Comparitive Analysis of Hyundai Santro

RESEARCH REPORT ON THE TITLE

“COMPARITIVE ANALYSIS OF HYUNDAI SANTRO”

SUPERVISING PROFESSOR

PROF. PIALI HALDER

PREPARED BY

HIMANSHU SINGHALPGDBM 2006-08

2K62A17Email Id:[email protected]

ASIA PACIFIC INSTITUTE OF MANAGEMENT3- 4 INSTITUTIONAL AREA, JASOLA, NEW DELHI.

Acknowledgement

I take this opportunity to express our deep sense of gratitude to our respected

mam, Ms. Piali Halder, for the valuable guidance, keen interest and helpful

criticism, during the project work.

I would also like to extend our thanks to Mr. Anmol Juneja of Maruti Suzuki for

providing all the necessary help and support.

Mr. Arvind Saurabh, Hyundai Motors Ltd was also kind enough to provide us with

valuable insights in the project.

Mr. Bakshi of Tata Motors has also been a great help in understanding the

mechanism of market research.

Last but not the least I would like to thank our friends, teaching and non-teaching

staff and others who have directly and indirectly helped in the successful

completion of the project

2

Index

Car Industry 4

Sales Trend of Cars In India 4

Hyundai – Company Profile 5

Literature Review 11-13

Santro Xing 14-18o Pricing Strategyo Placeo Promotion

STP – Hyundai 19

Market Research 20 - 32

Competitors 33- 39

Conclusion 40-42

Bibliography 43

Appendix 44-45

3

Car Industry

If there is one big market that is forcing the global auto majors to think small, it

is India. Until yesterday, all the world's auto-manufacturers expected to create

success out of their mid- size products

The Indian car industry as we know today is relatively recent in origins. Except

the ambassador and the Premiere Padmini’s there was not much moving around

with an Indian Tag. As a result of the liberalization the capacity of car production

has increased substantially in the last four years and is expected to grow

manifold in the coming years. The Indian car industry can be classified based on

the price of the car:

Those automaker and auto marketers having their business in India have to

understand the mindset of Indian customers buying cars. “Automakers are to

think globally and act locally” Indian customers can buy imported cars but

obviously they have to drive on Indian roads.

The factors that have plummeted the sales of car industry in India are the

increase in disposable income of the people. The other major driver of growth is

the easy availability of auto finance. The increase in competition in this industry

has resulted in decline in equated monthly installments (EMI), the increased

tenure, decline in interest rates in retail finance in general and auto finance area.

4

The automobile policy of the Indian Government has also proved to be a major

factor in the growth of sales. With steep decrease in excise duty India is on the

path to be hub for small cars.

5

Sales trend of cars in India

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

There has been a constant rise in the sale of cars. The Indian car industry is on the way up with the sales reaching 8,20,000 units approx compared to 7,00,000 last year.

6

Company profile

Hyundai Motors India Limited

“I believe that the primary reason for HMIL's success is that we never

allowed ourselves to be complacent. We were continuously innovating at

the marketplace, taking ourselves head on the competition."

- YS Kim, former Managing Director, Hyundai Motors India Limited

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai

Motor Company, South Korea and is the second largest and the fastest growing

car manufacturer in India. HMIL presently markets 35 variants of passenger cars

in six segments namely- the Santro in the B segment, Getz in the B+ segment,

the Accent and Verna in the C segment, the Elantra in the D segment, the

Sonata Embera in the E segment and the Tucson in the SUV segment.

HMIL’s fully integrated state-of-the-art manufacturing plant near Chennai boasts

some of the most advanced production, quality and testing capabilities in thek

country.HMIL was declared “The Star Company” amongst unlisted companies by

Business Standard this year. Getz got the coveted “Car of the Year 2005” award

twice over. It was declared a winner by both Business Standard Motoring and

CNBC-TV18 Auto car Auto awards.

7

HMIL was also adjudged the “Manufacturer of the Year” two years in a row in

2002 and 2003. ICICI Overdrive Awards declared Hyundai as the “Car Maker of

the Year” in 2003.

