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Automobile Industry - Marketing Mix

The automobile industry has evolved from craft production in the 1890s to mass production techniques pioneered by Henry Ford in the early 1900s. By the mid-20th century, the US dominated global automobile production. However, Japanese automakers utilizing lean production saw increased market share in the late 20th century. Emerging markets such as China and India are now growing rapidly in production and sales. The industry continues to have significant economic and environmental influence worldwide.

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0% found this document useful (0 votes)
332 views35 pages

Automobile Industry - Marketing Mix

The automobile industry has evolved from craft production in the 1890s to mass production techniques pioneered by Henry Ford in the early 1900s. By the mid-20th century, the US dominated global automobile production. However, Japanese automakers utilizing lean production saw increased market share in the late 20th century. Emerging markets such as China and India are now growing rapidly in production and sales. The industry continues to have significant economic and environmental influence worldwide.

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mupade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTERI:INTRODUCTION

HailedastheindustryofindustriesbyPeterDrucker,thefoundingfatherofthe
studyofmanagement,in1946,theautomobileindustryhadevolvedcontinuously
withchangingtimesfromcraftproductionin1890stomassproductionin1910sto
leanproductiontechniquesinthe1970s.TheprominentroleplayedbytheUStilllate
1990shadoflatebeencorneredbytheJapaneseautomakers.Theglobaloutputfrom
theautomobileindustrytouched64.6millionvehiclesin2005,therebyretainingits
leadershipinmanufacturingactivity,providingemploymenttooneinsevenpeople,
eitherdirectlyorindirectly.Thissupplymainlycateredtomeetthedemandfrom
households wheretheautomobilesconstitutedthesecondlargestexpenditureitem
nextonlytohousing.ThustheglobalautomobileindustrydominatedbyEurope,US,
Japan,andoflatebyChinaandIndia,continuedtohaveasignificantinfluenceon
economic development, international trade, foreign direct investment and
environmentfriendlypractices.
The US automotive industry, the largest automobile manufacturer in the world,
witnessedthedownwardslideoftheBigThree,viz.,FordMotorCompany(Ford),
General Motors Corporation (GM) and DaimlerChrysler (DC) in market share
continuingunabatedforthelast10years.ToyotaMotorCorporation(Toyota)seemed
allsettobecomethemarketleaderbytheendof2006(Ulrich,2006).Inthelightof
rapidlyrisinghealthcarecostsandtheheavyburdenoflegacycostsforretirees paid
bytheBigThreeaspartofthesettlementwiththeUnitedAutoWorkers,theBig
Three was losing out to Japanese and European automakers. Many strategic
interventionswereinitiatedbytheU.SautomakersundertheleadershipoftheBig
Threetotriggermarketgrowth.GMlaunchedKeepAmericaRollingcampaignafter
the9/11attackswithmoreemphasisonhighincentivesandlowtozerointerestrate
loans.FordofferedafreecomputeralongwiththepurchaseofFordFocusvehicle.
AnentrylevelpassengercarwasofferedalongwithahighendSportUtilityVehicle
(SUV).In2004,theU.SautomakersspentnearlyUS$60billioninrebatesandover
90%ofthecarssoldhadsomeincentive.ButJapaneseplayerswerealsofollowing
suit.In2004,ToyotasincentivesreachedalevelofUS$3100pervehicle.Overall

2006markedtheevolutionoftheNewSixviz,Toyota,Honda,Nissan,GM,Fordand
DC,replacingtheBigThree.
Japanaccountedfor16.7%oftheworldautomobileproductionin2004.TheJapanese
automakerswerethemarketleadersinthelightvehiclemarket,selling5.1million
vehicles,anincreaseof7%over2003.
China, the fourth largest producer of motor vehicles, next to Germany was fast
emerging as the market of the future by providing cost effective export base for
meetingthedemandfromAsianmarkets.ThepresenceofGermanautomakersalone
inChinahadincreasedby440%since1990.Chinaaccountedfor3%ofthetotal
internationallocations(722)ofglobalautomakersin1988.By2004,thisincreased
to 7% of a total of 1959. Domestic manufacturers were the dominant players in
Chinese market. Despite government initiatives to control domestic demand by
tightening credit flow, the market boasted of sales of more than 2.7 million
commercialvehiclesin2004.Thesalesofpassengercarsaloneincreasedby17%
over2003figures.Withreportsofhighestgrowthinmobilityintheworldat3%per
annum,furthersurgeindemandwasanticipatedfromChinesemarket.
Ridingonawaveoflowinterestratesandaboomingeconomy ,Indiamadeitsmark
intheautomobilesectorin2004,withsalesfiguresexceedingmorethan1millionin
thepassengercarsegment.MarutiUdyogwasthemarketleaderwithashareof51%,
followed by Hyundai Motor and Tata Motors. The sale of commercial vehicles
reachedatotalof305,000units;arecordgrowthof29%over2003.Foreignauto
makerssuchasMercedesBenz,VolkswagenGroup,GM,Honda,Toyota,Ford,Fiat
andMitsubishiwereintheforefrontofsettinguptheirmanufacturingunitsinIndiato
tapthegrowingdemand.
Intheenvironmentfront,theKyotoProtocol,whichcameintoforceinFebruary
2005, led to the emergence of a closed loop strategy encompassing production,
vehicleoperationandrecyclingintheglobalautomobilesector(VDA,2005).Despite
fragmented views from different regions, automakers were in the forefront of
popularizingenvironmentfriendlyinitiatives.

GenesisoftheAutomobileIndustry
Thegenesisoftheautomobileindustrydatedbackto15thCenturywhenthefamous
Italian genius, Leonardo da Vinci suggested the possibilities for powerdriven
vehicles. Later in 17th Century, the famous English physicist Sir Isaac Newton
proposedtheconceptofasteamcarriagewhichwasbroughttorealityinthelate18 th
CenturybyFrenchArmyCaptainNicholasJosephCugnot.Duringthemid1800s,
theattentionhadshiftedtointernalcombustionengineswhichweresaferandeasyto
operatethanthesteamdrivenengines.Thefirstsuccessfulversionoftheinternal
combustionenginewasbuiltbyJeanJosephEtienneLenoirin185911.Thismodel
wasrevisedbyaGermanshopclerk,NikolausAugustOttoin1876andhencecame
tobeknownastheOttoengine.HiscompatriotsGottliebDaimlerandKarlBenzused
thismodeltobuildthefirstmoderncars,whichwerelaunchedin1886.IntheUS,
GeorgeBaldwinSelden,madefurtherimprovementstotheengine,byreducingits
weightthereby,makingitcompatibleforlightvehicles.Thefirstautomobilecompany
was founded in 1896 by Charles Edgar Duryea and his brother Frank and this
initiativepavedthewayfortheemergenceofanautomobileindustry.
Theautomobilesmanufacturedinthe1890swerecalledashorselesscarriages.This
marked the beginning of craft production as all the manufacturing was done by
craftsmenemployedinmetalandmachinetoolindustries.Eachcarwastailormadeto
suit the needs of wealthy customers. But this craftbased production structure
demandedskilledworkersandresultedinverylowproductionvolume.Byearly20 th
Century, the craftbased system was replaced by mass production techniques 12,
popularizedbyHenryFord.In191314,heupgradedtheexistingpushandmove
assemblylinetoaconveyorbeltline,whichreducedassemblytimeconsiderably.His
famous Model T was assembled in 93 minutes 13. The main advantage of mass
production technique over craftproduction was the ability to manufacture several

