CASE STUDY ON FOUR 1WHEELER *

Introduction: Automobile Industry History: In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three-wheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S. A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of nonrechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances. The automotive industry branch has been put in pawn in Germany, where in 1885 Karl Benz (1848-1929) has designed three-wheeled "a vehicle with the gasoline engine". Then Gottlieb Daimler (1834-1900) has constructed a bicycle with the motor, and year later "vehicle" on motor pull-rod. Karl Benz's three-wheeled creation (1886) became the first-ever car started in industrial production. Its engine a working volume of 1,7 litres settled down horizontally. The huge sizes the flywheel behind acted. At the beginning of automotive industry this "monster" steered, as a rule, by means of the T-shaped wheel. The first "Mercedes" (December, 1890) - a prototype of the modern car with the elementary body intending for participation in a car racing. Instead of it the four-seater "walking" body could be installed. Since then all models "Daimler" began to be called "rcedes".
1* Copyright 2011 The author of this case is Ankur D Amin, Faculty member of Charutar Vidya Mandals SEMCOM, Vallabh Vidyanagar. The case is written for classroom discussion in order to develop the perspective among the students and to orient them, towards the importance of Tourism industry in India as well as the working of major tourism service providers.
1

The case is prepared on the basis of information generated from the websites of Maruti Suzuki, TATA Motors, Toyota Kirlosker, Toyota Motors, SIAM, Wikipedia, BSE, NSE and Ministry of Heavy Industries and Public Enterprises. The author acknowledges valuable guidance from Dr. Nikhil Zaveri, Director and Principal, SEMCOM, Vallabh Vidyanagar in writing this case. 1

The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and it first begun in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses. According the History of Automobile Industry US, dominated the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets.

Automobile Industry in India

The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every 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 purposes. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high and these barriers are study. On the other hand, India has a welldeveloped tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.

The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, Indias 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 and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors 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. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. Key Statistics: Automobile Production Type of Vehicle Passenger Vehicles Commercial Vehicles 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697 353,703 391,083 519,982 549,006 417,126 3 Units Number Number

Three Wheelers Two Wheelers Total

374,445 6,529,829 8,467,853

434,423 556,126 500,660 501,030 7,608,697 8,466,666 8,026,681 8,418,626 9,743,503 11,087,997 10,853,930 11,175,479

Number Number Number

Source: Society of Indian Automotive Manufacturing (SIAM) Automobile Sales Type of Vehicle Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Total 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1,061,572 1,143,076 1,379,979 1,549,882 1,551,880 318,430 351,041 467,765 490,494 384,122 307,862 359,920 403,910 364,781 349,719 6,209,765 7,052,391 7,872,334 7,249,278 7,437,670 7,897,629 8,906,428 10,123,988 9,654,435 9,723,391 Units Number Number Number Number Number

Source: Society of Indian Automotive Manufacturing (SIAM) Automobile Exports Type of Vehicle Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Total 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 166,402 175,572 198,452 218,401 335,739 29,940 40,600 49,537 58,994 42,673 66,795 76,881 143,896 141,225 148,074 366,407 513,169 619,644 819,713 1,004,174 629,544 806,222 1,011,529 1,238,333 1,530,660 Units Number Number Number Number Number

Source: Society of Indian Automotive Manufacturing (SIAM) Supply Chain The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminium to the second tier suppliers. 4

Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order to provide black-box solutions for the requirements of their customers. Black-box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-tier suppliers. Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers wants and needs, automakers begin designing models which are tailored to consumers demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies. Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorised dealers of the companies. The dealers then sell the vehicles to the end customers. Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers.

