Swift vs. Getz(Sales)2007 Format

8/14/2019 Swift vs. Getz(Sales)2007 Format

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Executive summary 3

Acknowledgement 4

Methodology 5

Automobile sector 7

Company background (Maruti) 11

Company background (Hyundai) 16

Final Analysis 19

Recommendations 24

Conclusion 25

Annexure

EXECUTIVE SUMMARY

s

Initially in the early 1980s when Maruti Suzuki joined hands to be a player in the Indian

automobile market, there was not much competition from the other players. There main

challenge was to make people buy there cars. There first car- Maruti 800 was a great success

and we can still find those Maruti 800s on the roads today also. But now, the situation is awhole lot different. There are many major international players of the automobile sector in


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the Indian market today. They have eaten up a sizable share of Maruti and are becoming a big

threat for Maruti. One of them is Hyundai. Hyundai became one of the fastest companies to

reach its break even point in India.

Our research involves an in-depth study and analysis of two established brands in terms of

sales and distribution network: HYUNDAI GETZ and MARUTI SUZUKI SWIFT.

The objective of our research was to compare and analyze the sales and distribution network

of Maruti Suzuki and Hyundai and their effectiveness.

The data collected for the project was collected from primary and secondary sources.Primary

data is based on the findings from the company personnel, dealers and consumers (every day

people) with the use of tools like Questionnaires, Interview Schedules and Discussions. This

data is further substantiated by the use of appropriate secondary sources like Internet,

magazines and reviews etc.

In this project we went through interviewing the Dealers, and Management officials ofMARUTI UDYOG and also HYUNDAI LIMITED covering most of the regions ofDelhi

and NCR. In this project we have also covered the financial terms of the company with the

dealers and that of the dealers with the customers.

Also, with the help of statistical tools like graphs and charts, the research and analysis work is

shown. By this study we have been able to compare the two giants of the automobile industry

in India and about the effectiveness of their sales and distribution channel.

ACKNOWLEDGEMENT

We are grateful to our esteemed Prof, Maninder Singh, for

giving us an opportunity to do an in-depth study on the project

and gain a practical exposure. We are also grateful to him for

his help, guidance and support. We are also grateful to IndianInstitute of Planning and Management for designing such


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a course structure so that we can gain a practical exposure

before actually going to the field.

We are also thankful to all the company representatives ofMaruti and Hyundai who provided us with the information

required and help us in completing our project report.

Company Representatives:

Mr. Anmol Joneja Territory Sales Manager , MSIL

Mr. Rahul Sharma Senior Officer, HMIL

We are also thankful to the various channel

membersassociated with MARUTI and HYUNDAI who provided

us with substantial information which was helpful for our study.

We are also grateful all the 250 consumers of MARUTI SWIFT

and HYUNDAI GETZ who cooperated with us to conduct our

survey on these companies.

METHODOLOGY

The business sector chosen for this purpose is the automobile sector, and the players chosen

for the study are:

Maruti Suzuki

Hyundai


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INFORMATION SOURCES

PRIMARY DATA SOURCES

MARUTI Territory Sales Manager

MARUTI Dealers

HYUNDAI Senior Officer

HYUNDAI Dealers

SECONDARY DATA SOURCES

INTERNET

www.google.com

www.autocar.com

www.marutisuzuki.com

www.wikipedia.com

DATA COLLECTION TOOLS

Interviews and Discussions with the company representatives (officials) and dealers. Surveys

of the consumers using Maruti or Hyundai automobiles basically models Maruti Suzuki Swift

and Hyundai Getz. Interview Schedules and Questionnaires were used to record data.

SAMPLE SIZE USED

The sample size for the company representatives (officials) was 1 each in number while the

sample size of the dealers was 5 each.

COMPANY MARUTI HYUNDAI

Company Representatives 1 1

Channel Partners 5 5


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Customers surveyed were 250 in number.

PROBLEMS FACED:

The basic problem that we faced was at two levels. One at the level of the dealers and the

other at the level of the consumers.

The dealers were hesitant about disclosing the financial facts about the company, and the

terms they have with the company, not many statistics were given as all was termed as

confidential

It was also difficult for us to identify and get information from the consumers of MARUTI

and HYUNDAI CARS for the purpose of our survey.