products simultaneously rather than one at a time. The other features like inter
changeability of standard parts, standardized product design, and centralized
hierarchy of tasks helped to realize economies of scale. This increased labor
productivitybyleapsandboundsbutalsobroughtaboutareductionofskilledlabors.
Eachworkerperformedidenticaltasksusingidenticaltoolswhichwerealwayskept
withinhandreach.ItwasfoundthattheFordassemblersaveragetaskcycledeclined
from514minutesin1908to1.19minuteswiththeintroductionofmovingassembly
linein1913(Sako,M).Theenormoussuccessofmassproductionresultedinthe
globalsectorbeingdominatedbytheAmericancarmanufacturers.In1955,North
Americaaccountedfor75%ofglobalmotorvehicleproduction.TheBigThree,Ford,
GMandChrysleraccountedfor95%ofallAmericancarsales.
InEurope,massproductionwaswidelyadoptedinthe1950sthroughtheinitiativesof
Volkswagen,RenaultandFiat.Butratherthanproductionefficiency,theemphasis
was more on product differentiation and technical innovation (Sako, M). Their
productofferingsincludedcompactcars(VWBeetle),sportycars(MG)andluxury
cars.Frontwheeldrive,fuelinjection,unitizedbodies,andfivespeedtransmissions
weresomeoftheirinnovationsinthetechnicalfront.Thuswithfocusonproduct
strategy,theEuropeanautomobileindustrycontributedmorethantheUStotheglobal
automobileproductionduring1960sandearly1970s.
Japaneseautomakersemergedasaforcetoreckonwithintheglobalscenariowith
the oil crisis in 1973, and subsequent price increases in 197914. The crisis had
resultedinashiftinconsumerdemandforenergyefficientcars,asegmenthitherto
dominatedbytheJapaneseautomakers.By1980s,theJapaneseautomakerswere
benefitedfromthevoluntaryexportrestraintsintheUSandsetupassemblyplants
knownastransplantswithinNorthAmerica.Towardsthelatterhalfof1990sJapanese
carsaccountedfor40%ofthetotalNorthAmericansales.Inadditiontocostsavings
bywayofcheaplabor,theyalsoinitiatedbettermanufacturingtechniquessuchasthe
ToyotaProductionSystem,developedbyTaiichiOhnointhe1960sand1970sbased
onleanproductiontechniquesinthe1980s.
ToyotaProductionSystemwasbuiltontwomainprinciplesnamely,JustInTimes
productionandJidoka.TheunderlyingconceptofthesystemwasGoodThinking
MeanGoodProduct.Theapproachhelpedtomanageequipment,materials,andlabor
4

inthemostefficientmannerwhileensuringahealthyandsafeworkenvironment.
JustInTimereferredtothemanufacturingandconveyanceofonlywhatisneeded,
whenitisneeded,andinthemannerneeded.Jidokareferredtotheabilitytostop
productionlines,bymanormachine,intheeventofproblemssuchasequipment
malfunction,qualityissues,orlatework,therebypreventingthepassingofdefects,
helpingtoidentifyandcorrectproblemareasusinglocalizationandisolation,building
qualitytotheproductionprocess.
MarketTrends
ProductionScenario
Theglobalautomobileindustry,witnessingrobustgrowthinthefaceofincreased
global demand, produced around 263 million motor vehicles in 2013. The Asian
countries,mainlybyJapan,ChinaandIndia,registereda9%increaseinproduction
overlastyear,constituting35.9%oftheglobalproduction.InfactChinaandIndia
postedpositivegrowthrateover2012.WiththeopeningupofEUmarkets,theshare
of EU countries in global automobile production was expected to increase in the
comingyears.
IndustryStructure
In the automobile industry, transaction cost economics, and technology shifts
determinedthestructure(Sako,M).Duringthe1890s,craftproductiontechniquesled
to the formation of a horizontally disintegrated industry, completely devoid of
consolidation.Manufacturingunitsevolvedinregionsboastingofskilledlabor.By
themiddleofthe20th Century,automobilecompanieslikeFordandGMbrought
about consolidation in the industry. The companies themselves were vertically
integrated.Themarketwasoligopolisticinnature.Hugeproductioncostsdeterred
newfirmsfromenteringthemarket.GMemergedasthemarketleader,wieldinghigh
influenceovermarketprices.By1920s,Fordperfectedmassproductiontechniques.
Thecompanyalsotookinitiativesforahighdegreeofverticalintegrationbyowning
its own steel mill and forging factory. Other players followed suit to achieve
substantialcostsavings.TheintegrationofFisherBodybyGMmarkedonesuch