Supply Chain of Automobile Industry:

Source: ImaginMotor, Inderscience Enterprises Ltd and United Nations Industrial Development Organisation

Product and Service Segmentation

Source: Society of Indian Automotive Manufacturing (SIAM) The automotive industry of India is categorised into passenger cars, two wheelers, commercial vehicles and three wheelers, with two wheelers dominating the market. More than 75% of the vehicles sold are two wheelers. Nearly 59% of these two wheelers sold were motorcycles and about 12% were scoters. Mopeds occupy a small portion in the two wheeler market however; electric two wheelers are yet to penetrate. Market Size The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USD 35.8 billion, (INR 165,000 crores) and an investment of USD 10.9 billion. The industry has provided direct and indirect employment to 13.1 million people. Automobile industry is currently contributing about 5% of the total GDP of India. Indias current GDP is about USD 650 billion and is expected to grow to USD 1,390 billion by 2016. The projected size in 2016 of the Indian automotive industry varies between USD 122 billion and UDS 159 billion including USD 35 billion in exports. This translates into a contribution of 10% to 11% towards Indias GDP by 2016, which is more than double the current contribution. (Source: Department of Heavy Industry & Public Enterprises Government of India)

Major Players

Top 20 motor vehicle producing countries 2010

Motor vehicle production (units) Sr. No. Country 1 China 2 Japan 3 United States 4 Germany 5 South Korea 6 Brazil 7 India 8 Spain 9 Mexico 10 France 11 Canada 12 Thailand 13 Iran 14 Russia 15 UK 16 Turkey 17 Czech Rep. 18 Poland 19 Italy 20 Argentina No. of Units 18,264,667 9,625,940 7,761,443 5,905,985 4,271,941 3,648,358 3,536,783 2,387,900 2,345,124 2,227,742 2,071,026 1,644,513 1,599,454 1,403,244 1,393,463 1,097,554 1,076,385 869,736 857,359 716,540 9

Top motor vehicle manufacturing companies by volume 2010

Total motor vehicle production
C mp n o aay T ota oy G M Volkswa en g Ford H unda K y i ia PS A H onda Nissa n Fia t S uzuki R ult ena D im AG a ler C naAutom ha obile B MW Ma zda C hrysler Mitsubishi B eijingAutom otive T ta a Cr as L h M to V h le ig t o r e ic s H a yC m r ia V h le e v o e c l e ic s

72,34,439 64,59,053 60,54,829 46,85,394 46,45,776 30,42,311 30,12,637 27,44,562 24,60,222 23,87,537 22,96,009 14,47,953 14,25,777 12,58,417 9,84,520 9,59,070 8,02,463 6,84,534 6,72,045

Source: Wikipedia

10

Three Major Four Wheeler Product Manufacturers with their Profile:

Maruti Suzuki India Limited Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. Market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. 18.28% of the company is owned by the Indian government, and 54.2% by Suzuki of Japan. Maruti was introduced targeting the middle class. Its target segments are well depicted in its Product Pyramid profit model. Targeting was based on a variety of factors such as style, color, price preference, features etc MSIL has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined capability to produce over a 1.2 million (1,200,000) vehicles annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. The company offers a wide range of cars across different segments. It offers 15 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell One Million cars in a year. Maruti Suzuki has employee strength over 8,500 (as at end March 2011) In 2010-11, the company sold over 1.27 Mnvehicles including 1,38,266units of exports. With this, at the end of March 2011, Maruti Suzuki had a market share of 44.9 per cent of the Indian passenger car market. Key Highlights of 2010-11

Total sales of 12,71,005 vehicles during fiscal 2010-11, a growth of 24.8 per cent over fiscal 2009-10 (10,18,365 units). Exported 1,38,266 units in the fiscal. This included 43 per cent to European countries. Sold 8,08,552 units in A2 segment, a growth of 27.7 per cent. 11

In the A3 segment, company sold 1,31,272 units, reflecting a growth of 32.2 per cent. In the C segment, sales grew by 58.5 per cent touching 1,60,626 units. During the year, the company expanded its countrywide network: 31 March 2011 933 666 2946 1395 164 31 March 2010 802 555 2740 1335 83 Increase 131 added 111 added 206 added 60 added 81 added

Number of Sales Outlets Cities covered by sales network Service Stations Cities covered by service network Maruti Driving Schools

Maruti Suzuki's revenue has grown consistently over the years. (Rs. in Million) Year 2005-06 2007-08 2009-10 Net Sales 1,20,034 1,78,603 3,01,198 Year 2006-07 2008-09 2010-11 Net Sales 1,45,922 2,03,583 3,61,282

Product List with Price: Maruti (Hatchback) Popular Maruti hatchback car prices range from Maruti hatchback cars at a bit above rupees two lakhs to a bit below rupees six lakhs. Maruti hatchback models include Maruti 800 (Hatchback)

It is the most compact car available in the Indian market. It is also dubbed as the people's car after the efforts of erstwhile Prime Minister Rajiv Gandhi. For many years, it was India's largest selling car. The Maruti 800 with its petrol variants targets the middle class consumer with Maruti car prices between rupees two and two lakhs fifty thousand.

