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TERM PAPER

OF

BUSINESS -ECONOMICS

SUBMITTED TO : SUBMITTED BY :

Mr. CHANDER SHEKHAR NAME - SONAMDOGRA REG. NO - 11013962

ROLL NO - R1002B66Good beginning, but patchy work, no coherence in thought or approach.

11/25

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ACKNOWLEDGEMENT:

The real spirit of achieving is through the way of excellence of austere disci

pline, without which I would never have succeeded in finishing it without

the co-operation, encouragement and help provided to me by various

personalities. With this deep felt consent and pleasure, I would like to

express my heart felt gratitude to all those who helped me in preparation of

this term paper.

It gives me immense pleasure in expressing my deepest and sincerest

gratitude towards my project guide Mr.CHANDER SHEKHAR DOGRA

(lecturer of ECONOMICS) and for there considerate help, inspiring

guidance throughout this work.

I shall be failing in my duty if I do not thank all the other Quality

Personnals and other lect. for source of constant encouragement and co-

operation, through out my project.

I would be defying if I do not mention my constant source of

inspiration and vitality, that is, my parents who invested their present for

my future and for their co-operation, support & encouragement without

which I could not have seen the light of the day.

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TABLE OF CONTENTS:

INTRODUCTION TO TATA 4

PRODUCT RANGE OF TATA 5-6

INTRODUCTION TO HONDA 7 PRODUCT RANGE OF HONDA 8 TYPE OF COMPETITION 9

FEATURES OF OLIOGOPOLY 10 DEMAND CURVE 11 TATA SALES RECORD 12-13 HONDA SALES RECORD 14-15 CHANGE IN PRICES 16

PRICE ELASTICITY 17

INCOME ELASTICITY 18

CROSS ELASTICITY 19 CONCLUSION&REFRENCES 20

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INTRODUCTION TO TATA MOTORS

Tata Motors is Indias largest automobile company, with consolidated revenues of USD20 billion in 2009-10. It is the leader in commercial vehicles and among the top three inpassenger vehicles. Tata Motors has winning products in the compact, midsize car andutility vehicle segments. The company is the world's fourth largest truck manufacturer,the world's second largest bus manufacturer, and employs 24,000 workers. Since firstrolled out in 1954, Tata Motors has produced and sold over 4 million vehicles in India.

Established in 1945, when the company began manufacturing locomotives, the companymanufactured its first commercial vehicle in 1954 in a collaboration with Daimler-BenzAG, which ended in 1969. Tata Motors is a dual-listed company traded on both theBombay Stock Exchange, as well as on theNew York Stock Exchange. Tata Motors in2005, was ranked among the top 10 corporations in India with an annual revenueexceeding INR320 billion. In 2010, Tata Motors surpassed Reliance to win the covetedtitle of 'India's most valuable brand' in a annual survey conducted by Brand Finance andThe Economic Times.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar,Lucknow, Ahmedabad,Sanand and Pune in India, as well as in Argentina, South Africaand Thailand.

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http://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Dual-listed_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Punehttp://www.cartype.com/pics/373/small/tata_logo_4.jpghttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Dual-listed_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Pune

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PRODUCT RANGE OF TATA MOTORS

Passenger cars and utility vehicles

Tata Xover

Tata Nano Europa

Tata Starbus Low Floor 1610

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http://en.wikipedia.org/wiki/Tata_Xoverhttp://en.wikipedia.org/wiki/Tata_Nanohttp://en.wikipedia.org/wiki/File:Best_cbd_wad.jpghttp://en.wikipedia.org/wiki/File:Best_cbd_wad.jpghttp://en.wikipedia.org/wiki/File:Nano_Tata.jpghttp://en.wikipedia.org/wiki/File:Nano_Tata.jpghttp://en.wikipedia.org/wiki/File:Xover.jpghttp://en.wikipedia.org/wiki/File:Xover.jpghttp://en.wikipedia.org/wiki/Tata_Xoverhttp://en.wikipedia.org/wiki/Tata_Nano

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Tata Marcopolo buses in the Delhi BRT.