instance.
ButcontrarytothetrendforverticalintegrationbytheUSautomakers,Japanese
automakerspracticedrelationalcontracting(Sako,M).ThepracticeofJustIn
Timedeliveryaspartoftheleanproductiontechniquesgaverisetoahealthyrelation
betweentheassemblersandthesuppliersofautomobilecomponents.
By 1980s the industry showed renewed signs of vertical disintegration. Chrysler
formedstrategictieupswithsuppliersformajorcomponentsandinturnconcentrated
onlyindesigning,assemblingandmarketing.TheseinitiativeshelpedChryslerto
realizethehighestaverageprofitpervehicleamongsttheBigThree.FordandGM
starteddependingonVisteonandDelphi,respectively,forsourcingtheircomponents.
Allthecomponentsofacarwereoutsourcedtosupplierswhoofferedlowestprices.
Thisincreasedthemanufacturingcapacityoftheautomakersandtheindustrywas
soon saddled with overcapacity. In 1999, the global automobile industry had an
excesscapacityof20millionunits.
To reap more profits, the automakers embarked on enhancing horizontal
concentrationbyformingallianceswithglobalplayers.DC(DaimlerBenz,merged
withChryslerofUSin1998andbecameDC),aGermanUSmergerenteredintoan
alliancewithMitsubishitospreaditsoperationsoverthreecontinents.Fordpurchased
Jaguar,VolvoandMazda,andRenaultsequitystakeinNissanandSamsungfor
wider reach. Thus the industry once again witnessed the emergence of oligopoly
market.
AllthemajorplayersincludingtheBigThreeintheUS,BMW,Volkswagen,Fiatand
other carmakers from Europe, Toyota, Nissan, Mitsubishi of Japan focused on
commercialexploitationoftechnologicaladvancementswiththeaimofofferingmore
efficientautomobilestoconsumers.OnonehandDCandBMWfocusedonluxury
vehicleswhileFiattargeteddieselengines.TheJapanesecompanieswerestrivingfor
betterfuelefficiencyandexperimentedwithsleekandslenderdesigns.
Towards the last quarter of the 20th century, globalization paved the way for
deregulationopeningupthemarketstoforeigncompetition.Theconsumersstoodto
gainwithmorevarietytochoosefromatcompetitiveprices.Inordertostemtheprice
war most of the major companies from the US, Europe and Japan entered into
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allianceswithcompaniesfromotherregionsoftheworld.In1997,GMenteredintoa
5050jointventurewithShanghaiAutomotiveIndustryCorporation(SAIC),astate
owned Chinese auto manufacturer to build a plant in China. In 1999, GM also
increaseditsequityinJapanesecompanieslikeIsuzu(raiseditsstaketo49%),Suzuki
(9.9%andlaterto20%)andFuji(20%).Allthesedealsranintomultibilliondollars
andGMgotaccesstoadvancedtechnologiesownedbytheJapanesecompanies.It
waswidelyopinedthatdevelopingthesetechnologiesonitsownwouldhavecostGM
moremoneyandtime.GMsalliancewithSAIChelpedittogainaccesstothefast
growingChinesemarketmuchbeforethananyofitscompetitors.
In2000,GMpurchasedastakeinFiatwiththeoptionofbuyingtheremainingshares
by2007.Butwithfallingfortunes,GMenteredintoaUS$2billionsettlementto
cancelthedealin2004.TheonlysuccessstorywastheRenault/Nissanmerger,with
bothcompaniesregisteringprofitsin2004.
By2005mergersandacquisitionstookabackseatintheautomobileindustry.DC
reduceditsshareinMitsubishifrom37%to14%by2005.DCalsodivestedits10%
stakeofHyundai.DCwastheonlyoneamongtheBigThreeregisteringincreased
salesintheUSmarketin2005.
The Big Three used to control 90 percent of the North American market.
Globalizationhascreatedeightnearequalcompetitorsfightingformarketsharethree
companiesusedtocontrol.
DennisDesRosiers,President,DesRosiersAutomotiveConsultantsInc.
AsfortheMercedesBenzmerger,theMercedessectionwasreportingqualityissues
resultingincustomercomplaints.Towardstheendof2005,consolidationactivities
hadbroughtGMseffectiveshareintheUSmarketto29.3%,Fordsshareto21%
andDCsto14.3%.
MarketShareofLeadingAutomakersinUS

Source:CSMWorldwide,McLaughlin,2006.

ProductOfferings
With increasing consumer awareness about the negative impact of automobile
emissions,automanufacturerswerereadilygoingfortechnologicalimprovements,
thereby launching new products. These innovations were broadly classified under
enginemodificationsandimprovedtransmissions.
Basedontechnologicalinnovations,automanufacturerswereofferingawiderange
ofproductsforconsumers.Ashiftinconsumerpreferenceinfavoroffueleffective
lighttrucksincomparisontopassengercarswasnoticedfrom2001onwardsinthe
US.Oflatethedemandwasmoreforcrossovervehicles,whichcombinedthebest
features of passenger cars and SUVs. The foreign players in the US market first
offered these in 1997. Hondas CRV, Mercedes MClass, Subarus Forester, and
ToyotasRAV4weresomeexamples.FordEscape,PontiacVibe,DCPTCruiser,
VolvoCrossCountry,andSubaruBajasoonfollowedthis.
Thesalesfiguresofcrossovervehiclespostedsignificantgrowth.Fromameager
tally of 195,000 units in 2000, it had increased to 1.9 million units in 2004,
constituting12%oftotalpassengervehiclesales.
HybridElectricVehicles

Green vehicles constituted another product range witnessing growing demand.


Thesevehiclesofferedloweremissionsandbetterfueleconomy.GMsallbattery
EV1andHondasEVPlusweretheinitialofferingsinthiscategory,whichappeared
inthemarketin1997.Butevenafterconcertedeffortsonly1400unitscouldbesold
inthenextfiveyears.Studiesprovedthatconsumerswerereadyforenvironment
friendlyvehiclesaslongastheywerecomfortablewithoperatingeconomy,comfort,
performance, and price, especially in the light ofgovernment regulations like the
CAFstandards.Alternativefuelvehicles,whichcameunderthecategoryofgreen
vehicles,alsoshowedimmensepotentialforfuturegrowth.Asof2005,morethan3
millionalternativefuelvehicleswereplyingtheroad.Themainchallengewasin
developing adequate infrastructure to provide alternative fuels such as biofuel,
naturalgas,andpropane.VWGofTDi,FordTaurua,DodgeRam1500truck,Dodge
Stratus, Chrysler Setring, GM Sierra Chevrolet Tahoe, GMC Yukon, Chevrolet
Silverado, and Chevrolet Cavalier were some examples for vehicles plying on
alternativefuels.
Thesemarketsituationspavedthewayforhybridvehicles(Appendix3).Japanwas
thepioneerindevelopingagaselectrichybrid.TheresultingproductnamedToyota
Prius was launched in 1997 in Japan. While US automakers were focusing on
hydrogenfuelcellengines,JapaneseautomakerspreparedtoentertheUSmarket.
HondaInsightwasthefirsthybridlaunchedintheUS.ThiswasonDecember1999
andwaspricedatUS$19570.Butduetosmallpowerbackuptheproductfailedto
catchupinthemarket.HondaalsolaunchedaremodeledversionofHondaInsight,
namelyHondaCivicin2002.By2003,nearly2000unitsofHondaCivicwerebeing
soldpermonth.In2004,HondalaunchedthefirsthybridwithaV6engine,viz,
Accordsedan,andafueleconomyof37mpginhighwayand29mpgincity.By
December2004,Hondahybridsalesjumpedtoatotalof74,608units.
Toyotaalsomadesignificantgainsfromhybridsales.In2000,ToyotaPrius,pricedat
US$19995enteredtheUSmarket.Theproducthadafueleconomyof55mpgand
recordedsalestotaling20,000unitsin2002.Ahigherversionwaslaunchedin2003
whichsold25,000units.In2004,therewasanincreaseof119percentinthesales
figures(54,000units).
FordandGMalsoenteredthehybridscenarioby2004,buthadlosttheheadstartto