12

Maruti Alto (Hatchback)

The Maruti Alto has overtaken the Maruti 800 as the most popular car in the Indian Market. The Alto comes with great looks and a superior feel, yet with the economy and easiness of the Maruti 800. Maruti (Hatchback) The Maruti Alto with its petrol variants targets the middle class consumer with car prices between rupees two lakhs fifty thousand and three lakhs fifty thousand. Maruti Zen (Hatchback)

The Zen is now called the Zen Estillo, which is Spanish for style. The new Zen Estillo has a perfect aerodynamic shape and a unique bean shaped body. The Zen with its petrol variants targets the middle class consumer with prices between rupees three lakhs and four lakhs. Maruti Swift (Hatchback)

The Maruti Swift is a new kind of low slung, wide body compact car that is a bit European but a lot more Japanese. Maruti has included a load of features on the exterior as well as the interior to give this car a sense of flawlessness and excellence in looks and performance. The Swift has more room and more aesthetic looks than any other car in the compact segment. The Maruti Swift with its petrol variants targets the middle class consumer with prices between rupees four lakhs and six lakhs.

13

Maruti (Wagon) Popular Maruti models range in price from a bit above rupees three lakhs to a bit below rupees five lakhs, including Maruti WagonR (Wagon)

The Wagon R is yet another stunning family car from Maruti's stable. Although it comes with a boxy van-like look and posterior, the Wagon R has an exterior that makes every one stand and notice its presence. The curves and lines of the exterior designing add to the beauty of the vehicle. The Wagon R with its petrol and LPG variants targets the middle class consumer with prices between rupees four lakhs and five lakhs. Maruti Sedan Maruti Esteem (Sedan) Maruti Esteem is India's most popular Sedan. Earlier manufactured as the Maruti 1000, it is now called the Maruti Esteem. The Maruti Esteem with its petrol variants targets the middle class consumer with car prices between rupees five and six lakhs. Maruti Esteem variants include Maruti Baleno (Sedan) Maruti Udyog is Maruti's first D segment luxury car. It has superb performance along with stylish and luxurious looks. The Maruti Baleno with its petrol variants targets the middle class consumer with car prices between rupees six and seven lakhs fifty thousand. Baleno variants include Maruti SX4 (Sedan)

14

This is a premier Sedan presentation from Maruti's stable in the A3 segment. This is essentially an inline with competition car to take on the leader in this segment Honda City. With its accentuated masculine features, Maruti boasts that it is the tallest, widest and the roomiest car in its segment. The Sx4 with its petrol variants targets the middle class consumer with car prices between rupees seven and eight lakhs. Maruti (SUV) Popular Maruti SUV car prices range from a bit above rupees five lakhs to a bit below rupees seventeen lakhs, including Maruti Gypsy (SUV)

The Maruti Gypsy is an all terrain Sports Utility Vehicle (SUV) that is specially designed for Indian conditions. Available in three different versions, hard top, soft top, and ambulance, it can take on any terrain be it the hills, desert, snow, or even congested city driving conditions. It is the preferred vehicle of adventure seeking youth in India. At the same time, it is the standard transportation vehicle of the police and Indian paramilitary forces. Maruti (SUV) The Gypsy with its petrol variants targets the middle class consumer with Maruti SUVs between rupees five and six lakhs. Maruti Grand Vitara (SUV)

The Grand Vitara is Maruti's entry into the luxury SUV segment. This SUV is distinctively designed with imposing front grills to lend a strong measure of audacity to the imposing forward stance. Additionally the flared wheel arches take in extra strong tyres to counter any type of terrain. The stronger R16 tyres are a 15

useful asset during congested city drives. The Grand Vitara with its petrol variants targets the middle class consumer with Maruti SUVs between rupees fifteen and seventeen lakhs.

