Hero Honda, Bajaj Auto and TVS. Foreign players in this segment include Honda, Yamaha 1
Transcript
Overview of the automotive industry in India
India is emerging as a source of high value and advanced quality engineering products and services for multinational companies. India is set to emerge not only as a large domestic market for automotive manufacturers, but also as a crucial link in the global automotive chain. Among other industries, the automotive industry in India is understood to be the most dynamic. It has been experiencing strong growth rates after delicensing of the industry in 1991, when major economic reforms took place in India.A snapshot of the Indian automotive industryThe automotive industry in India produces a wide range of vehicles like passenger cars, utility vehicles, commercial vehicles, two-wheelers, three-wheelers and tractors. Currently, there are approximately 15 manufacturers of passenger cars and utility vehicles, 9 manufacturers of commercial vehicles, 16 manufacturers of two-wheelers and three-wheelers and 14 manufacturers of tractors. The Indian automotive industry is one of the world’s fastest growing automotive industries growing at a Compounded Annual Growth Rate (CAGR) of approximately 17 per cent over the last five years. It is now the eleventh largest manufacturer of passenger cars, fourth largest manufacturer of commercial vehicles and the second largest manufacturer of two-wheelers in the world.1
The automotive industry in India6 Largest manufacturers in the automotive industryThe largest Indian passenger car manufacturers include Tata Motors, Maruti Suzuki, Mahindra & Mahindra and Hindustan Motors. Presence of foreign players such as Mercedes-Benz, Fiat, General Motors and Toyota is also growing in this segment. Recently, the passenger car segment has also seen the entry of other global majors such as BMW, Audi, Volkswagen and Volvo. Major Indian manufacturers of commercial vehicles are Tata Motors, Ashok Leyland, Eicher Motors, Mahindra & Mahindra and Force Motors. Like the passenger car segment, this segment has also seen foreign companies such as MAN, ITEC, Mercedes- Benz, Scania and Hyundai entering the market. Two-wheeler manufacturing is dominated by Indian companies like Hero Honda, Bajaj Auto and TVS. Foreign players in this segment include Honda, Yamaha and Piaggio. Three-wheeler manufacturing is also led by Indian companies that include Bajaj Auto, Force Motors and Mahindra & Mahindra.
Segments Domestic sales
Exports Total Current Global position
Passenger 3.00 1.10 4.10 7Commercial car
0.70 0.08 0.78 4
Three wheelers
0.97 0.50 1.47 1
Two wheelers 32. 3.00 35.00 2Tractor 0.65 0.05 0.70 1
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Market Share- Passenger Car 2009-10(April-Mar)
Passenger Vehicle production (Quantity are thousands)
The automotive industry is one of the largest industries in India and is a key driver for growth in the economy. Owing to its deep forward and backward linkages with other sectors in the economy, the automotive industry has a strong multiplier effect on the economy.
A well developed transportation system plays a vital role in the economic and industrial development of the country, where the Indian automotive industry has a crucial part to play.
The Indian automotive industry is one of the world’s fastest growing automotive industries growing at a Compounded Annual Growth Rate (CAGR) of approximately 17 per cent over the last five years. It is now the eleventh largest manufacturer of passenger cars, fourth largest manufacturer of commercial vehicles and the second largest manufacturer of two-wheelers in the world.
Largest manufacturers in the automotive industryThe largest Indian passenger car manufacturers include Tata Motors, Maruti Suzuki,Mahindra & Mahindra and Hindustan Motors. Presence of foreign players such asMercedes-Benz, Fiat, General Motors and Toyota is also growing in this segment.Recently, the passenger car segment has also seen the entry of other global majorsSuch as BMW, Audi, Volkswagen and Volvo.
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Contribution of the automotive industry to the economy
YearShare of transport sector in GDP
2003–2004 6.22004–2005 6.4
Automobile Industry in India has witnessed a tremendous growth in recent years and is all set to carry on the momentum in the foreseeable future. Indian automobile industry has come a long way since the first car ran on the streets of Bombay in 1898. Today, automobile sector in India is one of the key sectors of the economy in terms of the employment. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher.
In the initial years after independence Indian automobile industry was plagued by unfavourable government policies. All it had to offer in the passenger car segment was a 1940s Morris model called the Ambassador and a 1960s Suzuki-derived model called the Maruti 800. The automobile sector in India underwent a metamorphosis as a result of the liberalization policies initiated in the 1991. Measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies played a vital role in turning around the Indian automobile industry. Until the mid 1990s, the Indian auto sector consisted of just a handful of local companies. However, after the sector opened to foreign direct investment in 1996, global majors moved in. Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world.
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ENVIRONMENTAL SCANNING
MARUTI- SUZUKI
Economic variable- Maruti-suzuki
The Indian economy has grown at a compound rate of about 9% annually for the last 4 years (2006-2009) the automobile industry has correspondingly grown rapidly. The subprime crisis in the USA, accompanied by the huge rise in crude oil prices have triggered. Inflationary pressures in most parts of the world, particularly the developing countries. Interest rates haveGone up, and money supply is being tightened by the Central Banks.
Maruti Suzuki has decided to increase prices of its cars with immediate effect. The price increase on various models ranges from Rs 1,000 to Rs 9,000.
“ Due to sharp increase in the input costs and also introduction of BSIV norms in some models, the company has decided to pass on part of this cost impact to customers,” India's middle class, which according to a McKinsey report was 50 million in 2005, would jump by 11.6 times or about 583 million by the end of 2025.
And, people who earn Rs 10 lakh (Rs 1 million) per annum would grow four-fold from the current 4.4 million households to 18.1 million by 2020.
The reason is higher incomes. McKinsey's estimates suggest that as a result of rising incomes, 291 million people will move out of poverty and climb to higher income groups.
Further, with India's gross domestic product growing at about seven per cent yearly in the
past 10 years, its per capita income has grown by 9.11 per cent annually from $439 per person in
1999 to $1,050 per person in 2009.
The government stimulus programmes and personal tax incentives will mean higher
disposable income.
"Apart from that, if we take a view beyond 18-24 months, there are other triggers such as
creation of one million private sector jobs, and recruitments at IT (information technology), PSU
(public sector undertaking) banks and insurance companies.
"Additionally, hike in salaries by 10-15 per cent, implementation of Sixth Pay
Commission will lead to higher discretionary spending.
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The ripple effect of rapid urbanisation, a burgeoning middle class, with higher disposable
incomes, should favour consumption-based sectors this have higher impact on Maruti has it is
mainly targeted on middle class people and majority of sales are coming from this class.
The Indian automobile industry is expected to post robust annual growth rates of about
10-12 per cent.
For four-wheeler companies . Maruti due to improving affordability, low penetration (just
20 cars per 1,000 against 600-900 cars in the developed world) and emergence of a large, well-
heeled middle class.
New models and favorable interest rates kept the momentum going for car sales in May
2010 as demand remained strong growing by 28%.
The key factor in future for Maruti would be the effect of rising inflation on interest rates
will be an important factor.
The inflation rate in August 2008 was 4.1% where as in August 2009 it was 12.1% and
the interest rate in the year 2006 it was 10% and where in the FY 2008 it is 14%. The crude oil
price from last 4 years is increasing rapidly and it is affecting to the automobile sector in the year
July 2007 it was 80$/Barell and in the April 2008- 95$/Barell
May2008- 120$/Barell
June2008- 135$/Barell
July 2008- 136$/Barell
August 2008-110$/Barell
Currency headwinds to impact profitability
The recent debt crisis in Europe has resulted in a sharp depreciation in Euro against all
major currencies. Maruti’s 80% of exports being Euro denominated is likely to witness an
adverse impact of Euro depreciation. While the company has hedged its first six months exports
exposure, the 9% EUR/INR depreciation would impact Maruti’s exports realizations subsequent
to the H1FY11 period. Further, with Yen imports accounting for approx 25% of net sales, the
company enters into a cross currency hedge in EUR/JPY terms, which has also moved adversely.
As per our analysis, we expect an ~ 2% decline in FY11 and FY12 operating profits, based on
50% of the net exposure being impacted by spot rates in FY11 and 100% exposure to spot rates
in FY12.
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The recent price hike of ~ 1% on blended basis, MSIL would be able to partially offset some portion of commodity cost increase. Adverse forex movement is likely to impact operating profits by ~2% in FY11E and FY12E, based on Maruti’s unhedged exposure.
Indian government is giving more support for foreign players to have a set up in India.
Several global auto majors have announced new launches in India, with the view to participate in
the high growth market. Recognizing the local preferences, most new launches are targeted at the
compact car market. Most of the new launches are expected to have high levels of localization
and therefore pricing is likely to be aggressive.
With favorable demographic trends and increasing proportion of population entering into the affordability net for passenger cars, the proportion of first time users (FTU) in total sales have been steadily rising. We believe this trend favors the incumbents which have a proven track record and a well entrenched sales and service network.
First time user- 45%
Replacement- 30%
More than one car- 30%
TECHNOLOGICAL FACTORS
21 Jan, 2010, 12.23AM IST, Lijee Philip,ET Bureau
Indian auto cos to fast-track R&D
MUMBAI: Indian automakers are under growing pressure to scale up spends by 25-30% on R&D and new product launches. A change of habit is in order in the face of fierce competition from global rivals looking to lure consumers with superior product innovations and cheaper, compact models in the Indian automobile market, among the last bastions of growth.
The total expenditure of the local car makers on R&D as a percentage of sales are low compared to global players such as Honda, Toyota or General Motors (GM).
With car sales in India, riding on strong economic growth and government incentives, poised to rise about 16% this year to 1.4 million vehicles, global companies such as Honda, GM, Ford, Volkswagen and Toyota have designed cars exclusively for the Indian market. At the recently-concluded Auto Expo in New Delhi, Toyota unveiled Etios, Volkswagen came out with Polo while GM launched Beat, all compact cars. Late last year, Ford rolled out small car, Figo.