Hyundai products with state of the art technology have also been winning many

accolades over the years. Santro bagged top honors in JD Power Asia Pacific for

three years.

The Hyundai Santro was born to meet the typical Indian environment including

road condition, extremely high temperature, tough weather, heavy traffic and

difficult driving conditions.

It is claimed that the Santro would require less preventive maintenance which

means saving of cost, time and efforts to Indian customers. In order to

complement the hi - technology Santro, Hyundai has in place a rapidly expanding

and well structured after sale network across the country.

HMIL has also been awarded the benchmark ISO 14001 certification for its

sustainable environment management practices. The production process is

based on new and updated technology which ensures Total Quality

Management.

8

Milestones on the road to success

Hyundai Motor India completes a decade of success in the country

Hyundai Motor takes giant step towards Corporate Social Responsibility

Hyundai Motor launches Global No. 1 Quality and Brand Image Campaign

Dekhte Hi Dekhte Dus Lakh – Ten Lac cars sold

Hyundai Motor makes Delhi road safer

Tennis Ace Sania Mirza was presented her very own Hyundai Getz by

Hyundai Motor India Senior Vice President, Sales, Mr V D Bhasin, at a

ceremony in Hyderabad today. Getz will be the first car to be driven by Sania

Mirza.

Hyundai launched Sonata Embera - Drive into a New Age

Hyundai launched Tucson - Your Spirit of Adventure

Hyundai Motor India’s Dealer Conference in Istanbul

9

Hyundai Motor India launched the Accent Viva CRDi on Jan 15, 2004 at the

Auto Expo 2004 organised in Pragati Maidan from Jan 15 - 20, 2004

Hyundai Motor India rolled out its 500,000th car from its factory near Chennai

on 11th December 2003

HMI’s Santro Xing marks Europe debut at the Frankfurt Motor Show

Hyundai Sonata Hole in One Challenge

Swar Utsav -The Ultimate Music Festival of India

Hyundai Sonata Maharaj Sir Pratap Singh Polo Cup - 2003

Launch of the book 'The Automobiles of the Maharajas'

10

LITERATURE REVIEW

Santro Xing

“ A New Shining Dawn. Here Comes the Sun Again”

Santro has proved to be the best compact car in India, thanks to its excellent

design and extensive testing for over 100,000 kilometers in real Indian road and

climate conditions

Santro after being a run away success was renamed as Santro Zip Drive and

then another replacement as Zip Plus. HIML then launched Santro XING with

state of the art technology. Xing had new aerodynamic styling, power-assisted

brakes, the advanced suspensions; the uniquely responsive technology is as

much a magnificent creation to delight as a benchmark in engineering

excellence.

Santro is being produced exclusively in India and the Indian Xing will now drive

the World. The Xing was Tall, wide and uniquely different. While its sleek lines

11

and pleasing curves and contours pleased the customers. The compact outer

dimensions, combined with its sporty stance added some passion for driving.

Santro Xing features the world class McPherson Strut Suspension with a

stabilizer bar in the front and a torsion beam axle with 3-link offset coil springs

and hydraulic dampers in the rear. This provides a smooth ride on the pot-holed

Indian roads and the wider tyres ensure surefootedness even on slippery

surfaces.

The new Santro Xing had all new looking feel exterior and interior styling. That,

coupled with new advanced features, offers the best comfort & luxury in India’s

favorite compact car. New bigger & brighter clear headlamps, smiling radiator

grille, power operated rear windows with child lock and lots of other smart

features like the seat under tray are the hallmarks of your Sunshine Car.

Variants of Santro Xing: Hyundai Motor India has launched three new variants of

the Santro Xing with eRLX technology, new interiors and a cheaper price tag.

The new Santro Xing variants – XK-Non AC, XK and XL – will have the latest 1.1

liter engine with eRLX Active Intelligence technology, which gives class-leading

low-end torque resulting in better pick-up, better fuel efficiency, lower

maintenance and enhanced engine life, claims Hyundai Motor India

Where the Xing scores over other cars is in the engine department. Its 1086 CC

inline-four makes 62 bhp, enough to take the little car all the way up to 145 kph.

