CHAPTER-1

INTRODUCTION 1.1. COMPANY PROFILE :

Ford Motor Company (NYSE: F) is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Asto Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely Automobile. Ford discontinued the Mercury brand after the 2011 model year. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914. Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in Europe. Ford is the eighthranked overall American-based company in the 2010 Fortune 50BNB0 list, based on global revenues in 2009 of $118.3 billion. In 2008, Ford produced 5.532 million automobiles and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion. Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories and fourteen vehicles ranked in the top three. HISTORY: The Ford Motor Company was launched in a converted factory in 1903 with $28,000 in cash from twelve investors, most notably John and Horace Dodge (who would later found their own car company). Later Ford realized it would be better if he manufactured all of his company's automotive parts himself instead of using parts from aftermarket sources which lead to the production of the assembly line 1908. Henry's first attempt under his name was the Henry Ford Company on November 3, 1901, which became the

Cadillac Motor Company on August 22, 1902. In 1908 Ford During its early years, the company produced just a few cars a day at its factory on Mack Avenue in Detroit, Michigan. Groups of two or three men worked on each car from components made to order by other companies. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the world's largest and most profitable companies, as well as being one to survive the Great Depression. As one of the largest family-controlled companies in the world, the Ford Motor Company has been in continuous family control for over 100 years. CORPORATE GOVERNANCE : Members of the board as of early 2011 are: Richard A. Gephardt, Stephen Butler, Ellen Marram, Kimberly Casiano, Alan Mulally (President and CEO), Edsel Ford II, Homer Neal, William Clay Ford Jr. (Executive Chairman), Jorma Ollila, Irvine Hockaday Jr., John L. Thornton, and William Clay Ford, Sr. (Director Emeritus). The main corporate officers are: Lewis Booth (Executive Vice President, Chairman (PAG) and Ford of Europe), Mark Fields (Executive Vice President, President of The Americas), Donat Leclair (Executive Vice President and CFO), Mark A. Schulz (Executive Vice President, President of International Operations), and Michael E. Bannister (Group Vice President; Chairman & CEO Ford Motor Credit).Paul Mascarenas (Vice President of Engineering, The Americas Product Development) MARKET DEVELOPERS: During the mid to late 1990s, Ford sold large numbers of vehicles, in a booming American economy with soaring stock market and low fuel prices. With the dawn of the new century, legacy healthcare costs, higher fuel prices, and a faltering economy led to falling market shares, declining sales, and sliding profit margins. Most of the corporate profits came from financing consumer automobile loans through Ford Motor Credit Company. By 2005, corporate bond rating agencies had downgraded the bonds of both Ford and GM to junk status, citing high U.S. health care costs for an aging workforce, soaring gasoline prices, eroding market share, and

dependence on declining SUV sales for revenues. Profit margins decreased on large vehicles due to increased "incentives" (in the form of rebates or low interest financing) to offset declining demand. In the face of demand for higher fuel efficiency and falling sales of minivans, Ford moved to introduce a range of new vehicles, including "Crossover SUVs built on unibody car platforms, rather than more bodyon-frame chassis. In developing the hybrid electric powertrain technologies for the Ford Escape Hybrid SUV, Ford licensed similar Toyota hybrid technologies to avoid patent infringements. Ford announced that it will team up with electricity supply company Southern California Edison (SCE) to examine the future of plug-in hybrids in terms of how home and vehicle energy systems will work with the electrical grid. Under the multi-million-dollar, multi-year project, Ford will convert a demonstration fleet of Ford Escape Hybrids into plug-in hybrids, and SCE will evaluate how the vehicles might interact with the home and the utility's electrical grid. Some of the vehicles will be evaluated "in typical customer settings", according to Ford. In December 2006, the company raised its borrowing capacity to about $25 billion, placing substantially all corporate assets as collateral to secure the line of credit. Chairman Bill Ford has stated that "bankruptcy is not an option" .In order to control its skyrocketing labor costs (the most expensive in the world), the company and the United Auto Workers , representing approximately 46,000 hourly workers in North America, agreed to a historic contract settlement in November 2007 giving the company a substantial break in terms of its ongoing retiree health care costs and other economic issues. The agreement includes the establishment of a company-funded, independently run Voluntary Employee Beneficiary Association (VEBA) trust to shift the burden of retiree health care from the company's books, thereby improving its balance sheet. This arrangement took effect on January 1, 2010. As a sign of its currently strong cash position, Ford contributed its entire current liability (estimated at approximately US$5.5 Billion as of December 31, 2009) to the VEBA in cash, and also pre-paid US$500 Million of its future liabilities to the fund. The agreement also gives hourly workers the job security they were seeking by having the company commit to substantial investments in most of its factories. The automaker reported the largest annual loss in company history in 2006 of $12.7 billion, and estimated that it would not return to profitability until 2009. However, Ford surprised Wall Street in the second quarter of 2007 by posting a $750 million profit. Despite the gains, the company finished the year with a $2.7 billion loss, largely attributed to finance restructuring at Volvo.

