HISTORY OF INDIAN AUTOMOBILE INDUSTRY

PRE- LIBERALIZATION PERIOD

Since Independence The Car Industry was closely monitored and controlled by
the government till 1981. Limited choices were available to the car buyers due
to the limited manufacturers and tight supply. Hindustan Motors (HM) and
Premier Automobile (PAL) that were set up in 1940's dominated the vehicle
market and industry. In the 1950s, the arrival of Tata Motors, Bajaj Auto, and
Mahindra & Mahindra led to steadily increasing vehicle production in India,
while the 1960s witnessed the establishment of the two- and three-wheeler
industry in India.

But between 1970 to the economic liberalization of 1991, the automobile

industry continued to grow at a slow pace due to the many government
restrictions. However, the automotive industry witnessed tremendous growth
after the entry of Maruti Udyog in the 1980s.

In 1981 the government decided to review their car industry policy and found
that the segment was neglected and there was a big market available for cars.
The existing cars available in the market were costly and technically less sound
with compare to international standard. Then government initiated dialogues
with Suzuki Motors, a Japanese car manufacturing company, finalized a joint
venture, and formed a company named Maruti Udyog Limited (MUL). The
initial venture was between Government of India with a share of 74% and
Suzuki Motor with a share of 26%.
That was a revolutionary step taken for the car industry in India. In 1983 MUL
launched its first car in India (Maruti 800) with a price tag of Rs.40,000/-.
This development was a big shock to the existing car manufacturers and they
also rushed to improve and increase their product line.
After the lifting of licensing in 1993 by government, 17 new ventures came up,
of which 16 are for manufacture of cars.
Today, almost all of the major global players are present in India. The
automotive industry is today a key sector of the Indian economy and a major
foreign exchange earner for the country.

Government

1981 was the year when government taken a revolutionary initiative to review
and reform its policy related to car industry. Now getting permission to
produce cars in India is easier and new entrants are coming almost every year.
Government has also imposed heavy imposed heavy import duties on
imported vehicles to safeguard the car manufactured locally.

POST- LIBERALIZATION PERIOD

Following the economic reforms of 1991, the automobile section underwent

delicensing and opened up for 100 percent Foreign Direct Investment. A surge
in economic growth rate and purchasing power led to growth in the Indian
automobile industry, which grew at a rate of 17% on an average since the
economic reforms of 1991.

India's automotive components industry is being urged by the government to

partner with overseas firms with the aim of making India a platform for
outsourcing as well as a global R&D hub. As the Indian vehicle production
industry has grown, so has the domestic supplier industry. But the global auto
industry's search for lower cost and more international outsourcing has led to
a sharp growth in component output and exports in recent years.

The positive demographic factors, stable macro-economic environment and

pro-reform policies of the government, low manufacturing costs, availability of
skilled labor has attracted almost all major global auto players making their
way into India like GM, Ford, Daewoo, Honda and Toyota The intense
competition has compelled the manufacturers to launch the latest global
offering in India as early as possible. It has also enabled to keep the prices of
the vehicles under check. The consumers, in turn, have benefited from wide
choice of models, technologically advanced cars and better service from the
car manufacturers.

Major Manufacturers in Automobile Industry and their Cars

Maruti Udyog Ltd.

Cars:-
800,Omni,Gypsy,WagonR,Alto,Swift,Estilo,SX4,Grand Vitara,Swift DZire,A-
star,Ritz,Eeco,Alto K10,Kizashi,Maruti Ertiga

Tata Motors.
Cars:-
Aria,IndicaV2,IndicavistaIndigo,IndigoCS,IndigoManza,IndigoMarina,
Indigo V series,Indigo XL,Nano,Safari,sumo,Sumo Grand MK II,
Sumo Victa,

Hyundai Motor India Ltd.