Japaneseautomakers.DConthemeantimeconcentratedoncleandieseltechnology
andcameupwithDodgeRampickuptruckin2004.Advancedengineandemission
controlstrategiesanduseofultralowsulfurfuelcontributedtomakingthediesela
cleanfuel.FordMondeaoTDCi,BMW530dand740dsedan,Libertyjeep,Mercedes
E320CDi,VolkswagenPassatTDi,AudiA8TDi,ChevroletDuramax,FordFocus
TDCi

CHAPTERII:MARKETINGMIX
AMarketingmixisthedivisionofgroupstomakeaparticularproductbypricing,
product,branding,place,andquality.AlthoughsomeDay1 marketers haveadded
otherP's,suchas personnel, packaging andphysicalevidence,thefundamentalsof
marketingtypicallyidentifiesthefourP'softhemarketingmixasreferringto:
"MarketingMix"issetofcorrelatedtoolsthatworktogethertoachievecompany's
objectives,theyare:product,price,promotion,place.
Thesetofcontrollabletacticalmarketingtools,product,price,placeandpromotion
thatthefirmblendstoproducetheresponseitwantsinthetargetmarket:

ProductAtangibleobjectoranintangibleservicethatismassproducedor
manufactured on a large scale with a specific volume of units. Intangible
productsareoftenservicebasedlikethetourismindustry&thehotelindustry.
Typicalexamplesofamassproducedtangibleobjectarethemotorcarandthe

10

disposable razor.Alessobviousbutubiquitousmassproducedserviceisa
computeroperatingsystem.

Price The price is the amount a customer pays for the product. It is
determined by a number of factors including market share, competition,
material costs, product identity and the customer's perceived value of the
product.Thebusinessmayincreaseordecreasethepriceofproductifother
storeshavethesameproduct.

PlacePlacerepresentsthelocationwhereaproductcanbepurchased.Itis
oftenreferredtoasthedistributionchannel.Itcanincludeanyphysicalstore
aswellasvirtualstoresontheInternet.

PromotionPromotionrepresentsallofthecommunicationsthatamarketer
may use in the marketplace. Promotion has four distinct elements
advertising, public relations, word of mouth and point of sale. A certain
amountofcrossoveroccurswhenpromotionusesthefourprincipalelements
together, which is common in film promotion. Advertising covers any
communicationthatispaidfor,fromtelevisionandcinemacommercials,radio
and Internet adverts through print media and billboards. One of the most
notablemeansofpromotiontodayisthePromotionalProduct,asinuseful
items distributed to targeted audiences with no obligation attached. This
categoryhasgrowneachyearforthepastdecadewhilemostotherformshave
suffered.Itistheonlyformofadvertisingthattargetsallfivesensesandhas
therecipientthankingthegiver.Publicrelationsarewherethecommunication
is not directly paid for and includes press releases, sponsorship deals,
exhibitions,conferences,seminarsortradefairsandevents.Wordofmouthis
any apparently informal communication about the product by ordinary
individuals,satisfiedcustomersorpeoplespecificallyengagedtocreateword
ofmouthmomentum.Salesstaffoftenplaysanimportantroleinwordof
mouthandPublicRelations

11

PRODUCT

MARUTISWIFT
Europe,Algeria,EgyptandIndonesia.
European Styling. Japanese Engineering. DreamLike Handling.

12

ThenewSwiftisagenerationdifferentfromSuzukidesign.Styledwithaclearsense
ofmuscularity,itsoneandahalfbox,aggressiveformmakesforalookofstability,a
sense that it is packed with energy and ready to deliver a dynamic
drive.Itssolidlookiscomplementedbyanequallyrootedroadpresenceandclass
definingridequality.Newchassissystemsallowforthefrontsuspensionlowerarms,
steering,gearboxandrearenginemountingtobeattachedtoasuspensionframe.You
getlowerroadnoise,andagreaterfeelingofstabilityasyousailoverourroadswith
feathertouchease.

TATAINDICA
US,EuropeandSouthEastAsia.
Thoughalateentrant,theIndicaquicklyestablisheditselfasthebenchmarkforthe
segment.Byofferingexcitingfeatures,thecarchangedtherulesofthecategoryin
Space, Power, Style, Safety and Economy for international market. The Indica
ensuredapleasantrideandhandlingexperienceasithadfeatureslikewidelarge
tyres,generouslegroomandindependentfrontandrearsuspension.Itdevelopeda
newsegmentofdieselsmallcarsalongwithitspetroloffering.Theluggagespace
wasalsothebestinitsclass.
Therigid980kgssteelbodyofthecarwasrigorouslytestedatIndia'sfirstandonly
crash test facility. A collapsible steering wheel, impact absorbing bumpers, anti
submarineseats,crumplezonesandsideimpactbeamsarejustafewofthefeatures
13

thatmaketheIndicaoneofthesafestcarsontheroadstoday.Savingsareensured
withthefuelefficient1.4Ldieselengine,whilethe1.4Lpetrolengineisoptimized
forperformance.
Indicafeaturesforinternationalmarket:

Collapsiblesteeringcolumn

Sideimpactbeam

Energyabsorbingcrumplezonesinthefront

Antisubmarineseats

Childsafetylocksonreardoors

Laminatedfrontandrearwindshieldglass

SCORPIO
Europe,IndiaandUSA.

Rationalbenefits:Worldclassvehicle,goodlooks,carlikecomfort, greatvalue
Emotional benefits: Ownership experience of thrill, excitement and power
Relationalbenefits:Youngmodern,premium,citycompanion/extensionoflifestyle.

14

PACKAGING
Sinceproductisacar,packagingmightnotbeofmuchimportance.Carsusually
dontcomeinabox.However,sinceSantroismadeforstudentsandolder,theyhave
decidedtomakeabigbox,freeofallcharges,ifthecarisagiftforsomeones
birthday.Santroisagoodchoiceasafirstcar;parentscaneasilybuyitasagiftfor
theiryoungteenagers/students.