On June 2, 2008, Ford sold its Jaguar and Land Rover operations to Tata Motors for $2.3 billion. In January 2008, Ford launched a website listing the ten Built Ford Tough rules as well as a series of webisodes that parodied the TV show COPS .During November 2008, Ford, together with Chrysler and General Motors, sought financial aid at Congressional hearings in Washington, D.C. in the face of worsening conditions caused by the automotive industry crisis. The three companies presented action plans for the sustainability of the industry. The Detroit based automakers were unsuccessful at obtaining assistance through Congressional legislation. GM and Chrysler later received assistance through the Executive Branch from the T.A.R.P. funding provisions.On December 19, the cost of credit default swaps to insure the debt of Ford was 68 percent the sum insured for five years in addition to annual payments of 5 percent. That means it costs $6.8 million paid upfront to insure $10 million in debt, in addition to payments of $500,000 per year. In January 2009, Ford announced a $14.6 billion loss in the preceding year, making 2008 its worst year in history. Still, the company claimed to have sufficient liquidity to fund its business plans and thus, did not ask for government aid. Through April 2009, Ford's strategy of debt for equity exchanges, erased $9.9 B in liabilities (28% of its total), in order to leverage its cash position. These actions yielded Ford a $2.7 billion profit in fiscal year 2009, the company's first full-year profit in four years. THE WAY FORWARD: In the latter half of 2005, Chairman Bill Ford asked newly appointed Ford Americas Division President Mark Fields to develop a plan to return the company to profitability. Fields previewed the Plan, dubbed The Way Forward, at the December 7, 2005 board meeting of the company; and it was unveiled to the public on January 23, 2006. "The Way Forward" includes resizing the company to match current market realities, dropping some unprofitable and inefficient models, consolidating production lines, and shutting fourteen factories and cutting 30,000 jobs. These cutbacks are consistent with Ford's roughly 25% decline in U.S. automotive market share since the mid-late 1990s. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion. In the U.S., the F-Series is the best selling vehicle for 2010. Ford sold 528,349 F-Series trucks during the year, a 27.7% increase over 2009, out of a total sales

of 1.9 million vehicles, or every one out of four vehicles Ford sold. Trucks sales accounts for a big slice of Ford's profits, according to USA Today. Ford's realignment also includes the sale of its wholly owned subsidiary, Hertz Rent-a-Car to a private equity group for $15 billion in cash and debt acquisition. The sale was completed on December 22, 2005. A 5050 joint venture with Mahindra & Mahindra Limited of India, called Mahindra Ford India, Limited (MIFL), ended with Ford buying out Mahindra's remaining stake in the company in 2005. Ford had previously upped its stake to 72% in 1998. Chairman and Chief Executive Officer Ford also became President of the company in April 2006, with the retirement of Jim Padilla. Five months later, in September, he stepped down as President and CEO, and naming Alan Mulally as his successor. Bill Ford continues as Executive Chairman, along with an executive operating committee made up of Mulally, Mark Schulz, Lewis Booth, Don Leclair, and Mark Fields. The domain ford.com attracted at least 11 million visitors annually by 2008 according to a Compete.com survey. BRANDS : Ford Motor Company manufactures automobiles under its own name and as Lincoln in the United States. In 1958, Ford introduced a new brand, the Edsel, but poor sales led to its discontinuation in 1960. In 1985, the Merkur brand was introduced to market Fords from Europe in the United States; it met a similar fate in 1989. The Mercury brand was also introduced by Ford in 1939 but poor sales also led to its discontinuation in 2010. Ford has major manufacturing operations in Canada, Mexico, the United Kingdom, Germany, Turkey, Brazil, Argentina, Australia, the People's Republic of China, and several other countries, including South Africa where, following divestment during apartheid, it once again has a wholly owned subsidiary. Ford also has a cooperative agreement with Russian automaker GAZ. Ford acquired British sports car maker Aston Martin in 1989, but sold it on March 12, 2007,retaining a small minority stake, and bought Volvo Cars of Sweden in 1999,selling

it to Zhejiang Geely Holding Group in 2010. In November 2008 it reduced its 33.4% controlling interest in Mazda of Japan, to a 13.4% non-controlling interest. On November 18, 2010, Ford reduced their stake further to just 3%, citing the reduction of ownership would allow greater flexibility to pursue growth in emerging markets. Ford and Mazda remain strategic partners through joint ventures and exchanges of technological information. It shares an American joint venture plant in Flat Rock, Michigan called Auto Alliance with Mazda. It has spun off its parts division under the name Visteon. Ford sold the United Kingdom-based Jaguar and Land Rover companies and brands to Tata Motors of India in March 2008. Ford's FoMoCo parts division sells aftermarket parts under the Motorcraft brand name. Ford's non-manufacturing operations include organizations such as automotive finance operation Ford Motor Credit Company. Ford also sponsors numerous events and sports facilities around the US, most notably Ford Center (now Chesapeake Energy Arena) in downtown Oklahoma City and Ford Field in downtown Detroit. Overall the Ford Motor Company controls the Ford and Lincoln car brands. GLOBAL MARKETS: Initially, Ford Motor Company models sold outside the U.S. were essentially versions of those sold on the home market, but later on, models specific to Europe were developed and sold. Attempts to globalize the model line have often failed, with Europe's Ford Mondeo selling poorly in the United States as the Ford Contour, while U.S. models such as the Ford Taurus have fared poorly in Japan and Australia, even when produced in right hand drie. The small European model Ka, a hit in its home market, did not catch on in Japan, as it was not available as an automatic. The Mondeo was dropped by Ford Australia, because the segment of the market in which it competes had been in steady decline, with buyers preferring the larger local model, the Falcon. One recent exception is the European model of the Focus, which has sold strongly on both sides of the Atlantic.