Maruti (VAN) Popular van car prices range from Maruti vans at a bit above rupees two lakhs twenty five thousand to Maruti vans at a bit above rupees two lakhs fifty thousand. van models include Maruti Omni (VAN)

The Omni is a multi utility van for use in business as well as in the family. The Omni is just right vehicle to use within the city. It offers a turning radius of just 4.1 m, negotiating this vehicle in tight lanes and congested traffic is an easy job for the driver. There is a lot of space for nearly every family requirement. It is ideal for individuals who require travel long distances or take their family members for a holiday. The Omni with its petrol variants targets the middle class consumer with van car prices between rupees two and three lakhs. Maruti Versa (VAN)

The Maruti Versa is Maruti's larger and more optimum multi utility van with extensive features and specifications. The Maruti Versa with its petrol variants targets the middle class consumer with prices between rupees four and five lakhs. Market Coverage: Maruti has market for all the segment across the India as well the globe. Maruti has offered cars for aii the segments in india as well as across the globe. For A Segment Market, it has Maruti 800 and Omni. For B Segment market, it has Alto, Wagon-R, Estilo, A-Star, Ritz, etc,. for C and D Segment, it has Swoft, Desire, Esteem, SX4, 16

Baleno, Kizashi, etc,. Maruti Suzuki exports, entry-level models across the globe to over 120 countries and the focus has been to identify new markets. Some important markets include Latin America, Africa, South East Asia and Oceana. The Company clocked its highest ever exports at 147,575 units, a growth of 111% in the Fiscal Year 2009-10.

Sales network Dealers: Maruti offered the products to the customer through a Sales network of 500 authorized dealers with more than 900 sales outlets across 555 cities. This is the largest network of dealers amongst car manufacturers in Indi. Its dealers employed more than 6,000 sales executives. They are linked to our sales network through its secure extranet-based information network. The sales of our spares, accessories and automobile-related services such as insurance and finance serve as additional sources of revenue for our dealers. Maruti believes that the availability of these related products and services at sales outlets also helps to attract customers to the outlets and promotes sales of the cars.

Manufacturing Technology: Maruti Production System or MPS draws learning's from its parent company Suzuki Motor Corporation's concepts on `lean manufacturing' under Suzuki Production System i.e. SPS. Setting trends in new products and achieving customer delight starts with Manufacturing Excellence and Maruti's manufacturing excellence hinges around four important pillars-Cost, Quality, Safety and Productivity. Production Management System (PMS) is the next step towards moving ahead to sustain the momentum. It is a strategy to achieve Manufacturing Excellence evolved 17

through participative approach. The system is people driven and ensures involvement of all levels (Managers, Executives, and Supervisors). The concept ensures participation and error free communication. The result is clarity of content, better understanding and openness towards feedback. These values make PMS a sustainable system. Having achieved the target of selling a million cars in the financial year 2009 - 2010, PMS has lead the production team towards greater enhanced productivity with perfection.

PMS is derived from the basic Japanese principles of 5S, 3G and 3K Financial Highlights:

18

19

Tata Motors Limited Introduction Tata Motors Limited is Indias largest automobile company, with consolidated revenues of Rs.1,23,133 crores (USD 27 billion) in 2010-11. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The Company is the world's fourth largest truck manufacturer, and the world's third largest bus manufacturer. The Company's over 25,000 employees are guided by the vision to be "best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics." Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 5.9 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The Company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The Company's dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India. Tata (Sedan) Popular Tata sedan car prices start with Tata cars at a bit below rupees four lakhs to Tata cars at a bit above rupees eight lakhs. Tata sedan cars include Tata Indigo (Sedan)

Tata Indigo is India's first Sedan model - a mid size C' segment completely indigenous sedan. For the price that it is offered, this model is quipped with a host of features that offer extravagant comfort and imposing luxury, offering complete value for money. Tata (Sedan) The Tata Indigo with its petrol and diesel variants targets the middle class consumer with Tata Sedan cars between rupees four and eight lakhs.

