PROJECT REPORT MARKET POTENTIAL OF NEW TECHNOLOGIES IN AUTOMOTIVE AFTERMARKET: A STUDY WITH REFERENCE TO ‘BOSCH LIMITED’ A dissertation report submitted in partial fulfillment of the requirement for MBA degree course By H N Jyothi Enrolment No: 072371947 Under the Guidance of Dr O P Goel Academic Counselor IGNOU STUDY CENTRE Bangalore SCHOOL OF MANAGEMENT STUDIES INDIRA GANDHI NATIONAL OPEN UNIVERSITY NEW DELHI-110 068 1
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PROJECT REPORT
MARKET POTENTIAL OF NEW TECHNOLOGIES IN AUTOMOTIVE AFTERMARKET:
A STUDY WITH REFERENCE TO ‘BOSCH LIMITED’
A dissertation report submitted in partial fulfillment of the requirement for MBA degree course
ByH N Jyothi
Enrolment No: 072371947
Under the Guidance ofDr O P Goel
Academic CounselorIGNOU STUDY CENTRE
Bangalore
SCHOOL OF MANAGEMENT STUDIESINDIRA GANDHI NATIONAL OPEN UNIVERSITY
NEW DELHI-110 068
MAY 2010
1
Dedicated
To my beloved
Parents, Husband & Child
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INTRODUCTORY PAGES
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PREFACE
The automotive aftermarket is the part of the automotive industry concerned with the manufacturing, distribution, retailing, and installation of all vehicle parts, tools, equipment and accessories for light and heavy vehicles, after the sale of the automobile by the original equipment manufacturer (OEM) to the consumer.
The focus on getting more power from the engines, higher safety needs and lower emissions has resulted into Automobile engineers trying and developing new technologies like Common Rail Diesel Injection, Multi point Fuel Injection, Anti lock Braking system and air bags.
The study has focused on finding out the market potential of these technologies, with special reference to Bosch, a World leader in automotive technologies.
A study like this is not the outcome of the efforts of a single person. The study would not be completed if I do not take on the names of those personalities who have directly or indirectly helped me in carrying out the study. It gives me immense pleasure to put on their names here.
I wish to extend my reverence to Dr O P Goel Academic counselor IGNOU study Centre, Bangalore for his guidance & genuine support, who was constant source of inspiration during the entire project work..
I also express my sincere gratitude to all the respondents for providing the valuable data.
Finally, I express my gratitude towards my parents and family for their continuous support during the study.
H N Jyothi
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CONTENTS
Page No.
INTRODUCTORY PAGES...................................................................................................3PREFACE.............................................................................................................................4ACKNOWLEDGEMENTS....................................................................................................5CONTENTS.........................................................................................................................6SYNOPSIS APPROVAL.......................................................................................................7CERTIFICATE OF ORIGINALITY........................................................................................8GUIDE BIO-DATA...............................................................................................................9SYNOPSIS.........................................................................................................................11CHAPTER 1.......................................................................................................................17INTRODUCTION...............................................................................................................17
1.1 INDIAN AUTOMOBILE INDUSTRY........................................................................181.2 AUTOMOTIVE TECHNOLOGIES IN INDIA...........................................................281.3 CHANGES IN AUTOMOBILE ENGINE TECHNOLOGY........................................281.4 CHANGES IN VEHICLE TECHNOLOFY................................................................291.5 KEY AUTOMOTIVE TECHNOLOGY MANUFACTURERS IN INDIA:....................31
2.1 OBJECTIVES OF THE STUDY:..............................................................................412.2 RESEARCH DESIGN..............................................................................................41
2.2.1 Sample Size & Design...............................................................................412.3 PROFILE OF RESPONDENTS................................................................................42
CHAPTER 3.......................................................................................................................45DATA ANALYSIS AND INTERPRETATIONS...................................................................45
3.1 ANALYSIS OF SERVICE STATIONS DATA...........................................................46CHAPTER 4.......................................................................................................................55CONCLUSIONS, RECOMMENDATIONS AND DIRECTIONS FOR FUTURE RESEARCHES...................................................................................................................55
4.1 DIRECTIONS FOR FUTURE RESEARCHES.........................................................594.2 LIMITATIONS OF THE STUDY..............................................................................59
Bosch India is a leading supplier of technology and services, and has a
strong presence in the country at numerous locations in diverse industry
segments. Bosch set up its manufacturing operations in 1953, and has
grown over the years to 14 manufacturing sites and 3 development
centers. Bosch employs about 18,030 associates in India, and in business
year 2008 achieved total consolidated revenue of over Rs. 6400 crores.