In the first five months of 2010, auto sales in the U.S. rose to 4.6 million cars and light trucks, an increase of 17% from a year earlier. The rise was mainly caused by the return of commercial customers that had all but stopped buying in 2009 during the recession. Sales to individual customers at dealerships have increased 13%, while fleet sales have jumped 32%. Ford reported that 37% of its sales in May came from fleet sales when it announced its sales for the month increased 23%. In the first seven months of 2010, vehicle sales of Ford increased 24%, including retail and fleet sales. Fleet sales of Ford for the same period rose 35% to 386,000 units while retail sales increase 19%. Fleet sales account for 39 percent of Chrysler's sales and 31 percent for GM's. Europe A British Ford dealership in Wetherby , West Yorkshire. At first, Ford in Germany and Ford in Britain built different models from one another until the late 1960s, with the Ford Escort and then the Ford Capri being common to both companies. Later on, the Ford Taunus and Ford Cortina became identical, produced in left hand drivE and right hand drive respectively. Rationalisation of model ranges meant that production of many models in the UK switched to elsewhere in Europe, including Belgium and Spain as well as Germany. The Ford Sierra replaced the Taunus and Cortina in 1982, drawing criticism for its radical aerodynamic styling, which was soon given nicknames such as "Jellymould" and "The Salesman's Spaceship." Increasingly, the Ford Motor Company has looked to Ford of Europe for its "world cars", such as the Mondeo, Focus, and Fiesta, although sales of European-sourced Fords in the U.S. have been disappointing. The Focus has been one exception to this, which has become America's best selling compact car since its launch in 2000. In February 2002, Ford ended car production in the UK. It was the first time in 90 years that Ford cars had not been made in Britain, although production of the Transit van continues at the company's Southampton facility, engines at Bridgend and Dagenham, and transmissions at Halewood. Development of European Ford is broadly split between Dunton in Essex (powertrain, Fiesta/Ka, and commercial vehicles) and Cologne (body, chassis, electrical, Focus, Mondeo) in Germany. Ford also produced the Thames range of commercial vehicles, although the use of this brand name was discontinued circa 1965.

Elsewhere in continental Europe, Ford assembles the Mondeo range in Genk (Belgium), Fiesta in Valencia (Spain) and Cologne (Germany), Ka in Valencia, and Focus in Valencia, Saarlouis (Germany) and Vsevolozhsk (Russia). Transit production is in Kocaeli (Turkey), Southampton (UK), and Transit Connect in Kocael. Ford also owns a joint-venture production plant in Turkey. Ford-Otosan, established in the 1970s, manufactures the Transit Connect compact panel van as well as the "Jumbo" and long-wheelbase versions of the full-size Transit. This new production facility was set up near Kocaeli in 2002, and its opening marked the end of Transit assembly in Genk. Another joint venture plant near Setbalin Portugal, set up in collaboration with Volkswagen, formerly assembled the Galaxy people-carrier as well as its sister ships, the VW Sharan and SEAT Alhambra. With the introduction of the third generation of the Galaxy, Ford has moved the production of the people-carrier to the Genk plant, with Volkswagen taking over sole ownership of the Setbal facility. In 2008, Ford acquired a majority stake in Automobile Craiova, Romania. Starting 2009, Ford Transit Connect will be Ford's first model produced in Craiova, followed, in 2010, by low-capacity car engines and a new small class car. Ford Europe has broken new ground with a number of relatively futuristic car launches over the last 50 years. Its 1959 Anglia two-door saloon was one of the most quirky-looking small family cars in Europe at the time of its launch, but buyers soon became accustomed to its looks and it was hugely popular with British buyers in particular. It was still selling well when replaced by the more practical Escort in 1967. The third incarnation of the Ford Escort was launched in 1980 and marked the company's move from rear-wheel drive saloons to front-wheel drive hatchbacks in the small family car sector. The fourth generation Escort was produced from 1990 until 2000, although its successor the Focus had been on sale since 1998. On its launch, the Focus was arguably the most dramatic-looking and fine-handling small family cars on sale, and sold in huge volumes right up to the launch of the next generation Focus at the end of 2004.

The 1982 Ford Sierra replacement for the long-running and massively popular Cortina and Taunus models was a style-setter at the time of its launch. Its ultramodern aerodynamic design was a world away from a boxy, sharp-edged Cortina, and it was massively popular just about everywhere it was sold. A series of updates kept it looking relatively fresh until it was replaced by the front-wheel drive Mondeo at the start of 1993. The rise in popularity of small cars during the 1970s saw Ford enter the mini-car market in 1976 with its Fiesta hatchback. Most of its production was concentrated at Valencia in Spain, and the Fiesta sold in huge figures from the very start. An update in 1983 and the launch of an all-new model in 1989 strengthened its position in the small car market. Asia Pacific Ford dealership in Ho Chi Minh City, Vietnam (August 2005) In Australia and New Zealand, the popular Ford Falcon has long been considered the average family car and is considerably larger than the Mondeo, Ford's largest car sold in Europe. Between 1960 and 1972, the Falcon was based on a U.S. model of the same name, but since then has been entirely designed and manufactured in Australia, occasionlly being manufactured in New Zealand. Like its General Motors rival, the Holden Commodore, the Falcon uses a rear wheel drive layout. High performance variants of the Falcon running locally built engines produce up to 362 hp (270 kW). A ute (short for "utility", known in the US as pickup truck) version is also available with the same range of drivetrains. In addition, Ford Australia sells highly tuned limitedproduction Falcon sedans and utes through its performance car division, Ford Performance Vehicles. In Australia, the Commodore and Falcon have traditionally outsold all other cars and comprise over 20% of the new car market. In New Zealand, Ford was second in market share in the first eight months of 2006 with 14.4 per cent.More recently Ford has axed its Falcon-based LWB variant of its lineup the Fairlane and LTD ranges, and announced that their Geelong engine manufacturing plant may be shut down from 2013. They have also announced local manufacturing of the Focus small car starting from 2011.