AUTOMOBILE SECTOR

Indias automobile sector is a highly booming sector. There has been a consistent growth in

the production and sales of cars in the past few years. Instead there has been a growth of

about 49.4% of the automobile sector as a whole between 1998-99 to 2004-05.

Category 1998-99 2004-05 (Apr-Dec)

Passenger Car 25468 121478

Multi Utility Vehicles 2654 3892

Commercial Vehicles 10108 19931

Two Wheelers 100002 256765

Three Wheelers 21138 51535

Percentage Growth -16.6 32.8


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This the break up of the different types of automobiles and there growth between 1998-99

and 2004-05.

The auto component sector has also posted significant growth of 20 per cent in 2003-04, to

achieve a sales turnover of Rs.30,640 crore (US$ 6.7 billion). Further, there is a potential for

higher growth due to outsourcing activities by global automobiles giants. Today, this sector

has emerged as another sunrise sector.

Major Manufacturers in Automobile Industry

Maruti Udyog Ltd.

General Motors India

Ford India Ltd.

Eicher Motors

Bajaj Auto

Hindustan Motors

Hyundai Motor India Ltd.

TVS Motors

SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis

Strengths

1. People are more and more willing to buy cars

2. Presence of well known companies now in India

3. Dealership is now available in most of the cities

Weaknesses


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1. Low purchasing power of the consumers

2. High registration taxes imposed by the govt. in some places

3. Poor condition of roads in many places discourages consumers to buy an automobile

Opportunities

1. Rapid urbanization

2. Increasing purchasing power of consumers

3. Availability of more and more finance schemes

Threats

1. Increasing fuel prices

2. Increasing congestion on roads

3. Increasing price of the raw materials

CURRENT SCENARIO

Opposing the belief that the growth in automobile industry has catered only to the top

income-stratum of society, Growth of exports of 32.8 % in the first three quarters of 2004-05,

the fastest growth in volumes has come from commercial vehicles as against passenger cars.

Between 1998-99 and 2003-04, output of commercial vehicles has grown 2.8 times compared

to the 2.2 times increase in passenger cars. Furthermore, two-wheeler output continues to

dominate the volume statistics of the sector. In 2003-04, for every passenger car turned out by

the sector, there were 7 two-wheelers produced. In the two wheeler segment, there is a greater

preference for motorcycles followed by scooters, with both production and domestic sales of

motorcycles increasing at faster rates than for scooters in the current and previous years.

However, mopeds have registered low or negative growth. Export growth rates have been

high both for motorcycles and scooters.

From the total sales of all vehicles of 52 lakh in 2001-02 to over one crore in 2006-07, the

Indian automobile market is one of the fastest growing one in the world, says latest figures of

the Society of Indian Automobile Manufacturers (SIAM). Around 2,000 exhibitors from 25

countries, including France, Brazil, Japan and Korea, are participating in the car bazaar

summit.

The expo is witnessing one of the biggest global participation with automobile manufacturers and

ancillaries from the U.S., Japan, China, Germany, France and Italy among others exhibiting their

products.

The current car fair assumes great significance as it will be for the first time that the worlds

leading automobile companies would unleash global launches of their exciting new

products. Interestingly, many companies plan to launch their products first in India and then

scout for the global markets.

The biggest driver of this growth has been the passenger vehicle segment and two-wheelers

while sales figure of cars went up from 6.75 lakh units in 2001-02 to 13.79 lakh units in


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2006-07, in the case of two-wheelers, it skyrocketed from 42 lakh units to 78 lakh units,

making India one of the hot markets not only in Asia but also across the globe, says SIAM.

Similarly, commercial vehicles and two-wheeler market is also following the growth path.

While Indian automobile manufacturers are exploring foreign markets, global players are

entering the Indian market, either on their own or in collaboration with domestic players. Thecommercial vehicle segment, which off late has also come in the priority list of global

players, has been growing steadily, from 1.46 lakh units sold in 2001-02 to 4.61 lakh vehicles

in 2006-07.