The five-speed gearbox is notch-free.

12

The new Santro Xing had enhanced security and safety features which included

Child-Safety Rear Door Locks, Seat Belts – Front and Rear. It also had new and

better exteriors like clear lamps for both front and rear side, a new wheel cover

was provided along with the car to enhance the look of the tyres. The car’s

interiors had been changed keeping in mind the new image, they changed the

steering wheel with more spokes on it and also molded roof lining, front and rear

speaker grill, ash tray and room lamp. The instrument panel was also redesigned

with electronic trip meter and a low fuel warning to make users aware of the fuel

level. The seats were made keeping in mind the comfort of the passengers

where the seats in the rear could be folded to accommodate luggage.

13

Pricing Strategies

The strongest factor that was in favor of the newly introduced Xing was that it

represented excellent value for money. Even though it had the latest technology

and extra features it was priced below the price of its competitors. The strategy of

the company in the initial few years was not to make profit but to gain market

growth.

The New Santro Xing was launched with a cheaper price as compared to its

previous versions Santro Zip and Santro Zip Plus. The Xing was priced at 2.79

lacs (Ex-showroom price New Delhi) for the base model. The car was priced

keeping in mind the middle income group which is in majority in India.

Hyundai Motors had tie ups with different financial institutions like ICICI car loans

and HDFC Bank to provide easy loan facilities to the customers, to get cars on

easy installments. The interest rates were kept low to encourage customers to

buy the cars.

The company offered discounts to reduce the burden on the customers. The tax

paid to the government for the road and registration was done at a discounted

rate with the company paying some amount of it. Even the insurance premium for

the first year was paid by the company so that the customer did not bear the

burden of the charges. The company offered extended warranty which the

customers could avail by paying a nominal amount. These practices of Hyundai

Motors assured that the customers got the car at the prices mentioned without

having to pay any extra charges on it.

14

The increase in the prices of steel and some government taxes on the

manufacture of small cars led to a hike in the price of the cars. The new price

was 3.5 lacs for the base model and moved up depending upon the higher

model. The increase in the price did not affect the demand much as the overall

price was increased by all the companies by some amount.

To regain its lost ground, Hyundai launched a new scheme under which Santro

Xing XE (S) variant would be available for Rs 3,00,001, only between November

8 and November 10 2004 on the occasion of Diwali.

In August 20041, “Hyundai Motors India Limited (HMIL), an Indian subsidiary of

the South Korea- based Hyundai Motors Company (HMC) was expected to

reduce the price by as much as Rs 40,000.

Industry experts were expecting a reduction in Santro's price in response to the

price war being waged by the market leader in India - Maruti Udyog Limited

(MUL), which had reduced the price of its largest selling car in the B segment -

Alto - by Rs 58,000 in two price cuts starting from September 2003. This move

had resulted in Alto replacing Santro as the largest selling car in the B segment

in the period January to June 2004.”

15

Prices of Different variants of Santro

SantroModel Ex-

ShowroomRegistration

& TaxInsurance On Road

PriceXK Non A/C 270,222 7,974 10,273 293,719XK A/C 327,848 9,127 12,290 354,515XL 349,432 9,559 13,045 377,286XO 373,883 10,048 13,901 403,082AT 418,332 21,303 15,457 460,342

16

Promotion

The company planned to leave no stone unturned to advertise the launch of

Santro Xing. The company had supposedly earmarked Rs 15-20 crores as

marketing budget for the launch phase alone. Various media channels were

applied for the same like broadcast media, print media, banners, hoardings and

holding of events.

Thus, Hyundai has promoted its products through the entire possible medium.

The association of Shahrukh Khan as the brand ambassador of Santro made it a

huge success.

The experts believed that the humorous endorsements of King Khan coupled

with the new technology have catapulted Hyundai as one of the most visible,

talked about and debated brands in the country. The personality of Khan as a

fun-filled and mischievous person was an instant hit with the masses The

presence of Khan proudly peddling the Hyundai brand and car as the “Sunshine”

thing has always added a lot of zing to the brand equity of Hyundai.

