A project report on analysis of the pre owned car market in hublli of true value

Analysis of the Pre-owned car market in Hubli for Bellad Motor’s
Maruti True Value

Section 1
Executive Summary

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Maruti True Value

Executive summary
Indian auto market is booming the auto manufacturers from all over the world are
attracted by indian market for both,manufacturing and sell cars to indian and export
market.
Making the right choice while buying a used car is very important. Maruti Suzuki,
India's favorite car company, understands you concerns regarding quality,
documentation and value for money. That is why we ensure that the used car you buy
from us has never had an accident and is free from defects or legal hassles. What you
get is a car that is optimized for trouble-free performance and therefore needs
minimum maintenance. Of course, all this is possible only because of Maruti Suzuki's
direct involvement, which includes thorough checks, a complete reconditioning at
state-of-the-art Maruti Suzuki workshops and certification by a Maruti Suzuki
Engineer present at the TrueValue outlets. That's not all, as a mark of a assurance we
give you a warranty up to 1 year and 3 free services. Buy a Maruti Suzuki certified
used car and make a wise investment.

Title of the project

"Analysis of the Pre-owned car market in Hubli for Bellad Motor’s Maruti True
Value"

Problem definition:
Maruti has come out with a concept of creating a new market for Pre Owned
(second hand) cars which it calls ‘True Value’. Therefore Bellad Motors as a
franchisee wants to know the opportunity it has in the market (Hubli- Dharwad)
against the New Cars, and what strategies can be applied to attract the customers
effectively.


Maruti True Value

NEED FOR THE STUDY:

 As there are petty dealers in the ‘Pre Owned’ Car market in Hubli- Dharwad it
is important to learn about the ‘Target Audience’ and the market.
 To know how has Maruti handled the ‘Pre Owned’ market until
now?
 To know what the market share is?
 To understand and work on the gaps, if any.

Objective:
To know and study/analyses the effectiveness of second hand car sales by Maruti
Suzuki’s ‘True Value’ concept through it’s dealer Bellad Motors in Hubli city.
Sub Objectives-
– To know the nature of the market for used cars in the Twin Cities.
– To enumerate the various players for used cars in the Twin cities.
– To enumerate the various reasons for customers opting a used car.
– To find out the awareness/ knowledge level of customers on the
concept of ‘True Value’ offered by Bellad Motors.
– To access the impact of promotional activities on the sale of used cars.

Methodology:

Research Approach
Exploratory research
Exploratory research is concerned with discovering the general nature of the
problem and the variable that relate to it. Exploratory research is characterized by
high degree of feasibility and it tends to rely on secondary data.

Data collection approach
To carry out this research, primary data and secondary are collected.

Primary data (survey data)


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Systematic collection of information directly from respondents. This data is collected
for the descriptive research.
The survey data collected during the study includes the data collected through
questionnaire and face-to-face interview with customer to know about the consumer
behavior.
Secondary data
The first step in data collection approach is to look for secondary data. Usually it is
the data developed for some purpose other than for helping to solve the problem at
hand. Secondary data are collected through various magazines, internal experts,
website, directories, and external experts.

Measurement Technique

Questionnaire:-

For the purpose of this project self-administered questionnaire to potential customers
and for standard commercial business enterprises located in Hubli Dharwad city.

Analysis of DATA
Data are useful only after analysis. Data analysis involves converting the series of
data recorded observations into descriptive statements.
The survey will carried out in Hubli-Dharwad city, and the sample size was 100.The
information gathered is transferred to a SPSS coding sheet, interpretation.


Maruti True Value

Findings
Professionals:

• 36 % of Respondents are of age 25-35, 37 % of Respondents are of age 35-45,
23 % of Respondents are of age 45-55, 4 % of Respondents are of age greater
than 55
• 88 % of Respondents are male, 12 % of Respondents are Female
• 42 % of Respondents are under income Rs.1,00,000-Rs.1,50,000 and 36 % of
Respondents are under income Rs.1,50,000-Rs.2,00,000
• 81 % of Respondents are Married
• 31 % of Respondents have one child and 38 % of Respondents have two
children
• 68 % of Respondents don’t have their own car
• Out of remaining 32% of sample size 54 % of Respondents have Pre owned
cars
• 54 % of Respondents came to know about uncertified dealers through
Advertisements and33 % of Respondents came to know about uncertified
dealers through Friends & Neighbours
• Out of 68% of sampling who don’t own car, 31 % of Respondents wants to go
for new car and 63 % of Respondents wants to buy pre owned car and 63%
would buy it from uncertified dealers.
• 50 % of Respondents considers budget while buying pre-owned car and 40 %
of Respondents considers milage while buying pre-owned car,
• 40 % of Respondents heard about “Maruti True Value”
• Remaining 60% heard it from Advertisements, friends/neighbours
• 58% say they would not buy from ‘True Value’


Maruti True Value

Sample of Students:

• The sample is non-localities

• 68% of them are staying here since more than 2 yrs.

• 56% get more than Rs 10,000/- as their monthly pocket money.

• 60% own a vehicle, out of which 60% own a 2 wheeler, and 40% a 4 wheeler.

• 80% out of the 40% owning a 4 wheeler, own a ‘Pre-Owned Car’.

• 70% have purchased it locally.

• 55% of the sample is interested in buying a car (pre- owned) for time being.

• 78% said they would buy from an Un-certified Dealer.

• Expected price range is- 83% said Rs 50,000- 75,000

• 53% are aware of the concept of Maruti’s ‘True Value’.

• 42% have heard it from news papers, and 0% from melas.

• 71% say they would not buy from Maruti ‘True Value’.

Sample of Dealers:

• 20 % are established in the market since 5-10 years and 50 % are since from 10-

15 years

• 50% use middlemen for sales.

• Promotion activities-

 60%- use news papers


Maruti True Value

 40% - pamphlets

 25%- Melas

• 70% consider festive season as peak point for sales.

• The average sales per year is- 60% said- 25-125 cars

• 30% said- 425- 525 cars

• 67% say customers look for budget

• 68% say customers look for age of the car

• 90% say customers look for mileage

Recommendations and Suggestions -
For the Professionals:
• Target Segment- the target customers whom I suggest Bellad Motors should
concentrate is the advocates, lecturers and petty business men, because they are the
respondents who are keen in buying pre owned cars.
• The target can also be segmented age wise, 25-45 are the most interested
segment in buying a pre owned car.
• Bellad Motors should make an effort to advertise and promote ‘True Value’
through various mediums like news papers, melas and pamphlets.
• Mostly the age group of 25-35 is aware of the Maruti’s True Value concept.
• Family size influences in buying a car is proved through the Chi Square Test,
therefore respondents of the lower income category can also be looked at, for
the sales of the pre owned cars.
• Out of respondents who own pre owned cars, 98% bought it from a Un-
Certified dealer, this shows that people do not prefer buying pre- owned cars from


Maruti True Value

certified dealers, therefore Maruti True Value should make an effort to change this
mind set of the people in Dharwad city.
• When respondents were asked what have they heard of Maruti True Value, the
responses were mostly negative. ‘Price’ was the major issue they have with ‘True
Value’.
• ‘Pre-Owned’ is more of a sophisticated word for the localities; the other petty
dealers have an upper hand on this front, as they use a much simpler and an
easily understood word ‘second hand’. Therefore I suggest that Bellad considers this
point.
• The Bellad showroom is what comes to peoples mind when asked if they have
heard of Maruti ‘True Value’, it is because of the easy view from the highway.

For the students:
• Most of the students want to buy a pre owned car from an un certified dealer,
because of the price factor, therefore when targeting the students category lowering
the price should be considered
• The expected price of the pre owned cars is from Rs 50,000- 75,000.
• The expected age of the car is mostly 3-5 yrs, which the company can consider
these aspects when targeting the students.
• More than 50% of the students are not aware of the True Value concept, which
again calls for advertisements from Bellad Motors.
• 61% of the students get more than Rs 10,000 as their pocket money, this
signifies that it can be assumed the students are from well to do families and Bellad
Motors can use this as a advantage and try perusing them.
• From the personal interaction with the students, the insights gained were, that
the students go to these second hand car melas, and 0% 0f them have known or heard
of True Value conducting melas, therefore I suggest that it be advertised properly.
• The awareness can be spread by using banners and displayed it in front of the
college campus in the most attractive manner.