FUTURE SCENARIO

With the easy availability of finance, increasing requirement of more cars per family,

increasing double income families, increasing style and fashion sense in consumers and

increasing options of buying a car, the future of this sector looks very bright.

On the other hand, increasing fuel prices, high registration fees, poor road conditions,

increasing traffic congestion and traffic jams are the factors hindering the immense growth

potential of this industry.

India, which is the third largest car market in Asia, is no longer a market for smaller cars.

Sales in all segments be it an entry level car, a luxury hatchback, a sedan, a sports utility

vehicle, a multi-utility vehicle or the branded products are posting impressive growth.

Interestingly, India will soon be the only market in the world to have both worlds

cheapest car, the Rs. 1 lakh Nano, and the costliest ones like the Maybach, Bentley,Phantom and Lamborghini having made their debut in India.

When the entire country waited with bated breath in anticipation of Nano being unveiled at

the opening day of Asias largest automotive show Auto Expo in Delhi recently, it was

hardly surprising to see a large number of people seeking trade inquiries with the executives

of European luxury carmakers BMW, Volkswagen, Renault and Audi asking about

availability of their cars in India that are priced between Rs. 30 lakh and Rs. 1.25 crore.

It is this mass potential of the Indian automobile sector that is attracting all top car makers to

India, forcing them to set up their production facilities in the country, not just to tap the

domestic market but to source in overseas market, thanks to cheap Indian labour and low

production cost.


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MARUTI SUZUKI INDIA LTD.

COMPANY DETAILS

Maruti Suzuki India Ltd. was incorporated in February 1981. The Joint venture agreement

between Indian Maruti and Japans Suzuki came into being in October 1982. Suzuki, Japan

holds 54.2% of the shares of the company and the balance is with other financial institutions

and public. It is a leading four-wheeler automobile manufacturer in South Asia. It was the

first company in India to mass-produce and sell more than a million cars. It is largely credited

for having brought in an automobile revolution to India. It is the market leader in India. On

17 September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The

company's headquarters remain in Gurgaon, Haryana.

Since its beginning, Maruti has been the benchmark in the automobile industry of India. Due

to the trust the consumers have in this company, easy availability of service stations all over

India, good product quality, high level of customer satisfaction and a wide range of cars, it

holds the highest market share in the car industry of India.

Most of the technology for the cars is imported from Japan. These parts have to be ordered at

least 2 months in advance. But there are some cars whose technology is entirely made in

India now. Maruti 800 and Omni are entirely made in India. Maruti has 2 manufacturing

facilities in India, one in Gurgaon and the other in Manesar. The Manesar plant is majorly

used just for the production of Swift. Technologies like gearbox and some other parts for

Swift, DZire and SX4 are imported from Japan. All the cars except for the Grand Vitara are

assembled in these two plants. The Grand Vitara is imported in its assembled and ready to be

sold form from Japan through ships. It is delivered on the port in Mundla.

The cars are delivered to their respective dealers through trucks/trailors for long distances and

by road for short distances. Maruti is also starting rail services for delivering their cars in

some places. They also plan to fit in GPS systems in their cars. This will help them in

locating exactly where the cars are and tell the customer the exact time period in which they

will be able to get their car.

DISTRIBUTIONAL CHANNEL HIERARCHY OF MARUTI

Maruti also by far has the biggest channel structure in the automobile sector in India. They

have one Head Office which is situated in Gurgaon, Haryana. Then they have 4 Zonal Offices


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We can clearly see that Maruti is far ahead of its competition and contributes to almost half of

the market share of the automobiles in India.


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Looking at the current situations, Maruti is expecting sales of another 15 million cars by2012.

HYUNDAI MOTORS INDIA LT D.

The Hyundai Motor Company was established in 1967. It is a division of Hyundai Kia

Automotive Group, which is Koreas largest and worlds fifth largest automobile maker in

terms of units sold per year. Its headquarters are in Seoul. Hyundai operates the worldslargest integrated automobile manufacturing facility in Ulsan, which is capable of producing

1.6 million units annually. The company employees over 68000 people worldwide and its

revenues are approximately 30 billion. Hyundai has invested in manufacturing plants in the

North America, China, India, and Turkey as well as research and development centres in

Europe, North America, and Japan. In 2004, Hyundai Motor Company had $57.2 billion in

sales in South Korea making it the countrys second largest corporation, or chaebol.

