INTRODUCTION ON INDIAN AUTOMOBILE

The Automobile industry in India is the seventh largest industry in the world with an annual production of over 2.6 million units in 2009.

In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions.

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.

Embryonic automotive industry emerged in India in the1940s.

Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector.

After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.

In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.

INTRODUCTION TO VOLKSWAGEN GROUP

Type: Headquarters: Industry: Products: Revenue: Operating income: Profit: Employees:

Public Company Germany Automotive Cars, Trucks 113.8 billion (2008) 6.61 billion (2008) 4.68 billion (2008) 369,928(2008) Vehicle brand companies Audi Bentley motors ltd. Bugatti automobile Lamborghini Seat Skoda auto Scania Volkswagen passenger car Volkswagen commercials vehicles

Subsidiaries:

INTRODUCTION TO VOLKSWAGEN

Type: Founded: Founders:

Subsidiary of Volkswagen group May 28, 1937 Ferdinand Porsche, Adolf Hitler

Headquarters: Area served: Key people:

Wolfsburg, Germany Worldwide

Martin Winterkorn (Chairman of board of management)

Christian kingler: (board of management of the Volkswagen passanger cars) supervisory board

Ferdinand piech: (chairman of Volkswagen

Industry: Products: Website:

Automotive Cars, Trucks Volkswagen.com

4 Ps OF MARKETING Product 15 different models under 3 brands. Plant at Chakan, near Pune. More assembly plans in India competitive advantage. Awards last year.

Price Targeted mainly for the luxury segment in the Indian market. Plan to capture bigger market through the VW Polo. Place Significant presence number of dealerships and outlets across major cities.

Promotion Launched Integrated Marketing campaign in November, 2009. Collaboration with DDB Mudra. Evoke consumer awareness of VW as a brand. Innovative promotional campaigns OOH, print ads,TVCs. Print media Communicating benefits. Television Commercials Brand building.

PORTERS FIVE FORCE MODEL Threat of new entrant: 1) Nissan, Renault, GM 2) New Technology Bargaining power of buyers: There will be an indirect relation between the bargaining power of buyers and various product segments. More options to choose from the segment Volkswagen operates in. Honda, Toyota (Accord, Civic, Corolla) already capturing bulk of the market due to its advanced petrol engines. Skoda has been successful mainly because of its diesel offerings (Octavia, Laura). The D segment Market has been growing consistently. Bargaining power of suppliers

Bargaining power of suppliers would be high since VW does not deal in mass production unlike Maruti and Hyundai. Substitutes Volkswagen does not have substitutes in India currently for its diesel offerings except for the recently launched GM Optra and Hyundai Sonata. But Volkswagen easily scores over these products due to the brand recognition and loyalty it carries in the country. VW offers the widest range of diesel cars in the D segment. Niche products like Lamborghini & Bentley do not have competitors in the Indian market. Competitors Honda, Toyota, GM, Hyundai are its direct competitors

SWOT ANALYSIS Strengths 1) VW has boosted quality more than any other carmaker in the past five years, cutting defects by 60%. 2) Their "family culture", no leading brand. 3) The VW group has the flagship of some of the biggest and most trustworthy brands in the automobile industry. 4) Strong Procurement department with Sustainability in Supplier Relationships. 5) Strong CSR activities bringing together wealth creation and value orientation. Weaknesses 1) VW still trails Toyota, Mercedes, Nissan, and Honda in overall quality. 2) VW's cost of capital is relatively higher than Daimler's. 3) VW bungled its communications with investors. 4) It was late in inculcating the policies of Lean and JIT approach that Toyota was using for many years. 5) Bad publicity due to being sued by GM. Opportunities 1) Growth potential in the American and Asian markets. 2) Due to its very good results on the stock exchange, VW may expect to attract numerous new investors

3) Potential decrease in Cost with their Production Strategy. Threats 1) A softening in auto sales in Europe and South America. 2) Risk of self-cannibalization between VW's brands, like top of the line VW's models and bottom of the line Audi's. 3) Risk of brand dilution owing to confusion between the VW Passat and the Audi A4. 4) Ever increasing fuel costs.

Strengths The internationalization strategy so far has been to keeplocal managers in new acquisitions, and to only transplant acouple of senior managers from India into the new market.The benefit is that Tata has been able to exchange expertise.For example after the Daewoo acquisition the Indiancompany leaned work discipline and how to get the finalproduct right first time. The company has a strategy in place for the next stage of itsexpansion. Not only is it focusing upon new products andacquisitions, but it also has a programme of intensivemanagement development in place in order to establish itsleaders for tomorrow.

The company has had a successful alliance with Italian massproducer Fiat since 2006. This has enhanced the productportfolio for Tata and Fiat in terms of production andknowledge exchange. For example, the Fiat Palio Style waslaunched by Tata in 2007, and the companies have anagreement to build a pick-up targeted at Central and SouthAmerica. Weaknesses

The companys passenger car products are based upon 3rdand 4th generation platforms, which put Tata MotorsLimited at a disadvantage with competing carmanufacturers. Despite buying the Jaguar and Land Rover brands (seeopportunities below); Tat has not got a foothold in theluxury car segment in its domestic, Indian market. Is thebrand associated with commercial vehicles and low-costpassenger cars to the extent that it has isolated itself fromlucrative segments in a more aspiring India? One weakness which is often not recognized is that inEnglish the word tat means rubbish. Would the brandsensitive British consumer ever buy into such a brand?Maybe not, but they would buy into Fiat, Jaguar and LandRover (see opportunities and strengths).