Maruti True Value

Industry profile


Maruti True Value

AUTOMOBILE INDUSTRY

In India there are 100 people per vehicle, while this figure is 82 in China. It is
expected that Indian automobile industry will achieve mass motorization status by
2014.

Industry Overview
Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the
Automobile Industry of India has come a long way. During its early stages the auto
industry was overlooked by the then Government and the policies were also not
favorable. The liberalization policy and various tax reliefs by the Govt. of India in
recent years has made remarkable impacts on Indian Automobile Industry. Indian auto
industry, which is currently growing at the pace of around 18 % per annum, has
become a hot destination for global auto players like Volvo, General Motors and
Ford.
A well developed transportation system plays a key role in the development of an
economy, and India is no exception to it. Today Indian automotive industry is fully
capable of producing various kinds of vehicles and can be divided into 03 broad
categories: Cars, two-wheelers and heavy vehicles.
Snippets
• The first automobile in India rolled in 1897 in Bombay.
• India is being recognized as potential emerging auto market.
• Foreign players are adding to their investments in Indian auto industry.
• Within two-wheelers, motorcycles contribute 80% of the segment size.
• Unlike the USA, the Indian passenger vehicle market is dominated by cars
(79%).
• Tata Motors dominates over 60% of the Indian commercial vehicle market.
• 2/3rd of auto component production is consumed directly by OEMs.
• India is the largest three-wheeler market in the world.
• India is the largest two-wheeler manufacturer in the world.
• India is the second largest tractor manufacturer in the world.
• India is the fifth largest commercial vehicle manufacturer in the world.


Maruti True Value

• The number one global motorcycle manufacturer is in India.
• India is the fourth largest car market in Asia - recently crossed the 1 million
mark.

Segment Know-how
Among the two-wheeler segment, motorcycles have major share in the market. Hero
Honda contributes 50% motorcycles to the market. In it Honda holds 46% share in
scooter and TVS makes 82% of the mopeds in the country.

40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of
the market share. Among the passenger transport, Bajaj is the leader by making 68%
of the three-wheelers.

Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in
passenger cars and is a complete monopoly in multi purpose vehicles. In utility
vehicles Mahindra holds 42% share.

In commercial vehicle, Tata Motors dominates the market with more than 60% share.
Tata Motors is also the world's fifth largest medium & heavy commercial vehicle
manufacturer.

Miscellaneous

Hyderabad, the Hi-Tech City, is going to come up with the first automobile mall of
the country by the second half of 2008. It would be set up by city-based Prajay
Engineers Syndicate in area of more than 35 acres. This 'Autopolis' would have
facilities for automobile financing institutions and insurance services to create a
complete range of services required for both auto companies and customers. It will
also have a multi-purpose convention centre for auto fairs and product launches.


Maruti True Value

INDIAN AUTOMOBILE HISTORY

During the 1920s, cars exhibited design refinements such as balloon tires, pressed-
steel wheels, and four-wheel brakes.

In Brief
The origin of automobile is not certain. In this section of automobile history, we will
only discuss about the phases of automobile in the development and modernization
process since the first car was shipped to India. We will start automotive history from
this point of time. The automobile industry has changed the way people live and
work. The earliest of modern cars was manufactured in the year 1895. Shortly the first
appearance of the car followed in India. As the century truned, three cars were
imported in Mumbai (India). Within decade there were total of 1025 cars in the city.
The dawn of automobile actually goes back to 4000 years when the first wheel was
used for transportation in India. In the beginning of 15th century Portuguese arrived in
China and the interaction of the two cultures led to a variety of new technologies,
including the creation of a wheel that turned under its own power. By 1600s small
steam-powered engine models was developed, but it took another century before a
full-sized engine-powered vehicle was created.

The actual horseless carriage was introduced in the year 1893 by brothers Charles and
Frank Duryea. It was the first internal-combustion motor car of America, and it was
followed by Henry Ford's first experimental car that same year. One of the highest-
rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that featured a
quiet 6-cylinder engine, leather interior, folding windscreens and hood, and an
aluminum body. It was usually driven by chauffeurs and emphasis was on comfort
and style rather than speed. During the 1920s, the cars exhibited design refinements
such as balloon tires, pressed-steel wheels, and four-wheel brakes. Graham Paige DC
Phaeton of 1929 featured an 8-cylinder engine and an aluminum body. The 1937
Pontiac De Luxe sedan had roomy interior and rear-hinged back door that suited more
to the needs of families. In 1930s, vehicles were less boxy and more streamlined than
their predecessors.


Maruti True Value

INDUSTRY INVESTMENT

According to Commerce Minister Kamal Nath, India is an attractive destination for
global auto giants like BMW, General Motors, Ford and Hyundai who were setting
base in India, despite the absence of specific trade agreements.
Current Scenario
• On the cost front of Indian automobile industry, OEMs are eyeing India in a
big way, investing to source products and components at significant discounts
to home market.
• On the revenue side, OEMs are active in the booming passenger car market in
India.

• The Indian automobile industry crossed a landmark with total vehicle
production of 10 million units.
• Car sales was 8,82,094 units against 8,20,179 units in 2004-05.
• The two-wheeler market grew by 13.6 per cent with 70,56,317 units against
62,09,765 units in 2004-05.

• Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units
against 3,18,430 units in 2004-05.

Snippets
• By 2010, India is expected to witness over Rs 30,000 crore of investment.
• Maruti Udyog has set up the second car with an investment of Rs 6,500 crore.
• Hyundai will bring in more than Rs 3,800 crore to India.
• Tata Motors will be investing Rs 2,000 crore in its small car project.
• General Motors will be investing Rs 100 crore and Ford about Rs 350 crore.
• Ashok Leyland and Tata Motors have each announced over Rs 1,000 crore of
investment. India, sourcing base for global auto majors.
• Passenger car and motorcycle segment is set to grow by 8-9%. The two-
wheeler segment will clock 11.5% rise by 2007.


Maruti True Value

Why India
The economy of India is emerging. The following table shows the ranking of India in
the past four years.
Rank 2005 2004 2003 2002
1 China China China China
2 India Thailand Thailand Thailand
3 Thailand India USA USA
4 Vietnam Vietnam Vietnam Indonesia
5 USA USA India Vietnam
6 Russia Russia Indonesia India
7 Korea Indonesia Korea Korea

Twin Advantages:
• Scaling costs
• Optimizing resources

INDIAN AUTOMOBILE INDUSTRY GROWTH

The passenger car and motorcycle segment in Indian auto Industry is growing by 8-9
per cent.
Facts & Figures
India, in auto sector, is turning to be a sourcing base for the global auto majors. The
passenger car and the motorcycle segment is set to grow by 8-9 per cent in coming
couple of years, says the ICRA report. The industry is likely to maintain the growth
momentum picked up in 2002-03. The ICRA's analysis points on the auto sector
that the passenger car market in the country was inching towards cars with higher
displacements. The sports-utility-vehicle (SUV) that was getting crowded everyday,
would witness intense competition as many SUVs had been competitively priced, the
report said.

Honda, Suzuki, General Motors and Hyundai, the global automakers had already
launched their premium SUVs in the market to broaden their portfolio and create
product excitement in the segment estimated at about 10,000 units annually. Heavy
commercial vehicles market would rise at 5.5 per cent and sales of light buses and


Maruti True Value

trucks would achieve 4.7 per cent growth. For the tractors, the report predicts a
growth at 4.6 per cent.
Indian Auto Market Growth for the year 2005-06
• The domestic automobile industry sales grew 12.8 per cent at 89,10,224 units
as against 78,97,629 units in 2004-05.
• The automotive industry crossed a landmark with total vehicle production of
10 million units.
• According to the Society of Indian Automobile Manufacturers (SIAM), car
sales was 8,82,094 units against 8,20,179 units in 2004-05.
• The growth of domestic passenger car market was 7.5 per cent
• Car exports stood at 1,70,193 units against 1,60,670 units in 2004-05.
• The two-wheeler segment, the market grew by 13.6 per cent with 70,56,317
units against 62,09,765 units in 2004-05.
• Motorcycles had the upward march, 17.1 per cent in domestic market touching
58,15,417 units against 49,64,753 units in 2004-05.
• Scooter segment grew by 1.5 per cent, fall at 9,08,159 units against 9,22,428
units in 2004-05.
• Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units
• Medium and heavy commercial vehicles managed a growth of 4.5 per cent
against 23 per cent growth in the year ended March 31, 2005.
• Light commercial vehicles sales growth was 19.4 per cent at 1,43,237 units
• Three-wheelers sales rose by 17 per cent at 3,60,187 units against 3,07,862
units in 2004-05.