Cars:-
Atos/Atoz/SantroCoupé/Tiburon/Tuscani,Dynasty, Elantra/Avante/Lantra,
Eon,Equus/Centennial,Excel,Scoupe,ix20,
Genesis,GenesisCoupe,Getz/Click/Getz,i10,i20,i30/i30cw/Elantra
Lavita/Matrix,Pony,Santamo,Sonata/i45, Stellar,Veloste
Honda
Cars:- Honda Brio,Jazz, City, Civic, Accord,CR-V
BMW
Cars:- 1 series,3 Series, 5 Series, 6 Series, 7 Series,X1, X3,X5,X6 and Z4.
Other Automobile Companies are:-
Skoda
Toyota
Hindustan Motors
Ford
Toyota
Mahindra and Mahindra
General Motors
Mercedes

EVOLUTION OF AUTOMOBILE INDUSTRY

EVOLUTION OF AUTOMOBILE INDUSTRY

Initial Years Early to mid 90s Mid 90s- 2011

Manufacturing was Licensed Seller’s market and Long waiting Buyers Market
periods

High customs duty on import Delicensing in 1993 Increase in Indigenization

Steep excise duties & sales Removal of Capacity restrictions. Easy Auto Finance
tax

2 Major Players Decrease in customs & excise. Manufacturers diversifying into

related activities:

Premier Automobiles Ltd & Auto finance boom-more players Finance lease, fleet
Hindustan Motors (foreign banks & non banking management, insurance and
companies, better schemes).

1980s Used car market.

Entry of MUL, better product, Variety of Options available to

with Govt support. choose from.

Seller’s Market.

Long waiting periods.

fig:- 1

COMMON MARKETING STRATEGIES OF AUTOMOBILE COMPANIES

Advertising in News papers and Magazines:-

In this companies advertise about the car in
various local newspapers like Economic times
and they give detail explanation about the
feature of the cars, keeping customer’s
requirement. They also provide various dealers
addresses and contact numbers for reference.
Company also tries to advertise through various
magazines like Auto Cars, Overdrive, etc.

Grand Launch :-
Recently Tata Nano car was grandly launched and created a buzz in market.
After the launch media aggressively took interest in providing the minute
details about the car to the customer by showing test drives, etc.
Once the car is launched they give adds in every possible newspaper, car
magazines, put hoardings, display car models in the malls.

Company provides exchange offers to customers :-

This is one of the most effective ways adopted by the companies and very
successful marketing strategy, which has helped company increase their sales.
In this method, companies provide option to buy a new car of your choice in
exchange of their old cars, but the price of old car is decided by the dealer by
looking at its condition. It helps customers, as they don’t need to go anywhere
else to sell their old car. This also helps companies to increase their sale of new
cars.

Adding Star Value to product- Brand Ambassador :-

Companies choose brand ambassadors for their cars to reach wide masses. For
e.g. Shahrukh Khan promotes Hyundai, Abhishek Bachan promoted Ford
Fiesta, Saif Ali Khan and Rani Mukherjee promoted Chevrolet Aveo and Amir
Khan promoted Toyota Innova. Ambassadors give a special identity to the
products.

Companies have started sponsoring reality shows for better visibility :-

As we all know reality shows are making all time big in television and
entertainment industry. This is really a smart move by automobile companies
to gain visibility through reality shows. The reality shows are aired all over the
world and huge number of people watch it. So companies sponsor such shows
and get noticed.E.g. Maruti sponsored India’s Got Talent show on Colors
channel and gifted Ritz to the winner. Indian Idol winner was also gifted with
Maruti SX4.

Mall Displays
Various companies display their cars in Malls so as to get prime attention.
People go in Malls for shopping and hangouts with their friends and family.
They conduct small contests and give gift hampers as prize. Thus they try to
attract crowd towards them.

Companies enter market with help of Films

In terms of marketing strategies Chevrolet Aveo found a unique way of
advertising by way of a Yash Raj Film production, Tara Rum Pum. The main
motive behind this was to popularize and promote the product in youth.