Bosch India operates through the following companies -
Bosch Ltd.
Bosch Chassis Systems India Ltd.
Bosch Rexroth India Ltd.
Robert Bosch Engineering and Business Solutions Ltd.
Bosch Automotive Electronics India Private Ltd.
Bosch Electrical Drives India Private Ltd.
Automotive technology Business Group
Bosch innovations have shaped cars from the start and will keep doing so in
future. As the world’s biggest independent automotive supplier, Bosch focuses
on innovations to make driving safer, cleaner and economical. Automotive
Technology is the largest business segment of Bosch in India, supplying to the
local automotive industry, and exporting components overseas.
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Business divisions: Diesel Systems, Gasoline Systems, Chassis Brakes,
Automotive Accessories, Car multimedia, Starters and Generators, Energy and
Body Systems, Electrical Drives, Spark Plugs and Glow Plugs.
Industrial technology Business Group
Bosch Rexroth AG is an expert for all drive, control and motion technologies.
The Bosch Packaging Machines division in India brings the global expertise to
address the needs of the local confectionary and pharmaceutical industries.
The Special Purpose Machines (SPMs) and High Precision Tooling division
engineers customized equipment using cutting-edge technologies for
industries.
Business divisions: Automation technology, Packaging Machines, Special
Purpose Machines.
Consumer goods and building technology Business Group
The Bosch Power Tools division in India is the market leader in the segment,
offers a complete range of power tools for construction, woodworking and
metalworking industry; cordless tools, accessories and tools for DIY (Do-It-
Yourself) enthusiasts as well. The Security Systems division in India is one of
the leading security technology players with a comprehensive portfolio.
Business divisions: Power Tools, Security Systems.
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Engineering and IT Services Business Group
The Engineering and Information Technology division of Bosch in India is the
largest development center of Bosch outside Germany. For over 15 years, it
has been the preferred engineering services and solutions partner for the
Bosch Group worldwide.
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CHAPTER 2
RESEARCH METHODOLOGY
CHAPTER 2RESEARCH METHODOLOGY
2.1 OBJECTIVES OF THE STUDY:
1. To find out the market potential of new technologies (CRDi, ABS & Air Bags) in
the Indian automotive Aftermarket.
2. To find out the preparedness level of Automotive Service providers to handle
new technology fitted cars.
3. To evaluate the strengths and weaknesses of the marketing Strategies of
Bosch Limited, India to tap the Market potential of new technologies.
2.2 RESEARCH DESIGN
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2.2.1 Sample Size & Design: The design of the research was prepared to
make it an exploratory research. Survey method was used to collect the
data from 3 target respondents 1) Authorized service dealers of the car
companies 2) Un authorized garages , called roadside garages who repair
all makes of cars and 3) Bosch company officials from the aftermarket
division.
Two questionnaires were prepared to collect the data , 1) Service stations
of both categories, authorized and unauthorized and 2) second for Bosch
officials. The questionnaires’ design was structured. Also open ended
questions were included to give space to the respondents for providing
additional information. Questionnaires were self administered type, how
ever in most cases researcher herself was present and helped them in
understanding the questions where ever there was a doubt.
60 questionnaires each from both types of service stations were got filled
up. On careful scrutiny it was found that 59 nos. from authorized service
stations and 41 nos, from un authorized service stations were valid and
were included for analysis purposes. 25 questionnaires from Bosch officials
were included. The data collection was restricted to the geographical limits
of Bangalore city.
Secondary data was collected from the website of Bosch limited, Society of
Automobile Manufacturers of India (SIAM) and Automotive Components
Manufacturers’ Association of India (ACMA).
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2.3 PROFILE OF RESPONDENTS
1. Status of Authorization of the Service Stations
Data presented in Figure 3.1 indicates that 59% of the service stations
surveyed were ‘authorized dealers’ of respective car manufacturing companies
and 41% were unauthorized service stations (roadside garages) who deal into
multi brand cars
Fig 3.1: Distribution of Respondents – Authorization wise
2. No. of years in operation:
As per data depicted in tables 3.2a and 3.2b, it can be observed that
authorized dealers are more stable ( 37% are more than 5 years in existence,
as compared to unauthorized service stations who are 22% ).