Tata Sierra (Discontinued) Tata Estate (Discontinued) Tata Sumo/Spacio Tata Safari Tata Indica Tata Vista Tata Indigo Tata Manza Tata Indigo Marina Tata Winger Tata Magic Tata Nano Tata Xenon XT Tata Aria tata pratul

Concept vehicles

2000 Aria Roadster 2001 Aria Coupe 2002 Tata Indiva 2004 Tata Indigo Advent 2005 Tata Xover 2006 Tata Cliffrider 2007 Tata Elegante 2009 Tata Pr1ma 2010 Tata Versa 2010 Tata Essota

Commercial vehicles

Tata Ace

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http://en.wikipedia.org/wiki/Marcopolo_S.A.http://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Tata_Sierrahttp://en.wikipedia.org/wiki/Tata_Estatehttp://en.wikipedia.org/wiki/Tata_Sumohttp://en.wikipedia.org/wiki/Tata_Safarihttp://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Indigo_Marinahttp://en.wikipedia.org/wiki/Tata_Wingerhttp://en.wikipedia.org/wiki/Tata_Magichttp://en.wikipedia.org/wiki/Tata_Nanohttp://en.wikipedia.org/wiki/Tata_Xenonhttp://en.wikipedia.org/wiki/Tata_Ariahttp://en.wikipedia.org/w/index.php?title=Tata_pratul&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_Indiva&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Xoverhttp://en.wikipedia.org/wiki/Tata_Cliffriderhttp://en.wikipedia.org/wiki/Tata_Elegantehttp://en.wikipedia.org/wiki/Tata_Pr1mahttp://en.wikipedia.org/w/index.php?title=Tata_Versa&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_Essota&action=edit&redlink=1http://en.wikipedia.org/wiki/File:BusesDelhiDTC.jpghttp://en.wikipedia.org/wiki/File:BusesDelhiDTC.jpghttp://en.wikipedia.org/wiki/Marcopolo_S.A.http://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Tata_Sierrahttp://en.wikipedia.org/wiki/Tata_Estatehttp://en.wikipedia.org/wiki/Tata_Sumohttp://en.wikipedia.org/wiki/Tata_Safarihttp://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Indigo_Marinahttp://en.wikipedia.org/wiki/Tata_Wingerhttp://en.wikipedia.org/wiki/Tata_Magichttp://en.wikipedia.org/wiki/Tata_Nanohttp://en.wikipedia.org/wiki/Tata_Xenonhttp://en.wikipedia.org/wiki/Tata_Ariahttp://en.wikipedia.org/w/index.php?title=Tata_pratul&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_Indiva&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Indigohttp://en.wikipedia.org/wiki/Tata_Xoverhttp://en.wikipedia.org/wiki/Tata_Cliffriderhttp://en.wikipedia.org/wiki/Tata_Elegantehttp://en.wikipedia.org/wiki/Tata_Pr1mahttp://en.wikipedia.org/w/index.php?title=Tata_Versa&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_Essota&action=edit&redlink=1

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Tata TL/Telcoline/207 DI Pickup Truck Tata 407 Ex and Ex2 Tata 709 Ex Tata 809 Ex and Ex2 Tata 909 Ex and Ex2

Tata 1109 (Intermediate truck) Tata 1510/1512 (Medium bus chassis) Tata 1612/1616 (Heavy bus chassis) Tata 1618 (Semi Low Floor bus chassis) Tata 1610/1623 (Rear Engined Low Floor bus chassis) Tata 1613/1615 (Medium truck) Tata 2515/2516 (Medium truck) Tata Starbus (Branded Buses for city,inter city,school bus and standard passenger

transportation) Tata Globus (Range of fully built luxury coaches) Tata Hispano Globus (Rear Engined Inter city coach)

Tata Marcopolo Bus (Low Floor, Semi Low Floor buses for Mass Rapid Transitand also standard passenger transportation Buses) Tata 3015 (Heavy truck) Tata 3118 (Heavy truck) (8X2) Tata 3516 (Heavy truck) Tata 4018 (Heavy truck) Tata 4923 (Ultra-Heavy truck) (6X4) Tata Novus (Heavy truck designed by Tata Daewoo) Tata Prima (The World Truck designed by Tata Motors and Tata Daewoo)