Faced with a slump in many developed markets, auto majors are taking aim at the world’s fastest-growing car market after China. Even at the recent Detroit auto show, global automakers unveiled a number of hybrid gas-electric and battery-powered models. In contrast, launches of Indian companies have been few and far between. Except for Tata Motors’ Nano, few Indian
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models have managed to catch the world’s fancy.
And global majors did not cut investments to develop fuel-efficient cars, electric vehicles and alternate fuel technology even through the global crisis or when revenues fell, according to analysts tracking the sector. “Only those auto makers will be differentiated who spend on R&D and who address issues of the automotive industry which include climate change,” said Abdul Majeed, auto practice leader, PwC.
Revenues of Toyota dropped from $262 billion in 2007 to $209 billion in 2008, but the Japanese auto major maintained its R&D budget at $9 billion. Similarly, GM kept its R&D costs $8 billion despite revenues falling from $180 billion in 2007 to 149 billion in 2008.
Local auto companies have till date toyed with merely adapting or re-engineering products, their R&D budgets choked by falling margins and debts. “Auto companies need to spend significant amounts on R&D as customers interest cannot be sustained unless companies launch new products,” said IV Rao, managing executive officer of engineering at Maruti Suzuki.
The company, 54.2% owned by Japan’s Suzuki Motor, did little more than facelifts of existing variants till 2000, but has since stepped up its R&D focus after turning a dominant player in the small car market. “Maruti Suzuki will launch its first fully-configured India small car developed by its own engineers,” said Mr Rao, adding that the company’s number of R&D engineers will rise to 1,000 by April.
Maruti Suzuki introduces next generation CNG technology New Delhi, August 13, 2010 Launches five factory-fitted CNG models across segments Advantage Customer:
Contemporary i-GPI technology Vehicle body design for CNG system
Performance and Drivability at par with gasoline powered engine
Safety reinforced: High Quality Components, Integrated wiring harness, CNG system leak-proofing, toughened suspension
High fuel efficiency Dual ECU system for enhanced performance
Lower running costs by 60 percent Extensive performance testing
Peace of Mind: Full warranty coverage, Service support across the country
No compromise on engine life
The country's largest car maker Maruti Suzuki today unveiled its flagship CNG engine technology, 'intelligent-Gas Port Injection' or i-GPI on five popular models. The CNG vehicles were unveiled by Mr. Jairam Ramesh, Hon'ble Minister of State (Independent Charge)
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Environment and Forests in the presence of senior government dignitaries and Maruti Suzuki management team. The models include SX4, Eeco, WagonR, Estilo and Alto and are being launched in Delhi NCR, Mumbai and Gujrat. With this initiative, the CNG footprint of the company spreads across entry level cars, compact cars, sedans and MPV segments.
On the occasion, Maruti Suzuki India Chairman RC Bhargava said, We are happy to bring contemporary CNG technology to the Indian customer. We are confident customers would value our i-GPI technology that is safe, reliable, clean, responsive and environment friendly. Adapting the CNG technology in our vehicles is another step to keep low cost of ownership for our customers.
Shinzo Nakanishi Managing Director & CEO Maruti Suzuki India said, The development is significant on multiple counts. This is the first instance when a car manufacturer has developed and launched factory-fitted technologically superior CNG engines in India. Compressed Natural Gas is environment friendly and also reduce country's dependence on imported fuels. Maruti Suzuki's big ticket entry into CNG fuel segment augurs well for the environment.
Peppy and responsive 'intelligent-GPI technology'
The i-GPI or Intelligent Gas Port Injection bi-fuel technology offers an intelligent ride. Intelligent as it ensures more power vis-à-vis retro-fitted CNG vehicles and offers a peppier ride experience at par with that of a petrol-fuelled engine, while achieving high fuel efficiency at the same time. The factory fitted CNG vehicles score very high on safety and reliability vis-à-vis the aftermarket retro-fitted options. Maruti Suzuki CNG vehicles pass through all the quality checks, processes and systems similar to a regular car manufactured at Maruti Suzuki plants.
Service support across the country
As the CNG technology is factory fitted the customers will enjoy the full warranty benefits including extended warranty. To top it all, the CNG vehicles from Maruti Suzuki will enjoy the nationwide back up of over 2700 Maruti Service Stations.
The simultaneous launch of five CNG vehicles with the same contemporary technology demonstrates the company's intent and future readiness to produce environmentally friendly vehicles in large numbers.
Steps in Environment care
Maruti Suzuki has the distinction of introducing a host of environment friendly programmes ahead of government regulations and the industry. This includes implementing End of Life Vehicle (ELV) programme where harmful elements like Lead, Cadmium, Chromium and Mercury are not used in making vehicles. Maruti Suzuki produced the first BS-IV and E-10 compliant engines much ahead of regulations coming to force in the country. Developing a factory-fitted CNG engine is another effort by the Company to contribute to a clean environment.
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Technology up
The factory fitted CNG vehicles use advanced Intelligent Gas Port Injection technology. Maruti Suzuki R&D team has integrated this technology with the Company’s range of engines and products to bring the benefits to the consumers.
In a leap over alternative aftermarket options, the i-GPI technology is a Dual ECU (Engine Control Unit) technology. This highly reliable system delivers accurate amounts of gas to the engine thus ensuring improved and consistent performance under various driving conditions.
The i-GPI technology uses separate injectors for each cylinder. Based on inputs from the ECU, metered CNG quantity is injected to the engine through gas ports. The quantity of CNG required for different driving conditions is controlled by the dedicated ECU, leading to more efficient fuel usage. Similar to the usual pre-launch evaluation, each of the cars with i-GPI CNG technology has been extensively tested for around 2 lakh kilometers in varied terrains. In addition, over 3,000 hours of bench tests have validated the design and performance to bring unmatchable combination of performance and reliability for the customers.
While working on the new CNG technology, Maruti Suzuki engineers focused on critical aspects of safety, reliability and performance.
CNG for the future : Government of India has committed to developing the infrastructure and network of the CNG stations across the country. This is in line with government’s aim to reduce the dependence on import of fossil fuels. With the discovery of large gas reserves in the country the network of CNG supplies is set to expand rapidly in near future. Maruti Suzuki’s launch of CNG technology vehicles will help create the eco system for use of a clean and cost effective fuel in India.
The Ex-showroom Delhi price (Rs Lakh) of Maruti Suzuki CNG vehicles is as under
Alto Lxi Eeco 5-seater Ac SX4 Vxi WagonR Lxi Estilo Lxi
3.23 3.64 7.47 4.11 4.05
Maruti Suzuki Swift awarded the Frost & Sullivan 2010 Aspirational Car of the Year Award in Segment B
New Delhi, September 22, 2010 Maruti Suzuki Swift was awarded the Frost & Sullivan 2010 Aspirational Car of the Year Award in Segment B. The award was received by Mr. Shashank Srivastava, Chief General Manager Marketing, Maruti Suzuki India Limited.
The Frost & Sullivan 'Aspirational Car of the Year' Award is conferred to a manufacturer based
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on a structured research process and by evaluating the performance of its products by end users. The "Voice of Customer" survey recognizes an OEM that has launched the best models across various segments of passenger vehicles, satisfied aspiring needs, and been rated high for its achievement in "Excellence in Technology and Innovation".
Maruti Suzuki Swift is a truly global vehicle. It is built with typical Japanese precision, attention to detail, tested for unique Indian road conditions and customer requirements. Maruti Suzuki Swift is an example of the growing recognition for Indian intellectual and engineering capabilities. Maruti Suzuki's R&D capability, evident time and again in its efforts to upgrade existing models, has attained a new definition with Maruti Suzuki Swift.
Maruti Suzuki's Swift diesel model houses a next generation DDiS engine with a 16-valve cylinder head for more power and higher engine response, leading to a smoother drive. It boasts of a combination of Turbocharger, Intercooler, and a Double Overhead Camshaft for high performance. Swift houses the latest Chain Drive Timing System engine, which is maintenance-free for its entire life cycle.
5 lakh K-series engines roll out
New Delhi, August 20, 2010 Landmark reached in 23 months of introduction
Maruti Suzuki India Limited, the country's leading car manufacturer, today announced the production of a record 5 lakh K-series engines in less than 23 months.The first K-series engine was manufactured in October 2008.
The company has an installed capacity of 500,000 K-series engines annually. To meet the growing market demand, Maruti Suzuki recently announced an expansion plan of additional 200,000 K-series engines by 2012.
The K-series engines are available on seven Maruti Suzuki models including, Alto-K10, Wagon R, Swift, Ritz, Estilo, Swift Dzire and A star.
In this short period since its launch, the celebrated K-series all-aluminum light weight engine has built a reputation of best-in-class fuel efficiency combined with top performance.
On the occasion Managing Director and CEO, Shinzo Nakanishi said, "Introduction of K-series engine in India is an example of Maruti Suzuki's commitment to take the engine technology in
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India to the next level. In a short span, the company has scaled up the production of K-series engine manifold. K-series engines are environment friendly and fuel efficient while delivering performance."
K-series engines : Technical aspects
The new K-series engine is a result of enormous R&D efforts and hours of design, validation and testing. The engine realizes the true spirit of the global design trend of optimizing engine performance through innovative design techniques.
Some of the salient features of the all-new K engine are:
All Aluminum Low weight engine for Best in class fuel efficiency
Smart Distributor Less Ignition (SDLI) system with dedicated plug top coils, High pressure semi-return fuel system and advanced injectors for superior atomization provide uniform and optimized combustion for better performance
Optimised Cylinder block, Light Piston and Nut-less Con Rod for light weight configuration
Improved engine stiffness and use of advanced technology like silent timing chain to improve NVH (Noise, Vibration & Harshness) characteristics
There is 10 % less friction in K-series engines vis-a-vis engines with older technologyMaruti Suzuki launches Alto-K10 New Delhi, August 04, 2010 Package of best in class fuel efficiency, power and performance Brand Alto, India's largest selling car brand, now gets even more strength.
