Small Cars Industry: Presented By: Anand Ganpaa-003 Annie Patro-004

SMALL CARS INDUSTRY

Presented by: Anand Ganpaa-003 Annie Patro-004

Evolution Of Small Car Industry In INDIA Joint venture between Government of INDIA and

Suzuki Motors of JAPAN First car manufactured in 1983 , Maruti Suzuki 800 Biggest car manufacturers came into play like Tata,

Ford, Skoda, Volkswagen, Mitsubishi, Suzuki, Honda, Hyundai, Chevrolet and Fiat

Why? Availability of highly skilled engineers Low cost labor Technical know how Less investment Cheap machinery and raw materials Established quality systems and rewarding returns

SUV SUV

www.researchandmarket .com

www.researchandmarket .com

CONCEPT Price

Price Elasticity - It is defined as the percentage change in quantity demanded that results from one percentage change in price Ep = % Δ Q/ % Δ P

P1

A P B

P2 0

Q Q1

Q2

Demand Quantity

Cross Elasticity – It is defined as the

percentage change in quantity demanded of good X per one percent change in price of good Y EC = % Δ Qx /% Δ PY

PY

PY

Q Complimentary Goods e<0

Q

Substitutes Distant sub: 0<e<1 Close sub :1<e<∞

KEY ENABLERS- Car Industry 1.AUTO FINANCE BOOM- MORE PLAYERS(FOREIGN BANKS & NON BANKING COMPANIES, BETTER SCHEMES. 2.IMPROVING INCOME CURVE 3. REDUCING INTEREST RATES 4.INCREASE AFFORDABLITIY ON ACCOUNT OF REDCUTION IN ENTRY LEVEL PRICES 5. VARIOUS TAX RELIEF POLICIES

Key Enablers (Cont…..) 5. INCREASE IN DISPOSABLE INCOME 6. BUYERS MARKET 7. INCREASE IN INDIGENIZATION 8. INSURANCE AND USED CAR MARKET

Key Challenges 1. 2. 3. 4.

Cost Pressure High Expectations Lack of inadequate infrastructure facilities Rising fuel prices

PRICE COMPARISION Starting Price tag(ex-showroom price, Delhi) Maruti A-Star -----------------------------RS.3.41Lakhs Hyundai i10

-----------------------------RS.3.48Lakhs

Fiat Palio Stile -----------------------------Rs.3.35Lakhs Chevrolet Spark-----------------------------Rs.3.25Lakhs Tata Indica Vista----------------------------Rs.3.15Lakhs

MARUTI A-Star

Hyundai i10

 The starting price tag is Rs

 The starting price tag is Rs

 Three spoke steering

 Number of convenient features

3.41 Lakh (ex-showroom Delhi) wheel, an auto lock system, enhanced front power windows, and rear door pockets

Strategies: 1.Mp3players 2.Lucky draws 3.Gold coin 4.Color Selection if booked early

3.48 Lakh (ex-showroom Delhi) like upscale interior, and superior technology like antilock braking system

5.Holiday packages 6.Down Payments(e.g.Rs.5555) 7.Discounts Offers

FACT In August 2004, a leading business newspaper reported that Hyundai Motors India Limited (HMIL), an Indian subsidiary of the South Korea- based Hyundai Motors Company (HMC) was expected to reduce the price of its flagship car - Santro - by as much as Rs 40,000. Industry experts were expecting a reduction in Santro's price in response to the price war being waged by the market leader in India - Maruti Udyog Limited (MUL),which had reduced the price of its largest selling car in the B segment - Alto by Rs 58,000 in two price cuts starting from September 2003. This move had resulted in Alto replacing Santro as the largest selling car in the B segment in the period January to June 2004 (Refer Exhibit I for the market segmentation of the Indian car industry)

source: www.theeconomist.com

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