20

Tata (SUV) Popular Tata SUV car prices begin with Tata SUVs at a bit above rupees four lakhs fifty thousand to Tata SUVs at a bit below rupees ten lakhs. Tata SUV models include Tata Sumo (SUV)

The Tata Sumo is now renamed as Tata Sumo Victa with vastly improved features and design. Tata (SUV) The Tata Sumo with its petrol and diesel variants targets the middle class consumer with Tata SUV cars between rupees four and seven lakhs. Tata Safari (SUV)

The Tata Safari is the first SUV indigenously developed in India. One might consider it a bit obese and massive, but the Safari is a model to reckon with, due to its symbolism with the indigenous effort. Tata (SUV) The Tata Safari with its diesel variants targets the middle class consumer and offers Tata SUV cars between rupees seven and nine lakhs. Tata Winger (SUV)

The Tata Winger is a versatile maxi van based on an older generation Renault van - Trafic. It is designed to seat 9 to 13 passengers with generous interior space, more head and leg room, and a wide luggage space. The new Winger takes care of passenger comfort by providing all front facing seats that are equipped with magazine pockets, bottle holders, spot lamps, grab handles, and a music system. 21

Tata (Hatchback) Popular Tata hatchback car prices begin from Tata hatchback cars at a bit above rupees two lakhs eighty thousand to Tata hatchbacks at a bit above rupees four lakhs seventythousand. Popular Tata hatchback models include Tata Nano (Hatchback)

The Tata Nano is presently the world's cheapest small car that is manufactured by Tata Motors in India. It is a rear-engined, four-passenger city car. But despite the price, Tata Nano has not compromised in quality when it comes to performance & other specifications like fuel efficiency, emmission and safety. The Tata Nano runs on petrol and come with a warranty of 18 months or 24,000 km, whichever is earlier. The Tata Nano comes in three trim levels and their key features available at the time of launch are: Tata Indica (Hatchback)

The most desirable car of the Indian auto market for its great styling, price and low maintenance. Tata (Hatchback) The Tata Indica with its diesel variants targets the middle class consumer and offers an on-road price range between rupees two and five lakhs. Tata Indica Vista (Hatchback)

The latest and stylish version of Tata Indica is 22

launched. The body not only looks elegant but the features are advanced with a touch of style. The side and front view are so enhanced that it is hard to believe it is an improvised version of the Indica. The car comes in three engine options namely 1.2 Litre Petrol, 1.3 Litre Quadrajet Diesel and the re-worked version of 1.4 Litre turbocharged-intercooled 475 IDI engine. The interior comforts have lumbar support for the front seats, height adjustable driver seat, tilt adjustable steering wheel, a dual din music system with USB and AUX input and a remote control. It also has front and rear fog lamps. The engine and the gear box are FIAT Europe modeled. Tata Wagons Tata wagons have always held a special place in the market. Currently, Tata markets only one model, the Tata Indigo Marina, across seven variants including both diesel and petrol. Tata Indigo Marina (Wagon)

The Tata Marina is essentially modeled on the lines of a station wagon that combines the luxury of the sedan along with the roomy features and sizeable appearance of a MUV. Tata Wagons The Tata Indigo Marina with its diesel variants targets the middle class consumer and offers Tata wagon cars between rupees five and seven lakhs. Manufacturing Units: Tata Motors owes its leading position in the Indian automobile industry to its strong focus on indigenisation. This focus has driven the Company to set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolutiondesign, development, manufacturing, assembly and quality control, is carried out meticulously. Our manufacturing plants are situated at Jamshedpur in the East,Pune and Sanand in the West and Lucknow and Pantnagar in the North. Product Development The foundation of the Company's growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customerdesired offerings through leading edge R&D. With over 4,500 engineers and scientists, the Company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The Company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. After years of dominating the commercial vehicle market in India, Tata Motors entered the passenger 23

vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle. After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first sports utility vehicle). Tata launched the Indica in 1998, the first fully indigenous passenger car of India. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Though the car was initially planned by auto-analysts, the car's excellent fuel economy, powerful engine and aggressive marketing strategy made it one of the best selling cars in the history of the Indian automobile industry. Within two years of launch, Tata Indica became India's largest selling car in its segment. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became a mass-favorite.In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. The standard version has been priced at Rs.100,000 (excluding VAT and transportation cost). Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than twowheelers being manufactured in India today. The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint. In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. Tata Motors is equally focussed on environment-friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-friendly technologies in manufacturing processes, significantly enhancing resource conservation.