Maruti Suzuki today launched another version of Brand Alto, equipped with a K-series, 998 cc engine. This version, called 'Alto-K10', comes with improved suspension, new cable-type transmission, superior brake system and more knee-room for rear seat passengers.
The existing Alto clocks average sales of over 20,000 units every month. Maruti Suzuki expects the Alto-K10 to bring in additional customers.
On the occasion of Alto-K10 launch, Mr. Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki India, said “The Alto's package of performance, fuel efficiency and attractive cost of ownership have together made it India's most popular car. The Alto-K10 will take this forward. There are a growing number of first time buyers who seek more power, performance and attitude in their car, without having to stretch all the way to buy a higher segment car. The Alto-K10 is meant for them”.
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Highlights of Alto-K10 Fuel efficiency: 20.2 km per litre - the highest among petrol cars in A2 segmentPerformance: Alto-K10 can accelerate from 0 to 100 kmph in just 13.3 secondsNew cable type transmission for easy gear shifting and enhanced driving pleasure
Environment Friendly
BS IV compliant
E-10 and ELV compliant
Societal Environment
Maruti Udyog Limited was incorporated as a government company in February, 1981
and was given the task of modernizing the Indian Automobile industry and making available
large numbers of fuel efficient vehicles. In the then prevailing environment, most people in India
thought the targets given were impossible to achieve and the very survival of Maruti, for any
length of time, was considered doubtful. The subsequent events are now history and Maruti
Udyog Limited, which has become Maruti Suzuki India, is one of the leading companies in
India. It is also Suzuki Motor Corporation's (SMC's) most successful overseas subsidiary.
Sustainability Approach
Over the last 25 years, the Indian automobile industry has undergone great transformation
in terms of product range, customer expectation and competition. The gap between the quality of
cars sold in the developed markets and that of cars sold in the Indian market has narrowed down
considerably. Customers in India are fast becoming aware of sustainability issues such as global
warming, energy security and overall well –being of the society.
The products ensuring long term sustainability of the people and planet will be preferred
by customers in the future. Such products need not necessarily be expensive, rather, they would
be more economical to maintain and easy to dispose off at the end of their life cycle. The starting
point for developing such products would be awareness of issues concerning environmental and
social sustainability, in addition to economic sustainability.
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At a fundamental level, the sustainability approach followed by Maruti Suzuki towards
its various stakeholders, since its inception, is equally relevant for its future sustainability. This
approach has been based on treating direct stakeholders as partners and conducting operations in
a way to ensure economic, environmental and social sustainability.
This approach requires to continuously improve facilities, products and services.
Such a relationship with stakeholders starts with an approach of giving, with an
understanding that returns and progress are the natural outcomes.
Environment
Global warming and climate change have become global issues threatening the very
survival of Planet Earth. The challenge facing the society, corporation and government is, how to
meet the needs of the present, without compromising the ability of future generation to meet their
own needs
Since Maruti Suzuki started operations, conserving environment and natural resources has
been an integral part of the systems and processes. The concept of "Reduce, Reuse and Recycle"
(3Rs) has been their driving principle and over the years it has taken taken big strides to imbibe
this concept in the value chain.
New plant at Manesar was certified to ISO 14001 last year and our Gurgaon facilities,
including the K-series engine plant, have also been re-certified to ISO 14001 for the next three
years. To combat climate change, Maruti Suzuki has initiated Clean Development Mechanism.
As the number of cars that they make and sell increases, environment management
attains even greater importance. They are aware that today consumers are becoming more
environment conscious and prefer eco-friendly products. While we continue the good work
towards environment in our processes, we will see more environment friendly products from
MarutiSuzukistable.
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The global compact car from India, A-Star is positioned as an environment friendly car in
Europe by the parent company. The K10B and K12M engines, mounted on A-star and Ritz
respectively, bring environment friendly technologies of the future to the Indian automobile
market.
The new K-series engine plant uses state-of-the-art technology and energy efficient
equipments to manufacture engines that save fuel, thereby protecting the environment. Maruti
Suzuki is the first car manufacturer in the country to launch vehicles (Ritz and Estilo) which
conform to the Bharat Stage-IV norms that are equivalent to Euro-IV.
Initiatives for non conventional clean fuel with factory fitted CNG options has been made
available on several models. A-star and Ritz meet the End of Life Vehicle (ELV) norms that are
still to be mandated in India. Progressively most of our models will be ELV compliant by 2010.
The business associates, dealers and vendors also play a vital role in environment care.
They work closely with them to conserve resources and reduce its carbon footprint. No
environmental initiative can be successful without the co-operation and involvement of all our
stakeholders.
On the one hand, environment initiatives help conserve the environment and on the other,
they help us to lower the cost of operations. In the long term, both add to the bottom-line.
Society
The initial social responsibility of Maruti Suzuki was to provide a car that was affordable,
environment friendly, high quality, safe and easy to maintain for a large number of people of the
country. In the last two and a half decades, with the launch of a range of models and setting up of
suppliers, dealers and service network across the country, Maruti Suzuki has to a larger extent
fulfilled its original social responsibility. But it cannot rest on laurels. They, are looking at issues
impacting the society such as road safety, vocational training and community development as
part of CSR practice.
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As an expression of gratitude to the people of the country, on completing 25 years of
operations in India, Maruti Suzuki launched a National Road Safety Mission. The objective of
this programme is to promote road safety in India by setting up state-of- the art driving training
infrastructure, soreading road safety awareness and partnering with government and other
stakeholders. We are also committed to train 500,000 people in safe driving in three years. We
know that this is a small drop in the ocean, but we believe that we can catalyse and encourage
more organisations to join this effort.
The availability of skilled manpower must keep pace with industrial growth. This is in
line with the inclusive growth philosophy of the Indian government. Maruti Suzuki is
contributing to inclusive growth in a small way by upgrading and supporting Industrial Training
Institute(ITIs) and adopting villages in the neighbourhood of our facilities.
The commitment of Maruti Suzuki to these initiatives is long term and sustained.
Conclusion:
Socio Cultural Trends
The factor which has occurred here is Increasing environmental awareness which looks
occurring less frequently but has high impact on company’s decision to come with low cost
vehicle with high fuel efficiency.
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LEGAL ENVIRONMENT
• Follows highest standards of Corporate Governance• Customer can contact the Secretarial & Legal Department for any
questions/clarifications.
Legal compliance reporting
• The board periodically reviews reports of compliance with all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances.
• The Company has developed comprehensive legal compliance scheduling and management software by which specific compliance tasks are assigned to each individual. The software enables in planning and monitoring all compliance activities across the Company
The policies & objectives laid down by the Indian Government regarding the automobile sector are:
• Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country
• Promote a globally competitive automotive industry and emerge as a global source for auto components
• Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world
• Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry
• Conduce incessant modernization of the industry and facilitate indigenous design, research and development
• Steer India's software industry into automotive technology. Example: the company developed CMA software for carrying out target costing.
• Assist development of vehicles propelled by alternate energy sources• Development of domestic safety and environmental standards at par with international
standards
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Keeping the Government policies in mind Maruti Suzuki has adopted the following policies to run the organization
• Maruti Suzuki is one of the organisation which was able to survive the global recession. Not only they made a reasonable profit but also didn’t give away any pink slips
• Maruti Suzuki is the leading automobile manufacturer in the country. Now they are in the process of re-entering the European market by introducing A-Star
• The company has now started using CNG Kits. They have introduced this technology in Alto which fulfills the CSR of going Green
• The company has introduced KB-Series engine which offers latest technology to the customers
ARTICLE
New BS IV emission norms in, Maruti 800 out
The small car which fulfilled the middle-class man's dreams of owning a car, before the Tata Nano era, Maruti 800 is set to bid adieu as the company is forced to stop the sales of the model in 13 major cities.
Starting from Thursday, Apr 1, the Bharat Stage (BS) IV emission norms come into effect pushing the good old Maruti 800 model out of the markets as it falls to comply with the new norms.
The car will not be sold in 13 major cities including the metros. This means that New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Kanpur, Ahmedabad, Surat and Agra has to bid goodbye to the compact and affordable Maruti 800.
This may not be a permanent step as the company is still mulling over the possibility of upgrading the model's engine so that it complies with Bharat Stage IV norms.
If this is done, then the car will be back in the shops in these cities again.
With the new norms coming into effect other models such as Ford Ikon (1.3 petrol), Fiat Palio, Skoda Fabia (1.2 petrol) and Octavia (1.9 TDI engine) and Chevrolet Tavera (2.5DI) are also being kicked out from the cities.
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Taxing of marketing intangibles
Delhi HC ruling in the Maruti Suzuki case throws up new challanges, the toughest being the availability of reliable, comparable data.
As transfer pricing evolves in India, we see an emergence of increasingly sophisticated issues. The recent ruling of the Delhi High Court in the case of Maruti Suzuki India, which discusses the creation and compensation for marketing intangibles only underlines this trend. Background: Suzuki Motors Corporation, which holds a 50% stake in Maruti, licensed to Maruti the ‘S’ logo and the ‘Suzuki’ trademark. The ‘S’ logo was to replace the ‘M’ logo and Maruti was required to use the joint trademark of ‘Maruti Suzuki’ on all its vehicles. For this Maruti paid Suzuki a recurring royalty, besides a one-time lumpsum amount. The initial approach of the tax authority was that there was a ‘deemed transfer’ of ‘Maruti’ brandname to Suzuki for which taxpayer should receive an arm’s length consideration based on the fair market value of the brand.