However, with the acquisition of a stake in Japanese manufacturer Mazda in 1979, Ford began selling Mazda's Familia and Capella as the Ford Laser and TelstAr, replacing the European-sourced Escort and Cortina. In Australia, the Laser was one of Ford Australia's most successful models, and was manufactured in Ford's Homebush plant from 1981 until the plant's closure in September 1994. It outsold the Mazda 323, despite being almost identical to it, due to the fact the Laser was manufactured in Australia and Ford was perceived as a local brand. In New Zealand, the Ford Laser and Telstar were assembled alongside the Mazda 323 and 626 until 1997, at the Vehicle Assemblers of New Zealand (VANZ) plant in Wir, Auckland. The Sierra wagon was also assembled in New Zealand, owing to the popularity of station wagons in that market. Through its relationship with Mazda, Ford also acquired a stake in South Korean manufacturer Kia, which built the (Mazda-based) Ford Festiva from 19881993, and the Ford Aspire from 19941997 for export to the United States, but later sold their interest to Hyundai (which also manufactured the Ford Cortina until the 1980s). Kia continued to market the Aspire as the Kia Avella, later replaced by the Rio and once again sold in the US. Ford's presence in Asia has traditionally been much smaller, confined to Malaysia, Singapore, Hong Kong, the Philippines, and Taiwan, where Ford has had a joint venture with Lio Ho since the 1970s. Ford began assembly of cars in Thailand in 1960, but withdrew from the country in 1976, and did not return until 1995, when it formed a joint venture with Mazda called Auto Alliance. Ford India began production in 1998 with its Ford Escort model, which was later replaced by locally produced Ford Ikon in 2001. It has since added Fusion, Fiesta, Mondeo and Endeavour to its product line. On March 9, 2010, Ford Motor Co. launched its first made-for-India compact car. Starting at 349,900 ($7,690), the Figo is Ford's first car designed and priced for the mass Indian market.

On July 28, 2011 Ford India signs MoU with the State of Gujarat to build assembly and engine plant in Sanan and will invest approximately US$1 billion on a 460-acre site. South America In South America, Ford has had to face protectionist government measures in each country, with the result that it built different models in different countries, without particular regard to rationalization or economy of scale inherent to producing and sharing similar vehicles between the nations. In many cases, new vehicles in a country were based on those of the other manufacturers it had entered into production agreements with, or whose factories it had acquired. For example, the Corcel and Del Rey in Brazil were originally based on Renault vehicles. In 1987, Ford of Brasil and Ford of Argentina merged its operations with those of Volkswagen to form a company called Autolatina, with which it shared models. Sales figures and profitability were disappointing, and Autolatina was dissolved in 1995. With the advent of Mercosur, the regional common market, Ford was finally able to rationalize its product line-ups in those countries. Consequently, the Ford Fiesta and Ford EcoSport are only built in Brazil, and the Ford Focus only built in Argentina, with each plant exporting in large volumes to the neighboring countries. Models like the Ford Mondeo from Europe could now be imported completely built up. Ford of Brazil produces a pickup truck version of the Fiesta, the Courier, which is also produced in South Africa as the Ford Bantam in right hand drive versions. Africa and Middle East. In Africa, Ford's market presence has traditionally been strongest in South Africa and neighbouring countries, with only trucks being sold elsewhere on the continent. in South Africa began by importing kits from Canada to be assembled at its Port Elizabeth facility. Later Ford sourced its models from the UK and Australia, with local versions of the Ford Cortina including the XR6, with a 3.0 V6 engine, and a Cortina-based 'bakkie' or pick-up, which was exported to the UK. In the mid-1980s Ford merged with a rival company, owned by Anglo American, to form the South African Motor Corporation (Samcor). Following international condemnation of apartheid, Ford divested from South Africa in 1988, and sold its stake in Samcor, although it licensed the use of its brand name to the

company. Samcor began to assemble Mazdas as well, which affected its product line-up, and saw the European Fords like the Escort and Sierra replaced by the Mazda-based Laser and Telsta. Ford bought a 45 per cent stake in Samcor following the demise of apartheid in 1994, and this later became, once again, a wholly owned subsidiary, the Ford Motor Company of Southern Africa. Ford now sells a local sedan version of the Fiesta (also built in India and Mexico), and the Focus. The Falcon model from Australia was also sold in South Africa, but was dropped in 2003, while the Mondeo, after briefly being assembled locally, was dropped in 2005. Ford's market presence in the Middle East has traditionally been even smaller, partly due to previous Arab boycotts of companies dealing with Israel. Ford and Lincoln vehicles are currently marketed in ten countries in the region.Saudi Arabia, Kuwait, and the UAE are the biggest markets. Ford also established itself in Egypt in 1926, but faced an uphill battle during the 1950s due to the hostile nationalist business environment. Ford's distributor in Saudi Arabia announced in February 2003 that it had sold 100,000 Ford and Lincoln vehicles since commencing sales in November 1986. Half of the Ford/Lincoln vehicles sold in that country were Ford Crown Victorias. In 2004, Ford sold 30,000 units in the region, falling far short of General Motors' 88,852 units and Nissan Motors' 75,000 units.

1.2. INDUSTRIAL PROFILE:

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 automobileintheU.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 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.

Those who are interested in gathering more information about the Automobile Industry, may browse through the following links

World Automobile Industry Automobile Industry Trends India Automobile Market India Automobile Industry

The World Automobile Industry is turned to the developing markets. With the developed markets almost saturated, the World Automobile Industry is now focused on the developing markets of South America and Asia, and Eastern Europe with special emphasis on BRIC (Brazil, Russia, India, and China). As per the reports of the International Organization of Motor Vehicle Manufacturers or OICA(the association of the companies involved in World Automobile Industry), for the fiscal end in 2006, the automobile manufacturers in the U.S. have been overtaken by those in Japan, in terms of the total volume of automobile units manufactured worldwide. However, the struggling General Motors of the U.S. still remain the worldwide leaders of the World Automobile Industry, ahead of the rapidly growing Toyota Motor Corporation of Japan, by a substantial margin. Measures to be adopted by global leaders of the World Automobile Industry. Several significant economic measures are being considered by the major players of the World Automobile Industry in order to make a smooth entry into the markets of the developing countries, and to make a name for themselves. The effective measures include :

Reducing the selling prices of the automobiles manufactured in their factories Improving the levels of after-sales services to keep customers satisfied Opening manufacturing factories in the developing nations, to reduce effective costs of production as well as saving shipping charges, and enhancing prompt delivery of automobile units.