LABELING
Nolabelling,howeverforcurioususers,therewillbeasmallbrochureaboutthe
ingredientscarparts,sotheycanseehowexactlythecarworks,andwhatand
wherethedifferentpartsarefrom.

PRODUCTSUPPORTSERVICES
As for product support services, there are 3 things to know: Assess the value of
currentservicesandobtainideasfornewservices.Assessthecostofprovidingthe
extraservicesandputtingtogetherapackageofservicesthatdelightsthecustomers
andyieldsprofitsforthecompany.Allthese,arealreadyappliedtoSantroifwelook
atAugmentedProduct,whichIwroteaboutearlier.Customerswouldbedelighted
aboutthoseextraservices,andmighttellfriendsaboutthemandintheendmake
moreprofitforthecompany.

15

PRICE
MARUTISWIFT
Afterlaunchingcarsforthemassessincesomanyyears,Indiaslargestautomobile
manufacturerisnowtargetingthepremiumsegmentwiththeirlatestmodelfromthe
Suzukisstable.PricingofthispremiumhatchbackisstartfromRs.4lakh.Thisprice
rangewouldpracticallyripapartHyundaisofferinginGetz,whichispricedata
muchhighertagofRs.4.5lakh.Boththecompaniesareknownfortheirvaluebased
offeringsandMarutiwiththeirextensiveservicenetworkandbrandreputationfor
makingreliablecarsshouldgetthecustomersnodovertheircompetition.Thecostof
SwiftinEuropeisstartingfrom1.2Manual13,590.

TATAINDICA
TataMotorsadoptedacompetitivepricingstrategyforIndicaintheglobalmarket.
Priceswerefixedonthebasisofthenormsprevailingintheinternationalmarket.
AlsothepricesofferedbytheircompetitorslikeToyota,Ford,Fiat,werekeptinmind
whiledecidingtheprices.Inindiaitcostedaround34L.
SCORPIO
Pricing Strategy: to be a premium brand yet
havinguniversalappeal.ScorpiowastocompetewiththemidsizecarslikeHyundai
Accent,FordIkon,OpelCorsa,MarutiSuzukiEsteemontheonesideandUVslike
Toyota Quails,Tata Safari and the Tata Sumo on the other. Scorpio adopted the
penetrativepricingstrategypositionedinthepsychologicalpricebarrierofRs.57
Lakhs.InEurope,itcostedaround15,590.InJapan,itcostedaround14,300.

16

PROMOTION
MARUTISWIFT

When Maruti Udyog launched the Swift, the automotive industry was agog with
expectation that the car had the makings of a real winner. Three versions were
launchedwiththebasevariantcarryingaretailtagofRs3.85lakh,exshowroom,
NewDelhi,andthisaggressivepricingonlyreinforcedthisfeeling.

EventOrganizedByMarutitoPromoteSwift

Fever FM and Maruti Suzuki Swift organize a Night


RallyforDelhiites

In a cooperative marketing initiative, Fever FM and


MarutiSuzukiSwiftcametogethertoorganizeaNight
RallyinDelhi.TheSwiftNightLifeRallywasorganizedfortheSwiftLifeClub.The
brandtiedupwiththestationtoextendtheexperiencetothepeoplewhowereunable
toparticipateintheactivity.

HONDA

17

At8:10pmonMay30thlastyear,
Channel 4 aired thefirst 'live
advert'inBritishtelevisionhistory.
ItwasanadvertforHondaandit
filled an entire ad break. TV cut
live to an aeroplane flying
somewhere Spain with 15
skydiversinsidewaitingforthesignal.Theyhadacameraonanotherplaneflying
alongsideandoneoftheskydivershadacamerastrappedon,sothensomeonecut
betweenthemlive.AfterComeDineWithMegottoit'sfirstadbreaktheyjumped.
Astheyfelltowardsthegroundfrom10,000feetuptheysteeredthemselvesintothe
lettersHONDandAbeforepullingfortheirparachutesanddriftingtotheground.
HYUNDAI
TheUAE'sfirsteverMotorSouqeventbroughttogethercarenthusiastswithsomeof
thelatestmodelsfromMitsubishi,NissanandHyundaithathaveyettohitthemarket.
Interestedcustomersconnectdirectlywithrepresentativesfromautocompanies.

18

PrintAds
Daily advertisements in leading newspapers and
magazines are used to promote the product.
Leaflets at the initial stage are distributed at
railwaystations,malls,collegeareasandvarious
otherlocations.

WorkshopsandSeminars
Workshopsandseminarsareheldincollegesandbigcorporatetomakepeopleaware
about the companies past performance and product features, its affordability and
usage,vastdistributionnetwork.
Banners,neonsigns
Hoardings, banners, neon signs are displayed at clubs,
discs,outsidetheatres,highwaysandshopstopromoteits
brandcar.

Bookletsandpamphlets
Bookletsarekeptatcarshowrooms,retailbatteryoutlets,etcforthecustomertoread.
Thesebookletsprovideinformationaboutitscompany;theproductsofferedwhich
suitsthecustomersneedaccordingly.

TOYOTACOROLLA
The Promotion for Toyota Corolla consists of a blend of activities making its
PromotionMix.ItsPromotionMixconsistsofalmostallthepossibletechniquesof
Promotionusedforanyotherproduct.SomeofthemajorelementsofPromotionMix
ofToyotaCorollaarelistedasunder:
Advertising
19

It uses many different techniques of


Advertisement as a part of its Advertising
Strategy.
Most of the Print Ads of Toyota Corolla are
individuallytargetedatoneofthesefactorssuch
asComfort,Performance,Styling,Power,Leg
Room,Design,andDrivingPleasure.Onemost
commonfeatureofalmostalltheAdsisthatineveryAdvertisement,thefactthatitis
theWorldsLargestSellingCaranditspresenceacross160countriesispresent.This
isdonetobecausethecompanywantstodifferentiatetheproductinterms ofits
Reliabilitythatitisanentrustedbrandof30Millionpeopleacrosstheglobe.Thefact
thatitispresentin160countriesprovesthatitisaGlobalCar.
Thereare3TVCommercialsofthisCarinIndia.TheCommercialsshowthatthis
CaristargetedmainlyattheIndianyouthandyoungExecutive.Ithasbeenpositioned
asalittlesportierwhichisthemainreasonthatitisforyoungpeopleandisalsolike
bythemtoo.