No. of Years in operation % of respondents Less than 2 years 28%Between 2-5 years 35%More than 5 years 37%
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Figure 3.2a : No. of years in operation ( authorized dealers )
No. of Years in operation % of respondents Less than 2 years 42%Between 2-5 years 36%More than 5 years 22%
Figure 3.2b : No. of years in operation ( Un - authorized dealers )
3. No. of Vehicles attending per month:
No. of Vehicles attended by the service stations are shown in the Fig 3.3.
Authorized service stations are relatively bigger in size and capacity and none
of them was attending less than 100 vehicles pm ( that means 4 vehicles per
day X 25 working days). 18% of the Un authorized service station sfell uinto
this category. Sixty five percentage from authorized and 28% from
unauthorized categories were attending more than 250 vehicles pm.
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CHAPTER 3
DATA ANALYSIS AND INTERPRETATIONS
CHAPTER 3DATA ANALYSIS AND INTERPRETATIONS
The data collected has been organized and presented below, in two parts. First
part has data collected from Service Stations ( Both types I e authorized as well
un-authorized). Second part presents that data pertaining to Bosch officials,
collected as per the plan.
3.1 ANALYSIS OF SERVICE STATIONS DATA
1. No. of vehicles attended per month fitted with New Technologies:
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Average no. of vehicles being attended by Authorized service stations and the
un-authorized ones are shown in Fig 3.1. It is quite clear that the customers
owning new technology vehicles prefer to go to the company’s authorize
service stations and do not want to take chance with the roadside garages.
Data also indicates that the vehicles with Airbags ( normally high end cars like
Mercedes or BMW) are very few and only 3 vehicles in a month are being
attended by all the service stations in the sample ( that too all of them by the
authorized service stations).
Fig 3.1
Even the customers of Anti Lock Braking System ( ABS) cars do not seem to be
taking chance with the un-authorized car service stations and out of total 81
cars in a month, 74 customers patronize the authorized ones.
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The data brings out that the customers still do not have much confidence in
the technical competence of the un authorized service stations , when it comes
to handing over their high end expensive cars for servicing.
2. Average no. of Technicians in the Service Station:
As per data depicted in Fig 3.2, authorized service stations had, on an average
14 service technicians each as compared to the 3 nos. each at un-authorized
service stations.
Fig 3.2
3. Training Status of Technicians :
The status of training on new technologies of the technicians working at both
types of service stations is depicted by the data in Fig 3.3. It is clear from the
data that the situation of training at un-authorized service station is abysmal,
which places them at a quite incompetent place in the service market of new
technology fitted vehicles.
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Even at authorized service stations, there is huge gap in training status and
particularly, in case of airbags, the companies need to focus on improving
technicians competence.
Fig 3.3
4. Availability of Tools & Equipments necessary for handling new technologies
The availability of tools and equipments required to handle new technologies
fitted in the cars is as important as a trained technician. As per data shown in
table no 3.1a and 3.1b, it is clear that only authorized service stations are
reasonably well equipped ( 90%) that too mainly to handle Common Rail Diesel
Injection (CRDi) and to some extent ABS (74%)
Authorized Service Stations
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CRDi ABS Airbags
Available 90% 74% 24%
Not Available 10% 26% 76%
Table 3.1a
Unauthorized service stations ( Table 3.1b) are far from equipping themselves
to handle all of these technologies except that only 12% are equipped to
handle CRDi and 8% for ABS.
Un- authorized Service Stations
CRDi ABS Airbags
Available 12% 8% 0
Not Available 88% 92% 100%
Table 3.1b
5. Preparedness to handle new technologies coming in next 5 years.
As more and more vehicles with new technologies start coming on the Indian
roads, preparedness of the service stations shall become crucial to ensure
proper running of these vehicles. Only 16% of the Authorized service stations
find themselves going in the right direction with excellent preparation ( Fig 3.4)
and none of the service station in unorganized sector seem to be coping with
the requirements.
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With 64% of the service stations in unorganized sector being completely un-
ware of the requirements as to how these vehicles will be diagnosed or
repaired, it appears a cause of concern, not only for the manufacturers but also
for the Govt. which poses newer and newer norms for emissions and safety.
Fig: 3.4
6. Rating of Marketing Mix for New Technologies
As per data shown in Fig 3.5, The products coming in are near excellent with
4.6 rating ( on a 5 point scale), followed by availability. The real issues
seems to be the ‘price’, which, with 1.9 rating appears to be very high.
Promotion of these parts at 2.5 rating also has considerable scope for
improvement.