17

The promotion of Santro Xing started with the teaser ads showing Shahrukh

Khan handing over the keys of Santro to Mr. Kim of Hyundai. Khan is left

stranded on the street alone just when Mr. Kim returns with the all new Santro

Xing and hands over the keys to him.

In another advertisement, Shahrukh Khan is seen asking his family members

about their choice of colour of the Santro. A little girl gives away her piggy bank

saving for a ‘maroon car’. Where the whole family wants the black car, Khan gets

a maroon car for the little girl and the baseline is “hoga har sapna sakaar”

Segmentation, Targeting and Positioning (STP) of Hyundai

HMIL has divided its customers on the basis of age and income group. They

distinguish between car buyers who are primarily seeking a luxurious driving

experience, and those seeking driving thrills and performance.

HIML recognized the needs of the middle income groups and their likes and

dislikes about the car.

Xing attracts the customers through “Niche marketing segment”. In this the

customers are first divided into segments and then sub-segments. A basic model

of the car which is XL Non AC caters to the customers who are brand conscious

but do not care much about the comfort a car provides.

The other models are also according to the taste of the customers, their

importance to luxurious driving etc.

18

Once HIML decided the different segments, it then focuses upon the target

customers and brought about price variants on models. The target customers

were then offered discounts, scratch cards and other promotional schemes.

The positioning was done in the market seeing the customers and HIML’s

positioning is well placed that can easily be derived from the fact that 33% of the

total market is captured by Hyundai.

19

Market Research

Problems, decision alternatives and objectives:

The problems identified are

the stiff competition Hyundai faces from its competitors

to increase the customer satisfaction

Research Plan:

Data Sources:

Primary: Company Survey, Questionnaire

Secondary: Internet, Magazine*, Newspapers and Journals*(* Details given in bibliography)

Sample unit:

We targeted those people who had small cars and were looking to buy a new one

Sample Size:

We Surveyed 50 people.

Sample Procedure:

Probability: We used the random method to conduct our survey.

Information:

20

We have collected their response and gathered them together. Every person’s opinion has been counted in our survey

Analyze Information:

Based on the information collected we have analyzed the facts

32 % people said that Hyundai is the first name that comes to their mind when they talk about cars as compared to 52% said Maruti.

Brand Frequency Others 6Maruti 52Hyundai 32Tata 10

21

Customer care and better service is what attracts the customers to the showroom. 21% people said that the customer care provided by the Hyundai was the best.

Valid1% Better Service

20%

Customer Care21%

Genuine Spares

1%

More Trusted23%

No difference15%

No Idea6%

Responsible Employees

13% Valid

Better Service

Customer Care

Genuine Spares

More Trusted

No difference

No Idea

Responsible Employees

(Factors that matters to Hyundai customers)

22

39% of the customers said that the car should be luxurious to drive and the other major driving force was the size, meaning small attractive model.

Luxurious39%

Small attractive29%

Cost effective16%

Easy Maintainance

14%

Comfortable2%

Luxurious

Small attractive

Cost effective

Easy Maintainance

Comfortable

(Factors that decide the purchasing of car)

23

Advertisement on TV was the main source of information while the other print media has been catching up fast.

TV26%

Websites5%

New spapers22%

Magazines24%

Word of mouth23% TV

Websites

New spapers

Magazines

Word of mouth

(The Information Media)

24

Findings:

1. In the ranking for main purpose of the car the factor that scored the

highest importance were:

1. Necessity

2. Convenience

3. Comfort

2. 16.9% biased towards Hyundai due to its driving convenience and AC.

Hyundai was being perceived only by 11% customers who were in the age

group of 31-40

3. 48.5% consumers of cars (even other brands) found the pricing of

Hyundai cars to be satisfactory and reasonably priced. On an average, we

could conclude that the customers were satisfied with the pricing structure

of Hyundai cars.