GENERALATTACKSTRATEGY
FRONTALATTACK:theattackermatchesitsopponentsproduct,advertising,price
anddistribution.

20

In this advertisement BMW is using frontal attack strategy against its biggest
competitorAUDI

AUDIisreplyingtheBMWadvertisement

AlongwithAUDIandBMW,SUBARUandBENTLEYareusingfrontalattack
strategyagainsteachothersproducts.

21

TheBrochures,Posters/LeafletsaresuchdesignedthatshowsthatCorollaisacarfor
peoplewhodemandPerformance,Style,PowerandSheerDrivingPleasure.Thecar
being a perfect combination of these factors makes it a huge success across its
segment.
The Other Sources of Advertisement include Bill Boards, Display Signs, POP,
Displays,Symbol/Logo.ThecompanydoestheAdvertisingofCorollabydisplaying
BillBoardsandDisplaySignsatvarioustargetplaceswhereitfeelsthatprospective
buyerwillcomeacrossit.Attheshowroomalso,therearehugeamountofPointOf
PurchaseDisplaysandalsoSymbols/Logowhichaddtoit.
One of the major sources of Sales Promotion is Trade Fairs like AUTO EXPO,
MOTORSHOWetc.Thecompanyusedtotakepartinthesetypesoffairsandusedit
foritsSalesPromotion.Butnowthetrendisshiftingbecausethecompanythinksthat
iftheywanttolaunchaproductonaNational
Level, then there is noneed for suchkind of
showsasnowtherearevariousotherpowerful
sourcesofmediaavailabletothem.Moreover
thecostspentonthesekindsoffairswasnot
justified.Sothereforethecompanyisnowkeepingawayfromfairs.In1999Toyota
lasttimeparticipantattheRACrallyinBritain.
SomeotherSalesPromotiontechniqueusedbythecompanyistheFestivalSeason
Offers it introduces in the market at the time of Diwali, New Year, Christmas,
Navratrietctoboostshorttermsales.

22

PERSONALSELLING

PersonalSellinglargelytakesplaceattheDealersEnd.Thewaythecustomeris
attended depends mainly on the Dealer as he acts as an interface between the
companyandtheConsumer.
ThevariouscasesinwhichPersonalSellingtakesplaceisIndividualSales,Corporate
Sales,SalesPresentations,FairandtradeShows.MostlyincaseofIndividualSales
theCustomergoestotheshowroomandtakesalookattheproduct.Thereheis
attendedtobytheSalesPersonneloftheDealership.SometimestheSeniorSales
ExecutivehastomakeSalesPresentationtoCorporateBuyers.PersonalSellingis

23

alsopracticedatTradeFairsandAutoShowswhereintheCompanyappointedSales
Personnelattendprospectivecustomersandalsobooktheirorders.
DIRECTMARKETING
In the case of Direct Marketing the Company Officials directly contact the
Prospective buyers with the information available through various sources. For
exampleincaseofRoadShows,TradeFairs,Autoshowsetc.Sometimestheexisting
customers also provide references of prospective buyers such as their friends or
relatives.

TATAINDICA
More car per car is the

famous tagline

of this product. The Indicas

positioning has

remained consistent with the

brand's offering

inanincreasinglycompetitivemarket.TheIndicaisnowsynonymouswiththeword
More,byencapsulatingtheinherentproductstrengthsandmarryingthemwiththe
customertraitofdesiringMore.ApromotionstrategyforIndicav2ininternational
marketismoreorlesssameasthat
of the Indian market. Media innovations
have been a key to the success of the
Indica.
Tataat29thBangkok

InternationalMotorShow2008
Thepositioningwasstrengthenedwiththe
successfullaunchoftheIndicaV2,which
assumedtheleadershippositionintheyear
ofitslaunch.

24

The Indica v2 was launched in the


internationalmarketonlythroughthepress
medium,withthreedieselversionsanda
petrolversion,andthiscampaignshattered
many automobile advertising myths. The
car was launched without any television
advertising, but through highimpact
newspaper ads, dominating the medium
anddeliveringthedesiredimpact.HeadlinessuchasYoullneverhavetosuffera
smallcaragainassistedcustomersindistinguishingbetweentheiroldchoicesandthe
Indica.This,ineffect,placedtheIndicaonthepedestalofleadership,settochange
therulesofthegame.
ArecentcampaignfortheIndicaV2hashelpedinbuildingtheproductontherational
platformandaddsanemotionallayer.AnchoredontheinsightItsonlyhumanto
wantmore,thecampaignrevolvesaroundinterestingcandidmomentsinthedaily
livesofnormaleverydaypeoplewhodesiremore;beitaboywantingtheotherboys
biggerlollipop,orababycryingwhenherparentsstopdrivingheraroundinthe
IndicaV2.ThelatestcampaignmovestotheEvenmorecarpercarpositioning.

PLACE
MARUTISWIFT

25

Thecarmanufacturingcompany,calledMarutiSuzukiAutomobilesIndiaLimited,is
ajointventurebetweenMarutiUdyogandSuzukiMotorCorporationholdinga70
percentand30percentstakerespectively.
TheRs1,524.2croreplanthasacapacitytorollout1lakhcarsperyearwitha
capacitytoscaleupto2.5lakhunitsperannum.Thecarmanufacturingplantwill
begincommercialproductionbytheendof2006.
TheengineandthetransmissionplanthasownedbySuzukiPowertrainIndiaLimited
inwhichSuzukiMotorCorporationwouldhold51percentstakeandMarutiUdyog
holdingthebalance.Theultimatetotalplantcapacityisthreelakhdieselengines.
However,theinitialproductionis1lakhdieselengines,20,000petrolenginesand1.4
lakhtransmissionassemblies.
TATAINDICA
Tataautomobilegrouphaveaverylargedistributionnetworkallovertheworld.Tata
Indica v2 is exported and assembled in many countries. South Africa has an
assemblingunitforconsumervehicles.Otherplaceswherethecompanysproducts
(TataIndica)areexportedandinsomeassembledalsoarementionedbelow:

Africa:Algeria,Angola,Ethiopia,Ghana,Kenya,Mauritius,Sudan,

Uganda,SouthAfrica,Senegaletc.
Europe:Greece,Hungary,Italy,Malta,Portugal,Spain,
Switzerland,UKandIreland.
CIS:Belarus,Russia,Ukraine.
Asia:Bangladesh,Malaysia,SriLanka,Nepal,Bhutan.
Australiacontinent