Automobile Industry Trends In keeping with the Automobile Industry Trends, the leading automobile manufacturers are turning to the Asian markets that appear set to grow immensely over the next decade. The automobile markets in the U.S., Europe and the Japan have almost matured as a result of saturation and appear set to decline through the next decade. In contrast, the automobile markets spread over the entire Asian continent (with the exception of Japan), are constantly increasing in size and will be the destination for most of the globally leading automobile manufacturers. The Automobile Industry Trends reveal that the emerging markets of the developing nations of Asia especially China, and India are backed by their huge population growth rate, to add to the growing national economy of these two nations. The rapid growth of the national economy of the BRIC countries (including Brazil, Russia, India, and China) have enabled a growing section of the population of these countries to purchase automobiles. Global surveys conducted recently reveal that within the next ten years, these emerging automobile markets will account for nearly a whooping 90 percent of the global automobile sales growth. As a result of this, leading Automobile manufacturers of the world are setting up factories in the emerging markets, in order to serve the potential consumers better as well as reduce manufacturing and shipping costs. In addition, these arrangements are enabling the leading global automobile manufacturers to compete with the local automobile manufacturers, that were flourishing in the absence of quality competition.

The prosperity of the national economy is reflected in the rising per capita income of the developing nations. Therefore, increasing Gross Domestic Product and per capita income have raised the purchasing ability of the population that constitutes these emerging markets As a growing percentage of the population in the developed nations age rapidly, in comparison to the rest of the world, these aging numbers necessitate automobiles to fit the physiological change of the world population. The Emerging India Automobile Market. The India Automobile Market is a promising industrial sector that is growing immensely every passing year. The passenger cars are referred to, through the use of the word "automobile." The whooping growth experienced by the Indian Automobile Market in the last financial year itself, that is the financial year end in February, 2007, was very close to a 18 percent over the previous fiscal. This statistical fact is a glittering example of the potential of the growing Automobile Industry in India. As per the survey conducted by the Society of Indian Automobile Manufacturers, the total number of automobiles manufactured by the Automobile Industry in India, throughout the financial year 2006-07, was very close to the 15.5 lakh (1.5 million) margin. The huge of number of automobiles manufactured by the Automobile Industry in India was an enormous growth upon the number of automobiles manufactured during the previous fiscal, that ended in 2006. The total number of cars that were exported from India were very close to the 2.0 lakh (2.0 hundred thousand) margin, an encouraging sign for the Automobile Industry in India. The export of cars manufactured in India comprised nearly 13 percent of the total number of cars manufactured domestically by the Automobile Industry in India. The India Automobile Market looks set to prosper, largely due to the growing market for automobiles that is developing in India. In the financial year that ended in February, 2004, the Indian automobile markets were the fastest growing in the world, with the registered growth rate touching nearly 20 percent.

The Automobile Industry in India mainly comprises of the small car section, which enjoys nearly a 2/3rd market share of the entire market for automobiles in India. In this respect, the Indian markets are the largest in the world for small cars, behind Japan. The Indian passenger car market which ranks amongst the largest in the world, is poised to become even more larger and enter the top five passenger car markets in the world in the next decade. India Automobile Industry Following India's growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry. The data obtained from ministry of commerce and industry, shows high growth obtained since 2001- 02 in automobile production continuing in the first three quarters of the 200405. Annual growth was 16.0 per cent in April-December, 2004; the growth rate in 200304 was 15.1 per cent The automobile industry grew at a compound annual growth rate (CAGR) of 22 per cent between 1992 and 1997. With investment exceeding Rs. 50,000 crore, the turnover of the automobile industry exceeded Rs. 59,518 crore in 2002-03. Including turnover of the auto-component sector, the automotive industry's turnover, which was above Rs. 84,000 crore in 2002-03, is estimated to have exceeded Rs.1,00,000 crore ( USD 22. 74 billion) in 2003-04. Automobile Dealers Network in India In terms of Car dealer networks and authorized service stations, Maruti leads the pack with Dealer networks and workshops across the country. The other leading automobile manufactures are also trying to cope up and are opening their service stations and dealer workshops in all the metros and major cities of the country. Dealers offer varying kind of discount of finances who in tern pass it on to the customers in the form of reduced interest rates.

Major Manufacturers in Automobile Industry

Maruti Udyog Ltd. General Motors India Ford India Ltd. Eicher Motors Bajaj Auto Daewoo Motors India Hero Motors Hindustan Motors Hyundai Motor India Ltd. Royal Enfield Motors Telco TVS Motors DC Designs Swaraj Mazda Ltd

Government has liberalized the norms for foreign investment and import of technology and that appears to have benefited the automobile sector. The production of total vehicles increased from 4.2 million in 1998- 99 to 7.3 million in 2003-04. It is likely that the production of such vehicles will exceed 10 million in the next couple of years. The industry has adopted the global standards and this was manifested in the increasing exports of the sector. After a temporary slump during 1998- 99 and 1999-00, such exports registered robust growth rates of well over 50 per cent in 2002-03 and 2003-04 each to exceed two and- a-half times the export figure for 2001-02.

Automobile Export Numbers

Category Passenger Car Multi Utility Vehicles Commercial Vehicles Two Wheelers Three Wheelers Percentage Growth EVEN GROWTH

1998-99 25468 2654 10108 100002 21138 -16.6

2004-05 (Apr-Dec) 121478 3892 19931 256765 51535 32.8

Opposing the belief that the growth in mobile industry has catered only to the top income-stratum of society, Growth of exports of 32.8 % in the first three quarters of 2004-05, the fastest growth in volumes has come from commercial vehicles as against passenger cars. Between 1998-99 and 2003-04, output of commercial vehicles has grown 2.8 times compared to the 2.2 times increase in passenger cars. Furthermore, two-wheeler output continues to dominate the volume statistics of the sector. In 2003-04, for every passenger car turned out by the sector, there were 7 two-wheelers produced. In the two wheeler segment, there is a greater preference for motorcycles followed by scooters, with both production and domestic sales of motorcycles increasing at faster rates than for scooters in the current and previous years. However, mopeds have registered low or negative growth. Export growth rates have been high both for motorcycles and scooters.