However, subsequently, the tax office abandoned this ground and instead sought to make an adjustment under the ‘assister in development’ theory. The tax office contented that Maruti had incurred huge expenditure to promote the ‘Suzuki’ intangibles, thus crossing the ‘bright line’ of routine expenditure into realm of nonroutine, which had created economic ownership in the hands of Maruti. Consequently, Suzuki should compensate Maruti for the same. Moreover, the tax office also disallowed the royalty being paid by Maruti to Suzuki. Maruti challenged the notice issued by the tax authority by way of a writ petition.The HC decision gives some much needed clarity on the transfer pricing aspects of intragroup transactions involving licensing of intangibles like tradenames and logos. The HC has very clearly linked the compensation for intangibles to the benefit derived from their use. The court has held that, in the scenario where the ultimate benefit from the use of an intangible accrues only to the licensee, such benefit is compensation enough. The licensor need not compensate the licensee for marketing and promotion activities, as any benefit derived from the same would only be incidental in nature. This ruling will impact companies not only in the automobile industry but also in industries like FMCG and pharmaceutical, etc where the licensing of intangibles coupled with advertising and marketing is very significant to the business. Impact analysis : However, a careful reading of the order reveals that the HC judgement is far more nuanced and sophisticated than it appears at first. The HC has also held that in the case where the marketing spend is extraordinary or the use of an intangible is obligatory, a marketing intangible may be considered to have been created.
In such a scenario, the licensor should make appropriate payment on account of marketing intangibles obtained by it. These observations do not apply only to Indian subsidiaries of foreign MNCs. The impact of this decision will also be felt by Indian MNCs, with foreign subsidiaries.
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Especially in cases of large acquisitions by Indian companies which have resulted in IP rights, residing in foreign jurisdictions, being exploited in India, this judgement will add an extra angle to look into. In light of the principles laid down by the HC, it would be prudent for companies, who have similar intra-group arrangements, to review existing models to ensure that the pricing is in line with the benefit derived from intangibles.
Moreover, with the burden of proof being on the taxpayer, taxpayers will need to demonstrate that the marketing and promotion expenditure incurred by them to promote the intangible is similar to what a third party would have expended. Any extraordinary or nonroutine expenditure would be seen to create an economic ownership in the hands of the licensee. The amount of marketing and advertising expenditure that a company may incur on a product may be effected by a number of factors: the industry, the strength of the brand, whether the product is old or new, who are the target audience, is the company looking at market penetration or not, etc. In fact, of the three companies examined by the tax office, Hindustan Motors and Tata Motors had no advertising expenditure during the year. And, the court has itself rejected Mahindra & Mahindra on the grounds that its products, target audience and hence, mode of advertising are different from Maruti and hence, their marketing spends cannot be compared.
While the HC has suggested Honda and Hyundai as possible comparables, the data for the same may not be uncontrolled, rendering them unsuitable. Thus, even before we determine an appropriate methodology to compensate extra-ordinary expenditure, quantifying the “extra-ordinary” expenditure itself is an issue that needs to be addressed. The HC judgement has throw up its own set of challenges, the toughest being the availability of reliable comparable data. Greater availability of reliable comparable data will prove to be the most important determining factor in whether tax authorities and tax payers are able to implement the principles laid down by the HC in this case.
Economic factor ( Interest rate) Economic factor ( GDP trends)
Low
Ecological concern for society Legal Envt. (BS IV Norms) Economic factor (Disposable & discretionary income)
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ISSUES PRIORITY MATRIX
HYNUNDAI
Over the past decade, Hyundai has rapidly moved up into the top echelon of the worlds automakers and part of its success has come from better tailoring its cars to local needs. To help in that respect, the South Korean company has opened a network of technical centers in the regions where it does business.
Sociocultural factors affecting HYUNDAI
Lifestyle changes Age distribution & regional shifts in population
Reasons for socio cultural factors
Lifestyle changes Age distribution & regional shifts in population
A formal study was commissioned by Hyundai prior to the launch of the Santro, to gauge the needs of the Indian small car buyer.
Hyundai-i10 is launched in India at Rs 3.4 lakh. The car is first launched in India. This small car is also comfortably priced to be placed in the mid segment. The Hyundai has also slashed the price of its Santro car by Rs 40,000
The cars of Hyundai and their models available in Korea may not be available in India or vice versa.
For ex-santro,i-10,santro exists in India but Tucson does not
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Technological factors affecting Hyundai
Total industry spending for R&D
Focus of technological efforts
New products
Productivity improvements through automation
Reasons for Technological factors
Total industry spending for R&D
Hyundai opened it fourth R&D facility outside of Korea with its new location in Hyderabad, India. The Indian center will focus on developing small cars and the home office has named it the global center of excellence for the segment.
The Korean company which has presence in the A segment with flagship hatchback Santro and the i10 has been planning to launch the small car to compete with Maruti Suzuki
The development of the small car has been taken up at the Research and Development centre in Korea.
The company has spent around Rs 400 crore (Rs 4 billion) for upgradation of the car which
boasts aggressive and all-new front design, a new chrome radiator grill, 3D wraparound
headlamps with multi-reflector chrome surround fog lamps.
Namyang R&D Center, Korea I Located in Hwaseong, Gyeonggi Province, theNamyang
R&D Center is a comprehensive, world-class technology research complex equipped with
planning, design, and powertrain centers as well as wind tunnel, crash, and driving test
facilities. Approximately 8,000 researchers are working around the clock at the center to
develop the best automobiles in performance, quality, and eco-friendliness.
ndia Engineering Center I Located in Haidrabad, India’s IT capital, the India Engineering
Center actively supports the design and interpretation of automobiles that are adapted to local
needs
Focus of technological efforts
Hyundai has also pioneered many eco-friendly technologies like Hybrid Electric Vehicles (HEVs) and Fuel Cell Electric Vehicles (FCEVs). The introduction of kappa engine is also a
23
significant technology that has made its contribution to Hyundai’s effort to preserve environment.
o for ex-Indias second largest car manufacturer Hyundai Motor India Limited
(HMIL) Thursday launched its hatchback car Next Gen i10 at a price ranging
from Rs.3.49 lakh to Rs.5.91 lakh (ex-showroom in Delhi). "With the Next Gen
i10, we hope to continue the legacy. Further boosted the design elements and
packed the car with safety and comfort-related technological innovations.
Hyundai Next Gen i10 is the refreshed, upgraded version of the popular Hyundai i10
Car .The new Hyundai Next Gen i10 features the new cutting edge VTVT technology
behind the engine and Fluid form new sleek design and stylish interiors.
New products
Hyundai Motor today promised to introduce into the Indian market “a spate of new products” in the coming years.
the new products would “signify Hyundai's new design philosophy as well as its cutting-edge technology” that will be “far superior” to Hyundai's competitors.
Hyundai has always led the way when it comes to introducing class-leading products. When i10 made its global debut in India in October 2007, the customers welcomed it for its fresh design, voluminous interiors and refined performance. Now with the Next Gen i10, we hope to continue the legacy.
Productivity improvements through automation
INDIA PLANT-A comprehensive, self-sufficient automobile plant that focuses on the R&D, testing, manufacturing, and sales of new products that are adapted to the Indian market, the India Plant added a second plant in 2008 to achieve an annual production capacity of 600,000 units. It serves as an overseas manufacturing plant for compact cars, such as the first overseas-specific model i10 and the strategic European model i20. It has accomplished much in India’s automobile industry, including setting a production record of 2,500,000 units and sales of 1,000,000 units in the shortest time, and is responsible for 20% of the market share and 66% of the automobile export in India.
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CHINA PLANT-In addition to the existing first plant, a second plant with an annual capacity of 300,000 units was added to the China Plant, increasing its total annual production capacity to 600,000. The plant is a reassuring foothold in securing a sizable share in the automobile market in China, which is rapidly becoming a global economic powerhouse.
Probable impact on corporation High Medium Low
Prob
abili
ty o
ccur
renc
e
Hig
h
Life styleChanges,New Products,Improvements,Focus on tech
Energy availability and cost,Inflation rates, R&D
Med
ium
Disposable and discretionary income
GDP,Interest,regional shifts in population
Wage/price controls
Low
Unemployment levels
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ISSUES PRIORITY MATRIX - HYUNDAI
MARUTI SUZUKI
Maruti Suzuki India Limited (MSIL, formerly named Maruti Udyog Limited) is a
subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car
market for over two and a half decades. The company's two manufacturing facilities are located
at Gurgaon and Manesar, south of New Delhi. The Manesar and Gurgaon facilities have a
combined capability to produce over a million (1,000,000) passenger car units annually.
Recently, the company has announced a further investment of Rs1,700 crore (Rs 17
billion) for enhancing the production capacity by 250,000 units annually.
The company has a portfolio of 13 brands and over 150 variants across Maruti 800,
Omni, international brands Alto, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV
Grand Vitara, sedans SX4 and Swift DZire and the newest entrant Eeco.
At the end of March 2010, Maruti had a market share of 53.3 per cent of the Indian
passenger car market (including C segment). The company sold a record 10,18,365 vehicles in
2009-10 including 1,47,575 units of exports.
Maruti Suzuki's revenue has grown consistently over the years. In 2003-04, it recorded
net sales of Rs 93,456 million that rose to Rs 109,108 million in 2004-05. In 2005-06 net sales
touched Rs 120,034 million and further rose to Rs 145,922 million in 2006-07. In 2007-08
Maruti Suzuki's net sales was Rs 178,603 million, rising further to Rs 203, 583 million in
2008-09. During the last fiscal (2009-10),the company posted a revenue of Rs 301,197 million.
The CAGR over two years is 27% for net sales.
The company is listed on Bombay Stock Exchange and National Stock Exchange. The
company has over 7,600 employees on its rolls.
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The Government of Japan has honoured Maruti Suzuki with the METI Award for
promotion of Japanese brand in India. Maruti Suzuki is one of the six companies, as also one
among two outside Japan, to have received this prestigious award.
NATIONAL ROAD SAFETY MISSION
Maruti Suzuki considers road safety to be an integral part of its social initiatives. Taking
forward its commitment to road safety, Maruti Suzuki has adopted a National Road Safety
Mission launched in Dec 2008 under which 500000 people will be trained in road safety in the
next three years. This will be done through the two channels - Institute of Driving Training and
Research (IDTR) and the Maruti Driving
Schools spread across the country. Of the 500,000 people to be trained, at least 100,000
will be people from underprivileged section of society, who are keen to take driving as a
profession.