PEOPLE

26

TherearevarioustypesofpeopleinanyOrganization.Thevarioustypesofpeoplein
case of Toyota can be classified as Customers, Sales Executives, Society,
Government,Competitors,andMedia.
ThemostimportantoutoftheseisourCustomers.Acustomercanbeanypersonwho
purchasestheproduct;hemayormaynotusethatproductforhimself.Aconsumeris
onewhoactuallyusestheproducthimself.ForexampleafatherpurchasesCorollafor
hisson.InthiscasethefatherwillbetheCustomerandsonwillbetheConsumer.
The main people involved in the purchase decision of the car are the Family
Members.Inarecentstudyconducted,itwasfoundoutthatthesedayschildrenplaya
majorroleindecidingwhichcartobuyforthefamily.Thecompanyhastoseriously
takeintoconsiderationallthesefactors.Alsothefactorsthatwhetheroneusesthecar
fortravelling,office,shoppingorfamily/personaletc.
As this car falls into a segment where price range is between 911 Lacs, so the
companyhastotargetthosepeoplewhonotonlyhavetheabilitytospendthatmuch
amountofmoneybutarealsowillingtospendthatmuchamountofmoney.Data
regardingthepurchasingpowerofdifferentclassesofpeopleisalsoverynecessary.
Customerstastesandpreferenceshavetobetakenintoconsideration.
NextcomestheSalesExecutiveswhodealwiththefinalcustomersandfinishthe
salescall.TheSalesExecutivesplayamajorrole.Asthepeopleoftheorganization
theyareawindowthroughwhichthecustomersinteractwiththecompany.Theyhave
to be trained properly through customized modules designed especially for them
takingintoconsiderationthevariousfactors.

PHYSICALEVIDENCE
27

Displaying physically the product creates the Physical Evidence. Along with that
creatinganatmosphereforthecustomerswhereintheyfeelthepresenceofproduct.
ToyotacreatesapowerfulphysicalevidenceforitscustomersthroughitsShowrooms,
Hoardings,Logoetc.Alltheshowroomsaredesignedonacommonplatform.The
interiorsofalltheshowroomsacrossIndiaarethesame.AteamofProfessionalsin
thisfieldcreatesthedesignsforthesame.Thedesignsarepreparedverycarefully
keepingintoconsiderationvariousfactorssuchascustomerstastesandpreferences,
likesanddislikesetc.YouwillalwaysfindaToyotashowroomhavingtheToyota
Bill Board outside with white base and red foreground. This creates a physical
presenceandpeoplecanfeeltheproduct.

SHOWROOMINTERIORANDEXTERIOR

28

PROCESS
Thevariousprocessesinvolvedingettingavailabletheproductfromthemanufacturer
totheendconsumeraretobeefficientlyperformedbythecompany.Theprocesses
startwhenthecustomeriscontactedbytheSalesPersonneloftheDealershiporthe
customer contacts the Dealership if he is interested to buy a Corolla. The data
regardingthevariouscustomerscanbehadfromvarioussourcesofdataavailable
throughdifferentagencieswhichspecializeinprovidingdata.Afterthecallismade,
anappointmentisfixed.TheSalesExecutivepreparesforthemeet.Hecollectsallthe
possible information which would be needed for the meeting i.e. data about the
customer, details about the car, maximum permissible discount structure, finance
options,deliveryterms,freeaccessorieswhichwillbeprovidedtothecustomer.
The sales personnel will find out that what is the present vehicle used by the
customer, his present buying power, satisfaction level, seriousness in buying etc.
Alongwiththathewillalsofindouthisexactneeds,desiredlevelofsatisfaction,
lifestylepatternsetc. Salespersonnelalsoaskcertainquestionsthroughwhichhe
comestoknowaboutthevariousfactorshewantstoknow.Heasksbothopenaswell
asclosedendedquestions.Withthehelpofthesequestions,hecancometoknowthe
variousreasonsduetowhichheisbuyingthatcar.ThesecanbePerformance,Safety,
Comfort,DrivingPleasure,Appearanceetc.
Theseprocesseseitherleadtocompletionofsalescallorsometimesunfortunately
leadstounsuccessfulsalescallwhichcouldnotbecompeted.

29

CHAPTER III: PORTERS FIVE FORCES AND SWOT


ANALYSIS
PortersFiveForces
Globalizationhadindeedleftitsimpactontheautomobileindustry.Nowforeignauto
dealers were facing lesser restrictions to operate in overseas markets. Michael E.
PorterinhisbookTechniquesforanalyzingindustriesandcompetitorsdealtwith
fivecompetitiveforcesthatshapedallindustries.Thishelpedtoanalyzetheintensity
ofcompetitionwhichhadanimpactontheprofitabilityofanindustry.
TheUSautomobileindustrywasconsideredasaforcetoreckonwithfromthedays
ofcraftproductionandhencewouldserveasastandardusecasetoidentifyPorters
five forces. With low level of entry barriers, the Big was facing increasing
competitionfromforeignplayerslikeToyotaandHonda.
TherelationshipamongPortersfiveforcesintheUSautomobileindustry,detailed
belowclearlyproveditscompetitivenature.

1. ThreatofNewEntrants
The existing loyalty to major brands, incentives for using a particular buyer,
higherfixedcosts,scarcityofresources,highcostsofswitchingcompanies,and
governmentregulationsconstitutedthebarrierstoentrywhichinturnreducedthe
competition in an industry. The success of foreign car manufacturers like the
Honda Motor Co. had disproved the general belief that the Big Three were
invincible.Theonlyfactorsexpectedtoretardthegrowingsignificanceofforeign
auto dealers were the loyalty to American made vehicles and the aftersale
servicesoffered.

2. PowerofSuppliers
Thepresenceofveryfewsuppliersofaparticularproduct,andtheabsenceofany

30

substitutesfortheproductsuppliedreflectedthepressureexertedbythesupplier.
Sometimes the product was extremely important to the automaker and the
alternativesprovedtobeverycostly.Insuchcasesthesupplierswereinabetter
positiontodictateterms.Alotofsuppliersdependedonautomakerstobuytheir
products.Butiftheautomakerdecidedtochangesuppliersitwouldbadlyaffect
thesuppliersroleinautomanufacturing.

3. PowerofBuyers
Smallnumberofbuyers,purchasesoflargevolumes,prevalenceofalternative
options,andpricesensitivecustomersweresomeofthefactorsthatdetermined
theextentofinfluenceofthebuyersinanyindustry.Americanconsumerswere
driventowardsforeigncarsmainlybecausemostoftheautomakerssourcedtheir
keyautopartsfromdifferentsuppliers.Butthisraiseddoubtsonthereliabilityof
thevehicleitself.