Worldwide sales in 2005 reached 2,533,695 units, an 11 percent increase over the previous

year. Hyundai has set as its 2006 target worldwide sales of 2.7 million units.

In India, Hyundai Motors India was incorporated in May 1996. The groundbreakingceremony for the Chennai plant was held in December in the same year, and the first pilot


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Santro was ready in a record-breaking 17 months. In the domestic market it clocked a growth

of 19.1 percent a compared to 2005, with 186,174 units, while overseas sales grew by 17.4

percent, with exports of 113,339 units. It recorded a sale of INR 178603 Million in the

financial year 2007-08.

In India, HMIL presently markets over 30 variants of passenger cars across six models, theSantro and Getz in the B segment, the Accent in the C segment, the Elantra in the D segment,

the Sonata in the E segment and the Tucson in the SUV segment.

DISTRIBUTIONAL CHANNEL HIERARCHY OF HYUNDAI

Unlike Maruti, Hyundai has a relatively smaller chain of distribution channels. Even the

hierarchy is much smaller as compared to Maruti.

Hyundai has one head office in Delhi, four regional offices in North, East, West and South

and then come the dealers.

The company takes the payment from these dealers only in the form of advance payment. No

credit period is given for the dealers.

The company runs on a Pod lifting system, where they would despatch the cars as and when

they are produced. These despatches are directly sent to the dealers. They ferry their cars

through trucks/trailors and trains. Hyundai incurs a cost of about Rs. 9000-10000 per car fortheir transportation. The cost also depends on the distance where they have to be delivered.

The company provides for different margins on different cars to the dealers. They provide for

Rs 10000-12000 on a Santro, Rs. 15000-18000 for a Getz, about Rs. 15000 on an Accent, Rs.

10000- 12000 on a i10, Rs. 18000 on Elantra and more than Rs. 20000 on Sonata.

SETTING UP OF TARGETS

Hyundai sets up monthly targets for dealers for specific cars. This can be done to push a

dealer to increase the sales of a specific car if the company wants.

CRITERIA FOR SELECTING CHANNEL MEMBERS

Financial strength on the dealer

Their goodwill in the particular area

Their knowledge of business they would be doing

The place should be contusive for their cars to be sold


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QUESTION 3

Out of the 250 customers, 192 people were satisfied with their car and were happy with the

money spent on their car. But there were 58 people who did not consider their car worth the

money they had spent on it. This means 77% of the people were happy with their cars and

33% of the people were not.

QUESTION 4

Out of the 250 customers, 185 people were satisfied with their dealers and 65 were not. This

means 74% of the customers were happy with their dealers and 24% of them were not.

QUESTION 5

How would you rate the services of your dealer?

MARUTI SWIFT

Very

good

Good Satisfactor

y

Bad

30 % 60

%

9 % 1

%

HYUNDAI GETZ

Very

good

Good Satisfactor

y

Bad


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10 % 65

%

21 % 4

%

QUESTION 6

How do you rate the discount of special offers given by the dealers?

HYUNDAI GETZ

Very

good

Good Satisfactor

y

Bad

8 % 37

%

33 % 22

%

MARUTI SWIFT

Very

good

Good Satisfactor

y

Bad

7 % 47

%

34 % 12

%


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RECOMMENDATIONS

MARUTI SUZUKI INDIA LTD.

As per our research, we did not find much wrong with the system of the company. But we

still have a few recommendations for the company.

Customers complain about the waiting on some cars of Maruti. They claim that they

do not even receive the cars in the promised time by the dealers.

Competitors like Hyundai are catching up fast and Maruti has to make plans for that.

HYUNDAI MOTORS INDIA LTD.

Hyundai is falling short on the number of dealers as compared to Maruti.

They also fall short in terms of reach to the customers in far away places.

Many customers complain of faulty services of Hyundai service stations.

Customers complain that they do not usually get what they are promised from their

dealers.