Established in December 1983, Maruti Suzuki India Ltd. has ushered a revolution in the
Indian car industry. This car is meant for an average Indian individual which is affordable as
well as has elegant appeal. Maruti Suzuki India Ltd. is the result of collaboration of Maruti with
Suzuki of Japan. At this time, the Indian car market had stagnated at a volume of 30,000 to
40,000 cars for the decade ending 1983. This was from where Maruti took over.
The company has crossed the milestone of becoming the first Indian company in March
1994, by manufacturing in totality one million vehicles. It is known for its mass-production and
selling of more than a million cars. Maruti Suzuki India Ltd. is the India's largest automobile
company which entered in the market with affirmed aim to render high quality fuel – efficient
and low - cost vehicles.
Sales figure in the year 1993 has reached up to 1,96,820. Maruti comes in a variety of
models in the 800 segment. Its cars operate on Japanese technology, pliable to Indian conditions
and Indian car users. By the year 1998-99, the company has modernize the existing facilities and
expand its capacity by 1,00,000 units.
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Recently to ward off the growing competition, Maruti has completed Rs. 4 billion
expansion project at the current site, which has raised the total production capacity to over
3,20,000 vehicles per annum. With the coming of each and every year, the total production of the
company exceed by 4,00,000 vehicles.
In the small car segment it produces the Maruti 800 and the Zen. The big car segment
includes the Maruti Esteem and the Maruti 1000. Along with them, the company also
manufactures Maruti Omni. Other models includes Wagon R and the Baleno.
Headquarter in Gurgaon, on 17 September 2007, Maruti Udyog was renamed to Maruti
Suzuki India Limited. Both in terms of volume of vehicles sold and revenue earned, the company
is India's leading automobile manufacturers and the market leader in the car segment. Sales
recorded in June 2008, is Rs. 4,753.58 crores.
Maruti Suzuki has a strategy for the future, says Bhargava
Maruti Suzuki which controls slightly over half of the domestic car market in the country has
said that it would design small cars suitable for the Indian conditions as a strategy to beat the stiff
competition with the entry of global auto makers.
It would be launching compact cars with more features to meet the needs of the
customers locally.
In its annual report released on Wednesday, the company's Chairman, Mr R. C.
Bhargava, stated, "The car market is growing increasingly competitive. This is not surprising as
global manufacturers are bound to come where they see a growing market. Maruti has a strategy
for the future."
He said that the company would capitalise on Suzuki¿s research and development
capabilities and internal resources to finance its expansion, thereby cushioning itself from the
higher interest rates and borrowing costs and become cost competitive.
Maruti is also betting on a faster growth in the small car market as fuel prices trend
upwards boosting demand for such models worldwide. The Indian small car market is set to
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witness a plethora of compact models being launched starting from Tata Motors' much awaited
'Nano' to foreign players like Honda, Volkswagen, Toyota who are also either customising their
existing model or launching a new model to cater to this market.
Explaining the company's plan to stay away from the ultra low-cost segment, Mr Shinzo
Nakanishi, Managing Director and CEO, said, "With growing incomes and aspirations, Indian
consumers have exposure to global design. Most of them would want compact cars to be more
stylish, loaded with features and superior engines and at least as reliable and fuel efficient as
their earlier cars. We would meet the needs of these customers."
The company's annual report also emphasised its growing focus on the export market.
Maruti Suzuki is looking to make India an exclusive base to manufacture small cars for Europe.
"We want to export 2 lakh units annually by 2010-11. At that time our target for the domestic
market would be to sell one million cars for which we are expanding capacity," Mr Nakanishi
said. In the fiscal 2007-08, Maruti exported 53,000 units, the highest ever till date.
The company, however, painted a bleak picture on its outlook in the current financial
year in the domestic market on account of US economy slowing down and high crude prices
which has led to inflationary pressure globally. It has also expressed concerns over interest rates
and tightened money supply.
"The general expectation is that industrial growth including sale of automobiles will be
adversely impacted. The company posted a 12 per cent increase in domestic sales in the first
quarter of the current fiscal and will continue to make all efforts to maintain a reasonable rate of
growth," the company outlined in the report.
Maruti Suzuki to establish new plant at Manesar
New Delhi, September 07, 2010 Fresh investment of Rs 1,925 Cr to take annual
production capacity to 1.75 million units India's leading car maker Maruti Suzuki India Limited
(MSIL) today held its 29th Annual General Meeting here today. At the meeting Mr. O Suzuki,
Chairman and CEO, Suzuki Motor Corporation, Japan, (majority stakeholder in MSIL), made
wide ranging announcements.
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Outline on current production capacity:
Annual Capacity at Maruti Suzuki Gurgaon is: 850,000 units
Annual Capacity at Maruti Suzuki Manesar is: 350,000 units
Total capacity : 12,00,000 units (1.2 million units)
To keep pace with growth (which has been as high as 27% in this fiscal), Maruti Suzuki
needs more capacity
Capacity announcements (subject to Board approval)
Maruti Suzuki will establish "Plant C" at Manesar.
Plant C will be constructed concurrently with the Plant B at Manesar.
Plant C to have an installed capacity of 250,000 units per annum.
Plant C is likely to be ready by end of fiscal 2012 / early 2013
Plant B (announced earlier in Feb2010) at Manesar, will be ready by Jan 2012 and will
bring an additional capacity of 250,000 units per annum
Plush two-tone interiors and an all-new 3-spoke steering wheel. These are aided by
Present facilities : 12,00,000 units per annum
Plant B (Manesar) : 2,50,000 units per annum by Jan 2012
Plant C (Manesar) : 2,50,000 units per annum likely in fiscal 2012-13
Total Capacity: 17,50,000 units per annum by end of fiscal 2012-13 (including productivity
enhancements)
Investment update (subject to Board approval)
The investment to construct Plant C at Manesar is estimated at 35 Billion Japanese Yen
(approx Rs. 1,925 crores @ Yen 1= 0.55 Rs). This investment will be funded by
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internal accruals of Maruti Suzuki.
Medium term investment: Rs 6,000 Crores (or $ 1.3 billion) during the period 2010-2013.
Rs 1700 Cr (Manesar plant B) announced earlier in March 2010
Rs 2500 Cr (Engine plant & R&D) announced earlier in March 2010
Rs 1925 Cr (Manesar plant C) announced at AGM-2010 (7 Sept 2010)
Other projects to be undertaken in Medium term:
Commence construction of test course at R&D Centre at Rohtak
We would also look at constructing Regional Offices at 16 locations.
SMC and MSIL will have an integrated approach towards these developments.
The timelines for all these projects will be evolved post board approval.
Limited edition of Swift launched by Maruti Suzuki
The limited edition celebrates Maruti Suzuki's landmark of selling one million cars a
year, achieved in late March. The one millionth car was a Swift, and it rolled out of the
Company's state-of-the-art plant at Manesar.
The limited edition car is branded: "Swift One Million Edition".
Speaking on the occasion Mayank Pareek, Managing Executive Officer (Marketing and
Sales) said, "It is indeed a moment of pride for us. Swift One Million Edition is our gesture to
show gratitude to our customers who have strongly supported us in our journey to reach
milestone of one million sales in one year."
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ENVIRONMENTAL OPPORTUNITY- THREAT PROFILE OF MARUTI SUZUKI
INDIA LIMITED A BACKGROUND
The automobile industry in India is the ninth largest in the world with an annual production
of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea and Thailand. Several Indian automobile manufacturers
such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and
international operations. India's robust economic growth led to the further expansion of its
domestic automobile market which attracted significant India-specific investment by
multinational automobile manufacturers. In February 2009, monthly sales of passenger cars in
India exceeded 100,000 units. Maruti Suzuki India Limited is the largest automobile
manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the
company. It was the first company in India to mass- produce and sell more than a million cars.
Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in
the car segment, both in terms of volume of vehicles sold and revenue earned since past two
decades.
ENVIRONMENT SCANNING
No doubt Maruti Suzuki has been market leaders in India since past two decades especially
in small car segment with Maruti 800 being the most sold car across India. Its market share has
always been over 50% as against other domestic players like Mahindra & Mahindra, Hindustan
motors, Hyundai etc; the latest figure being 55% in the last fiscal year, selling around 792167
cars both in the domestic market and the exports. Maruti has around 13 models to offer in the
Indian market but barring a few like SX4 or Vitara, Maruti has always been the FIRST CAR
OWNER’s Choice for the Indian markets. It cashes on the huge Indian population and the strong
brand name. It’s a very strong financial base unlike few of its immediate competitors and so
immense opportunity to sustain some products with the whole marketing thing even when the
early response is not quite good, WagonR being the most suited example. Maruti rarely scraps
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any car. As a company it has immense brand value and growth prospects. Biggest strength being
the service centers of the company. It has a total of around 2767 service centers covering a
whooping 1314 cities across India, all the components of Maruti cars are readily available, at
very affordable prices which gives Maruti owners true value for their cars.
THREAT:
The biggest threat to Maruti is Globalization. With increase in globalization and world being
a common market place every automobile company is landing or has landed in the small car
segment taping the large customer pool at the base of the pyramid. Tata Nano – the one lakh car
being the latest example. The one lakh tag really attracts customers as owning a car is still a
status symbol in India. Considering Maruti is going to stop the manufacturing of its most popular
cars Maruti800, it has to really fill the gap with its own offering before the competitor take over.
The major competing cars are Toyota – Prius Honda – Jazz Volkswagen – Polo Chevrolet –
Spark Ford – Figo Fiat – Palio Skoda – Fabia Tata – Indica Hyundai – Santro. Another threat is
the diesel n LPG car segment which gives a tough competition due to low operating costs. In the
past Maruti has been good in responding to this kind of threat by launching its diesel version cars
n cars fitted with LPG arrangement.
