A

PROJECT REPORT
ON

BRIEF STUDY OF AUTOMOBILE INDUSTRURY & MAHINDRA &

MAHINDRA

SESSION 2011-13

SUBMITTED TO:Ms. Sanjeela

SUBMITTED BY:GROUP-1
AMIT RANJAN 03
SHASHANK JAIN 21
ANKUR SHRIVASTAVA 05
RAHUL CHAUDHORY 30
PGDM-I.B

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

NEW DELHI

ACKNOWLEDGEMENT
I express my sincerest gratitude and thanks to honorable, Ms. SANJEELA for whose
kindness I had got the precious opportunity of doing this project. Under her brilliant
guidance I could complete the project being undertaken on the BRIEF STUDY

OF AUTOMOBILE INDUSTRURY & MAHINDRA & MAHINDRA

In business strategy. Successfully in time. Her meticulous attention and invaluable
suggestions have helped me in satisfying the problems involved in the work. I would
also like to thank the overwhelming support of all the group member whose better
effort gave me the opportunity to learn and gain the knowledge about the various
aspects of the industry.

AUTOMOTIVE INDUSTRY IN INDIA

INTRODUCTION
The automotive industry in India is one of the largest in the world and one of the
fastest growing globally. India's passenger car and commercial vehicle
manufacturing industry is the sixth largest in the world, with an annual production of
more than 3.9 million units in 2011. According to recent reports, India overtook
Brazil and became the sixth largest passenger vehicle producer in the world
(beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada,
Mexico, Russia, Spain, France, Brazil), growing 16 to 18 per cent to sell around
three million units in the course of 2011-12.
In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind
Japan, South Korea, and Thailand. In 2010, India beat Thailand to become Asia's
third largest exporter of passenger cars.
As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million
automotive vehicles were produced in India in 2010 (an increase of 33.9%), making
the country the second (after China) fastest growing automobile market in the world.
According to the Society of Indian Automobile Manufacturers, annual vehicle sales
are projected to increase to 5 million by 2015 and more than 9 million by 2020. By
2050, the country is expected to top the world in car volumes with approximately 611
million vehicles on the nation's roads.
The majority of India's car manufacturing industry is based around three clusters in
the south, west and north. The southern cluster consisting of Chennai and Bangalore
is the biggest with 35% of the revenue share. The western hub near Mumbai and
Pune contributes to 33% of the market and the northern cluster around the National
Capital Region contributes 32%. Chennai, is also referred to as the "Detroit of India"
with the India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW,
Hindustan Motors, Daimler, Caparo, and PSA Peugeot Citron is about to begin their

operations by 2014. Chennai accounts for 60% of the country's automotive

exports.Gurgaon and Manesar in Haryana form the northern cluster where the
country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor
near Pune, Maharashtra is the western cluster with companies like General Motors,
Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land
Rover, Fiat and Force Motors having assembly plants in the area. Aurangabad with
Audi, Skoda and Volkswagen also forms part of the western cluster. Another
emerging cluster is in the state of Gujarat with manufacturing facility of General
Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford,
Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat.Kolkata
with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of
the other automotive manufacturing regions around the country.
The Indian Automobile Industry manufactures over 11 million vehicles and exports
about 1.5 million each year. The dominant products of the industry are two-wheelers
with a market share of over 75% and passenger cars with a market share of about
16%. Commercial vehicles and three-wheelers share about 9% of the market
between them. About 91% of the vehicles sold are used by households and only
about 9% for commercial purpose.The industry has a turnover of more than USD
$35 billion and provides direct and indirect employment to over 13 million people.
The supply chain is similar to the supply chain of the automotive industry in Europe
and America.
Currently, India's increasing per capita disposable income which is expected to rise
by 106% by 2015 and growth in exports is playing a major role in the rise and
competitiveness of the industry.
Tata Motors is leading the commercial vehicle segment with a market share of about
64%.Maruti Suzuki is leading the passenger vehicle segment with a market share of
46%. Hyundai Motor India Limited and Mahindra and Mahindra are focusing
expanding their footprint in the overseas market. Hero Moto Corp is occupying over
41% and sharing 26% of the two-wheeler market in India with Bajaj Auto. Bajaj Auto
in itself is occupying about 58% of the three-wheeler market.

Analysis of automotive Industry.

1.SWOT Analysis
2.PESTEL Analysis
3. Porters 5 forces model analysis
4. Comparative theory analysis.

5. Mahindra & Mahindra & TATA analysis

SWOT ANALYSIS OF AN INDUSTRY

Strength

Low costs with good technology base.

Easy access to raw materials

Upcoming base for Research and Development (R&D).

Ability to cater to low volumes proficiency in understanding technical

drawings and well conversant in all global automotive standards:
American, Japanese, Korean, European Standards etc.

