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12/24/2009

Mradul Raj Pachouri | 08BS0001794 Section B

IBS

PUNE

INDIAN SMALL PASSENGER CARS IN US

MARKETThis Document consist

of the US Auto Industryanalysis, Analysis of

India as an Exporter of

Passenger cars, and

strategies that will be

adopted by the author

to make the his Business

of Manufacturing and

exporting small carssuccessfully to US

Market.

International

MarketingAssignment

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Background

The automotive industry is the industry involved in the design, development, manufacture, marketing,

and sale of motor vehicles. In 2007, more than million motor vehicles, including cars and commercial

vehicles were produced worldwide. In 2007, a total of 71.9 million new automobiles were sold

worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4

million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The markets in

North America and Japan were stagnant, while those in South America and Asia grew strongly. Of the

major markets, Russia, Brazil and China saw the most rapid growth.

In 2008, with rapidly rising oil prices, industries such as the automotive industry are experiencing a

combination of pricing pressures from raw material costs and changes in consumer buying habits. The

industry is also facing increasing external competition from the public transport sector, as consumers

re-evaluate their private vehicle usage.

The United States is the worlds largest consumer market for light vehicles, passenger cars and light

trucks. The United States auto industry is dominated by the Big Three or General Motors, Ford Motors

and Daimler/Chrysler. These three account for roughly a little over half of the production of cars and

light trucks in the industry. What has currently started to happen in the recent years is that the Big

Three are starting to lose market share to other rivals within the industry. In 2006 the Big Three

accounted for 41.5% of light vehicle sales when compared to the top three foreign companies which

accounted for 36.6% (Toyota, Honda, & Nissan). Overall the Big Three account for 54.9% of the U.S.

market in 2006. This was down from 58.2% in 2005, 60.1% 2004 and 61.8% in 2003. This trend is

expected to continue but to taper off in the coming years.

Factors affecting the US Automobile Industry (PEST Analysis)

1. Political

Laws and government regulations have affected this industry since the 1960s. Almost all of the

regulations come from consumers increasing concerns for the environment and the concern for safer

automobiles.

These days Developed Government is providing special incentives to citizens who are buying small

cars by junking their earlier Big Behemoth car which are neither efficient nor eco friendly. Small cars

from India or china, imbibing features like small size, high fuel efficiency & low pollution satisfying all

pollution norms.

Not only the consumer, even the manufacturer and Exporters which are exporting such cars can get a

heavy duty tax deduction because even government was like to promote such cheap, small, and fuel

efficient cars.

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2. Economic

The automobile industry has a huge impact on every countrys economy. According to various studies

this industry is the major user of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics,

vinyl, and rubber. The study also showed that for every autoworker there are seven other jobs created inother industries. These industries include anything from the aluminums to lead to vinyl.

3. Socio-cultural

Todays society judges people on the type of car you drive. Society does not like to admit to this but it

is very true. Manufactures know this happens and targets their markets by these thoughts. Anyone who

drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of

junk because of what other people will think of him or her. Consumers also just feel better when they

are driving a nice or new car, if makes them feel better about themselves.

4. Technology

The internet has affected just about every industry in the world and has also had a huge impact on the

automobile industry. A study was conducted by J.D. Power and Associates in 2002 and involved more

27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before

making their purchases and out of that 60%, 88% went to the auto websites before going and taking a

test drive. Business-to-business marketplaces have given the industry many opportunities because of

the internet, such as more efficiency and lower cost.

5. Demographics

For many years now, the baby boomers generation has been the main target market for just about everyproduct. As their generation is getting ready to retire and spend less money, the automakers are looking

at the younger generations. Right now, the focus is starting to turn towards the baby boomers children

(Generation X) who are in their mid 20s and 30s. According to Analysts, five years from now Gen X

will account for at least 30% of vehicle sales.

6. Global

General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda,

and Nissan Motor Company come together to create a new trade association created the Alliance of

Automobile Manufacturers. The organization was to replace the American Automobile Manufacturers

Association that only consisted of American manufacturers, the goals of the associations were to work

together on public policy matters of common interest to provide credible industry information and data,

and seek consistent global regulatory standards.

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Export Trend from India

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My Strategies

Due to all these reasons Indian Companies can be a good exporter of small cars

My Company- XYZ Motors

My Small car (name)XYZSweety

TaglineSmall is sensible

My Strategies:

1. A world class product: Small car with all the safety features and Pollution norms. 2. Internet and Social Media support: As we know that in US, 60% of the buyers referred to the

internet before making their purchases and out of that 60%, 88% went to the auto websites

before going and taking a test drive. Business-to-business marketplaces have given the industrymany opportunities because of the internet, such as more efficiency and lower cost. So I will go

for a beautiful 3 D java supported website where people can understand our car and buy that on

the very same moment.

3. Strong Collaboration with Governmental Bodies: In US if governmental bodies are onceconvinced that our product is of supreme quality and can give many benefits like low emission,

less traffic problems due to size, High fuel efficiency then there is a possibility that US

government start giving incentives to our customers and giving us low tax import duties when

bringing the Car in their market.

4. Tie Up with different distributors, outlets so that I can promote my product by them also.

References:

ICMR Publishers- International Marketing SIAM official Site- www.Siamindia.org Ibef Official Site- www.ibef.org

http://www.realclearmarkets.com/news/ap/finance_business/2009/Dec/23/indian_super_compact_car_market_overtakes_japan.html

http://www.infodriveindia.com/India-Exports-Trade-Data.aspx