4. Hyundai’s outlet (HMP) is believed to be trustworthy for the service being

provided compared to other dealers. This was the opinion of 23%

consumers. 21% perceived that customer care would be much better own

outlets rather than the dealers

5. About 27.2% of the consumers preferred to buy Hyundai in future followed

by 17.6% of them preferred to buy Maruti brands and 13% were will to buy

other cars

25

6. Auto magazines are the primary media sources. Majority of the people

refer to them to gather information about cars.

26

Competitors and their Strategies

The Hyundai faces tough competition from the following brands:

Maruti Suzuki, Wagon R Tata Motors, Indica Fiat, Palio

27

Comparative Table of the competitors (Cost)

Xeta GLG WagonR LxiSantro Xing XL

Cost Cost Cost

Price factors

Ex-showroom price

320800 356548 348191

Insurance 11842 13105 12661

Registration 9220 10216 0

Num plate/Other charges

0 750 400

Under body treatment

2530 2530 2530

Paint protection

2900 2900 2900

Sub Total 347292 386049 366682

Freebies Cost Cost Cost

Seasonal discount

NO 0 YES -35000 NO 0

Extra Central NO 4200 NO 1400 NO, 0

28

locking w/remote

dealer gift

OEM MP3 Player

NO, dealer gift

0 NO 9000 NO 9000

Car CoverNO, dealer gift

0 NO 400 NO 400

Seat Cover NO 2500 NO 2500NO, dealer gift

0

Exchange bonus

NO 0 YES 0 YES -3500

Corp Discount NO 0 YES -2000 NO 0

Full set mats YES 0 YES 0 YES 0

Mud flaps YES 0 YES 0 YES 0

Addi. Cost/Discounts

6700 -23700 5900

Net on road

Xeta GLG

CostWagonR Lxi

CostSantro Xing XL

Cost

Ex Cost + Reg 347292 386049 366682

29

+ Ins + etc.

Min. Added Benefits/Costs (see above)

6700 -23700 5900

Net on road 353992 362349372582

(Strategies of the Competitors)

Tata Indica Maruti WagonR Fiat Palio

Promotion More car per Car”

“More dreams per car”

“Made in India”. Sachin Tendulkar, the

major architect of

30

“Forget small cars, we even make big cars feel small”

“50cc moped, 100cc bike 800cc car. Time you asked for more.”

“the peoples car”

“tall boy design”

sales.

Fiat introduced a new

range of Palio with

Sachin’s signature on

top.

Price Indica offers a vast range of price for its customers. The petrol version ranging from Rs. 252,458 to Rs. 4,11,792 for the top model of the diesel version.

Tie ups with different banks and financial institutions to provide hassle free loans at lowest possible interest.

Price range between Rs. 325612 for the base model of WagonR to 408937 for the fully loaded top model

Interest rates as low as 9%4 and financing up to 90% of on - road prices.

Tie up with State bank of India to provide loan facility

Price Range: Palio

Diesel EL Rs. 4,19,500.

– Rs. 6,99,000

Place Has a well maintained

and integrated dealer

network and retailers to

reach the remote areas.

Huge dealer

network and has

the biggest and

after sales service.

Its service station

Limited dealers and

service stations

installed along with the

showrooms

31

expands to the

length and breadth

of country

Market Share of Hyundai and Competitors

32

Hyundai Xing32%

Maruti49%

Tata10%

Others9%

Hyundai Xing

Maruti

Tata

Others

Hyundai Xing has a 32% market share with only Maruti as a competitor

Maruti Udyog Limited

WagonR

33

Customer Service

After-sales service for cars is as critical as showroom deals. Maruti services its

2million customers through an army of 174 dealers spread across the length and

breadth of the country. It will be impossible for a company to duplicate such

infrastructure, particularly with investments in a metro-based showroom going up

to Rs 4 crores.

The problem of price war is evident with Auto majors as much as with dealers. In

a bid to woo the customers, Maruti dealers, particularly in non-prime locations,

are cutting their margins.

Doing so will benefit all the three constituents in the marketing chain: the OEM,

the dealer, and the buyer. The carmaker can expand his reach without expensive

investment; the dealer can increase his revenue; and the customer gets a variety

of models under one roof.