Maintaining its market share in the small car segment and having vision of the larger pie is
the best strategy for Maruti.
OPPORTUNITES
Maruti has always been so focused in its core competency of small car segment it has
actually left the Luxury car market totally untouched barring a few car models which are still not
doing really well for themselves, With the 6th pay commission in picture, lot of money to spend
in the hands of the younger generation the company can tap this market by luxury stylish car;
launching a SUV that would be a multipurpose car. And making the use of the current social
change, when husband and wife both are working and people are not thinking much about
spending on car, a second car – projecting there in the buyers mind. Because any Maruti car is
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rarely a second car choice in customer’s mind. Its more associated with the concept of
affordability rather than style. So breaking that mindset and projecting itself in a totally new
avatar. There is a immense customer base in India which can be tapped that too in different
segments. India is an growing economy with rate as high as 9 % and the growth is expected to be
there in the coming few years, utilizing the growing economy’s perk and the growth the
automobile sector per say Maruti Suzuki India Limited has a long way to go. Nikita Jain MBA –
FT – Marketing IMS, DAVV
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HyundaiSouth Korea's leading carmaker, Hyundai Motor produces compact and luxury cars,
SUVs, and minivans, as well as trucks, buses, and other commercial vehicles. The company re-established itself as South Korea's leading carmaker in 1998 by acquiring a 51% stake in Kia Motors (since reduced to about 34%). Selling cars in the US since 1986, Hyundai started selling its heavy trucks stateside in 1998. Hyundai's models for the North American market include the Accent and Sonata; models sold elsewhere include the GRD and Equus. Through its Hyundai WIA subsidiary, it also manufactures machine tools for metalworking applications, such as horizontal machining, turning, and vertical machining.
Strategy formation begins with a situational analysis that fits the organization´s mission, vision, objectives, strategies, and policies. In this instance the strategy formation/situational analysis will be tailored for Hyundai Motors. There are numerous approaches to assessing needs for your organization, but they all point to the same end rationale and that is quality improvement. No matter which plan you choose it will involve basically the same steps and those are;
1. Identify opportunities for improvement.
2. Document your current process
3. Create a vision for your improvement processes
4. Define the target/goal of this improvement effort and don´t make it too broad reaching.
Hyundai is dedicated to providing exceptional quality services, support, and products to their employees, dealers, and customers. From the top down, the entire Hyundai organization is quality driven and strives for continuous improvement across many spectrums, especially in the area of costs, technological advances, and efficiency. Their management is committed to ethical business practices and creating partnerships with suppliers, customers, and employees who can help them to achieve and maintain their competitive/cost saving/technological edge while remaining sensitive and receptive to the diverse communities they operate in.
Hyundai continue to be so responsive to their customer´s needs, innovative in their processes, services, and products they should have no foreseeable problems. Hyundai has become a leader and innovator of quality affordable automobiles for a number of years. They
35
have achieved this because they were nimble and flexible enough to respond to changes in their marketplace and because they have kept their eye on quality, cost, and customer service. Since Hyundai is a worldwide organization they have also had to make the most of their diverse work force, as well as, overcome many regulatory, socio-cultural, and environmental variables of doing business in a multicultural and multi-ethical environment.
Weaknesses: questionable branding, depreciation/trade in value, lack of consumer information: especially on their web site
Opportunities: green alternatives and hybrid cars, technological innovations/research/development of same, better integration of web site for customer product information and company profile information
Threats: political, trade, socio-economical, and other regulatory constraints: especially those associated with environmental issues and manufacturing
Improved recycling effects
Hyundai Motor Company is continually working to create a sustainable and recycling society by developing environmentally friendly cars, considering the entire process from acquisition of raw materials, development of new materials, to recycling and disposal. The QarmaQ, developed specifically as an environmentally friendly car by Hyundai, ushers in the future of environmentally friendly cars with a light weight body at a maximum 60 kilograms, thanks to advanced materials, by lowering fuel efficiency, and by dramatically reducing greenhouse gas emissions. Major new technologies applied to the QarmaQ, such as the 'C' shaped side window, using new materials other than glass, and the elastic front which reduces potential pedestrian injuries dramatically upon impact through a three–layer energy absorption structure, will be selectively applied to Hyundai's new future models.
Reduction in emission gas
Nitrogen oxide (NOx) and fine particles (PM), which have a direct impact on people and the environment, are a challenge for automobile makers working for the reduction of automobile emission gases. Hyundai Motor Company, putting both people and the environment first, not only strictly controls the volume of its emission gases under each region's regulation standards, but also works to develop new technologies to achieve the ultimate goal of zero emission gases.
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Hyundai has been getting a lot of attention these days as a company that cares about its customers and part of this success can be credited to social media marketing. By integrating a customer relationship management (CRM) strategy with social media along with their traditional marketing, Hyundai has branded itself as an altruistic company that really does care about its’ customers. In fact – Hyundai has jumped ahead of every other car manufacturer in the critical customer satisfaction index (CSI) category. Here are a few examples how Hyundai is applying their social media marketing strategy in key parts of their business and how it is paying off.
Promotion
Hyundai’s Assurance Program began in early 2009 when the economy was at its worst and unemployment was rising rapidly. The Hyundai Assurance Program promised that if you got laid off from your job, you could return your car and not even have to worry about honoring the rest of the note payable. The promotion was innovative but coming from a major car corporation was it believable? The attention the campaign received from the press and from many blogs and websites was skeptical.
Hyundai began promoting the idea on Facebook and Twitter. They asked everyone to buzz and tweet about it and people responded with enthusiasm. The idea of social networking for business exposure is not new but the strategy was extraordinary because it laid the groundwork for the campaign and gave it credibility. It was a brilliant way to market a promotion that really did work. Sharing this information on Facebook and Twitter turned out to be a big plus for the car company’s marketing campaign.
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Internal Factor Evaluation Matrix (IFE)- MARUTI
Strength Wt. age Rating Wtd. Score0.06 4 0.24
1. Major strength of MUL is having largest network of dealers and after sales service caters in the country.
2. Refurbished Cars: MUL has also entered into second hand car market
with a brand name “Maruti True Value”.
0.06 3 0.18
3. Loyal Customer Base is another big strength of MUL. In JD Power survey, MUL has been awarded consequently 5th year for best customer satisfaction.
0.08 4 0.32
4. Strong Brand Value. 0.10 3 0.3
5. Maruti streamlined the sourcing and stocking of materials and
components through its Delivery Instruction system.
0.09 4 0.36
6. PMS has leaded the production team towards greater enhanced
productivity with perfection.
0.12 4 0.48
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7. Profitability Ratio 0.08 3 0.24Weakness
7. Low interior quality inside the cars.
0.10 2 0.2
Wt. age Rating Wtd. Score
8. Labour Unions are not in a good form in the company.
0.1 2 0.2
9. Dividend per share 0.12 2 0.24Total 1.00 2.76
Maruti Suzuki Production and operation Details
Maruti had three integrated manufacturing plants with 17 manufacturing shops and flexible assembly lines at Gurgaon, about 25 Kms from New Delhi, the capital of India. In 1984, the first plant was set up with an initial installed capacity of 20,000 vehicles per annum. This was augmented to 130,000 by 1991.
In 1995, the second plant was installed, which increased Maruti's capacity to 200,000 vehicles per year. In 1996, Maruti's installed capacity was increased to 250,000. With a third plant becoming operational in March 1999, the installed capacity became 350,000 vehicles per year, making Maruti one of the largest passenger car manufacturing facilities of Suzuki outside Japan...
Improving Operational Efficiency
Maruti turned around from a loss of Rs.2690 million in 2001 to a net profit of Rs.1045 million, in 2002. This turnaround had been facilitated by sharp improvements in quality and productivity, both in-house and at the vendors' end.
In 2002, Maruti started a program "Challenge 50 initiative" to improve productivity by 50 % and reduce cost by 30 % by 2004-05. Maruti involved various component suppliers in Challenge 50. Productivity
39
improvement programs were undertaken by key vendors in collaboration with experts from Suzuki. Maruti started implementing new manufacturing techniques and various value analysis and value engineering initiatives. Product development in the automobile industry was a very capital-intensive process...
Improving Quality
Maruti measured the relative quality of dispatched vehicles on a random, daily basis through a quality index audit. To improve quality, Maruti had introduced various measures:
• Tracking surveys and direct customer contact in order to understand the problems faced by customers.
• Full-time task forces for improvement in initial quality study problems and departmental cross-functional teams to work on defined problems with challenging targets...
Vendor Management
Vendor management became an important area as Maruti attempted to improve operational efficiency. Maruti procured components worth about Rs.5,000 crores every year. The company's top 10 vendors accounted for about 34 % of its aggregate purchases ofcomponentsfromvendorsinIndia.
Maruti was working on a 3.5% per annum reduction in vendor prices by 2004-2005. Maruti streamlined the sourcing and stocking of materials and components through its Delivery Instruction system , one of Suzuki's best practices. This system provided details of Maruti's component requirements for every 15 days, across the different variants of the various models, to its vendors. Web initiatives helped Maruti to bring down procurement time and costs...
Leveraging Information Technology
When Maruti decided to automate its operations in the early 1990s, there was no ERP vendor support available in the country. So, the company decided to do it all by itself. A team of 45 engineers, using a combination of software from Oracle and Computer Associates, built a variety of applications covering inventory management, receipts, excise, consumption, production, sales, invoicing, exports, financial accounting, payroll, and bank reconciliation. The applications were developed and upgraded on a regular basis, while the maintenance and administration were outsourced...
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Future plans
Maruti had plans to raise its operating efficiency to that of Suzuki's premier plant at Kosai in Japan by 2005. This program had the personal backing of O. Suzuki, worldwide chairman of Suzuki. Suzuki planned to bring in new technology from Japan making Maruti capable of full model-development by 2007. Maruti had plans to export to the Middle East and Far-East Asian Countries in a big way.
