PREFACE Someone has rightly said that practical knowledge is far better than classroom teaching. During this project I fully realized this and I came to know about how a consumer chooses among a varied range of products available to him. The subject of my study is market survey of customer buying behavior in bikes taking TVS for comparison, which has slowly but steadily evolved, from a beginner to a corporate giant earning laurels and kudos throughout. The report contains first of all brief introduction about the company. Finally there comes data presentation and analysis in the end of my report. I 1
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
PREFACE
Someone has rightly said that practical knowledge is far better than classroom
teaching. During this project I fully realized this and I came to know about how
a consumer chooses among a varied range of products available to him.
The subject of my study is market survey of customer buying behavior in bikes
taking TVS for comparison, which has slowly but steadily evolved, from a
beginner to a corporate giant earning laurels and kudos throughout.
The report contains first of all brief introduction about the company. Finally
there comes data presentation and analysis in the end of my report. I also put
forward some of my suggestion hoping that they help TVS Motor Company
move a step forward to being the very best.
1
CONTENTS
Chapter 1 :
Company Profile
Introduction of the Project
Scope of Study
Objectives
Chapter 2 : Research Methodology
Sample Size
Sample Location
Research Type
Data Type
Instruments
Chapter 3 : Finding and Discussions
Chapter 4 :
Recommendations
Limitations
2
Summary and Conclusions
References / Bibliography :
Annexure Questionnaires :
3
Indian Two-Wheeler Industry
Automobile is one of the largest industries in global market. Being the leader in
product and process technologies in the manufacturing sector, it has been
recognised as one of the drivers of economic growth. During the last decade,
well-directed efforts have been made to provide a new look to the automobile
policy for realising the sector's full potential for the economy. Steps like
abolition of licensing, removal of quantitative restrictions and initiatives to
bring the policy framework in consonance with WTO requirements have set the
industry in a progressive track. Removal of the restrictive environment has
helped restructuring, and enabled industry to absorb new technologies, aligning
itself with the global development and also to realize its potential in the country.
The liberalisation policies have led to continuous increase in competition which
has ultimately resulted in modernisation in line with the global standards as well
as in substantial cut in prices. Aggressive marketing by the auto finance
companies have also played a significant role in boosting automobile demand,
especially from the population in the middle income group.
Evolution of Two-wheeler Industry in India
Two-wheeler segment is one of the most important components of the
automobile sector that has undergone significant changes due to shift in policy
environment. The two-wheeler industry has been in existence in the country
since 1955. It consists of three segments viz. scooters, motorcycles and mopeds.
4
According to the figures published by SIAM, the share of two-wheelers in
automobile sector in terms of units sold was about 80 per cent during 2003-¬04.
This high figure itself is suggestive of the importance of the sector. In the initial
years, entry of firms, capacity expansion, choice of products including capacity
mix and technology, all critical areas of functioning of an industry, were
effectively controlled by the State machinery. The lapses in the system had
invited fresh policy options that came into being in late sixties. Amongst these
policies, Monopolies and Restrictive Trade Practices (MRTP) and Foreign
Exchange Regulation Act (FERA) were aimed at regulating monopoly and
foreign investment respectively. This controlling mechanism over the industry
resulted in: (a) several firms operating below minimum scale of efficiency; (b)
under-utilisation of capacity; and (c) usage of outdated technology.
Recognition of the damaging effects of licensing and fettering policies led to
initiation of reforms, which ultimately took a more prominent shape with the
introduction of the New Economic Policy (NEP) in 1985.
However, the major set of reforms was launched in the year 1991 in response to
the major macroeconomic crisis faced by the economy. The industrial policies
shifted from a regime of regulation and tight control to a more liberalised and
competitive era. Two major results of policy changes during these years in two-
wheeler industry were that the, weaker players died out giving way to the new
entrants and superior products and a sizeable increase in number of brands
entered the market that compelled the firms to compete on the basis of product
5
attributes. Finally, the two-¬wheeler industry in the country has been able to
witness a proliferation of brands with introduction of new technology as well as
increase in number of players. However, with various policy measures
undertaken in order to increase the competition, though the degree of
concentration has been lessened over time, deregulation of the industry has not
really resulted in higher level of competition.