24

Acquisitions

In 2004 Tata Motors acquired Daewoo's truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in South Korea. In 2005, Tata Motors acquired 21% of Aragonese Hispano Carrocera giving it controlling rights of the company. In 2007, Formed a joint venture with Marcopolo of Brazil and introduced lowfloor buses in the Indian Market. In 2008, Tata Motors acquired British Jaguar Land Rover (JLR), which includes the Daimler and Lanchester brand names. In 2010, Tata Motors acquired 80% stake in Italy-based design and engineering company Trilix for a consideration of 1.85 million. The acquisition is in line with the companys objective to enhance its styling/design capabilities to global standards.

Market Coverage Tata Motors has more than 250 dealerships in more than 195 cities across 27 states and 4 Union Territories of India. It has the 3rd largest Sales and Service Network after Maruti Suzuki and Hyundai. Tata's dealership, sales, service and spare parts network comprises over 3500 touch points. Tata Motors also distributes and markets Fiat branded cars in India. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles in India with products in the compact, midsize car and utility vehicle segments. Tata vehicles are sold primarily in India, and over 4 million Tata vehicles have been produced domestically since the first Tata vehicle was assembled in 1954. Tata also has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many countries it has only managed to create a large consumer base in the Indian Subcontinent, namely India, Bangladesh, Bhutan, Sri Lanka and Nepal. Tata has a growing consumer base in Italy, Spain and South Africa. Financial Profile Production:
Category M& HCV LCV UTILITY CARS TOTAL 2006-07 1,31,636 1,12,310 32,469 1,46,131 422546 2007-08 120463 123567 32672 131792 408494 2008-09 40237 40500 13444 40596 134777 2008-09 40237 40500 13444 40596 134777 2010-11 44760 58455 8931 67286 179432

Sales 25

Category M& HCV LCV UTILITY CARS TOTAL

2010-11 42156 55073 9650 62589 169468

Domestic 2009-10 2008-09 26626 35835 45430 35645 8065 12366 37772 38728 117893 122574

2010-11 3142 6566 145 2390 12243

Exports 2009-10 2339 1928 52 901 5220

2008-09 2534 5152 197 1276 9159

2010-11 45298 61639 9795 64979 181711

Total 2009-10 28965 47358 8117 38673 123113

2008-09 38369 40797 12563 40004 131733

Challenges

Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated. Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments. For example ICICI bank and DaimlerChrysler have invested in a new Pune-based plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Maruti Udyog, General Motors, Ford and others. Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tatas products run on Diesel fuel which is becoming expensive globally and within its traditional home market.

Competition Strategies:

The internationalization strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple 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 Indian company leaned work discipline and how to get the final product right first time. The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programme of intensive management development in place in order to establish its leaders for tomorrow. The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pickup targeted at Central and South America. In the summer of 2008 Tata Motors announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK 2.3 million. Two of 26

the Worlds luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments.