1.3. OVERALL STUDY OF ORGANIZATION:

ORGANIZATION STRUCTURE:

CHAPTER II

2.1 STATEMENT OF THE PROBLEM: Customer satisfaction greatly affects the organization growth and development and there are several factors which effect the satisfaction level of an customer. The few factors which measures the satisfaction level of customers are service, accessibility, facility, brand name, etc.. Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. 2.2. OBJECTIVE OF THE STUDY: The objective of the project is To study and understand the key service parameters using Customer Satisfaction and reflect upon the low performing areas: To study about the customer satisfaction on the services provided by the dealers. To study the opinion of the customers regarding the availability and cost of spare parts. To study the opinion of the owners of cars regarding its features like mileage, price etc. To study the effect of advertisement on the customers to promote the product. To study the customer satisfaction with usage of their cars.

2.3. LIMITATION OF THE STUDY: The survey is subjected to the bias and prejudices of the respondents. Hence 100% accuracy cant be assured. The research was carried out in a short span of time, where in the researcher could not widen the study. The study could not be generalized due to the fact that researcher adapted personal interview method.

2.4 NEED FOR STUDY: Increasing competition, ever growing market, easy availability of the finances and increasing population of young executives, with huge disposable incomes, over the past few years has substantially increased the sales in the automobile industry. Also, the competition among the dealers of the products has increased with each trying to maximize their customer base. This makes it imperative for the dealers to provide the best of the services and exceed the customer expectations to achieve customer delight and loyalty. The study tries to understand the key service parameters and reflect upon the dysfunctional areas, thus providing the dealer with an insight into the level of customer satisfaction and changing trends of the customer expectations. 2.5 SCOPE OF THE PROJECT The research measures the experiences of customers. Defines and analyses the experiences based on key deliverables. Gains insights into Customer expectations.

CHAPTER

III

3.1. REVIEW OF LITERATURE:

Concept IdentificationAs organizations become increasingly customer focused and driven by demand, the need to gain customer loyalty and retain their loyalty is critical. Customer satisfaction is the most effective way to achieve customer loyalty. Customer satisfaction and customer loyalty share many similar traits. Customer value is the customers perception of the ratio of benefits to what he or she gives to obtain those benefits. The customer Value Triad is a framework used to understand what it is that customers want. The framework consists of three parts: (1) perceived product quality, (2) value-based pricing, and (3) perceived service quality. Customers are satisfied, when value meets or exceeds expectations. If their expectations of value are not met, there is no chance of satisfying them. Figuring out what the customers want, however, is a difficult and complex process. To be able to create and deliver customer value is important to understand its components. On the most basic level, value from a customers perspective is the ratio of benefits to the risks being taken while buying the product.

CUSTOMER SATISFACTION AN INSIGHT : According to Harold E Edmondson Customer Satisfaction seems to appear in print more frequently than any other catch phrase used to describe a new found magic for industrial success. Before we proceed in to the study of the dynamics of Customer Satisfaction it is important to know about, who a customer is and what satisfaction really means. Who really is a Customer? The question of defining who your customers are seems fairly easy particularly if you have segmented your market properly and understand who you are trying to satisfy. However subtlety that frequently goes undetected by many firms is that is that customer set can be divided into two parts, the apparent customer and the user. The apparent customer is the person or group of people who decide what product to buy and basically have control over the purse strings. The user is a person or group who physically uses the product or is the direct recipient of a service. What does satisfaction really mean? As in defining customer above, defining satisfaction also appears simple. However as with customer there is a subtlety that needs addressing. Satisfaction by most definitions simply means meeting the customers requirement. Customer satisfaction is a concept that more and more companies are putting at the heart of their strategy, but for this to be successful theyre needs to be clarity about, what customer satisfaction means and what needs to happen to drive improvement. Without this, there is a risk that customer satisfaction becomes little more than a good intention, with confused objectives failing to address the real issues for customers, one helpful way

to look at the problem is to rephrase the objectives: set the sights on helping the customers meet their goals. Customer satisfaction can be defined in many different ways. Finding the right way for a company depends on understanding your customer and on having a clear vision of the role that customer satisfaction is to play in the strategy. For example, a focus on customer satisfaction can work alongside existing segmentations to support revenue generation from high value customers or it can be a company-wide objective rooted in the brand values. For the former, it may be sufficient to focus on improving customer service, but for the latter a broader definition of customer satisfaction is necessary, closer akin to corporate reputation. Whatever the strategy for customer satisfaction, it must at least include getting the basics right. Failing to achieve this can destroy the reputation as well as losing valuable customers. Every customer, regardless of their economic worth to the business, has the power to influence positively or negatively a companys reputation. Once the objectives for the customer satisfaction strategy are defined there are a number of steps we can take to make sure the focus on customer satisfaction is effective. Building a company around Customer Satisfaction : With the increase in customers demands and competition it has become a lot more important to base the entire company on customer service. When doing this one must first realize that every member of an organization plays an active role in customer service. This includes both external customers and internal customers within a company. Customer focused organizations focus both on customer satisfaction and

profit. Achieving customer satisfaction generates the profit. In these organizations top management has frequent contacts with external customers. The top management uses consultative, participative, and supportive management styles to get through to the customer. The staff focuses all of its attention on satisfying the customers needs. However, the managements job is to provide the staff with support necessary to