Auto Component Market


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The Indian auto parts industry is significantly fragmented with a large number of
players having a turnover of less than US$10 million per year. The industry directly
employs about 2,50,000 people and has an annual turnover over US$ 56.3 billion.
• Estimated market size - US$ 6.7 bn
• Estimated market size by 2012 - US$ 17 bn
• Projected CAGR - 15%

Market Advantage
• Fast paced urbanization to rise from 28% to 40% by 2020.
• Upward migration of household income levels.
• Middle class expanding by 30-40 million every year.
• Growing working population.

Vehicle Production in India
India is the 11th largest Passenger Cars producing countries in the world and 4th
largest in Heavy Trucks Indian Market Analysts are jubilant over the fact that India
has the fastest growing automobile industry (passenger cars segment) in the world
today. This is seen as the result of rapid increase of middle-class population in the
country combined with the government's pro-development policies. The findings of
International Organization of Motor Vehicle Manufacturers revealed that in India the
car production had grown to 30% in 2004, thus leading the table, Brazil came a
distant second with the increase of 17%.
Automobile Industry is the largest industry in India with an impressive growth in the
last two decades. The reason behind the growth was abolition of licensing in 1991 and
permitting automatic approval and successive liberalization of the sector. According
to estimation the compound annual growth rate (CAGR) of Indian Automobile sales
will grow at 9.5% and will touch a mark of 13,008 million by 2010. The figure for
FY05 was 8.45 million units. To tap this large opportunity, the Indian Auto
Companies along with the global giants have announced huge expansion plans.
Maruti Udyog Ltd. was the largest 4-Wheelers producer in 2005-06 followed by Tata
Motors. Hyundai did well but the difference was nearly half of Tata Motors.
Production of 4-Wheelers


Maruti True Value

Types of Vehicle 2002-03 2003-04 2004-05 2005-06
Passenger Vehicles 557400 782550 960480 1045880
Utility Vehicles 114470 146330 182020 196380
Multipurpose Vehicles 51450 60670 67370 66665
Total 723320 989550 129870 1308925

ANALYSIS OF THE CAR MARKET IN INDIA

The automotive industry is one of the largest industries worldwide and in India as
well. The automotive sector drives upstream industries like steel, iron, aluminum,
rubber, plastics, glass and electronics, and downstream industries like advertising &
marketing, transport and insurance.

The automotive industry can be divided into five sectors:

• Passenger Cars
• Multi-Utility Vehicles (MUVs)
• Two-Wheelers
• Three-Wheelers
• Commercial Vehicles-Light Commercial Vehicles (LCVs) / Medium & Heavy
Commercial Vehicles (M&HCVs) Tractors

Despite a head start since its beginning in the 1940s, the Indian automotive industry
has been moving at a slow pace mainly due to the all-pervasive regulatory atmosphere
prevailing till recently. Moreover, the industry was considered low-priority as cars
were thought of as unaffordable luxury for the masses.

In the post-liberalization period the passenger car sector witnessed a boom, owing to
economic vibrancy, changes in government policies, increase in purchasing power,
improvement in lifestyles, and availability of car finance. The industry was
deregulated in 1993, and many companies, both Indian and foreign (Daewoo, Ford,
General Motors, and DaimlerChrysler), entered the market. However, the smooth
sailing was disrupted in the last quarter of 1996. The automotive industry, which


Maruti True Value

contributed substantially to the industrial growth in FY1996 failed to maintain the
same momentum between FY1997 and FY1999. The overall slowdown in the
economy and the resultant slowdown in industrial production, political uncertainty
and inadequate infrastructure development were some of the factors responsible for
the slowdown in the automotive industry.

While the passenger car segment, with the launch of many new models, posted
positive growth rates in FY 2000 and FY 2001, the upturn was rather brief. In
FY2002, the automotive sector especially the passenger car segment continued to reel
under the pressure of over-capacity with low demand. FY2003 witnessed a healthy
growth in the passenger car sales with the pick up in the economy. The passenger car
sales in the first half of FY2004 were also buoyant.

However, the contribution of the automobile sector to industrial output, number of
cars per person, automobile sector employment as a percentage of industrial
employment, number of months' income required to purchase a car, and penetration of
cars are quite low. Low demand and lack of vision on the part of the OEMs and
policymakers stunted the Indian automobile industry. However, major car
manufacturers worldwide foresee future demand in India. The regulatory environment
has been liberalized and demand has picked up. Global OEMs who enjoy scale
economics both in terms of manufacturing and research and development have
entered the Indian market, leading to a shift in the business operations of suppliers,
assemblers and marketers.

Key Demand Drivers

Disposable income was perceived as the key factor driving passenger car demand. But
over time, other factors included the need for greater mobility, non-availability of
public transport services, availability of cheap finance, development of the used-car


Maruti True Value

market, introduction of new technologically superior models, increasing levels of
urbanization, and changing consumer profiles.

Market Characteristics

Product Penetration

The penetration of passenger cars in India stood at five per thousand persons as
against 27 for two-wheelers in 2000. Significantly, the Indian figures are lower than
even those for economies like Indonesia (14 and 62). The relatively high penetration
of two-wheelers in India reflects the population's need for mobility and their limited
affordability.

Automotive Penetration (vehicles in use per thousand persons)*

Passenger Cars Two wheelers

USA 478 14

United Kingdom 373 12

Japan 395 115

Germany 508 36

China 3 8

Indonesia 14 62

South Korea 167 59

India 5 27

*Source: World Bank

Market Segmentation


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Considering that affordability is the most important demand driver in India, the
domestic car market has been segmented on the basis of vehicle price till SIAM
introduced the length-based2 classification of passenger cars since FY2003. The
automobile industry in India is still concentrated around the mini and the compact
segments which together account for around 81.8% of the automobile market in terms
of units sold in FY2003.

Demand Projection for Passenger Cars

FY2003 FY2004 FY2007 CAGR
(Actual (Forecast) (Forecast)
)

Passenger car sales 611715 666248 838845 8%

Domestic Sales

Increased affluence, wider selection and the ready availability of car loans is driving
the Indian car market through the roof. During the last five years (2000-05), the
production of passenger cars in India increased by more than 100 per cent. India
achieved the sales of 1.11 million vehicles last year (2005).

Domestic sales have been growing at a clipping pace:

• Passenger car sales rose by 22.84 per cent during April-September 2006,
compared to the corresponding period n 2005.
• The cumulative growth of overall sales of passenger vehicles during April-
September of 2006-07 was 20.73 percent.
• Utility Vehicle (UVs) sales grew at 12.85 per cent during the same period.
• Overall, the commercial vehicles segment grew at 36.96 per cent. Growth of
Medium and Heavy Commercial Vehicles was 39.92 per cent. Light Commercial
Vehicles also performed well with a growth of 32.86 percent.


Maruti True Value

Exports

India is fast emerging as a manufacturing base for car exports. According to the
Society of Indian Automobile Manufacturers (SIAM), a total of 89,338 vehicles were
exported in September 2006, a 58.07 per cent jump as compared to the same month
last year. While passenger vehicle exports grew at 13.15 per cent, two-wheelers and
commercial vehicle exports grew at 27.80 per cent.

Major Manufacturers of Automobiles in India

• 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

Foreign players in India

Calendar 2006 has seen the entry of many high-end brands into the country. The
Indian automobile market will see at least 30 new launches, spanning everything from
affordable hatchbacks to mid-size models to super luxury high-end cars and SUVs.


Maruti True Value

Mercedes, BMW, Porsche, Audi, Bentley and Rolls Royce are already here. Now, the
Italian marquee Lamborghini is also planning to enter the country. The Italian
marquee plans to launch the Gallardo.

German luxury car maker Audi AG is preparing to drive into India a range of sporty,
lifestyle cars like S8 and RS4 early next year. The year 2007 will also mark Audi's
entry into merchandising in Indian car bazaar.

CAR STATISTICS INDIA

The Indian automotive industry is the 2nd fastest growing in the world. About 8
million vehicles are produced annually in this country toady. During 2005-2006, India
has emerged as the 3 rd largest market in the Asia Pacific Region. With various car
manufacturing companies setting up their units in different parts of the country, the
production of the cars will increase at a very fast rate. The car statistics indicate that
India will soon become one of the top 10 car manufacturing countries , leaving behind
the U.K. Car statistics also show that by the end of the fiscal year 2006-2007, the car
production capacity in India will exceed the mark of 2 million. Thus, the production
of cars will increase by 70% from the present capacity of 1.2 million.