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Fig: 3.5
7. Key Suggestions given by Service Technicians for the Companies
1. As there is very low level of awareness about compatibility of the components, the companies should provide application charts for each of the component fitted in the sub assemblies of new technology items.
2. On the spot, short duration training cum re-fresher training programmes should be organized more often.
3. As far as possible, compatible items should be produced by various manufacturers (means, components in one brand of the assembly, should be interchangeable with another brand). This will help reduce inventory.
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ANALYSIS OF BOSCH OFFICIALS DATA
8. Rating of Marketing Mix Strategies
Bosch Ltd, being the pioneer and market leader in supplying new technologies
to almost all the car manufacturers’ in the country, has its marketing
strategies which are evolving over time. The Company’s officials were
interviewed by the researcher with the help of a structured questionnaire (copy
appended in the annexure) and the findings are presented below.
The company officials, with high ratings (Table 5) appear to be confident
about every element of their marketing mix strategies. The company has
strong product plate-form backing from its parent company in Germany
( Robert Bosch GmbH, Stuttgart), which supplies these technologies to most of
the car manufacturers in Europe and North America.
9. What % age of the vehicles are you able to service with your products in automotive aftermarket?
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No. of officials ( Total : 25) % age of vehicles serviced with available products
21 More than 90%4 Between 75-90%0 Less than 75%
Table 3.3
As per data presented in table 3.3, Company officials are sure that their
product range takes care of majority of the vehicles in the market and the
product range in wide enough to cover 90% of the vehicles ( 21 officials).
10. What is the break - up of Service Technicians ( Authorized and un-authorized) who have undergone training organized by your company
Out of the total technicians trained by the company 82% were from authorized service stations and rest from unauthorized.
Fig 3.6
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CHAPTER 4
CONCLUSIONS, RECOMMENDATIONS AND DIRECTIONS FOR FUTURE RESEARCHES
CHAPTER 4CONCLUSIONS, RECOMMENDATIONS AND DIRECTIONS
FOR FUTURE RESEARCHES
54
1. Traditionally, India is low cost preference car service market. Companies
like Maruti Suzuki have been historically strategizing to increase service
load at their authorized Service stations from about 12% to 25%, which
means more than 75% of the vehicles are repaired at Un –authorized
Service stations operating in unorganized sector (popularly known as
roadside garages).
The study has brought out that, in case of new technologies the trend is
reverse, where majority of the vehicles are attended by company’s
dealers as they are better equipped to handle these products.
2. Common Rail Diesel Injection (CRDi) has emerged as relatively more
popular technology than Anti Lock Braking System (ABS) and Airbags.
With emission norms becoming stricter in the country and price gap
between Diesel and Petrol rates continuing to be high, CRDi appears to
be the technology for all new models of the cars coming in Diesel
Version. The companies manufacturing CRDi technology, led by Bosch
Ltd, in India has to start looking at it as basis for future business and start
investing in marketing activities more heavily.
3. Anti Lock Braking System is mandatory in each type of car sold in Europe
as it has strong link with the safety of the passengers. In India it is still
being used only in the high end , expensive cars like Mercedes and BMW.
Govt. of India, in its Automotive Mission Plan ( AMP-2016) has indicated
about more stringent safety norms and the possibility of ABS becoming
mandatory for registration of Mid end cars in near future seems evident.
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This norm will have immediate effect on the preparedness level of the
service stations in the country. While initially, until the vehicles are under
warranty period, the Authorized service stations shall be more in demand
for attending to the vehicles, as soon as the vehicles run out of the
warranty period, a surge in demand of unorganized sector shall be seen.
4. This research has brought out that the unorganized sector in servicing
vehicle is not only grossly unprepared- both in terms of training as well
as tools and equipment, they are not even fully aware of the changes
happening in the Automotive Technology space.
5. It is the joint responsibility of the Technology manufacturers and the
Govt. to start spreading the clear communications among the target
audience, as to what will be the technological future in next 5 to 10
years. The seminars can be organized to reach the unorganized players,
who then can be checked for their interest in acquiring the competence
and affordability.
6. Availability of Finance with the unorganized sector appears to be another
area of concern. With the Govt. focus on generating employment through
entrepreneurship, this is an area where micro-finance should be
promoted and low interest loans with longer repayment period should be
offered to the roadside garages, who are interesting in staying in the
business in the longer term.
7. Airbag as a technology has come out at its inception stage and even
authorized dealers of the company do not seem to be serious about it.