Opportunities In the summer of 2008 Tata Motors announced that it hadsuccessfully purchased the Land Rover and Jaguar brandsfrom Ford Motors for UK 2.3 million. Two of the Worldsluxury car brand have been added to its portfolio of brands,and will undoubtedly off the company the chance to marketvehicles in the luxury segments. Tata Motors Limited acquired Daewoo Motors Commercialvehicle business in 2004 for around USD $16 million. Nano is the cheapest car in the World - retailing at littlemore than a motorbike. Whilst the World is getting readyfor greener alternatives to gas-guzzlers, is the Nano theanswer in terms of concept or brand? Incidentally, the newLand Rover and Jaguar models will cost up to 85 times morethan a standard Nano! The new global track platform is about to be launched fromits Korean (previously Daewoo) plant. Again, at a time whenthe World is looking for environmentally friendly transportalternatives, is now the right time to move into this segment?The answer to this question (and the one above) is that newand emerging industrial nations such as India, South Koreaand China will have a thirst for low-cost passenger andcommercial vehicles. These are the opportunities. Howeverthe company has put in place a very proactive CorporateSocial Responsibility (CSR) committee to address potentialstrategies that will make is operations more sustainable.

 The range of Super Milo fuel efficient buses are powered bysuper-efficient, eco-friendly engines. The bus has optionalorganic clutch with booster assist and better air intakes thatwill reduce fuel consumption by up to 10%. Threats Other competing car manufacturers have been in thepassenger car business for 40, 50 or more years. ThereforeTata Motors Limited has to catch up in terms of quality andlean production. Sustainability and environmentalism could mean extra costsfor this low-cost producer. This could impact itsunderpinning competitive advantage. Obviously, as Tataglobalises and buys into other brands this problem could bealleviated. Since the company has focused upon the commercial andsmall vehicle segments, it has left itself open to competitionfrom overseas companies for the emerging Indian luxurysegments. For example ICICI bank and DaimlerChryslerhave invested in a new Pune-based plant which will build5000 new Mercedes-Benz per annum. Other playersdeveloping luxury cars targeted at the Indian market includeFord, Honda and Toyota. In fact the entire Indian market has become a target forother global competitors including Maruti Udyog, GeneralMotors, Ford and others.

Rising prices in the global economy could pose a threat toTata Motors Limited on a couple of fronts. The price of steeland aluminium is increasing putting pressure on the costs of production. Many of Tatas products run on Diesel fuelwhich is becoming expensive globally and within itstraditional home market.

Marketing mix TATA MOTORS

1. Product: Tata has a very wide range of products it has passenger cars, utility vehicles, Trucks, Commercial passenger Carriers And Defence Vehicles Passenger cars UtilityVehicles Trucks Indica vista Indigo XL Nano Fiat cars Safari Dicor Sumo Grande Sumo Xenon XT Commercial Passenger Carriers Winger Magic

Tata Novas Buses TL 44

2. Price: The prices of Tata motors are generally affordable acceptable by the general public at large. Tata always have something for the lower class people with Nano being their trump card. Giving discount every month and special promotion for certain type of vehicle also one of the strong strategy use by Tata Motors. Discount can be made from Companys profit or from dealers profit at certain range. 3. Place: Tata Motors has an extensive dealer network covering Indian and International markets. Wherever you are, there is a Tata Motors Sales and Service dealership close to you. The channel of distribution, physical location, and dealership method of distribution and sales is generally adopted. The distribution of vehicle must be in a very systematic way, from the plant to dealership and to end user. This is not only in India itself but also to the world-wide dealership. 4. Promotion: Tata motors promote their products via Advetising and after sales services 5. People: Tata Motors owe our success to the highly motivated and talented staff. Our recruitment division picks the crme-de-la-crme from premier universities, management and engineering institutes in India. they put them through rigorous training programmes to hone their entrepreneurial skills and impart comprehensive product knowledge. 6. Processes: Tata motors follow Balanced Scorecard Collaborative, Inc for achieving excellence in overall Company performance. 7. Physical Evidence: The management of the company has managed to keep their hopes alive even in this recession and hopes that the worse is behind Tata Motors recently launched the most awaited car of the year, Tata Nano and the company has already received 203,000 booking that are fully paid and 70 percent of the applicants are ready to wait till the end of 2010 for the car to be manufactured.

MAHINDRA

SWOT Analysis

Strength

1. Mahindra has been one of the strongest brands in the Indian automobile market 2. Mahindra group give employment to over 110,000 employees 3. Excellent branding and advertising, and low after sales service cost 4. Sturdy SUVs good for Indian roads and off-road terrain

Weakness

1. Mahindras partnership with Renault did not live up to international quality standards through their brand Logan

Opportunity

1. Developing hybrid cars and fuel efficient cars for the future 2.Tapping emerging markets across the world and building a global brand 3.Fast growing automobile market 4.Growing in the market through electric car Reva (controlling stake) and entry into twowheeler segments

Threats

1. Government policies for the automobile sector across the world 2. Ever increasing fuel prices 3. Intense competition from global automobile brands

4. Substitute modes of public transport like buses, metro trains etc