The domestic sales of passenger cars have increased significantly over the years. A
graphical representation of the domestic sale of cars will give you an insight about the
present market situation prevailing in the country: In the recent years, India has
emerged as one of the major bases for manufacturing small passenger cars. At present
the Indian automotive industry boasts of being the 3 rd largest manufacturer of small
cars. According to the car statistics almost 70 % of the cars sold in this country come
under the segment of small cars. A number of car manufacturers like: Maruti Udyog,
Tata Motors, Hyundai, Honda, Ford, Hindustan Motors, Fiat, General Motors etc
offer various new model of cars now and then. It is expected that the various
automobile manufacturers will be investing about $ 5 billion in India, between 2005-
2010.


Maruti True Value

As per the car statistics, export of passenger cars from India has also grown
considerably over the last decade. A graphical representation of car export trend will
help you to make an in-depth analysis of the present status of the Indian automotive
industry: With new strategies being implemented and more investments being made
in Indian automotive industry the production as well as the domestic sale and exports
will increase substantially.

India definitely is shining; with a GDP that is sparkling at over 8 per annum the
country certainly is on the right course. The automobile exports are at an all time high
as was indicated by Society of Indian automobile Manufacturers in a report released
in 2006. According to the report, the passenger car segment saw a rise of 9% in
January 2006.
The following table will provide a clear picture of the rapid rise of automobile Export
in India.

Analysis of Indian Exports:

Strengths
• Cost competitiveness in terms of labor and raw material.
• Established manufacturing base. Economics of scale due to domestic market.
• Potential to harness global brand image of the parent company.
• Global hub policy for small car like Hyundai, Suzuki, etc.

Weakness
• Perception about quality.
• Infrastructure bottlenecks.

Opportunities
• Huge export markets such as Europe, America, Africa, and others for Indian
cars.

Threats
• China, Malaysia, Thailand, etc.
• Many other countries also have strategies for export promotion.


Maruti True Value

Export Imperatives:
Internal Factors:
• Attaining high quality for global standards.
• Continuous cost reduction for global competitiveness.
• Supply chain management (logistics).
• Attaining economies of scale & scope.

External Factors:
• Improve infrastructure (ports, roads, etc).
• Improve EXIM regulations.

The Indian passenger car segment
The Indian car industry an be classified, based on the price of the car, into the ‘small’
car or the economy segment (up to Rs.0.25mm), mid-size segment (Rs.0.25 –
0.45mn), luxury car segment ( Rs 0.45 -1mn) and super luxury car segment (above
Rs1 mn).
The models in the car market can be fitted to different segment as given below:-
Category Models
Economy segment (up to 0.25mn) Maruti Omni, 800, Padmini
Mid-size segment (Rs0.25-0.45mn) Swift, Wagen-R Premier
118NE,Ambassador,Nova, Fait Uno,Zen,
Huundai Santro, Daewoo Matiz, Tata
Indica, Contessa, Aulto.
Luxury Car Segment Tata Indica, Maruti esteem,Ford Ikon,
Opel Astra, Fait Siena, Opel Corsa,
Hyundai Accent, Tata Estate, Ford Feasts,
Honda City,Lancer.
Super luxury segment ( Above Rs 1mn) Merceds Benz, BMW, Nissan, Audi,
Luxus, Skoda and other imported Models.

The demand for passenger cars can be segmented on the basis of the user segment as
those bought by taxi operators, government/non government institutions individual
buyers etc. A major portion of the demand in India accrues mainly from personal
vehicle owners.


Maruti True Value

Industry analysis using porters five force:
Porters “five force of competition” model views the profitability of an industry as
determined by the five source of competition pressure. Theses five force of
competition include three source of “Horizontal” competition – competition from
substitute, the threat of competition from entrants, and competition from established
producers – and two source of “vertical” competition – the bargaining power of
suppliers and buyers. The following write-up is a view of the Indian passenger car
industry from these five angles leading to the expected changes in the coming years in
the underlying structure of the Indian passenger car industry.

Competition from substitute
 Inadequate Public Transportation System: In developed nations city planners
have tried to relieve congestion and pollution by creating an efficient public
transportation system. However, they have been remarkably ineffective in
encouraging motorists to forsake their cars for buses or subway. The public
transportation system in India is not only extremely inadequate, it is notably poor in
quality. This scenario is not expected to change drastically in the next ten years.
 Electric cars: All the major car manufacturers in the world are currently
developing electric cars or hybrid cars to reduce pollution in the coming years.
However, these technologies wll requires considerable length of time to become
commercially feasible in developing nations.
The lack of inadequate public transportation system coupled with the fact that the
electric or hybrid cars are still in the developmental stage means that the Indian car
industry faces minimal competition from substitutes.

Treat of new entrants
 Economies of scale: in the automobile industry, economies of scale act as a
significant entry barrier since it is a capital-intensive industry. Globally, it has been


Maruti True Value

witnessed that car manufacturers with low volumes find it extremely difficult to
survive given the high per unit cost. The acquisition of Rolls Royce, Jagur, Rover, and
AMC/jeep are a testament to this. On the other hand by entering on a large scale, one
runs the risk of drastic under-utilization of capacity as observed by Daewoo’s
experience in India. Since the economy segment cars are expected to drive volume
growth in India in the coming years, it is extremely important for a manufacturer to
have a model in this segment to reduce his per unit cost.
 Government policy: the license-raj of the Indian government toll 1991 acted as
a significant barrier for any new entrants in the passenger car industry. Moreover, the
government’s perception of the car being a “luxury “rather than a modern “necessity’
resulted in this sector being labeled as “low priority.” However, the liberalization of
the Indian economy has removed this hindrance.
 huge capital Costs: Huge capital Cost act as significant entry barrier and only
established companies with deep pockets possess the resources to enter the
automobile industry. Significant costs are involved in the development of a new car as
can be seen by Telco’s Indica car which has incurred an expenditure of Rs.17 bn.
 Absolute cost Advantages: Maruti’s presence in the car industry since 1984
gives it considerable cost advantage over the new entrants. Not only are its plants
highly depreciated and its cars highly indigenized as compared to its competitors, it
has a wide distribution and service network which will require mammoth resource to
replicate.
Absolute Cost Advantage: Maruti’s presence in the car industry since 1984 gives it
considerable cost advantage over the new entrants. Not only are its plants highly
depreciated and its cars highly indigenized as compared to its competitors, it has a
wide distribution and service network which will require mammoth resource to
replicate.
Although liberalization of the Indian economy has reduced the impact of government
policy as an entry barrier, the car industry still enjoy high entry barriers due to huge
capital costs involved in setting up efficient plants and numerous cost advantages
enjoyed by Maruti. The recent pull-out of Peugeot is an example that even a global
automobile company could find it extremely difficult to operate in India if it faces
labor trouble and Rivalry between Established competitors.


Maruti True Value

 Highly Concentrated Industry : The Indian car industry is highly
concentrated with Maruti itself accounting for about 80% of all sales. The lack of
competition in the economy segment to Maruti 800 has given the company
considerable power. Its dominance in this segment gives it the power to cross
subsidize its models in the other segment. However, this scenario is expected to
change drastically over the next three years with a number of new models being
launched to challenge maruti 800s dominance the scenario in the economy segment
could be similar to that in the premium segment currently with intense price
competition. The slashing of cielo`s price by 25%has led to ford and opel introducing
cheaper models
 Diversity of competitors: 1984 and 1993 have been land mark years for the
Indian car industry. The entry of Maruti in 1984 changed the complexion of the
industry as for the first time Indian had opportunity a buy a car which was comparable
to the Japanese automobile. 1993 was a historic year as the industry was deregulated
an India become the latest battlefield for global auto majors. The last few years have
seen the industry integrate with global automobile industry and evolve into being
extremely competitive. For the first time, Maruti’s position as the leader of the car
industry will be severally challenged especially if three new cars (Tata Indica,
Daewoo, D’Art, and Hyundai Santro) in the economy segment can deliver the
promised performance.
 Product differentiation: One of the key trends observed in the car industry
during the last decade is that the products of different companies have become
increasingly similar especially in the economy and mid-size segment. There is a
perceptible shift towards “car” being treated as a commodity rather than as a
consumer good. In the premium car segment in India, differentiation between
different models is declining as companies strive to increase volumes by cutting
prices. Even Opel Astra has decided to introduced a new model without any frills to
reduced its prices by Rs.10 million.
 Increase in Working Capital Needs: The intense rivalry between the
automobile companies will mean that the companies would have to give longer credit
periods to its dealers. The substantial over-capacity in the industry will lead to


Maruti True Value

increased inventory holding. These two factors point towards an increase in working
capital needs of car companies.
 The competition between firms in the car industry is expected the intensify
considerable as never companies will start reducing Maruti’s dominance of the market
the expected significant over-capacity in the industry, increasing working capital
needs, and high exit barriers coupled with low differentiation between models
especially in the economy segment will put downward pressure on price and
profitability of companies.