Maruti had set itself the target of wresting a 60% market share of the country's car market during the period 2003-2006...
Production Management System (PMS)
Production Management System (PMS) is the next step towards moving ahead to sustain the momentum. It is a strategy to achieve Manufacturing Excellence evolved through participative approach. The system is people driven and ensures involvement of all levels (Managers, Executives,andSupervisors).
The concept ensures participation and error free communication. The result is clarity of content, better understanding and openness towards feedback. These values make PMS a sustainable system. Having achieved the target of selling a million cars in the financial year 2009 - 2010, PMS has lead the production team towards greater enhanced productivity with perfection.
PMS is derived from the basic Japanese principles of 5S, 3G and 3K
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In order to bring an improvement in overall processes and systems in Production Division through involvement of all levels, PMS was launched in Maruti Suzuki. Through various phases of PMS the company embarked on its journey of bring in a) Clarity of Role, Non-duplication of work, Ownership, Commitment and Standardization in all our process and systems across the production division.
Manufacturing facilities
Maruti Suzuki has two state-of-the-art manufacturing facilities in India. Both manufacturing
facilities have a combined production capacity of 1,250,000 vehicles annually.
Gurgaon Manufacturing Facility
The Gurgaon Manufacturing Facility has three fully integrated manufacturing plants and is
spread over 300 acres (1.2 km2). All three plants have an installed capacity of 350,000 vehicles
annually but productivity improvements have enabled it to manufacture 700,000 vehicles
annually. The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The entire
facility is equipped with more than 150 robots, out of which 71 have been developed in-house.
The Gurgaon Facilities manufactures the 800, Alto, WagonR, Estilo, Omni, Gypsy and Eeco.
Manesar Manufacturing Facility
The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread over
600 acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles annually but this
was increased to 300,000 vehicles annually in October 2008. The production capacity was
further increased by 250,000 vehicles taking total production capacity to 550,000 vehicles
annualy. The Manesar Plant produces the A-star, Swift, Swift DZire and SX4.
1. Good employee base & productivity- Tata Motors has a good employee base & productivity of the Tata manufacturing plants is higher. It gives Tata good production efficiency.
0.12 4 0.48
2. Tata produces the low price cars with high fuel efficiency. This is the requirement of Indian market. It gives Tata a big customer base in the country. We can say that TATA NANO is the biggest strength of the company.
0.14 3 0.42
3. Tata has also an alliance with Italy based Automobile company Fiat. Tata is going to launch some utility vehicles in central & South America.
0.02 3 0.06
4. Tata focuses not only the quality of products but on the quality of management also. Tata also has a program of intensive management development in place in order to establish its leaders for tomorrow.
0.08 2 0.16
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5. Backward integration-by production of Sophisticated spare parts gave a edge to Tata Motors to introduce new products and improve existing ones.
0.09 3 0.27
6. World’s best foundry at chinchwad and maval- with an annual capacity of 3,300 Tonnes
0.13 3 0.39
7. Dividend per share 0.08 2 0.16
Weakness
1. However Tata has acquired Land Rover & Jaguar, the popularity of Tata as a luxury car producer is in doubt.
0.04 2 0.16
2. A Tata industry has made much investment in Tata motors. But return on investment is not up to the mark.
0.1 2 0.2
3. The cars produced by Tata are 3rd & 4th generation. Thus in terms of technology, Tata is behind its competitors.
0.05 3 0.15
4. Tata produced cars are not meeting the safety standards as compare to its competitors. This is a big disadvantage for the company
0.08 2 0.16
5. Profitability Ratio & EPS 0.09 3 0.276. Management efficiencies ratio 0.08 3 0.24
Total 1.00 3.1
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TATA MOTORS
The Pune unit is spread over 2 geographical regions- Pimpri (800 acres) and Chinchwad (130 acres). It was established in 1966 and has a Production Engineering Division, which has one of the most versatile tool making facilities in the Indian sub-continent. It houses a Vehicle manufacturing complex which is one of the most integrated automotive manufacturing centers in the country producing a large variety of individual items and aggregates. It is engaged in the design and manufacture of sophisticated press tools, jigs, fixtures, gauges, metal pattern and special tools, as well as models for the development of new ranges of automobile products. Its capabilities have enabled Tata Motors to introduce new products and improve existing ones without resorting to imports of dies or fixtures.
Over the years, this division has developed expertise in design and manufacture of automated dies, fixtures and welding equipment. Its large design group is fully conversant with state-of-the-art CAD facilities and manufacturing facilities comprising of light and heavy CNC machine shops, jigs boring room, plastic template shop, wood pattern and model pattern shop, five axis precision machine tools and laser control machines. To cope with such a diverse range, four assembly lines have been established, one each for MCVs and HCVs, LCVs, Utility vehicles and one for Passenger Cars (Indica and Indigo).
The Passenger Car Division in 'K' block executes the entire process of car manufacture over five shops - the engine shop, the transmission shop, press and body shops, paint shop and the trim and final assembly shop. The shops are fully automated ensuring that there is minimal chance for error in the manufacturing processes.
After the car is completely assembled, it goes through several checks like wheel alignment, sideslip test, brake test, shower test, and a short test run before it is ready for dispatch. All systems such as materials management, maintenance and other activities are computerized, enabling smooth operations and minimum inventory needs.
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The Electronics Division is engaged in the production of a wide variety of Machine Tool Controllers, PLCs, Test rig instrumentation, Servomotors, Proximity Switches. In addition, it has developed a number of components such as flashers, horns, timers that are used in Tata Motors' vehicles.
Industry experts rate the fully automated Foundries at Chinchwad and Maval among the best, worldwide. The Iron Foundry at Chinchwad produced 37,000 Tons of high precision castings in 2006-07 while the Iron Foundry at Maval produced 14000 Tons of spheroidal Iron castings in 2006-07. These include Cylinder Blocks, Cylinder Heads, Gear Box Housing, etc. To dispense with the need for outsourcing, an Aluminum Foundry with an annual capacity of 3,300 Tonnes has been established.
HYUNDAI (INDIA)
Strength Wt. age Rating Wtd. Score1. 1.well sophisticated
class(no models available for middle class segment)
The Infrastructure
The Hyundai India plant located in Irungattukottai, 30 kilometers from Chennai was built in record time. The plant is first self-sufficient manufacturing unit in India to be independently invested by an overseas automobile company. Incorporated in May 1996, the groundbreaking ceremony for the Chennai plant was held in December in the same year, and the first pilot Santro was ready in a record-breaking 17 months.
The plant which stands on a 500+acre plot has been built with an initial investment of more than Rs. 2500 crores. It has a capacity to make 120,000 cars and 130,000 engine transmission units per annum and is the largest overseas investment made by the Korean Company.
HMIL commenced operations with 70%-localized content, which is one of the highest amongst all car manufacturers. The entire powertrain and the body panels are made in-house and the integrated manufacturing setup at the Hyundai Motors Chennai plants consists of:
Hitachi Zosen 2500 ton presses for the body panelsState-of-the-art Paint shopFinal assembly lineEngine and transmission linesAluminium foundry Plastic extrusion unitIn-house R&D Centre
Hyundai has brought in 14 Korean companies and helped them setup base in India for sourcing components. The total vendor base consists of 60 companies located at the plant site itself. HMIL aims to increase localized content to over 90% in the millennium.
Hyundai Motors India Ltd. plans to build a world-class facility, which will offer quality products and services to the discerning consumer. It plans to enforce the " global optimum production system", setting
its goal to achieve the utmost result with the lowest running cost
• The Quality Advantage Hyundai owners experience fewer problems with their vehicles than any other car manufacturer in India
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(J.D. Power IQS Study). The Santro was chosen the best in the premium compact car segment and the Getz in the entry level mid - size car segment across several parameters. This study measures owner in terms of design, content, layout and performance of vehicles across several parameters
• A Buying Experience Like No Other Hyundai has a sales network of 250 state-of-the-art showrooms across 189 cities, with a workforce of over 6000 trained sales personnel to guide our customers in finding the right car. Our high sales and customer care standards led us to achieve higher nameplate in the J.D. Power SSI Study. • Quality Service across 1036 Cities In the J.D. Power CSI Study Hyundai scored the highest across all 7 parameters: least problems experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service advisor experience, most user-friendly service and best service initiation experience.The 92% of Hyundai owners feel that work gets done right the first time during service. The J.D. Power CSI study also reveals that 97% of Hyundai owners would probably recommend the same make of vehicle, while 90% owners would probably repurchase the same make of vehicle. Weaknesses
• Commodity Price Risks Hyundai commodity price risks to higher costs due to changes in prices of inputs such as steel, aluminum, plastics and rubber, which go into the production of automobiles.In order to mitigate these risks, the company continues to attempts to enter into long term contracts based on its projections of prices. In a volatile commodity market, where your company gives top priority to ensuring smooth availability of inputs, long term contracts are helpful
Risk Factors
In the course of its business, Hyundai is exposed to a variety of market and other risks including the effects of demand dynamics, commodity prices, currency exchange rates, interest rates, as well as risk associated with financial issues, hazard events and specific assets risk. Whenever possible, we use the instrument of insurance to mitigate the risk.
Business Risks
The automotive industry is very capital intensive. Such investments require a certain scale of operation to generate viable returns. These scales depend on demand. Although 2005-06 was year of continued growth for the Indian economy, whether this growth momentum will continue has to be seen
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Differentiation
They believe in product differentiation, as in the i20 which offered class leading features and fulfilled the aspiration value of our customers. It's about understanding customer's needs, on which they make a lot of effort with detailed surveys that run to over 8,000-9,000 customers. That's the reason why their recent launches such as the i10 and i20 have been successful. If only the pricing factor was important, people would just buy the cheapest product in the market – and that doesn't happen. Plus, there are other services that add value, such as Roadside Assistance. One has to create an environment where the customer would automatically prefer the brand, like new features and providing him with a more modern product. Surpassing the customer's expectations is important and that's what will work for company.(source business line)
SFAS FOR HYUNDAI
Strategic factors
Weight Rating Weighted score
O1 * Improvement in affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities.