A Growth Perspective
The composition of the two-wheeler industry has witnessed sea changes in the
post-reform period. In 1991, the share of scooters was about 50 per cent of the
total 2-wheeler demand in the Indian market. Motorcycle and moped had been
experiencing almost equal level of shares in the total number of two-wheelers.
In 2003-04, the share of motorcycles increased to 78 per cent of the total two-
wheelers while the shares of scooters and mopeds declined to the level of 16
and 6 per cent respectively. A clear picture of the motorcycle segment's gaining
importance during this period is exhibited by the Figures 1, 2 and 3 depicting
total sales, share and annual growth during the period 1993-94 through 2003-04.
National Council of Applied Economic Research (NCAER) had forecast two-
wheeler demand during the period 2002¬-03 through 2011-12. The forecasts
had been made using econometric technique along with inputs obtained from a
primary survey conducted at 14 prime cities in the country. Estimations were
6
based on Panel Regression, which takes into account both time series and cross
section variation in data.
A panel data of 16 major states over a period of 5 years ending 1999 was used
for the estimation of parameters. The models considered a large number of
macro-economic, demographic and socio-economic variables to arrive at the
best estimations for different two-wheeler segments. The projections have been
made at all India and regional levels. Different scenarios have been presented
based on different assumptions regarding the demand drivers of the two-wheeler
industry. The most likely scenario assumed annual growth rate of Gross
Domestic Product (GDP) to be 5.5 per cent during 2002¬-03 and was
anticipated to increase gradually to 6.5 per cent during 2011¬-12. The all-India
and region-wise projected growth trends for the motorcycles and scooters are
presented in Table 1. The demand for mopeds is not presented in this analysis
due to its already shrinking status compared to' motorcycles and scooters.
It is important to remember that the above-mentioned forecast presents a long-
term growth for a period of 10 years. The high growth rate in motorcycle
segment at present will stabilise after a certain point beyond which a condition
of equilibrium will set the growth path. Another important thing to keep in mind
while interpreting these growth rates is that the forecast could consider the trend
till 1999 and the model could not capture the recent developments that have
taken place in last few years.
7
However, this will not alter the regional distribution to a significant extent.
Table 1 suggests two important dimensions for the two-¬wheeler industry. The
region-wise numbers of motorcycle and scooter suggest the future market for
these segments. At the all India level, the demand for motorcycles will be
almost 10 times of that of the scooters. The same in the western region will be
almost 20 times. It is also evident from the table that motorcycle will find its
major market in the western region of the country, which will account for more
than 40 per cent of its total demand. The south and the north-central region will
follow this. The demand for scooters will be the maximum in the northern
region, which will account for more than 50 per cent of the demand for scooters
in 2011-12.
Table 1: Demand Forecast for Motorcycles and Scooters for 2011-12
2-Wheeler
Segment
Regions
South WestNorth-
Central
East & North-
East
All
India
Motorcycle2835
(12.9)
4327
(16.8)
2624
(12.5)
883
(11.1)
10669
(14.0)
Scooter203
(2.6)
219
(3.5)
602
(2.8)
99
(2.0)
1124
(2.08)
8
The present economic situation of the country makes the scenario brighter for
short-term demand. Real GDP growth was at a high level of 7.4 per cent during
the first quarter of 2004. Both industry and the service sectors have shown high
growth during this period at the rates of 8.0 and 9.5 per cent respectively.
However, poor rainfall last year will pull down the GDP growth to some extent.
Taking into account all these factors along with other leading indicators
including government spending, foreign investment, inflation and export
growth, NCAER has projected an average growth of GDP at 6.7 per cent during
the tenth five-year plan. Its mid-term forecast suggests an expected growth of
7.4 per cent in GDP during 2004-05 to 2008-09. Very recently, IMF has
portrayed a sustained global recovery in World Economic Outlook. A
significant shift has also been observed in Indian households from the lower
income group to the middle income group in recent years.
The finance companies are also more aggressive in their marketing compared to
previous years. Combining all these factors, one may visualise a higher
growth rate in two-wheeler demand than presented in Table 1, particularly
for the motorcycle segment.
There is a large untapped market in semi-urban and rural areas of the country.
Any strategic planning for the two¬-wheeler industry needs to identify these
markets with the help of available statistical techniques. Potential markets can
be identified as well as prioritised using these techniques with the help of
9
secondary data on socio-economic parameters. For the two-wheeler industry, it
is also important to identify the target groups for various categories of
motorcycles and scooters.