Bargaining power of Buyers
• Buyers price Sensitive: Car buyers in India are extremely price-sensitive
especially in the economy segment. Although it is too early to judge the three new
small cars and Maruti response to it, we can expect the price competition to intensify
since buyers would e more willing to switch while intense competition among the
companies would require them to generate volumes.
• Relative bargaining power : Gone are the days when the India car buyer had
to buy one of the 30,000 Ambassadors or Fiate, which were produced. The
penetration of satellite television has globalized the Indian customer. Car companies
have seen forced to revamp their dealer network. From a small shed for a dealership,
the shift is towards huge dealership who not only offer complete range of services for
the car but also make sure that the customer has a replacement vehicle so that they
may not become immobile.
• Availability of Easy financing: the entry of numerous car companies has
brought along with it a massive increase in the availability of cheap finance for the
Indian consumer. This hassled to fierce competition among the car companies and has
even led to free gifts being doled out to buyers to lure them to purchase a particular
car.
Bargaining Power of Suppliers
Diminishing Supplier Power : one of the key trends observed in the global auto
industry is the significant increase in outsourcing of car parts. In India, the
development of the auto ancillary industry has also brought in this phenomenon.


Maruti True Value

However, the large number of competitors for supplying each part implies that in the
coming years, supplier power will diminish to a large extent except for suppliers who
have almost monopolistic power like Mico-Bosch. Also, there is a increasing shift
towards reduction in vendor base for a company which means that the chosen
suppliers also have to make substantial financial investments to enhance the quality of
their products.
Supplier power in the automobile industry will diminish greatly in the coming years
due to the large number of competing supplier, threat of cheaper and better-quality
imports, and an increasing trend towards reduction of a car company’s vendor base.
Conclusion
Although it is possible to predict with some confidence the qualitative impact of
individual structural changes, there are difficulties, first in predicting the quantitative
impact of structural changes, and second, in predicting the aggregate effect of
simultaneous structural changes that have conflicting effect n probability. The Indian
car industry is still in a nascent stage. The economy car segment acconts for the
majority of the cars sold. However, as the economy picks up stream again and the
Indian market matures, the car industry will also climb up the learning curve. The
industry has virtually no competition from substitute at next decade. High entry
barrier due to high capital costs is also a positive indicator for the existing car
manufacturers. However, the intense competition between firms and increasing
bargaining power of the buyers indicate towards intensifying competition ad
competition and depressing profitability. It will also lead to an increasing need of
working capital for these companies who will e faced with longer credit periods and
higher inventory holdings. However, given the low motorization in India and
increasing per capita incomes, the potential exists for the Indian car industry to
increase profitability y generating significant volumes and reducing manufacturing
costs. Significant opportunities exist for players to spot gaps in the market and cater to
particular niche markets like sports utility vehicles and minivans. The diminishing
power of the supplier industry will help the industry in improving the quality of car
components and getting longer payment periods. The key to success in the Indian car
market will be offering good quality cars that offer value for money, run innovative
marketing campaigns to attract potential buyers, and offer excellent after sales


Maruti True Value

service. Companies, which have a range of vehicles in all the segments of the market
like Maruti, will be at a significant advantage due to their ability to cross-subsidize
model
Manufacturing process
The body panel and engine constitute a major portion of the total cost of car
manufacture. A typical cost structure for car is as given below.
Parts/assembly % of total cost
Glass 5
Brakes/wheels/tyres 6
Interiors 7
Transmission system 8
Ignition/exhaust system 8
Steering/suspension 9
Comfort fittings 11
Engine 16
Body 18
Others 13

Car manufacturing is basically assembly of components procured from ancillaries or
auto component manufacturers. Nearly 80% of auto components are outsourced by
the car manufacturers. This helps in reducing the capital cost needed to setup a car
manufacturing plant.


Maruti True Value

Company profile


Maruti True Value

Maruti Suzuki motors

MARUTI UDYOG LIMITED

Maruti Udyog Ltd is one of India's leading automobile manufacturers and the market
leader in the car segment, both in terms of volume of vehicles sold and revenue
earned. 18.28% of the company is owned by the government, and 54.2% by Suzuki of
Japan. The Indian government held an Initial Public Offering of 25% of the company
in June of 2003.

The company annually exports more than 30,000 cars and has an extremely large
domestic market in India selling over five hundred thousand cars annually. Maruti
800, till 2004, was the India's largest selling compact car ever since it was launched in
1983. More than a million units of this car have been sold worldwide so far.
Currently, Maruti Alto tops the sales charts.

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti"
is commonly used to refer to this compact car model. Till recently the term "Maruti",
in popular Indian culture, was associated to the Maruti 800 model.

The largest selling car from Maruti's stable, Maruti 800

In the order they were launched:

• Maruti 800: Launched 1983. Largest selling car in India, till 2004.
• Maruti Omni: Launched 1984.
• Maruti Gypsy: Launched 1985.
• Maruti 1000: Launched 1990
• Maruti Zen: Launched 1993 with a facelift in 2003.Production ended in 2006.
• Maruti Esteem:Launched 1994
• Maruti Wagon-R:Launched 1999 Modified 2006
• Maruti Baleno:Launched 1999
• Maruti Alto:Launched 2000. Currently the largest selling car in India
• Maruti Grand Vitara:Launched 2003


Maruti True Value

• Maruti Grand Vitara XL-7
• Maruti Versa: Launched 2004
• Maruti Swift: Launched 2005
• Maruti Zen Estilo Launched in 2006
• Maruti Swift Diesel Launched in 2007

Services offered

• Authorized Service Stations- Maruti is one of the companies in India which has
unparalleled service network. To ensure the vehicles sold by them are serviced
properly Maruti had 1545 listed Authorized service stations and 30 Express Service
Stations on 30 highways across India.
• Maruti Insurance- Launched in 2002 Maruti provides vehicle insurance to its
customers with the help of the National Insurance Company, Bajaj Allianz, New India
Assurance and Royal Sundaram. The service was set up the company with the
inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and
Maruti Insurance Brokers Pvt. Limited.

• Maruti Finance- To promote its bottom line growth, Maruti launched Maruti
Finance in January 2002. Prior to the start of this service Maruti had started two joint
ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE
Countrywide respectively to assist its client in securing loan. Maruti tied up with ABN
Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank,
and Sundaram to start this venture including its strategic parnters in car finance.
Again the company entered into a strategic partnership with SBI in March 2003. Since
March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-
Maruti Finance is currently available in 166 cities across India.

• Maruti TrueValue- Maruti True Value is a service offered by Maruti Udyog to
its customers. It is a market place for used Maruti Vehicles. One can buy, sell or
exchange used Maruti vehicles with the help of this service in India


Maruti True Value

• N2N Fleet Management- N2N is the short form of End to End Fleet
Management and provides lease and fleet management solution to corporates. Its
impressive list of clients who have signed up of this service include Gas Authority of
India Ltd, DuPont, Reckitt Benckiser, Sona Steering, Doordarshan, Singer India,
National Stock Exchange and Transworld. This fleet management service include
end-to-end solutions across the vehicle's life, which includes Leasing, Maintenance,
Convenience services and Remarketing.

• Accessories- Many of the auto component companies other than Maruti Udyog
started to offer components and accessories that were compatible. This caused a
serious threat and loss of revenue to Maruti. Maruti started a new initiative under the
brand name Maruti Genuine Accessories to offer accessories like alloy wheels, body
cover, carpets, door visors, fog lamps, stereo systems, seat covers and other car care
products. These products are sold through dealer outlets and authorized service
stations throughout India.