0.15 4 0.72
O2 * Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by
0.12 4 0.60
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growth in road infrastructure & favorable Govt. Policies.
T3 * Increase in input costs on account of emission related upgrades andCommodity cost increase.
0.17 3 0.54
T2 * The entry of new players in the compact car segment.
0.12 4 0.48
S5 The Quality Advantage
0.11 4 0.36
S3 Best technology 0.10 4 0.36
W1 Commodity Price Risks
0.11 3 0.33
W2 Exchange Rate Risk
0.12 3 0.36
Total score 1.0 3.75
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SFAS FOR MARUTI
Strategic factors Weight Rating Weighted score01 * Improvement in
affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities.
0.11 3 0.33
O2 * Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by growth in road infrastructure & favorable Govt. Policies.
0.11 3 0.33
T2 * The entry of new players in the compact car segment.
0.15 4 0.60
T7 * Governments imposition of rules on compliance for environmental issues.
0.10 3 0.3
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S4 4. Strong Brand Value.
0.10 3 0.3
S5 5. Maruti streamlined the sourcing and stocking of
materials and components through its Delivery
Instruction system.
0.09 4 0.36
S6 6. PMS has leaded the production team towards
greater enhanced productivity with
perfection.
0.12 4 0.48
W7
7. Low interior quality inside the cars.
0.10 2 0.2
W9 Dividend per share 0.12 2 0.24Total score 1.0 3.14
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SFAS FOR TATA
Strategic factors Weight Rating Weighted score01 * Improvement in
affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities.
0.13 4 0.52
O2 * Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by growth in road infrastructure & favorable Govt. Policies.
0.10 4 0.40
T2 * The entry of new players in the compact car segment.
0.09 4 0.36
T3 * Increase in input costs on account of emission related upgrades andCommodity cost increase.
0.10 3 0.3
S1 8. Good employee base & productivity- Tata Motors
0.12 4 0.48
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has a good employee base & productivity of the Tata manufacturing plants is higher. It gives Tata good production efficiency.
S2 9. Tata produces the low price cars with high fuel efficiency. This is the requirement of Indian market. It gives Tata a big customer base in the country. We can say that TATA NANO is the biggest strength of the company.
0.14 3 0.42
S6 10. World’s best foundry at chinchwad and maval- with an annual capacity of 3,300 Tonnes
0.13 3 0.39
W2 7. A Tata industry has made much investment in Tata motors. But return on investment is not up to the mark.
0.1 2 0.2
W5 8. Profitability Ratio & EPS
0.09 3 0.27
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Total score 1.0 3.34
TOWS Matrix
Hyundai- Tows Matrix
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Maruti’s TOWS Matrix
Strength weaknessOpportunity 1) Strong Brand value
2)Maruti streamlined the sourcing and stocking of materials and components through its Delivery Instruction system
1) PMS has leaded the production team towards greater enhanced productivity with perfection
Low interior quality inside the cars.Dividend per share1) Improvement in
affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities
2) Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by growth in road infrastructure & favorable Govt. Policies
Increase no of outlets More into untapped areas
Maximize base production capacity through efficient use of resources
Hire more IT Experienced people New innovations
Review & improve on current stratergy.
Threats 2) The entry of new
players in the compact car segment.
3) Governments imposition of rules on compliance for environmental issues..
Penetration of CNG & LPG Market.
Strong focus on R&D
New distribution channels .
Reduce disputes to improve increased retained customers
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Strength weaknessOpportunity 1) Best technology
2) The Quality Advantage1) Commodity Price Risks2) Exchange Rate Risk
1) Improvement in affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities
2) Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by growth in road infrastructure & favorable Govt. Policies
Go for merger ,joint venture ,or strategic alliance.
Increase in business efficiency
Threats 1) The entry of new players
in the compact car segment.
2) Increase in input costs on account of emission related upgrades and
Commodity cost increase.
Penetration of CNG & LPG Market.
New services
New distribution channels .
Benchmark with new competitors
Tata- TOWS matrix
Strength weaknessOpportunity 1)Good employee base &
productivity- Tata Motors has a good employee base & productivity of the Tata manufacturing plants is higher. It gives Tata good production efficiency2)Tata produces the low price cars with high fuel efficiency. This is the requirement of Indian market. It gives Tata a big customer base in the country. We can say that TATA NANO is the biggest strength of the company.
1)Profitability Ratio & EPS2)A Tata industry has made much investment in Tata motors. But return on investment is not up to the mark.
1)Improvement in affordability levels in addition to the increasing aspiration levels are key demand drivers for passenger car sales in these smaller cities
2)Growth in Indian Economy, GDP & Favorable Interest Rate & increase in demand for 4 wheeler, accompanied by growth in road infrastructure & favorable Govt. Policies
Increase no of outlets More into untapped areas
Maximize base production capacity through efficient use of resources
Need to increase Market share New innovations
Review & improve on increased customer spending in India .
Threats 1)The entry of new players in the compact car segment. 2)Increase in input costs on account of emission related
Penetration of CNG & LPG Market.
Reduce disputes to improve increased retained customers.
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upgrades andCommodity cost increase.
Strong focus on R&D
New distribution channels . Include dealers in performance based schemes
1. Maruti- BCG Matr
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Product Star Cash Cows
Question Mark
Dogs Comments
1. Swift * The premium hatchback Swift is performing well for India's largest auto maker Maruti Suzuki, The fastest selling car of its category, Swift crossed the sales mark of 300,000 units in the domestic market.
2. Swift Desire *3. Zen Estilo *4. Grand Vitara ?5. A star ?6. MARUTI SX4 ?
7. Alto * Alto has maintained its best-selling position in spite of the launch of new small cars by global auto majors. It had become India's first car to sell more than 200,000(212568) units in one financial year (Mar 2010).
8. Wagnor + Maruti WagonR is very popular due to its dependability and fuel economy. This car has maintained its reputation of being a good car for family (sales – 134768).
9. Maruti 800 +10. Baleno
11. Omini As the Sales of Omni car is coming down & demand is decreasing.
12. Versa
Tata Motors- BCG Matrix
Sources: Tata News RoomsThe Tata Motors Group global sales, comprising of Tata, Tata Daewoo and Hispano Carrocera range of commercial vehicles, Tata passenger vehicles along with distributed brands in India, and Jaguar and Land Rover, were 86,705 nos. in October 2010, a growth of 18% over October 2009. Cumulative sales for the fiscal (April 2010 – October 2010) are 598,639 higher by 44% compared to the corresponding period in 2009-10.
Sales of all commercial vehicles were 40,750 nos. in October 2010, a growth of 20%. Cumulative sales for the fiscal are 274,323 nos., a growth of 52%.
Sales of all passenger vehicles were 45,955 nos. in October 2010, a growth of 17%. Cumulative sales for the fiscal are 324,316 nos., a growth of 39%.
Tata passenger vehicle sales, including those distributed, were 27,110 nos. for the month, a growth of 20%. Cumulative sales for the fiscal are 193,184 nos., a growth of 41%.
Jaguar Land Rover global sales in October 2010 were 18,845 vehicles, higher by 12%. Jaguar sales
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Product Star Cash Cows Question Mark Dogs
1. Indica *
2. Passenger Vehicles Commercial Vehicles
*
3. Tata Safari Décor ?
4. Jaguar Land Rover ?5. Indigo +
6. Nano
for the month were 3,219, lower by 19%, while Land Rover sales were 15,626 higher by 22%. Cumulative sales of Jaguar Land Rover for the fiscal are 131,132 nos., higher by 35%. Cumulative sales of Jaguar are 32,999 nos., higher by 21%, while cumulative sales of Land Rover are 98,133 nos., higher by 41%.
Hyundai Motor India Limited (HMIL) Wednesday reported a 17.2 percent growth in sales in August 2010 as compared to the like period last year. Total sales for August stood at 50,636 units as
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Product Star Cash Cows
Question Mark
Dogs Comments
1. Hyundai santro Xing.
* HS Lheem, the Managing Director, Hyundai Motor India, said, “The Hyundai Santro Xing sales was much better than our expectations. In year 2009, we are expecting at almost the same overall sales figure as last year, around 2.3 lakh cars. In this sales figure, Hyundai Santro Xing and Hyundai i10 are contributed around 85,000 units each.”
2. Hyundai I10
* The i10 has recorded an average sales figure of 12,000 units a month, compared to the Santro’s 7,000 units per month, thus becoming the company’s weapon of choice for battling rival automaker Maruti Suzuki on the local market.
3. Hyundai I20
+ During the last month of 2009, the i10, i20 and Santro mini-car have been the top performing Hyundai vehicles with sales topping at 44129 units. In addition, Hyundai also sold a little more than 3000 units of Accent hatchback and 20 units of Hyundai Sonata sedan.
4. Hyundai Accent
+ Saloons, 4,137 cars of Accent and Verna were sold.
5. Hyundai Verna
? Newly launched and to make a mark in the market so it is in questionMark section
6. Hyundai Sonata
ransform
But in the segment only 18 Sonata Transform cars were sold. Hyundai has launched new facelift Hyundai Verna Transform, which the company hopes.
against 49,521 units in the corresponding period of last year.The domestic sales accounted for 28,601 units as against 24,401 units in the like period of 2009. While exports declined by 12.3 percent from 25,120 units in August, 2009 to 22,035 units in August, 2010.The company said it sold 45,804 A2 segment cars which include Santro, i10 and i20 sold, while A3 Segment cars like Accent and Verna sold about 4,806 units and A5 segment’s Sonata at 26 units.‘We expect the demand in the domestic market to be even stronger in the coming festival season,’ said Arvind Saxena, director, marketing and sales, HMIL.
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