achieve these goals. The other department and staff in the organization that do not have direct contact with the external customers deal exclusively with internal customer satisfaction. The Influence of the salesperson in Customer SatisfactionIn an article titled, The influence of salesperson selling behavior on customer satisfaction with products, Brent G.Goff and James S. Boles examine the effects of nonproduct related construct on customer satisfaction with major retail purchases such as automobiles. The article states that salespersons selling orientation- customer orientation (SOCO) will affect not only consumer satisfaction with the salesperson and dealer, but also indirectly, satisfaction with the product or manufacturer. In the perspectives of both the retailer and the manufacturer, customer satisfaction represents an important issue because it relates to several desirable outcomes. Customer satisfaction leads to future purchases, and repeated purchases of the same product from the same source. In other words, it helps a firm retain its present customers and build loyalty. By helping a buyer obtain product information and providing guidelines about what should be expected during the buying process and use of a product, a salesperson may influence customer expectations concerning the product. Thereby this may reduce the likelihood of dissatisfaction ( Grewal and Sharma, 1991). A successful salesperson tailors to the needs of each individual customer. By being customer-oriented, a salesperson is likely to identify with needs of the customer, enabling the salesperson to match his or her presentation to those requirements of the customer. Internal Marketing how it affects Customer Satisfaction Successful companies make every effort to ensure satisfaction to their customer by focusing all organizational efforts of the company on providing superior customer service. By doing this these companies hope to retain their existing customers and attract new ones. Only angle of customer satisfaction commonly overlooked is the internal aspect.

The internal customer or employee plays a vital role in achieving customer satisfaction and loyalty. Some firms do not understand that the treatment of internal customers becomes the external customers perception of the company. A firms employees or other departments within the organization make up its internal customers. Their job performance affects the firms ability to deliver superior product and customer service (Boone and Kurtz, 1999). When a firms employees are happy at work, their overall attitude and performance towards the customer enhances tremendously. Internal marketing helps members or employees of an organization understand and fulfill their roles in implementing its marketing strategy. Internal marketing not only keeps employees happy, it also shows them how their actions affect the firms ability to achieve customer satisfaction.

CHAPTER IV

4.1. RESEARCH METHODOLOGY: The type of research employed for this study was descriptive research .The descriptive study, the researchers discover causes even when they cannot control the variables .The tools used in descriptive research are survey methods of all kinds ,including comparative and co relational methods .It is both qualitative and quantitative in nature .It deals with determining frequency with which something occurs or how two variables vary together .Descriptive research Design is generally concern with narration of facts with specific prediction of concern group or situation .It describes as it exists at present. 4.2. RESEARCH DESIGN: Descriptive type of research design is chosen for this research study. 4.3. SAMPLING TECHNIQUE: The researcher has used Non-probability sampling in which convenience sampling is used. 4.4. DETERMINATION OF SAMPLE SIZE: The study sample constitutes 50 respondents constituting in the research area. 4.5. SOURCE OF DATA: Most of the data collected by the researcher is primary data and secondary data. Primary data is collected through personal interview, where the researcher and the respondent operate face to face and secondary data through the data and documents obtained from the organization. The researcher has used a structured questionnaire as a research instrument tool which consists of open ended questions, multiple choice and dichotomous questions in order to get data. Thus, Questionnaire is the data collection instrument used in the study.

All the questions in the questionnaire are organized in such a way that obtain all the relevant information that is needed for the study.

CHAPTER V

DATA ANALYSIS AND DATA INTERPRETATION

5.1 TOOLS USED FOR ANALYSIS: The statistical tools used for analyzing the data collected are Chi- square test and correlation by using the SPSS software. 5.2.ANALYSIS AND INTERPRETATION:

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
Test drive offered Observed N Yes No Total 36 14 50 Expected N 25.0 25.0 Residual 11.0 -11.0

Test Statistics Test drive offered Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0. 9.680a 1 .002

Inference: From the above output the chisquare value is 9.680 and the Asymp. Sig. (P) is .002 which is less than the 0.05 therefore reject null hypothesis.

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
Customer Experience Observed N Satisfied Not satisfied Total 23 27 50 Expected N 25.0 25.0 Residual -2.0 2.0

Test Statistics Customer Experience Chi-Square df Asymp. Sig. .320a 1 .572

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Inference: From the above output the chisquare value is .320 and the Asymp. Sig. (P) is .572 which is greater than the 0.05 therefore accept null hypothesis.

Correlations Satisfaction over usuage Satisfaction over usuage Pearson Correlation Sig. (2-tailed) N Age Pearson Correlation Sig. (2-tailed) N 50 -.064 .658 50 50 1 Age -.064 .658 50 1

Inference: The output shows that there is negative correlation between the two variables since the correlation coefficient is -.064. So if increase in one variable will simultaneously decrease the other variable.

Correlations Satisfaction over Occupation Occupation Pearson Correlation Sig. (2-tailed) N Satisfaction over after sale service Pearson Correlation Sig. (2-tailed) N 50 .172 .233 50 50 1 after sale service .172 .233 50 1

Inference: The output shows that there is positive correlation between the two variables since the correlation coefficient is 0.172. So if increase in one variable will simultaneously increase the other variable.

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
people thought Observed N Excellent good Total 28 22 50 Expected N 25.0 25.0 Residual 3.0 -3.0

Test Statistics people thought Chi-Square df Asymp. Sig. .720a 1 .396

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Inference: From the above output the chisquare value is .720 and the Asymp. Sig. (P) is .396 which is greater than the 0.05 therefore accept null hypothesis.

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
Delivery on time Observed N YES No Total 34 16 50 Expected N 25.0 25.0 Residual 9.0 -9.0

Test Statistics Delivery on time Chi-Square df Asymp. Sig. 6.480a 1 .011

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Inference: From the above output the chisquare value is 6.480 and the Asymp. Sig. (P) is .011 which is less than the 0.05 therefore reject null hypothesis.