With the formal introduction of secondhand car market by the reputed car
manufacturers and easy loan availability for new as well as used cars, the two-
wheeler industry needs to upgrade its market information system to capture the
new market and to maintain its already existing markets. Availability of easy
credit for two-wheelers in rural and smaller urban areas also requires more
focussed attention. It is also imperative to initiate measures to make the
presence of Indian two-wheeler industry felt in the global market. Adequate
incentives for promoting exports and setting up of institutional mechanism such
as Automobile Export Promotion Council would be of great help for further
surge in demand for the Indian two-wheeler industry.
10
INTRODUCTION
The TVS Group is one of India's largest industrial conglomerates. TV Sundram
Iyengar and Sons Limited, established in 1911, is the parent and holding
company of the TVS Group.
TVS Motor Company is the third largest two-wheeler manufacturer in India and
one among the top ten in the world, with annual turnover of more than USD 1
billion in 2008-2009, and is the flagship company of the USD 4 billion TVS
Group. With a workforce of over 5000, the company has 4 plants - located at
Hosur and Mysore in South India, in Himachal Pradesh, North India and one at
Indonesia. The company has a production capacity of 300 thousand units a year.
TVS and Sons also distribute Heavy Duty Commercial Vehicles, Jeeps and
Cars. It represents premier automotive companies like Ashok Leyland,
Mahindra and Mahindra Ltd., Fiat and Honda. It also distributes automotive
spare parts for several leading manufacturers.
TVS & Sons has grown into a leading logistics solution provider and has set up
state-of-the-art warehouses all over the country. It has also diversified into
distributing Garage equipment that ranges from paint booths to engine analyzers
and industrial equipment products.
11
GROUP COMPANIES
With steady growth, expansion and diversification, today TVS commands a
strong presence in various fields-two-wheelers, automotive components,
automotive spares, computer peripherals and finance.
Lakshmi Auto Components Limited - Large OE supplier of two wheeler
gears and camshafts.
Lucas Indian Service Limited (www.lucasindia.com) - Company looks after
the distribution of auto electrical components all over India.
Axles India Limited - A joint venture with Eaton Limited, U.K. Manufactures
axle housings and drive heads for heavy and light commercial vehicles
12
COMPANY AT PRESENT & IN FUTURE
Successfully launched the Victor and Fiero-F 2 models after parting ways
with Suzuki.
Two wheeler markets show sign of revival after a lackluster first half.
The company is suffering a decline in volumes due to poor response of its
two strokes Max motorcycles.
Recently launched the TVS Centra and 125 cc TVS Victor GLX and four
stroke Max in the pipeline, which would be launched later this year.
Plans major foray into three-wheeler and quadricycles market through
fresh investments of Rs 500 crore.
Actively looking to set up manufacturing unit in Indonesia or Vietnam.
Strong focus on R&D and product development.
Apache the Savior
TVS launched Apache RTR 160 cc model in September 2008, with its ultra
modern technology for Indian bikes has proved to be a big success. The success
of TVS Apache is especially significant because it was developed with
indigenous technology.
13
Two stroke Max Range – On the way out
The company is currently looking forward to phase out its two stroke Max
range, which is perceived to be less fuel efficient with a new four stroke range.
The changeover is expected to take place by the end of June 2009.
Two new launches could out TVS on a high growth
trajectory
TVS Centra
TVS Centra a new 100 cc model has recently been launched and the company
has set ambitions targets of achieving monthly sales in the range of 15000-
20000 bikes per month.
Also, a new upgraded 125 cc TVS Victor has been launched which will improve
the trajectory of the company.
Three wheeler project- entering a new market
TVS Motor has set the stage for entry into the three-wheeler markets with the
setting up of a new plant at Nanjangud, near Mysore in Karnataka. We
understand that the company would be targeting the sub-one ton passenger and
goods carriers segment of the market.