• Maruti Driving School

• Exports- Maruti Exports Limited is the subsidary of Maruti Udyog Limited with
its major focus on exports and it does not operate in the domestic Indian market. The
first commercial consignment of 480 cars were sent to Hungary. By sending a
consignment of 571 cars to the same country Maruti crossed the benchmark of
3,00,000 cars. Since its inception export was one of the aspects government was keen
to encourage. Every political party expected Maruti to earn foreign currency. Angola,
Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri Lanka, Uganda, Chile,
Guatemala, Costa Rica and El Salvador are some of the markets served by Maruti
Exports

Key Competitors-
• Tata Motors
• Hyundai India
• Ford India
• FIAT India


Maruti True Value

• General Motors India

Pride Pointers

• India’s largest automobile company

• MUL Rolls out one car every 43 second.

• Around 4 million people in India are proud to own maruti cars.

• The highest installed production capacity

• More than 35,000 trained technicians for customer support.

• Largest Sales network-270 sales outlets

• Largest service networks- 359 dealers workshop

• Cities covered by sales- 172

• Cities covered by service- 922

• Spare Parts Store- 26

• MGP Shopee- 11

• True Value network- 127 outlets

Some Milestones-


Maruti True Value

1983- Launched, hence bringing the first revolution in the Indian car market in terms
of

• Technology

• Availability- production Capacity

• Fuel Efficiency

• Choice of colour

• Shape May- 1993, Zen the world car unvieled at a world premier.

• November- 1994, Esteem the first luxury car on Indian roads launched

• December- 1999, Baleno, the top end of the luxury car launched.

• March-2000 WagonR the original tall boy launched.

• September-2000, Alto launched in three variants

• October-2001, Versa, India’s first MPV launched in three variants

• April-2002 Grand Vitara, the SUV launched.

Some Milestones in Exports

• MUL Export cars to more than 100 countries.

• India’s largest exporter of completely built cars (CBU) during 2001-2002 both
in terms of volume and value.


Maruti True Value

• Cumulative export sales crossing the 2.5 lakh mark, far more than any car
company in the country.

Local market trends
• Sales, particularly in the small car segment, will drive passenger car sales in
the near in term. However, within the next two years , capacity is expected to be twice
the total demand for cars.
• With developments in the small car segment acquiring a degree of stability in
terms of price competition, the action is shifting to the mid-size car segment. sales in
this segment will pick up as new models come in and income levels rise but it is still
some times till it comes anywhere close to the economy sized segment.
• What will also drive car sales is the wide availability of finance schemes by a
variety of banks and FI’s.
• Sales in the used car market is also expected to do well as more an dmore
older models get replaced by newer ones at a faster pace. The coming in of Euro 3 and
4 norms will also increase scrappage rates.
• In view of expected surplus in the domestic market, India will emerge as one
of the leading car sourcing point in the Indian subcontinent.
• Consumers will be the beneficiaries as a result of marketing war, as they will
be offerd technologically superior products at better price and terms and conditions.
But the customer has a risk of model discontinuation as a result of shake-out expected
in the industry.
• India offers a releatively low cast production base and is strategically
positioned as a launching base for third country export to Asia-pacific and European
markets
• Growth in road transport, increasing urbanization and privatization of public
transport will into growing demand for commercial vechile which is sited to reach
three hundred thousand by 2001, growth of disposable incomes will push up demand
for two-wheelers to 4.5 million, of three-wheelers to 250 thousand and of passenger
car to 420 thousand over the same time span.


Maruti True Value

• India has added advantage of an extensively segmented market and a well-
developed dealer network.
• Growth of consumer finance leasing and hire-purchase options for vehicle
dealers and buyers also boost demand.
• A well developed component industry offers opportunities for sourcing. The
scope is vast for foreign collaboration to produce branded models stressing on
emission standards, fuel efficiency, advanced features and contemporary styles.


Maruti True Value

BELLAD MOTORS (P) LTD.

BELLAD MOTORS (P) Ltd is a multi franchise automobile dealership based at
Hubli servicing the North Karnataka. The Bellad Group with a standing of more than
three decades in Automobile industry established their prestigious Maruti Dealership
in the year 2006.
Ideally located on Hubli Dharwad highway the dealership can boast of a spacious
4000 sq ft. and well lit showroom with ample frontage. The showroom has the
complete range of cars for display and test drive and professional and trained sales
staff always eager to serve and delight our value customers.
The service center with an area of 6000 sq ft has two post lifts, pneumatic tools,
computerized wheel alignment and wheel balancing machines and a most modern
paint booth which can handle any make of car. The service personnel highly trained
and professional with up to date knowledge owing to the groups policy of
implementing continuous learning programs. A 24 hours emergency road service
attached to the service division is always on call and is a confidence booster to our
customer.
The parts center in an area of 2000 sq ft is well stocked and has a wide range of
accessories to suit the varying needs of our customers.
The dealership with its professional management looks forward to their growth by
focusing on customer centric and value added offers to their customers. Bellad Motors
(P) Ltd with their network of branches at Bagalkot and Karwar are striving hard to
satisfy their customers.


Maruti True Value

ORGANIZATION CHART

Managing Director

Deputy General Manager HRD

M. W/S Parts Sales Account
Manager Manager Manager

M.T.V

Team Leader Team Leader Team Leader Team Leader

Sr. Sales
Executive

Sales Executive Sales Executive Sales Executive Sales Executive

Sales Executive Sales Executive Sales Executive Sales Executive

Reception
Data Entry


Maruti True Value

SALES DEPARTMENT

Managing Director

Deputy General Manager

Sales Manager

Team Leader Team Leader Team Leader Team Leader
Bagalkot Karwar

Sales Executives Sales Executives Sales Executives Sales Executives


Maruti True Value

WORK STATION

Managing Director

Deputy General Manager

Customer Care Works
Manager Manager

Assistant Assistant Works
Customer Care Manager
Manager

Service Advisor

Floor Floor
Supervisor Supervisor

Technicians Technicians


Maruti True Value

SERVICE DEPARTMENT
WORKMEN 25
SUPERVISERS 04
HEAD OF THE DEPT 01
SALES DEPARTMENT
MD = Managing Director
DGM = Deputy General Manager
T.L = Team Leader
S.E = Sales Executive
M.T.V = Maruti True Value
The following chart explains the Sales Department. In that Sales Manager handles the
sales promotion activities, Customer Care Executive handles the identifying the
customer problems and solving. Branch Managers are district wise and their work is
to take the information form the sales executives about the needs of vehicles and send
the same information to the Sales Manager and bring the vehicles from Sales
Manager to Sales executives. Karnataka in Hubli Bellad Motors (P) Ltd. showroom is
located on PB road at Unkal Cross. The workshop located at there itself, carries out
after sales operations, free service, paid service and Running repairs.
Quality Management System:
 Bellad Motors has a documented and established quality management
system to ensure that
 The documentation structure of Bellad Motors can be represented in the
following manner.
1. QULITY MANUAL
2. QULITY SYSTEM ROCEDURES
3. WORK INSTRUCTIONS AND CHECKLIST
4. FORMS AND
CARDS
5. REFERENCE STANDARDS AND EXTERNAL ANNUAL
Customer Focus at Sales:


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 The Field executives visit the customers and explain the features of the
vehicle to them.
 Demonstration and test drives shall be given whenever required.
 The Performa invoice/price list terms and conditions will be given.
 The order booking forms duly collected from the customer and clarity with
regard to the terms and conditions are explained and the copy id handed over
to customer along with the receipt or payment made.
Customer Focus at Service:
a) The customer can book the vehicle for the servicing/repairs either through the
telephone or personally the front office.
b) The detail shall be entered in 'booking register' by the telephone operator.
c) The list of the vehicles shall be given to front office ~very morning to accept
the vehicles for servicing for that date.
d) The customer can bring their vehicle for servicing without booking. However
such vehicle shall be accepted only after ensuring that there is enough
capacity for the booked vehicles.
e) On the bases of kilometers run by the vehicle and customer requirement, the
customer shall explained about the type of the servicing/repairs and spare
parts required and to ensure that the service station has the required capacity
to accept the vehicle.
f) Before accepting the vehicle, a mutually acceptable delivery time and date is
fixed with the customer.
g) The customer's consent shall be taken on the estimated cost of the
repair/service of the vehicle.
h) All the details of the work required along with the date and time of the
delivery and the established cost shall be recorded in the job order card before
commencement of the work.