Correlations Age Age Pearson Correlation Sig. (2-tailed) N Responsiveness Pearson Correlation Sig. (2-tailed) N 50 .125 .388 50 50 1 Responsiveness .125 .388 50 1

Inference: The output shows that there is positive correlation between the two variables since the correlation coefficient is 0.125. So if increase in one variable will simultaneously increase the other variable.

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
Recommendation Observed N YES No Total 23 27 50 Expected N 25.0 25.0 Residual -2.0 2.0

Test Statistics Recommendation Chi-Square Df Asymp. Sig. .320a 1 .572

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Inference: From the above output the chisquare value is .320 and the Asymp. Sig. (P) is .572 which is greater than the 0.05 therefore accept null hypothesis.

Chi-Square Test
Null Hypothesis: Observed and expected frequency have no change

Frequencies
Best feature in ford car Observed N price Style Total 45 5 50 Expected N 25.0 25.0 Residual 20.0 -20.0

Test Statistics Best feature in ford car Chi-Square Df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0. 32.000a 1 .000

Inference: From the above output the chisquare value is 32.000 and the Asymp. Sig. (P) is .000 which is less than the 0.05 therefore reject null hypothesis.

Correlations Satisfaction of Occupation Occupation Pearson Correlation Sig. (2-tailed) N Satisfaction of mileage Pearson Correlation Sig. (2-tailed) N 50 -.024 .867 50 50 1 mileage -.024 .867 50 1

Inference: The output shows that there is negative correlation between the two variables since the correlation coefficient is -.024. So if increase in one variable will simultaneously decrease the other variable.

Correlations Age Age Pearson Correlation Sig. (2-tailed) N Feel Pearson Correlation Sig. (2-tailed) N 50 -.049 .738 50 50 1 Feel -.049 .738 50 1

Inference: The output shows that there is negative correlation between the two variables since the correlation coefficient is -.049. So if increase in one variable will simultaneously decrease the other variable.

Chi-Square Test

Null Hypothesis: Observed and expected frequency have no change

Frequencies
Model of the car Observed N fiesta new fiesta classic figo endeavour Total 13 11 19 7 50 Expected N 12.5 12.5 12.5 12.5 Residual .5 -1.5 6.5 -5.5

Test Statistics Model of the car Chi-Square Df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 12.5. 6.000a 3 .112

Inference: From the above output the chisquare value is 6.000 and the Asymp. Sig. (P) is .112 which is greater than the 0.05 therefore accept null hypothesis.

CHAPTER: VI

6.1. FINDINGS

CHENNAI FORD enjoys a high patronage from its customers. Most of the customers had a good experience of shopping at CHENNAI FORD.

The

satisfaction

levels

can

also

measured

with

the

level

of

recommendations to friends and associates; It is evident that more than 80% customers are satisfied with the service offered at CHENNAI FORD.

The probability that the customers would repeat that purchase at the same showroom is high, which is a good sign.

The sale satisfaction index of CHENNAI FORD showroom is 8.4 on

scale of ten, which is exceptionally good, the showroom should persist on high levels of commitment to maintain the good image it has created.

In the interview it was found that the customers are happy about the training programs under taken by the showroom, which train the customers to negotiate minor breakdowns comfortably.

It has been observed that 25% of customers have reported a slack in the delivery process. .

6.2. SUGGESTIONS

The overall sales satisfaction index from the study reveals that the company is performing very well and customers buying are much satisfied with the service given to them. The only couple problem noticed are: Some of the customers have complained about the slack in the delivery process and timings. Therefore, this is the area which I recommend to the showroom to focus a little bit more. It needs to improve its delivery process and time. Need to become little quick and fast.

Some of the customers have also complained about the after purchase services provided by the showroom. Even though complaints are minor, the showroom needs to resolve the customer after purchase service issues in order to achieve customer satisfaction .

BIBLIOGRAPHY

BIBLIOGRAPHY

Books: Principles of marketing: KOTLER ARMSTRONG. Marketing Management: PHILIP KOTLER. (Analysis, Planning Implementation and Control) Services Marketing : TATA Mc GRAW HILL. Marketing Research: G.C. BERI. Research Methodology: KOTHARI. C.R.

Websites: http://www.google.com http://www.citehr.com http://www.coolavenues.com

APPENDIX

CUSTOMER SATISFACTION INDEX

Details: VehicleNo: _______________________________________________________ Model: ___________________________________________________________ CustomerName: __________________________________________________ TelephoneNo: ______________________Mobile:________________________ Date:__________________ Customer signature: ________________________

1. Age group a) 20-30 2. Occupation? a) Employee b) business c) NRI d) others b) 30-40 c) 40-50 d) Above 50

3. Which model of ford car do you own? a) fiesta new b) fiesta classic c) figo d) endeavour

4. which feature is the best one in ford car? a) price b) style c) mileage d) quality e) mileage & quality e) mileage & style 1. How do you feel when you drive ford car?
a)

Good

B) better c) best b) No

d) Poor

6. Are you satisfied with your vehicle mileage? a) Yes

7. will you recommend ford product to anybody? a) Yes

1.

b) No

what do you think about Chennai fords customer service?

a) Excellent

b) Good

c) Better

d) Poor

9. How do you feel about companys response towards customers? a) Excellent b) Good c) Better d) Poor

10. did you receive the product on delivery time? a) Yes b) No

11. are you satisfied companys after sales service? a) Satisfied b) not satisfied

12. How do you feel the experience at the showroom? a) Satisfied b) not satisfied

13. were you offered test drive? a) Yes b) No

14. Are you satisfy with their usage of the car? a) fully satisfied b) just satisfied c) not satisfied