Military vehicles

Tata LSV (Light Specialist Vehicle) Tata Mine Protected Vehicle (4x4) Tata 2 Stretcher Ambulance Tata 407 Troop Carrier, available in hard top, soft top, 4x4, and 4x2 versions Tata LPTA 713 TC (4x4) Tata LPT 709 E Tata SD 1015 TC (4x4) Tata LPTA 1615 TC (4x4) Tata LPTA 1621 TC (6x6) Tata LPTA 1615 TC (4x2)

Tata Winger Passenger Mini Bus

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http://en.wikipedia.org/wiki/Tata_TLhttp://en.wikipedia.org/wiki/Tata_1510/1512http://en.wikipedia.org/w/index.php?title=Tata_1612/1616&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_1618&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_1610/1623&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Starbushttp://en.wikipedia.org/wiki/Tata_Globushttp://en.wikipedia.org/wiki/Tata_Hispano_Globushttp://en.wikipedia.org/w/index.php?title=Tata_Marcopolo&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Novushttp://en.wikipedia.org/wiki/Tata_Primahttp://en.wikipedia.org/wiki/Tata_TLhttp://en.wikipedia.org/wiki/Tata_1510/1512http://en.wikipedia.org/w/index.php?title=Tata_1612/1616&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_1618&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_1610/1623&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Starbushttp://en.wikipedia.org/wiki/Tata_Globushttp://en.wikipedia.org/wiki/Tata_Hispano_Globushttp://en.wikipedia.org/w/index.php?title=Tata_Marcopolo&action=edit&redlink=1http://en.wikipedia.org/wiki/Tata_Novushttp://en.wikipedia.org/wiki/Tata_Prima

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INTRODUCTION TO HONDA

Honda is the world's largest manufacturer of motorcycles as well as the world's largestmanufacturer ofinternal combustion engines measured by volume, producing more than14 million internal combustion engines each year. Honda surpassed Nissan in 2001 tobecome the second-largest Japanese automobile manufacturer. As of August 2008, Hondasurpassed Chrysleras the fourth largest automobile manufacturer in the United States.Honda is the sixth largest automobile manufacturer in the world.

Honda was the first Japanese automobile manufacturer to release a dedicated luxurybrand, Acura, in 1986. Aside from their core automobile and motorcycle businesses,Honda also manufactures garden equipment, marine engines, personal watercraft andpower generators, amongst others. Since 1986, Honda has been involved with artificialintelligence/robotics research and released their ASIMO robot in 2000. They have alsoventured into aerospace with the establishment ofGE Honda Aero Engines in 2004 andthe Honda HA-420 HondaJet, scheduled to be released in 2011. Honda spends about 5%of its revenues into R&D.

PRODUCT RANGE OF HONDA

The honda deals in variety of products they are market leaders in the case of motorbikes

and also providing the cars .

BIKES AND SCOOTERS

Activa

Aviator dlx

Aviator STD

CB shine DISC

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CB shine Drum

CB unicorn Dazzler CB unicorn Electric start

Activa

Eterno

Aviator

CB 1000 R

CBR 1000 RR

CBF stunner

CBF stunner PGM-FI

Dio

HONDA CARS

- Honda Jazz

- Honda city

- Honda city hybrid

- Honda accord

- Honda CR-V

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http://www.google.co.in/imgres?imgurl=http://www.blogcdn.com/www.autoblog.com/media/2007/10/honda_dn-01_lo.jpg&imgrefurl=http://hotheavybikes.blogspot.com/2009/11/tokyo-2007-preview-honda-dn-01.html&h=302&w=450&sz=28&tbnid=AXfmr7zoEfxLzM:&tbnh=85&tbnw=127&prev=/images?q=bikes+of+honda&zoom=1&q=bikes+of+honda&hl=en&usg=__RT13gyrfjZLl8hmkVW-luX14puI=&sa=X&ei=eUXLTJ_wK4ewcezvrIQO&ved=0CB4Q9QEwAAhttp://www.google.co.in/imgres?imgurl=http://4.bp.blogspot.com/_XFGuSZ6n1LY/SSNR1B2mgZI/AAAAAAAAElA/rdpCPAQ8CSo/s400/Honda_CBR100RR-ok_2004_18_1024x768.jpg&imgrefurl=http://bikepicts.blogspot.com/2009/03/honda-gold-wing-touring-bikes.html&h=300&w=400&sz=28&tbnid=nkr70fkqszIugM:&tbnh=93&tbnw=124&prev=/images?q=bikes+of+honda&zoom=1&q=bikes+of+honda&hl=en&usg=__55cVY33NckfKrx6y7MIc49s1OpA=&sa=X&ei=eUXLTJ_wK4ewcezvrIQO&ved=0CCAQ9QEwAQ