34

The advertisement of Maruti emphasized the availability of service centers

across the country with service centers even in remote areas of Ladakh.

35

Fiat – Palio

Promotion Strategy

Fiat has a fantastic image internationally. The heritage is more than a 100 years

old and has a big history and a big brand. Fiat believes that Sachin will help

convey this image of Fiat to the people of India. Also, Sachin's image of

dynamism and excellence matches that of the Palio. He is passionate about cars

and so FIAT is looking forward to working with Sachin Tendulkar to promote the

Palio. The Company used Sachin’s status to great effect when it launched the

New Signature series which were signed by Sachin Tendulkar himself and these

were a huge success as the people took a great liking for it.

“Three beauties from Fiat, for the three beauties of India” is how Mr. Bianchi

summed up the event.

Fiat India, organized a special function at their Kurla plant to felicitate the winners

of the Fa Femina Miss India contest, 2002. On the occasion, Mr. M.P. Bianchi,

Managing Director, Fiat India Pvt. Ltd presented the three beautiful ladies, Neha

Dhupia, Shruti Sharma, and Reshmi Ghosh, with Fiat Palio’s. Over 2000

36

members of the Fiat team gathered together on the lawns in front of the factory to

witness the handing over ceremony.

Pricing Strategy

The Palio Diesel is offered in three versions - The Palio Diesel EL, Palio Diesel

ELX and the top of the line, fully loaded Palio Diesel ELX SP. The new range of

diesel cars is competitively priced and continues Fiat’s tradition of offering its

customers true value-for-money.

The Palio Diesel EL was launched at the price of Rs. 4,19,500. The other

variants were priced according to the different features. The diesel cars were

launched at the following rates Palio Diesel ELX – Rs. 4,49,500, Palio Diesel

ELX SP – Rs. 4,75,000, Adventure Diesel – Rs. 6,99,000

37

38

Tata Engineering and Locomotive Company (TELCO)

Promotions

The Indica advertising made interest for the car go into overdrive. The campaign

revolved around the premise that the Indica would not just meet people's

expectations, it would exceed them. Every advertisement has a story to tell

Pre launch Campaign

The Indica campaign began in the right earnest in December 1998. It was

advertised as the launch of a car that will spell doom for the small cars. It was

directly aimed at Maruti 800. The ad line used in the first campaign was “Car

makers will suddenly remember all the things they forgot to give you”.

This hinted that Indica would have more features than any of the existing small

cars. Indica used the catch lines like “More car per Car” “More dreams per car” to

suggest that Indica will be bigger in size to the existing small cars yet be in the

small car category. It competes with the mid size cars on size and give them a

run for their money with its cheaper price tag.

At the launch of the car TELCO claimed that the people would never have to

suffer from a small car again and the end of the year (1998) would be the end of

the small cars.

Launch Campaign

39

The launch campaign of Indica focused on the many advantages that it offered

over other cars in the same segment. It promised the customers more than the

current offerings. Its first advertisement carried the following catch line “50cc

moped, 100cc bike 800cc car. Time you asked for more.”

It then concentrated its efforts on criticizing the negative aspects of Maruti 800

and highlighted how Indica has removed those very defects and presented a very

sophisticated and modern car to the Indian customer. It even pointed out that the

shape of Maruti was very unconventional and that people would prefer the shape

of Indica to Maruti 800. The advertisement read “Box shaped, bubble shaped,

wedge shaped. But then Gentlemen prefer curves”

The launch campaign also focused on the roomy interiors of Indica, a feature not

offered by Maruti at that point of time. Also the expertise of TATA in diesel

engines and fuel efficiency of these were the highlight of the launch campaign of

Tata Indica.

Post Launch Campaigns40

While the Launch campaign focused on the features of Indica the post launch

advertisements focused on the superior after sales service and longer warranty

periods offered by Indica.