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Companies, manufacturing this technology as well as those who use this
as in OE ( Original Equipment) in their cars, need to organize seminars to
create awareness about this technology. Most of the states in the country
have ‘Auto Service Garages Associations’ and these forums should be
used to communicate such messages to the target audience.
8. Marketing strategist at Bosch need to look at these products from a
completely different perspective. As most of the components, at present,
are not interchangeable with other brands, it is inevitable that the
customer and the garages need ready – reference guides or application
charts about the right fitments. The company should invest more in
such activities to gain a first movers advantage in the market before the
completion picks up.
9. Companies should also look at the possibility of local tie ups of their
dealers with the nearest garages in the interest of better customer
service. If a customer approaches a roadside garage and he is not able to
diagnose or repair the product, help fro the nearest authorized dealer
should be possible.
4.1 DIRECTIONS FOR FUTURE RESEARCHES
1. The research has thrown some light on the status of Automotive new
technology service situation. As the under awareness and under
preparedness of unorganized sector has clearly emerged, The
researches in future may be directed at evaluating and profiling of
the garages , as to who can afford to upgrade and equip themselves.
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2. Researches in future can also be directed at understanding the
finance requirements of a garage to fully upgrade to handle these
technologies.
3. Role of Govt. in supporting the smaller garages through subsidy or low interest loans may also be an area of interest in future researches.
4.2 LIMITATIONS OF THE STUDY
1. The researcher had limited time and resources at her disposal and hence
the sample size taken was 100 service technicians from one city I e
Bangalore. The finding may not be true representative of the situation
countrywide.
2. Although complete confidentiality was assured, the responses from
Bosch Officials may not be completely free from biases as the there
might be a fear of their names coming out in disclosing the companies
strategies, which may affect the competitive market situation.
ANNEXURES
QUESTIONNAIRE 1 - Service Technicians
Dear Sir/Madam,
I am carrying out a study on “MARKET POTENTIAL OF NEW TECHNOLOGIES IN ‘AUTOMOTIVE AFTERMARKET’: A STUDY WITH REFERENCE TO ‘BOSCH LIMITED’. The information provided by you shall be
58
used for academic purposes only. Kindly give your free responses. Your cooperation will be highly appreciated.
H N Jyothi
1. Name of the service station:
2. Status: Authorized dealer Un-authorized service station
3. No. of years in operation:
4. No. of Vehicles attend per month:
5. Out of the above no. of vehicle per month fitted with:
CRDiABS
Airbags6. Total no of technicians in your service station:
7. How many of these technicians have undergone training on:
CRDiABSAirbag
8. Is your service station fully equipped with necessary tools & equipments to handle new technologies?
Yes NoCRDiABSAirbag
9. How do you rate your preparedness to handle new technology fitted vehicles likely to come to your workshop in next 5 years on a 5 point scale.
Excellent Very Good Good Fair Bad10. How do you rate the new technologies on following parameters ( on
5 point scale…5 for best and 1..for worst)
5 4 3 2 1ProductPrice
59
PromotionAvailability
11. Would you like to give any suggestions to the companies manufacturing new technology fitted vehicles.
QUESTIONNAIRE 2 – Bosch
Dear Sir/Madam,
I am carrying out a study on “MARKET POTENTIAL OF NEW
TECHNOLOGIES IN ‘AUTOMOTIVE AFTERMARKET’: A STUDY WITH
REFERENCE TO ‘BOSCH LIMITED’. The information provided by you shall be
used for academic purposes only. Kindly give your free responses. Your
cooperation will be highly appreciated.
H N Jyothi
60
Name :
Designation:
1. How do you rate your marketing strategies for new technologies on following parameters ( on 5 point scale…5 for best and 1..for worst) vis a vis competition.
5 4 3 2 1ProductPricePromotionAvailability
2. What % of the vehicles are you able to service with your products in Automotive aftermarket?
3. What is the break - up of Service Technicians ( Authorized and un-authorized) who have undergone training organized by your company
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Anastakis, D., 2005. Auto pact: creating a borderless North American
auto industry, 1960-1971. University of Toronto Press, Toronto.
Kotler on Marketing: How to Create, Win, and Dominate Markets, Philip
Kotler, April 1999
The New Strategic Selling : The Unique Sales System Proven Successful by the
World's Best Companies, Stephen E. Heiman, January 1998
The Soul of a New Machine, Tracy Kidder, June 2000
Advances in services marketing and management : research and practice.