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CONCLUSION

Indian market provides favourable demand conditions for the automobile sector to grow.

India has been experiencing a strong growth in the demand of automobiles and it is already

hub of the compact car segment. This has facilitated growth in the automobilesector both

directly and indirectly. Growth in demand has been because of many important factors

suchas the growth of the per capita income of a person which leads to better living standards

At the same time, consumer demand has boosted growth in Indias overall manufacturing

sector as well, which in turn has a positive impact on the automobile sector .

It has been noted in our research that Marutis sales and distribution channel system is far

more superior and complex than that of Hyundai. This could be as a result of the longer

existence of Maruti. But certainly, Maruti has been able to use its wide reach of outlets andservice stations very effectively, making it the largest automobile seller in India and by a huge

margin. Swift recently reached a figure of 2 lakh cars in just 3 years of its launch, the fastest

in the industry to do so. This is another mark in the success of Maruti.

Hyundai is a relatively new company in India, but it is one of the fastest growing companies

of India in the automobile sector. It reached its break even point in just three years and is still

maintaining a good growth rate. Hyundai has been successful in taking away some of the

market share of Maruti. Hyundai has already made a strong foothold in the Indian automobile

market.

Hyundai is already competeing with Maruti on many fronts. With the rate at which theautomobile sector is growing it is certainly a very booming sector. With companies like


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Maruti, Hyundai, Ford, GM, Honda, Toyota etc. competing with each other, it is bound to

heat up even more. But it is for sure that the company which takes care of Place the most,

is most likely to win the car wars, and at the moment Maruti is leading the battle. It will not

come as any surprise for us, to see Hyundai coming very close to Maruti in terms of its

place factor.

ANNEXURE

Questionnaire

(Sales and Marketing department)

1. What type of sales organisation structure do you possess?

2. What are the various channel structures in which you operate?

3. What are the various criterion/terms and conditions of selecting your channel members?

4. What is the average Inventory Size you keep?

5. What is the average Order Cycle time?

6. What are the various modes of transportation adopted and cost incurred?

7. What are the methods of measurement and frequency of providing appraisals to channel

members?

8. What are the modes of by which you receive your payments:

i) Advance payment ii) Payment on Delivery iii) Credit payments

9. In case you provide the credit period, what is the time limit?

10. How frequently do you collect the feedback from your Channel members?

i) Weekly ii) Quarterly iii) Monthly

11. How will you rate and rank the following aspects of your Channel Members:

Excellent Very good Good Fair Poor

DealersEfficiency


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Questionnaire

(For Dealers/Retailers/Franchisee)

1) Which car is most asked by the customer?

2) What is your average sales/month?

3) Which brand do you recommend to the customer and why?

4) Do you get any credit period from the company?

a) YES b) NO

If Yes, What is the credit period you get:

5) What is your average order size?7) What are the margins that you get from the company?

8) What is the average order cycle time taken by the company?

9) Where would you rank the services/assistance provided to you by the company/s

Very

Good

Good Satisfactory Poor Very

poorDelivery Time

Quality MaintenanceIncentivesPromotional activitiesCondition of ProductEase and Flexibility of placing

OrderTransporters BehaviorCustomers OrientationCommercial TermsServices of Sales Persons

10) How will you rate the efficiency of your sales persons

a) Very Good b) Good c) Satisfactory d) Poor e) Very poor

11) Does company provides you with any assistance by means of promotional activities?

a) YES b) NO

If Yes, Numbers, Timing, Quantity of promotions.

12) Do you provide appraisals to your sales persons?a) YES b) NO


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If Yes, on what Parameters?

_______________________________________________________________________

Person contacted: ..

Name of dealer: ..

Address: ..

Tel. No.:

Questionnaire

(For Customer)

1. How would you rank the following outlets on the parameters given below:

V.Good Good Satisfactory Bad V.Bad

1 Reach of Maruti

Outlet Hyundai

2 Availability Maruti

of cars Hyundai

(test drive, sales)3 Price Maruti

of cars Hyundai

4 Convenience Maruti

(facilities, etc) Hyundai

5 Special offers Maruti

like discount

cards Hyundai


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