Maruti True Value

The various models of vehicles from Maruti Udyog Ltd. Sold and
serviced
at Bellad Motors.
 Maruti-800 car
 Maruti omni
 Zen Estilo
 Alto
 Wagon-R
 Esteem
 Versa
 SX4
 Vitara
 Swift
The various types of servicing done at Bellad Motors.
 Services-Free service and paid service.
 Running repair.
 Quick service repair.
 Break down service.
The external manuals acquired from Maruti Udyog Ltd. To sell and service the
vehicles.
 Sales policy bulletin
 Marketing circulars
 Service manuals
 Service circulars
 Service bulletin
 Warranty bulletin
 Spares parts price catalogue
 Spares parts price list
 Spare parts procedure manuals


Maruti True Value

 Spare parts bulletin
 Spare parts circulars
 Maruti service quality standards
 Customer care manual
 Service marketing manual.

OVERVIEW OF THE INDIAN SECOND HAND CAR MARKET

The pre-owned, or used, car market continues to be fragmented and unorganized.
Despite the rapid growth of the organized used-car dealers and manufacturer-owned
pre-owned car outlets, the market for old vehicles continues to be dominated by
individuals trying to sell and buy cars.

However, the pre-owned vehicles market is likely to mature as the car ownership base
grows. The scorching pace at which the new car market has grown this fiscal and the
growth projections for the next are indicators of the potential growth of the used-car
market in the next few years.

Further, in addition to the number of two-wheeler owners who are looking to buy
a car, the number of existing small-car owners hoping to upgrade to a three-box
(sedan) car will progressively drive used-car sales in the two critical B and C
segments. The C segment (particularly entry-level) used car sales are expected to
witness the kind of sales boom that B segment used cars saw over the past two
years.

Organized market imminent

Company-owned used-car outlet and increased demand for certified used cars are
likely to become the dominant themes. It is evident, from the surge in the number of
car manufacturers entering the pre-owned cars business, that the used car market is
getting increasingly attractive, both in terms of its potential to generate sales volumes
and higher margins. For the car-maker, the organized used-car business also throws


Maruti True Value

up the possibility of better using the dealer-cum-service outlet's vehicle servicing
capacity.

The manufacturer-sponsored pre-owned car business has seen entrants such as the
car market leader Maruti Udyog, with its Maruti True Value brand, Ford India,
with its Ford Assured, and Hyundai with its Hyundai Exchange brand. After
starting out in a small way amongst their dealerships, many of these
manufacturers are now actively involved in streamlining their used-car
operations.

Better place to shop

For the used-car buyer, the manufacturer-sponsored outlet is much better place to go
shopping. In addition to being able to buy a certified car at a fair price, these outlets
will also ensure that the paper work is right, throw in a couple of free services, offer
an extension of warranty at times, help with the transfer of the vehicle's ownership
and complete formalities at the regional transport office (RTO).

A certified used car, including the charges for inspection and certification, is usually
priced 5-10 per cent more than a similar used car in the unorganized segment. Despite
the higher cost, for the average first-time car buyer, a certified car is the better option.
In the absence of any organized car history services being offered by independent
consultants and a more transparent vehicle insurance system, getting background
information about the previous owner and the used-car is extremely difficult for
buyers looking for a deal.

Used-Car Buyer Behavior :

However, used-car buyers continue to be hesitant to shop for their cars at
manufacturer-sponsored outlets.

A recent study about the resale value of cars in India conducted by NFO Automotive,
part of the NFO World Group, threw up interesting points. Some of the key findings
of NFO Automotives inaugural 2003 India Used-Car Buyer Study (UCBS) were:


Maruti True Value

• Very few Indian buyers pay for an expert to evaluate the vehicles; most rely on
their personal mechanics and friends.
• Low reliance on vehicle financing at 20 per cent compared to nearly 65 to 70 per
cent for new car buyers.
• Word-of-mouth, classified advertisements, and used-car brokers are the key
sources of deciding brand and price, with the Internet and manufacturer-backed
sources playing only a limited role.
• Lack of shopping - over 60 per cent owners are pre-determined in their used-car
model choice and do not shop around.
• The age of car (model year) and kilometers on the vehicle are the top evaluation
criteria. The degree of importance attached to accident history, ownership transfers,
and service/ parts availability is relatively lower.

Used-car finance

More than two-thirds of all new cars sold are part financed through auto loans. Intense
competition, reliable retailing channels and cross-subsidization of the financier's
interest costs by the vehicle manufacturer have brought down interest rates for new
cars dramatically during the last two years. However, the interest rates for financing
used-cars continue to be uncompetitive.

The interest rate for financing of new cars ranges between 7 per cent and 11 per cent
on a reducing balance basis depending on manufacturer and model. On the other
hand, interest rates on used cars range from 14 to 19 per cent, close to the rates for a
personal loan.

The interest rates for certified cars being offered by manufacturer-sponsored outlets
are usually lower than financing for used-cars bought from the open market.

This again is largely due to the higher reliability factor and, in some cases, to some
kind of preferred financing arrangement the manufacturer has with the financier.

More reliable experience-


Maruti True Value

Overall, the process of buying a used-car can be fruitful and risk-free, if you take the
necessary precautions (refer accompanying story) and opt for buying a certified car.
With the increased presence of the organized used-car dealer, the rate of growth in the
pre-owned car market is likely to outstrip new car sales.

Though a more market-friendly interest rate, which is on a par with the prevailing
rates for new cars, will continue to elude used-car financing, at least the differential
between the two rates are expected to gradually narrow. This is likely to happen after
the reliability factor goes up in the used- car market.

Tip sheet

Buyers

Check out these following aspects before closing a deal:

• If you are on a tight budget and plan to buy an entry-level car in any of the
segments, a used-car may not always be the best option to upgrade to the higher
segment. Instead, you may opt for a new car in the lower segment.
• If you do decide to upgrade to a bigger, higher segment used-car, then you
have to be ready for accelerated depreciation post-purchase and uncompetitive interest
rates, if you are part financing the buy.
• It is better to go in for a certified used-car rather than trusting the judgment
of your neighbourhood mechanic.
• Check the used-car seller's insurance records for the car's claims (accident)
history, if any.
• Avoid cars that have had more than one previous owner.
• A used-car owner who has been meticulous with the car's paper work and
maintains an exhaustive log of repairs, oil change, service will, in all probability, have
been meticulous with the car too.


Maruti True Value

• If you are confident of about your own assessment skills and feel that you
can do the job of scouting for a used-car better, then the pointers given in the box
alongside may be of help.

Sellers

Here are a few pointers that can be of use when you decide to sell
your car:

• Selling your car through a used-car dealer may be a better option than
attempting it yourself, despite the commission that you have to fork out to the dealer.
• It will also still be worth it, especially if your car is more than three/four years
old, to get the vehicle used-car certified by an authorized car dealer or certifying
agency.
• Passenger car manufacturers are nowadays offering attractive loyalty bonuses
and exchange plans for programmes for existing car owners to upgrade or switch to a
new car. But if your car is not more than three years old, it may still fetch a better
price in the open market. So, sell that car yourself and talk down the price of the new
one with the dealer. You will win both ways.
• Go to the used-car market with realistic expectations. Remember if your car
has had crashes in the past, no matter how well it has been restored, its resale value
will have dropped never be the same.
• If you have avoided frivolous repairs and the subsequent insurance claims
from your auto insurance company, or if your car has had an accident-free history,
then, do not forget to transfer the no-claims bonus from the used car's insurance
policy to the insurance cover for the new car. You can transfer almost half of your no-
claims bonus and help shave off a large chunk of the premium payable on the new
car.

ANALYSIS OF THE MARKET

• Global Scenario


Maruti True Value

In developed markets like U.S, Europe, Japan etc the market is very big and
organized.
- U.S Market Size: 1:3(48 Million)
- Japan Market Size: 1:1.8(8.4 Million)
- India Market Size: 1:1(Estimated)
Global Certified Markets
In Developed Markets all OE Manufacturers are doing certified
programs- like ‘True Value’
- GM-GM Certified
- Ford-Ford assured
- Toyota-Toyota Certified Used Cars
- Honda-Honda Certified
- Suzuki-Suzuki Ok, U’s Station
Source NFO UCBS-2003
3-level Evolution of Certified Programs-

Level 1 Market is highly unorganized,
dominated by purchase houses and C2C

Market is highly unorganized,
Level 2 dominated by purchase houses and
C2C; new car dealers also start their
used car programs.

Level 3 Certified programs by OEM’s start as
customers started demanding for
assurance from OEM’s.

• Indian Used Car Market
Estimated - To be 1:1 - i.e. for every one new car one old car is sold


Maruti True Value

- In U.S the market is 1:3
- Indian market is also growing in the direction of the developed markets.