Appropriate automation leading to economic production costs

Flexibility in small-batch production

Growing IT capability for design, development & simulation

Respect for intellectual property (IPR)

High-skilled manpower

Adoption of high quality & productivity initiatives (TQM, TPM, Six Sigma, etc.)

Proximity to markets

Weakness

Multiple tax components in the cost of the vehicle.

Inadequate R&D facilities.

Lack of economies of scale Supply chain infrastructure bottlenecks.

Opportunities

MNCs focusing on low cost outsourcing opportunity

Viewed as a global manufacturing hub for small cars

Exports projected to grow at over 30% p.a.

Indias share in world Auto Components is expected to grow over 2.5% by 2015

National Automotive Testing and R&D Infrastructure Project (NATRIP), a US$

400 million initiative, aims to create the state-of-art dedicated Testing, Validation
and R&D infrastructure across the country.

Opportunity to set up R&D centre in India

High level of sourcing of auto components from low cost countries (LCC) to act
as a growth driver.

Threats

Increase in the fuel prices may lead to slowdown in the sales

Import of components from ASEAN and China will have adverse impact on
GDP and employment

Increased cost of raw materials (steel, etc)

PESTEL ANALYSIS
Political
Political climate in a different countries producing an buying automobiles regarding
policies on import, export and manufacture of automobiles and automobile
components. This will also include policies on allowing setting up of manufacturing
plants by foreign companies.

Stability of governments. This may affect the future conditions in a country.

Taxation policy

6th largest passenger vehicle in the world.

Growing 16 to 18 % to sell around three million units in the course of 201112.

In 2010, India beat Thailand to become Asia's third largest exporter of

passenger cars.

As of 2010, India is home to 40 million passenger vehicles.

Annual vehicle sales are projected to increase to 5 million by 2015 and more
than 9 million by 2020.

Economic

Level of economic activity that affects need for commercial use of

automobiles.

Weighted tax deduction.

Manufacturing sector 8-10%

Indian economy growth by 8.5%

Social

Lifestyle and preferences of people, that impact their choice of types of

automobiles.

Social norms that impact the decision to own and use automobiles versus
other means of transport.

Price sensitive Indian customer

Customer base service

Growth in urbanization

Technology

Technology relating to automobile designs

Technology of automobile manufacture

Technological developments that may increase use of automobiles.

R&D

Renewable energy development.

Environmental
Physical conditions effecting ability to use automobiles of different types.
This will also include state infrastructure such as roads for driving vehicles.
Infrastructural development
Acquisition of land.
Global warming
Roof of a car
Hybrid & electric car.

Legal
Legal provision relating to environmental population by automobiles.

Legal provisions relating to safety measures.

Open trade with minimum risk

Govt. tax on import decrease by 60%

PORTERS FIVE FORCES MODEL ANALYSIS OF INDUSTRY

1.The threat of new entrants
In the auto manufacturing industry, this is generally a very low threat. Factors to
examine for this threat include all
Romeo has been out of the US since the early 90s largely due to the inability to reestablish a dealer network. But if you are looking at Singapore, for example, only one
Alfa barriers to entry such as:1.Upfront capital requirements (it costs a lot to set up a car manufacturing facility),
brand equity (a new firm may have none),
2.Legislation and government policy (think safety, EPA and emissions),
3.Ability to distribute the product (Alfa Romeo dealer is needed!).

2. The bargaining power of buyers/customers

Who in the US has ever bought a car without bargaining? Anybody? In 2009
especially, US dealers were giving great deals to buyers to get the industry moving.
While quantity a buyer purchases is usually a good factor in determining this force,
even in the automotive industry when buyers only usually purchase one car at a
time, they still wield considerable power.
However, this may be different in other markets. In Singapore it sure is lower than in
the US, creating a more favorable situation for the industry but not the buyers.
Generally, however, it's safe to say the customers have some buying power, but it
depends on the market.

3. The threat of substitute products

If buyers can look to the competition or other comparable products, and switch easily
(they have low switching costs) there may be a high threat of this force. With new
cars, the switching cost is high because you can't sell a brand new car for the same
price you paid for it. A P5F analysis of the car industry covers the new market, not
used or second-hand.
But what about the threat of substitute products before the buyer makes the
purchase? You need to know whether the market you are analyzing has many good
alternatives to new cars. A vibrant used car market perhaps? Used cars threaten the
new market. How about a very good mass-transportation system?
Product differentiation is important too. In the car industry, typically there are many

cars that are similar - just look at any mid-range Toyota and you can easily find a
very similar Nissan, Honda, or Mazda. However, if you are looking at amphibious
cars, there may be little threat of substitute products (this is an extreme example!).