4. AvailabilityofSubstitutes
Ifsubstituteswereavailableofferingsimilarservices,thelikelihoodofbuyers
switchingovertoanothercompetitordependedmainlyonthecost.Thecostofthe
automobilesalongwiththeiroperatingcostswasdrivingcustomerstolookfor
alternative transportation options. The rising gasoline price was bound to
influencethebuyers.

5. CompetitiveRivalry
Thepresenceofmanyplayersofaboutthesamesize,littledifferentiationbetween
competitors,andaverymatureindustrywithverylittlegrowthwasthefeaturesof
ahighlycompetitiveindustry.Higherthecompetitionintheindustrylowerwould
betheprofitmargin.Toremainaheadincompetition,automakersweretempted
tooffervalueaddedservicestothecustomersincurringmorecosts.Easyfinance
optionsandlongtermwarrantieswereofferedtolurethecustomers.Butthese
measurescutintotheprofitmargins.

31

ThustheUSautomobileindustryinthefaceofglobalcompetitionfromforeignfirms
wasofferingbetterdealstocatertodiverseneedsofcustomers.

SWOTAnalysis

AnanalysisofthefortunesofFord,agloballeaderintheautomotiveindustrybased
inMichigan,wieldingsignificantinfluencesincetheinceptionofglobalautomobile
industry,wouldserveasaclassicexampletodiagnosethestrengths,weaknesses,
opportunitiesandthreatsexistingforautomakers.

Strengths
Fordownedavastarrayofbrandnames,whichhadworldwiderecognitionand
respect.Ford,Lincoln,Mercury,Mazda,Volvo,Jaguar,LandRover,AstonMartin
werethefamousvehiclebrandnamesownedbythecompany.FordCredit,Genuine
Parts&ServiceandMotorcraftwereitsautomotiveservicebrands.
HugesizeofthebusinessoperationsallowedFordtoreapthebenefitsofeconomies
ofscale.Asof2005,Fordsdistributionnetworkspreadover200marketsacrosssix
continents, supported by an employee base totaling 300,000 and 108 plants
worldwide.
BusinessdiversificationinitiativesofpastdecadeshelpedFordtofocusonfinancing
sectorinadditiontomanufacturing,withthehelpofitssubsidiaries.Mostofthe
vehiclessoldtodealersanddistributorswerefinancedbyFordCreditatwholesale
rate. The diverse product line was another positive outcome of business
diversification.Asof2005,FordwasthesecondbiggestplayerinUSwithatotal
marketshareof18.2%.InEurope,themarketsharestoodat10.8%.

Weakness
Fords large size could pose serious impediment to its efforts to adjust to the
dynamicsofglobalautomobilemarket.UnlikeitsJapanesecounterparts,Fordhadto
rideonheavyincentivestoboostsalesofmodels,whichfailedtocatchtheattention

32

of consumers. Financial constraints prevented Ford from channeling investments


towardsthemanufactureofnewmodels.Failuretocontrolplantcapacityalsocut
downtheprofitmargin.

Opportunities
TheopeningupofAsianmarkets,whereinliedthepotentialforgrowthincommercial
vehiclesales,offeredabigopportunitytoFordinthenearfuture.Thebigsizeand
extendedglobalreach,whichsomeidentifiedasaweakness,washelpingFordto
becomeamajorplayerinthesemarkets.MeanwhileintheUS,consumersinthe
higher income category were expected to spend more on highend models more
frequently.Thegrowingtrendinenergyprices23 waspavingthewayforahuge
marketforfullandmediumsizedSUVsandhybridvehicleswithbetterfueleconomy.
DespitelosingthefirstmoveradvantagetoJapaneseautomakers,Fordwasmaking
headwayinthisgrowingmarket.Andinordertoleverageonitsbrandimage,efforts
wereontodifferentiatebrandidentitiestothepotentialconsumers.Bythisinitiative,
Fordwastryingtocutdownitsincentives.Tocheckcapacityissues,Fordmadeplans
toclose10plantsand30,000jobsby2008.Itsultimateaimwastoboostcapacity
utilizationto95%fromthecurrentlevelof72%.

Threats
The main threat to Fords market dominance came from Japanese automakers,
particularly Toyota, whose products were of high quality. Ford was losing out
customers,whowentforhigherqualityvehiclesfromJapaneseautomakers,despite
absenceofincentives.Thenegativeratingsgivenbymostofthecreditratingagencies
in2005alsodemandedattentionasthedecisionreflectedconcernsoverFordscash
flow and profitability, declining market share, excess industry capacity, industry
pricingpressureandrisinghealthcarecosts.

33

CHAPTERIV:CONCLUSION
The US automotive industry, the largest automobile manufacturer in the world,
witnessedthedownwardslideoftheBigThree,viz.,FordMotorCompany(Ford),
General Motors Corporation (GM) and DaimlerChrysler (DC) in market share
continuingunabatedforthelast10years.ToyotaMotorCorporation(Toyota)became
themarketleaderbytheendof2006.Inthelightofrapidlyrisinghealthcarecostsand
theheavyburdenoflegacycostsforretirees paidbytheBigThreeaspartofthe
settlementwiththeUnitedAutoWorkers,theBigThreewaslosingouttoJapanese
andEuropeanautomakers.ManystrategicinterventionswereinitiatedbytheU.S
automakersundertheleadershipoftheBigThreetotriggermarketgrowth.
Indias expedition to become a global auto-manufacturing hub could be seriously
challenged by its inability to uphold its low-cost production base. A survey conducted
by the research, KPMG firm reveals that the Indian auto component manufacturers
are increasingly becoming skeptical about sustaining the low-cost base as overheads
including labour costs and complex tax regime are constantly rising.
Indian auto businesses will only flourish if they boost investments in automation. In
the longer term, cost advantage will only be retained if Indian capital can be used to
develop low-cost automation in manufacturing. This is the way to preserve our low
cost.
Global auto majors are also cynical about Indias low cost manufacturing base. India
taxation remains a big disadvantage. This is not about tax rates it is just about

34

unnecessary complexity. But some companies also believe there is scope for reducing
the cost of doing business.

BIBLOGRAPHY

TOYOTA OFFICIAL SITE


MARUTI OFFICIAL SITE
TATA OFFICIAL SITE
HYUNDAI OFFICIAL SITE
AUTO INDIA MAGAZINE
AUTODRIVE MAGAZINE
BBC NEWS SITE
INSIDETIME.COM

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