27

Toyota Kirloskar Motor Private Limited (TKM) As a joint venture between Kirloskar Group and Toyota Motor Corporation, Toyota Kirloskar Motor Private Limited (TKM) aims to play a major role in the development of the automotive industry and the creation of employment opportunities, not only through its dealer network, but also through ancillary industries. TKM's growth since inception can be attributed to one simple, yet important aspect of its business philosophy - "Putting Customer First". While managing growth, TKM has maintained its commitment to provide quality products at a reasonable price and has made every effort to meet changes in customer needs. TKM, along with its dedicated dealers and suppliers, has adopted the "Growing Together" philosophy of its parent company TMC to create long-term business growth. In this way, TKM aims to further contribute to progress in the Indian automotive industry, realise greater employement opportunities for local citizens, improve the quality of life of the team members and promote robust economic activity in India. TKM, along with its dedicated dealers and suppliers, has adopted the "Growing Together" philosophy of its parent company TMC to create long-term business growth. In this way, TKM aims to further contribute to progress in the Indian automotive industry, realise greater employement opportunities for local citizens, improve the quality of life of the team members and promote robust economic activity in India. All Toyota employees are expected to embody these values in their daily work, including environmental protection activities. To "respect" the environment, we go to the source to identify and analyse problems ("Genchi Genbutsu"), move forward to "challenge" conventional ideas and old habits, to improve further ("kaizen") through "teamwork." The framework provided by The Toyota Way enables our company to respond to, among other things, the environmental challenges at various stages of the life-cycle of a vehicle. These include greenhouse gas emissions, waste reduction, increased recycling and the banning of hazardous substance use in parts and components. These challenges will have inevitable consequences for Toyota's organisation and employees, and we must balance them with our desire for future growth. In 1992, the Toyota Guiding Principles were established in direct response to the international initiatives agreed to at the Rio 'Earth Summit.' This summit focussed on the potential for a clash between trade and environmental rules, and resulted in a statement of principles about forest management, conservation and sustainable development. The Toyota Guiding Principles are a cornerstone of our corporate management philosophy. These principles were updated in 1997, to ensure they continue to provide Toyota with a clear path towards achieving sustainable development. These principles have been explored and developed in Toyota's Global Vision 2010, adopted in April 2002, which proposes a series of long-term policies on the theme of 28

"Innovation into the Future." Toyota's Global Vision 2010 guides management in its response to long-term social changes, combining consideration for the environment, the benefit to our customers of value-added products and the encouragement of our employees through shared prosperity and social involvement. Legacy of Toyota (Parent Company) Look back at the history of Toyota, starting with the birth of founder Sakichi Toyoda. It traces the company's development through 1937 from when Toyota Motor Corporation was established to when the 2 millionth Prius hybrid was sold.

The AA Sedan
Toyota Office

Koromo Plant (Honsha Plant)

Older Building of

29

TOYOTA Four Wheelers: Toyota Sedan Toyota Corolla Altis (Sedan)

30

Flaunting new styling and improved engine the all new Toyota Corolla Altis is set to hit Indian roads with a promising mileage and enhanced performance. A 1.8 L Variable Valve Timing, with intelligence lies within the hood of the sedan. The other distinct features include soft plush seats, ample storage space, sound insulated interior design, centre armrest and integrated audio system. All these undeniably offer special treatment for its occupants. To enable good off road value it is equipped with Electronic Power Steering (EPS), better suspension and the tight turning radius. Approximately priced between 13-14 lakh rupees, the all new Altis has been launched in five sizzling colors. The Corolla Altis has a distinctive exterior flow lining with wing mirror and turn indicator. Front and rear parking sensors, auto climate controlled air conditioning; tilt & telescopic steering control with switch control, super electronically controlled transmission are the other striking features of the all new Toyota Corolla Altis.

Toyota Corolla (Sedan) The Corolla is a luxury sedan that combines excellence with style and performance. The advanced aerodynamic styling gives the appearance of travelling in a luxury car with the looks of a sports car. The Toyota Corolla with its petrol variants targets the middle class consumer with Toyota Sedan cars between rupees ten and fourteen lakhs. Toyota Camry (Sedan)

The Camry is Toyota's latest entry in the luxury sedan segment targeted at premium buyers. This model boasts of superior aerodynamic features coupled with a host of stylish and elegant external features along with athletic curves that blend with the overall design. Toyota (Sedan) The Toyota Camry with its petrol variants targets the upper middle class consumer and offers Toyota cars between rupees twentyfour and twenty-five lakhs. Toyota (SUV)

31

Popular Toyota SUV car prices range from Toyota SUVs at a bit above rupees eight lakhs to Toyota SUVs at a bit below rupees forty-six lakhs. Toyota SUVs include Toyota Innova (SUV)

The Innova is an elegant and urbane three-row seating multi passenger vehicle (MPV) cum sedan. Also called a Multi Utility Vehicle (MUV), the Innova comes with some exemplary and stylish looking external features like sporty design and curves, aerodynamically shaped exteriors, three dimensional fronts, panoramic windows, and semi concealed wipers. Toyota (SUV) The Toyota Innova with its petrol and diesel variants targets the middle class consumer and offers Toyota SUV cars between rupees eight and twelve lakhs.