Companies Sponsor Go- Karting events

Go-karting events are really booming up among young crowd. And that’s the
reason we see craze for participating in go-karting events is on high. People
have started taking interest in the sport and huge crowds turn up for such
events. But for sure car companies would to not like to miss chance of visibility
they get in such competitions.Few years before Maruti Suzuki sponsored
Autocross rally. Similarly Tata Engenieering has sponsored Narayan Kartikeyan
as India’s Entry in to the World Series motorcar racing.
Personal selling
Personal Selling largely takes place at the Dealers’ End. The way customer is
attended depends mainly on the Dealer as he acts as an interface between the
company and the Consumer. The various cases in which Personal Selling takes
place is Individual Sales, Corporate Sales, Sales Presentations, Fair and trade
Shows. Mostly in case of Individual Sales the Customer goes to the showroom
and takes a look at the product. There he is attended to by the Sales Personnel
of the Dealership. Sometimes the Senior Sales Executive has to make Sales
Presentation to Corporate Buyers. Personal Selling is also practiced at Trade
Fairs and Auto Shows wherein the Company appointed Sales Personnel attend
prospective customers and also book their orders.
Market Share Of Automobile Companies

% Market Share

3.9
4.3 10.1
6.7 46.9

13.5
14.6

Maruti Suzuki Ltd. Tata Motors Ltd.

Hyundai Motor India Ltd. Mahindra & Mahindra Ltd.

General Motors India Pvt Ltd. Honda Siel Cars India Ltd.

Others

fig : 2

Above market share graph shows us that in automobile industry still Maruti
Suzuki is enjoying highest market share. And then comes companies like TATA
and Hyundai Motors India Ltd.

Marketing Strategies used by Maruti Suzuki

Advertisements
Good promotional strategy is adopted by Maruti Suzuki to transform its
thoughts to the people about its products by marketing through advertisement
in television, radio, newspaper, etc.
Through radios they try to promote their product by organizing quiz contests
and the person who wins are offered special discounts, gift vouchers, coupons,
etc.
Through television they promote their vehicle by showing the utility value, its
comfort level.

Some of the strategies used for cars were:-

Baleno: “Missed the flight catch Baleno” The most comfortable Car even in
long drives.
Esteem: “My Daddy’s Big Car” Affordable mid size car

Alto: “Lets Go” The fuel efficient and affordable car

After Sales Service:- “Kya yahan Maruti Service Station hai” Availibility of
service stations even in the remotest place in the country.

Display
If you visit any of the Maruti Dealers showroom what you will notice is one
thing very similar, that is the display. They display only 2-3 cars in the
showroom. Well this is the strategy to make people concentrate on only few
choices otherwise they might get distract and get confused. Here Maruti wins
one customer.

Tie up with many banks

To promote its bottom line growth, Maruti launched Maruti Finance in Jan 02.
Prior to the start of this service Maruti had started two joint ventures –
Citicorp Maruti and Maruti countrywide with Citi Group and GE Countrywide
respectively to assist its client in securing loan.
Today Maruti has tie ups with ABN Amro Bank, HDFC Bank, ICICI Ltd, Kotak
Mahindra Bank, Standard Chartered Bank etc.

Exchange offers

Maruti has also placed its step and progress by marketing through exchange
offers. In this it makes possible to leave and get it replaced for a new one with
barely some amount. This is one of the greatest ways to attract more and more
customers and also makes possible to increase sales.

SBI Maruti Car Loans

The country’s largest bank and the largest car maker have joined hands to
make affordable car finance available to more and more people across the
country. The mega alliance makes car loans available at lower interest rates to
a wider section of people, with transparent terms and conditions.

The unbeatable advantages of SBI Maruti car loans:-

-Two market leaders in their respective industries with trusted brand names.
-Low interest rates
-No processing fees or hidden costs to ensure transparency.
-Car loans available for diverse categories of customers including govt.
employees and agriculturist.

MARKETING STRATEGIES OF HYUNDAI

Advertisements
Hyundai had used Bollywood star Sharukh Khan as Brand Ambassador for
promoting their car. Through this they tried to attract the customers.
To promote their product they organized quiz contests on radio and the person
who wins was offered special discounts, gift vouchers, coupons, etc.
They also advertise in Newspapers. In this companies advertise about the car
in various newspapers and they give detail explanation about the feature of
the cars, keeping customer’s requirement. They also provide various dealers
addresses and contact numbers for reference.

Free checkups
Hyundai arranges free checkups from time to time in which they check for any
problem and advice to visit the nearest service center for