14
With an investment of about Rs 50 crore in phase-1, it will cater to both
passenger and cargo segments. The total investments for the three wheeler and
four-wheeler quardricycle project are expected to be in the range of Rs 500
crore in the next two-three years. It plans to go with petrol version of three
wheelers and expects higher demand to come from B class towns. The company
expects higher margin and low competition in three-wheeler business as
compared to its two-wheeler business. Three wheeler sales have grown at a
CAGR of 7% over the last 9 years to 2.26 lakh units FY 03, and are expected to
grow at the same rate for the next five years. TVS is expected to roll out its first
three-wheeler by the end of FY05 to garner a 30% market share with around
100,000 unit sales by the end of FY08.
Three-wheeler market scenario
These are two main segments in the Indian passenger three -wheeler markets
are:
Number of seats, including driver, not exceeding 4 and maximum mass not
exceeding 1 tonne.
Number of seats including driver excluding 4 but not exceeding 7 max mass not
exceeding 1.5 tonnes.
The three-wheeler goods carrier segments are:
Maximum mass not exceeding 1 tonne
15
Others.
Around 95% of the three-wheeler sold in India belongs to the smaller vehicles
category in which Bajaj Auto is the major player and has around 90% market
share. The other players in the segment are Atul Auto and Piaggio group, Italy.
Similarly, in the three-wheeler segment, domestic sales of the goods carrying
variety grew a whopping 46.95%. This growth in 2002-03 could have possibly
come from two factors.
1) The increasing number of cities whose corporations have legislated that
larger goods carrier, like trucks be kept out for logistics purpose.
2) The increase in the number of offerings in this category, especially from
companies such as Mahindra & Mahindra and Piaggio vehicles pvt. Ltd.
Quardricycle-A new introduction in the Indian market
There is a new challenger emerging in the Quardricycle segment. These new
vehicles could impact on the entry level sales. These new vehicle could impact
on the entry level sales. Quardricycles are three wheelers converted into four
wheelers by using, a column axle. All the major three-wheeler units have
prepared Quardricycles prototypes.
16
Merger of engine components Division of Lakshmi Auto components with
TVS Motor:
TVS motor would merge engine component division of Lakshmi Auto
Component Ltd. (LAC) and investments and other assets with itself and the
dwap ratio has been fixed at once phase of TVS motor for every seven share
held as consideration for the merger. Presently TVS motor holds 66.5% of
equity capital of LAC, which would be cancelled. Around 66% of LAC’s sales
come from the engine components division, mode of which is currently being
sold to TVS motor. LAC’s total net sales in HI FY 04 were Rs. 69 crore and
made a net profit of Rs. 10.5 crore..
The Plastics and Rubber components division of LAC will be transferred to the
wholly owned subsidiary company, Sundaram Auto Components Ltd. The total
consideration on slump – sale based is Rs. 12.25 crore.
Strong focus on R&D
The company has put in place a strong R & D team consisting 400 engineers &
is spending about 3% of its turnover on R & D every year and has in the
process setup a strong world class facility for product design and development.
During 2002-03, the company applied for 16 patents & published five technical
research papers in international conference. Modified research projects are
17
carried in association with leading international research labs and Indian
institutes. R & D as percentage of sales in expected to increase from 1.5% in FY
o2 to 3.2% in FY 04.
Valuation
The company’s valuations are dependent on five events:
Current four businesses grow at the normal industry growth rates.
New product launches achieve their targets and are well accepted by the
market.
Three wheeler foray achieve targeted volume in the desired rates of return on
capital employed.
Quadricycle foray achieve the desired rate of return on the capital employed.
Overall investment returns
18
TVS MOTOR COMPANY
TVS Motor Company Limited, part of the TVS Group, is one of India's leading
two-wheeler manufacturers. With a turnover of over Rs.2700 crores, the
Company manufactures a wide range of motorcycles, scooters, mopeds and
scooterettes. Little wonder, it boasts of more than 7 million happy customers.
The chapter called two wheelers in India begins…..
The year was 1980. And it is a year to remember for the Indian two-wheeler
industry. For it was this year that saw India's first two-seater moped, TVS 50,
rolling out on the Indian roads. For some it was freedom to move. For some,
shorter distances to span. For the Indian Automobile sector, a breakthrough to
be etched in history.
With the joint venture with Suzuki Motor Corporation in 1983, TVS-Suzuki
became the first Indian company to introduce 100 cc Indo-Japanese motorcycles
in September 1984. Through an amicable agreement the two companies parted
ways in September 2001.