Market Structure

• Customer to Customer- 60%

- I.e. between friends, relatives and reference individuals.

• Broker Market- 30%

• Organized Market- 10%

• Lacks-

- Reliability
- structured pricing mechanism
- structured exchange/ upgrading facility
- Assurance, warranty, etc

CUSTOMER ANALYSIS
Indian Customer Expectations-
Seller expectation
Seller expectation Brokers OEM backed dealership
Correct pricing of vehicle Prices offered by Pricing is as per or above
reflecting market value brokers are as per the market, however only in
market. exchange scheme.
True evaluation of the None finds faults in Yes, thorough elaborate
vehicle cars which do not exist. checklist.

Financial
speed of setting the Yes, at a cost Yes
account
reliability Very low High
Form of payment- wants Mostly cash Cheque
flexibility between cash and


Maruti True Value

cheque.
Car to be left in the Unsafe Safe
dealership
Credliblity of the buyer Doubtful Can be known
Logistics- time and distance Few pockets in the city One or two outlets in limited
of travel to selling point. or through local cities.
workshops

Buyer’s expectation:
Buyer’s Brokers OEM backed dealership
expectation-

Buy a reliable Unreliable Reliable
car Backed by refurbishment and
warranty provided by a third party.
Fair price Unreliable At par with market
Transparency Very poor Good
Clean Very poor Yes
documentation

Top 5 reasons for Customer Going for Finance
1. 49%- fast paper work
2. 43%- interest rate
3. 41%- reputation of finance company.
4. 33%- good finance terms
5. 21%- flexible of finance terms.
- Source NFO-UCBS 2003
(2.7) OVERVIEW OF THE TWIN CITIES- HUBLI- DHARWAD-
The population of the city as per the 2001 Census was 7.85 lakhs. The
present population is more than 10 lakhs.
Hubli is well known as a commercial as well as industrial centre, where as
Dharwad is seat of learning. The city is well connected with important cities like


Maruti True Value

Bombay, Bangalore, Hyderabad and port towns of Karwar and Goa and easterns
and north-eastern regions by an excellent network of roads and rail. The airport at
Hubli is expected to find a place on our national air map.
The city is situated in the dividing line between the Malnad and the
planes. The Malnad is well known for its forests and forest based industries and
the other three side region are known for their agricultural products like cotton,
groundnut, oilseeds manganese ore and granite stones. The value of agricultural
products coming into Hubli market runs into multiple crores.
Hubli is an important industrial centre, with more than 1000 allied small
and medium industries already established. There are machine tools industries,
electrical, steel furnitures, food products, rubber and lather industries and tanning
industries. With the establishment of Bhoruka textile Mill, N.G.E.F and K.M.F. it
has gathered momentum in industrial development.
Dharwad is the seat of learning with Karnataka University and
Agricultural University. There are large number of Arts, Science, Commerce and
Law Colleges in the city. Karnataka Medical College, S.D.M. College of Dental
Sciences and Engineering and technical institutions are crowning additions to the
educational facilities in the city. Due to these educational and industrial facilities,
the city attracts considerable floating population.

ANALYSIS OF THE CAR MARKET IN HUBLI- DHARWAD

• Hubli- Dharwad is one of the fast growing market for Cars in the state.

• There are showrooms of most of the segments of the Cars.

• The company owned showrooms that are present in the Twin cities are-
Maruti, Hyundai, Tata, Skoda, GM Opel, Ford, Toyota, Fiat, Mahindra and
Mahindra, HM etc..

• There are many co owned service stations, Mercedes has set up it’s service
station in Hubli recently.


Maruti True Value

• There was a demand for the small cars mostly in the Twin cities, because
of the shorter distance for traveling, economical, less parking space etc..

• The mindset and the consumer behavior is fast towards buying cars in
Hubli- Dharwad.

SECOND-HAND CAR MARKET IN THE TWIN CITIES.
There are about 40-50 unorganized dealers in Hubli- Dharwad.
There are only two other certified dealers in the market- Bellad,
Automartindia.
Insights of the dealers- (sample size - 8MAIN DEALERS)

• No proper infrastructure.

• The average years of established is 8years

• Average sales per year is 180-200 cars

• The dealers do not use middle men for their dealings.

• The promotional activities are mostly undertaken through Melas and
Newspaper ads

• The average peak time for the maximum sales in in festive seasons.

• They do not give any service or guarantee backup for the vehicles sold.

• They say the customers are very satisfied with them.

• Cost is the only problem when customers are purchasing.

• The major factors considered by the buyer are-

- Budget


Maruti True Value

- Condition
- Age


Maruti True Value

“MARUTI TRUE VALUE”- WHAT IS IT?

Maruti Suzuki’s new Initiative along with Maruti Insurance,
Maruti Finance and Maruti N2N under Project Vistaar.

The Most Reliable Option to Buy or Sell Pre-Owned Cars-

• First True Value outlet on 19th Oct-2001

• Present network :127 outlets in 94 cities

• Product- Sourcing: they buy cars of any make, age and mileage in
exchange.

Objectives of Maruti Suzuki behind True Value

• Increasing New Car sales through exchange.

• Managing Residual Value.

• Enhancing your Dealer Profitability.

• Enhancing motorization-2-4 Wheeler.

Unique Strengths

• Backed by Maruti Suzuki- India’s largest and most trusted passenger car
manufacturer.

• The largest used car dealer networks in India run by professional
management.


Maruti True Value

• The Maruti True Value warranty and services can be availed by the
customer across the nation at any true value outlet.

• Only true value can ensure that if any problem arises anytime their service
at their service 24 hours.

Maruti True Value Products

• GR- Upto 5 years old & upto 1 lac kms-

- Warranty- 15000 kms or 1year whichever occurs earlier.

• XR- Upto 7 years old & upto 1 lac kms-

-Warranty-7500 kms or 6months whichever occurs earlier.

• PR- Upto 10 years old & upto 1 lac kms-

- No warranty but mechanical refurbishment standards same as GR/XR.

Evaluation Process of the Cars at ‘True Value’

• Backed by Maruti Suzuki- India’s largest and most trusted passenger car
manufacturer.

• The largest used car dealer network in India run by professional
management.

• The Maruti true value warranty and services can be availed by the
customer across the nation at any true value outlet.


Maruti True Value

• Only true value can ensure that if any problem arises anytime their service
at their service 24 hours.

True Value VS Market

Maruti true Value Brokers and C2C

Every car is bought through a stringent No checking
120 point check which is done by
professionals trained by Maruti- Suzuki.

Only cars that meet strict criteria are No assurance of quality
taken under True value ensuring that
cars are non-accidental and free of any
major defects.

Seller bonofides are verified from RTO Dubious

This ensures that the buyer does not end Risky
up in any legal hassles

All the 11 systems of the car like No re-conditioning
engine, transmission, electrical, brakes,
suspensions, body etc are reconditioned
to Maruti Suzuki standards.

This ensures that the car is reliable, safe Car is not assured of safety reliability
optimized fuel economy. Sparkling and any time it can break down: big
clean and aesthetically finished giving tension option
the experience of the new car.

Maruti- Suzuki trained professionals No refurshibment, even the genuine
refurbish every car only with Maruti spares are replaced with spurious
genuine parts at state of the art.-maruti parts.
workshops.


Maruti True Value

Ensures zero maintenance cost- ensures Many parts need replacement from
zero maintenance cost, all the critical time to time, buyer ends up visiting
parts of the car are ensured to be once the workshop more than driving the
on the new car- ensures happy driving. car, end up spending about rs 10,000/-
in a year.

Every car is inspected and certified by None- no assurance.
Maruti- Suzuki Engineer present at your
True Value outlet.- Maruti Suzuki’s
assurance to the customer that what we
promise we deliver.

Every car comes with Maruti Suzuki None- part gone, money gone all
Warranty upto one year- all the parts round troubles and strain.
that are covered under new car are
covered in True Value.

True Value Finance

• Best value finance option available to the Used Car Buyer.
• Most convenient, no hidden costs, less paper work

• Interest rates (15% reducing) Lower by 2-3% than the market

• Financing upto 10 years of age- “ Unique to True Value”

• Best Cars+ Best Finance “ High Conversion”


Maruti True Value

PROJECT DETAIL


A project report on analysis of the pre owned car market in hublli of true value

A project report on analysis of the pre owned car market in hublli of true value

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