Telco was the first company to offer an 18-month warranty period on engine

parts. The most famous line used during this campaign was “We could go on and

on about service or give you the one word summary. TATA.” While their main

adversary was the Maruti 800, Telco felt that it could also tap the mid size

segment using the selling point of space given by Indica. They carried a

campaign, which said “Forget small cars, we even make big cars feel small”

It then went on to highlight the fact that Indica was Euro II compliant even before

it was legally binding upon car manufacturers to do so. It also highlighted the

concrete wall safety test that Indica withstands and tried to showcase the car as

a safe and strong car.

41

Conclusion

Since idea was to analyze the marketing stratergy of Hyundai Santro so by the

intensive study carried out with car owners and marketers of different brand I

come at specified conclusions on four P’s of marketing.

People

Talking about people targeted by Santro is a class who would look for

“Value for Money”. It not only comprises of those middle class segment but also

of some special class like me and others who are looking for buying their first

ever car.

Price

Santro has been priced very specifically due to it being on straight

competition with all time tough competitor Maruti, as it has a very unique mind

set of economical vehicle. Giving Santro at this affordability with higher features

marks its presence in this segment really well.

Promotion

What well it could be if one of the best endorsers in the industry comes

himself showing that this what now one would dream of. Shahrukh Khan has a

presence which would ask his fan following to trust the brand he trusts.

Product

If Santro still requires any introduction then we would say a car which has

eaten up a huge share of running cars on the road especially of Maruiti’s

42

monopoly. Then this car has given all what customer would look for cars in this

segment.

General analysis

The demand for the small car will continue to drive growth for the next five years.

In the US, auto demand rises by 4 per cent for every 1 per cent increase in the

real Gross Domestic Product but this is irrelevant for India as only the top 1.50

per cent of the population can afford a car. The demand can shoot up if the

income levels of the top 5 per cent continue to rise in future.

It is stagnant at 1.70 cars per 1,000 people for decades. However, in the post-

liberalization period, the motorization level has leaped to 3.70 cars per 1,000.

Although it is still lower than the levels in the developed markets, motorization is

bound to rise further in the coming years.

Falling imports and excise duties coupled with competition will continue to boost

demand and the prices are likely to fall further at least in the short run.

Over 60 per cent of customers opt for consumer finance. That figure could go up

if interest rates continue to fall.

Traffic congestion and bad roads could deter potential buyers from going for

small cars particularly in small cities of India. The future is not very heartening in

this aspect.

43

As manufacturers shift their attention to the small car, more and more people will

be able to afford it and demand will only rise in the future period of time.

There is a sharp contrast in the buying behavior of Indian Consumer compared to

their western counter parts, yet there is no doubt that Indian car market is going

to increasingly resemble the latter. In the West, the industry is likely to be

dominated by three or four major players.

The market will consolidate to a few segments. The carmaker has to make

diverse models based on diverse and flexible platforms. For the price-sensitive

customers, there can be a no-frills version; a loaded version for the middle

customer and luxury car manufacturers can target the high-end customers.

The fortunes of the automobile industry will continue to hinge on the large, price

sensitive customers, who will graduate to the higher end of the market over a

period of time.

44

Bibliography

Marketing Management – Philip Kotler and KellerMarketing Research – Aaker Kumar Dey

Websites:

Hyundaimotorindia.comSantroxing.comIndianinfoline.comHindubusinessline.comAutoindia.com

Magazine:

AutoIndiaBusiness WorldOverdriveAuto Car4 P’s of marketing

Newspapers:

The Economic TimesThe Financial Express

45

AppendixQuestionnaire

1. Which car do you own?

Santro Xing WagonR Tata Indica Fiat Palio

2. What is main purpose of having a car?

Necessity Convenience Comfort

3. Are you satisfied with the driving convenience and other features of car?

Yes/No

4. Do you think Hyundai cars are satisfactory and reasonably priced?

Yes/No

5. Are you satisfied with after sales service of the car company?

Yes/No

6. Would you buy Hyundai in future?

Yes/No

7. How did you come to know about Xing?

Auto Magazine_________________________________________Newspapers____________________________________________TV advertisement_______________________________________Word of Mouth_________________________________________

46

Please provide your name and address:Title: Mr./Mrs./Ms.____________________ Telephone no._________________ Name ______________________________________________Address_____________________________________________

47