19
Unmatched Performance
Today TVS Motor Company has the largest market share in the moped category
with a whopping 65.3% and is also the undisputed leader in the scooterette
segment with 34.3% share. It also holds 18.3% market share in motorcycles.
Graph
Wide Network
With a strong sales and service network of 500 Authorized Dealerships, 1018
Authorized Service Centres and over 864 Certified Service Points, TVS is
growing from strength to strength.
World Class Facilities
The company manufactures its motorcycles, scooterettes and mopeds at its
state-of-the-art factories in Mysore and Hosur.
Product Range
TVS offers a wide range of two-wheelers
- Motorcycles - TVS Centra / TVS Victor / TVS Fiero F2/ TVS Max 100/ TVS
Max 100 R
- Scooterettes - TVS Scooty Pep/ TVS Scooty 2S
- Mopeds - TVS XL Super/ TVS XL Super HD
20
VISION
TVS Motor - Driven by the customer
TVS Motor will be responsive to customer requirements consonant with its core
competence and profitability. TVS Motor will provide total customer
satisfaction by giving the customer the right product, at the right price, at the
right time.
TVS Motor - The Industry Leader
TVS Motor will be one among the top two two-wheeler manufacturers in India
and one among the top five two-wheeler manufacturers in Asia.
TVS Motor - Global overview
TVS Motor will have profitable operations overseas especially in Asian
markets, capitalizing on the expertise developed in the areas of manufacturing,
technology and marketing. The thrust will be to achieve a significant share for
international business in the total turnover.
TVS Motor - At the cutting edge
TVS Motor will hone and sustain its cutting edge of technology by constant
benchmarking against international leaders.
21
TVS Motor - Committed to Total Quality
TVS Motor is committed to achieving a self-reviewing organization in
perpetuity by adopting TQM as a way of life. TVS Motor believes in the
importance of the process. People and projects will be evaluated both by their
end results and the process adopted.
TVS Motor - The Human Factor
TVS Motor believes that people make an organization and that its well-being is
dependent on the commitment and growth of its people. There will be a
sustained effort through systematic training and planning career growth to
develop employees' talents and enhance job satisfaction. TVS Motor will create
an enabling ambience where the maximum self-actualization of every employee
is achieved. TVS Motor will support and encourage the process of self-renewal
in all its employees and nurture their sense of self worth.
TVS Motor - Responsible Corporate Citizen
TVS Motor firmly believes in the integration of Safety, Health and
Environmental aspects with all business activities and ensures protection of
employees and environment including development of surrounding
communities. TVS Motor strives for long-term relationships of mutual trust and
inter- dependence with its customers, employees, dealers and suppliers.
22
TVS MOTOR COMPANY
The TVS group was established in 1911 by Shri. T. V. Sundaram Iyengar. As one of
India’s largest industrial entities it epitomizes Trust, Value and Service. It all began way back
in 1984 when Sundaram Clayton Limited (A TVS Group company) introduced its 50 CC
mopeds in the arena of road racing, notching up unbelievable speeds of 105 kmph. Since
then, there has been no looking back for TVS Motor Company. TVS Racing was established
in 1987 with the objective of improving the performance of its bikes. Over the years it has
provided valuable data, design inputs, development of reliable motorcycle models, excellent
vehicle dynamics & handling etc. The true evidence of it is seen in today's TVS Victor and
TVS Fiero. Today, there are over thirty companies in the TVS Group, employing more than
40,000 people worldwide and with a turnover in excess of USD 2.2 billion.
With steady growth, expansion and diversification, TVS commands a strong presence
in manufacturing of two-wheelers, auto components and computer peripherals. We also have
vibrant businesses in the distribution of heavy commercial vehicles passenger cars, finance
and insurance.
TVS Motor Company Limited, the flagship company of the USD 2.2 billion TVS
Group, is the third largest two-wheeler manufacturer in India and among the top ten in the
world, with an annual turnover of over USD 650 million.
The year 1980 is one to be remembered for the Indian two-wheeler industry, with the
roll out of TVS 50, India's first two-seater moped that ushered in an era of affordable
personal transportation. For the Indian Automobile sector, it was a breakthrough to be etched
in history. TVS Motor Company is the first two-wheeler manufacturer in the world to be
honoured with the hallmark of Japanese Quality – The Deming Prize for Total Quality