4. The amount of bargaining power suppliers have

In the car industry this refers to all the suppliers of parts, tires, components,
electronics, and even the assembly line workers (auto unions!). We know in the US
the auto unions are tremendously powerful. But we also know that some suppliers
are small firms who rely on the carmakers, and may only have one carmaker as a
client. So this force can be tricky to evaluate.

5. The intensity of the competitive rivalry

We know that in most countries all carmakers are engaged in fierce competition.
Tit-for-tat price slashes,
Add campaigns,
product developments keep them on the edge of innovation and profitability.
Margins are low and pressure between rivals is high.

Analysis
Over view of the company.

Industry Founded Headquarters Area served Key people Products Revenue Net income Total assets Employees Parent
Website -

Automotive
1945 (Ludhiana)
Mumbai, Maharashtra, India
Worldwide
Anand Mahindra (MD)
Automobiles, commercial vehicles, two-wheelers
37,026 crore (US$6.7 billion)(2011)[
3,079 crore (US$557.3 million)(2011)
36,926 crore (US$6.68 billion)(2011)
15,147 (2011)
Mahindra Group
Mahindra.com

Products
Commercial Vehicles
Alfa
Gio
Mahindra Navistar Trucks
Bolero Maxi Truck
Genio
Mahindra is also into Tractor manufacturing
Personal Vehicles
Bolero
REVA Electric Cars
Scorpio
Kyron
Rexton II
Rodius
XUV 500
Competitors
1.Honda
2.Toyota
3.Nissan
4.Hyunda
5.Mitsubishi
6.Maruti Udyog
7.Tata Motors
8. Skoda
9. Toyota
10. Volkswagen
11. Ford

PESTEL ANALYSIS OF MAHINDRA

Political

Government laid stress on mechanization of agriculture to boost the food

grain production.

Reduction in the tariff imposed on car exports, a removal of the minimum

capital investment required from new investors, 100% foreign equity
investment allowed.

Weighted tax deduction of 150% on R&D helping in innovation.

Economic

Economic pressure leading to reorganization of traditional sales process.

Lending norms stringent.

National Economic growth increases the demand of automotive products.

Inflation increases the prices of supplies and also

company products

Technological

Use of internet as a medium to trade using e-strategies bolster the marketing

strategy of company.

Can affect costs, quality, and lead to innovation (customised cars).

More hybrid cars like REVA.

Social

Preference of small & compact cars.

Growth in urbanization, more demand.

Improvement of living standards of middle class.

Seeking Value for money behaviour of customers.

Rising customer emphasis on aesthetics, luxury and comfort.

Environmental

Technological solutions help in integrating the supply chain hence reduce loss
and increase profitability.

Legal

Legal provisions relating to safety measures.

Confirms the governments intention on harmonizing the regulatory standards

with the rest of the world.

Indian government auto policy aimed at promoting an integrated, phased and

conducive growth of the Indian automobile industry.

Ensure a balanced transition to open trade at minimal risk to the Indian

economy and local industry.
SWOT ANALYSIS
Strength

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

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

Opportunity

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

Threats

Ever increasing fuel prices.

Intense competition from global automobile brands.

Substitute modes of public transport like buses, metro trains etc.
PORTERS MODEL OF MAHINDRA

Porters strategy for Mahindra SCORPIO:

Threat from new entrant:

High and unfavorable.

Govt. has approved 100% FDI & minimum capital investment for
new
Entrant has been removed.

Threats from buyers:

Low & favorable

Getting SUV at such a affordable price.

Threat from supplier:

High & unfavorable.

Car is manufactured through global alliance of companies each

company handling different sets of areas.

Threat from substitution:

Moderate/ moderately favorable.

Presence of MUV sports bike etc.

Threats from competitors:

Low & favorable.

No presence of SUV at this price.

Marketing strategy of Mahindra

First & foremost they tries to provide a status of Pajero in
Scorpio at affordable price.
Shadow endorsement was done which doesnt shout Mahindra.
Advertising, public relation, mass media, nothing was left to
make the brand popular.
Scorpio adopted penetrating pricing strategy positioned
between 5-7 lakh.
As they were targeting urban area, stronger distribution channel
were needed.
Scorpio was launched in phase manner, i.e. first in metros and
then covered in another cities so as to ensure the attention
towards main market.

Conclusion
This report is all about the automobile industry & Mahindra & Mahindra. This report
briefly explain about the overall strategy adopted by an automobile industry and its
players, which give us the detail knowledge about the internal & external
environment of the industry. Through applying different analysis we come to know
about the companies product, companies promotions strategy, companies market
positions, their near competitors.. And we also come to know about the political,
social, technological, environmental, legal aspects which affect the companies
strategy. And how a company manage all this to acquire a no. 1 position in the
market amongst their all their competitors.