Toyota Prado (SUV)

Toyota (SUV) The Toyota Prado, at present, has only a single variant. Toyota Prado is a Prado is Toyota's premium 5-door, 8-seater presentation in the Sports Utility Vehicle (SUV) segment. It is a rugged and powerful petrol powered vehicle. Toyota Landcruiser (SUV)

The introduction of the all new Toyota Land Cruiser Quad 32

Cam V8 is a major step to upgrade the 100 series range. The main improvements are in the area of safety, performance, economy, emissions, and comfort. Lowered noise, vibrations and harshness is also seen in the latest version. Toyota Alphard (SUV)

Toyota launched two minivans the Alphard and Vellfire. Though the two share a common aim of delivering impressive and high quality vehicle design, they are specifically designed so that the two models impart separate individual identities. It represents a clear cut evolution of excellent performance. Aplhard epitomizes elegance and style while its counterpart the Vellfire is power and innovation oriented.

Financial Profile

Toyota Production System (TPS) Leaner production, higher quality The keystone to the Toyota Production System is a vision of production whereby the end product is literally "pulled" through the system, starting with the raw materials and ending with the final assembly of the vehicle. As the product is drawn along the manufacturing line, parts and materials are called up from suppliers only as necessary. 33

The vital agents in this process are the line employees, called "team members" in Toyota plants. By ensuring their full involvement as a team, they can identify new solutions (kaizen, or continuous improvement), respond to immediate problems in a standardised way (jidoka, or autonomous defects control), and continually focus their attention on ensuring that quality and throughput rates are optimised. The Toyota Production System is now widely accepted as a proven approach to more resource-effective, environmentally responsible production. By empowering employees to expose problems as they arise - by stopping the production line in case of a problem, for instance - the system clearly shows that lasting gains in productivity and quality are possible. Engine technology is one of Toyota's greatest assets. Toyota's award-winning engine range reflects the high design and quality standards set by its engineers. Toyota engines are developed for performance and responsiveness with a big focus on reducing emissions and saving fuel. Today Toyota brings these benefits to customers with advanced variable valve technology (VVT-i) petrol engines, common-rail turbo diesels (D-4D), and with the unique Toyota Hybrid System (THS).

Future Trends of Four Wheelers in India We are all well aware of the fact that, for decades the Indian automobile industry was way behind some of the most influential economies in the world like USA and Japan. The Indian automobile industry, though in its nascent stage, is expected to set the ball rolling in the Indian Economy as well. Coming to the automotive trends, today, the Indian automobile industry is one of the most vibrant, modern and upbeat automobile markets in the world. It is also the second largest two-wheeler market in the global map. With the emergence of the financially sound middle class, the four-wheeler segment is set for tremendous growth and one can expect of more impetus to the economy from this sector. No wonder then that this industry has become the centre of attraction for most of the global automotive giants the world over. Government: Unlike in the past, the Indian Government has gone through a total role reversal by becoming the enabler rather than the controller. In the recent past it has started providing better infrastructure, conducive atmosphere to attract investments and implementing growth oriented economic policies. Competition: With the coming of the multinationals, an immense pressure has grown on the Indian companies. As a result, a lot of joint ventures have taken place, some others have invested heavily on R&D to build their own empires and the rest have perished. Customer: Armed with higher buying power and an ever increasing expectation from products and services, the customer is undoubtedly the king and has propelled a fierce competition among the major players in the market. Pollution and Safety Norms: cars as well as two-wheelers have met the most stringent international norms of pollution. Euro II vehicles have become the norm of the 34

day all over India. Unfortunately, in the Indian context, safety in motor vehicles is a relatively neglected area. Bad roads coupled with the absence of adequate safety features in the vehicles such as airbag and crumple zone needs immediate attention. But awareness is on the increase and the use of seat belts while driving has been made mandatory. Questions for Discussion: 1. 2. 3. 4. 5. 6. 7. Discuss how four wheeler had been evolved in the world? Discuss the world four wheeler markets in detail. Explain the Indian Four wheeler market in detail. Briefly explain the history of Maruti Suzuki. How Tata Motors remained market leader in commercial vehicles market? Explain the history of Toyota motors with list of products offered. Discuss the future trends of Indian Four wheeler industry.

35