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TYPE OF COMPETITION IN WHICH BOTH THE COMPANIES

ARE OPERATING

An oligopoly is a market form in which a market or industry is dominated by a smallnumber of sellers (oligopolists). The word is derived, by analogy with "monopoly", fromthe Greek (oligoi) "few" + (polein) "to sell". Because there are few sellers,each oligopolist is likely to be aware of the actions of the others. The decisions of onefirm influence, and are influenced by, the decisions of other firms. Strategic planning byoligopolists needs to take into account the likely responses of the other marketparticipants.

Oligopoly is a common market form. As a quantitative description of oligopoly, the four-

firm concentration ratio is often utilized. This measure expresses the market share of thefour largest firms in an industry as a percentage. For example, as of fourth quarter 2008,Verizon, AT&T, Sprint Nextel, and T-Mobile together control 89% of the US cellularphone market.

Oligopolistic competition can give rise to a wide range of different outcomes. In somesituations, the firms may employ restrictive trade practices (collusion, market sharingetc.) to raise prices and restrict production in much the same way as a monopoly. Wherethere is a formal agreement for such collusion, this is known as a cartel. A primaryexample of such a cartel is OPEC which has a profound influence on the internationalprice of oil.

Firms often collude in an attempt to stabilize unstable markets, so as to reduce the risksinherent in these markets for investment and product development. [citation needed] There arelegal restrictions on such collusion in most countries. There does not have to be a formalagreement for collusion to take place (although for the act to be illegal there must beactual communication between companies)for example, in some industries there may bean acknowledged market leader which informally sets prices to which other producersrespond, known asprice leadership.

In other situations, competition between sellers in an oligopoly can be fierce, withrelatively low prices and high production. This could lead to an efficient outcome

approaching perfect competition. The competition in an oligopoly can be greater thanwhen there are more firms in an industry if, for example, the firms were only regionallybased and did not compete directly with each other.

Thus the welfare analysis of oligopolies is sensitive to the parameter values used todefine the market's structure. In particular, the level of dead weight loss is hard tomeasure. The study ofproduct differentiation indicates that oligopolies might also createexcessive levels of differentiation in order to stifle competition.

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FEATURES OF THE OLIOGOPOLISTIC MARKET

Profit maximization conditions: An oligopoly maximizes profits by producing wheremarginal revenue equals marginal costs.

Ability to set price: Oligopolies are price setters rather than price takers.

Entry and exit: Barriers to entry are high. The most important barriers are economies ofscale, patents, access to expensive and complex technology, and strategic actions byincumbent firms designed to discourage or destroy nascent firms.

Number of firms: "Few" a "handful" of sellers. There are so few firms that the actions

of one firm can influence the actions of the other firms.

Long run profits: Oligopolies can retain long run abnormal profits. High barriers ofentry prevent sideline firms from entering market to capture excess profits.

Product differentiation: Product may be standardized (steel) or differentiated(automobiles).

Perfect knowledge: Assumptions about perfect knowledge vary but the knowledge ofvarious economic actors can be generally described as selective. Oligopolies have perfectknowledge of their own cost and demand functions but their inter-firm information may

be incomplete. Buyers have only imperfect knowledge as to price, cost and productquality.

Interdependence: The distinctive feature of an oligopoly is interdependence. Oligopoliesare typically composed of a few large firms. Each firm is so large that its actions affectmarket conditions. Therefore the competing firms will be aware of a firm's marketactions and will respond appropriately. This means that in contemplating a market action,a firm must take into consideration the possible reactions of all competing firms and thefirm's countermoves. It is very much like a game of chess or pool in which a player mustanticipate a whole sequence of moves and countermoves in determining how to achievehis objectives. For example, an oligopoly considering a price reduction may wish to

estimate the likelihood that competing firms would also lower their prices and possiblytrigger a ruinous price war. Or if the firm is considering a price increase, it may want toknow whether other firms will also increase prices or hold existing prices constant. Thishigh degree of interdependence and need to be aware of what the other guy is doing ormight do is to be contrasted with lack of interdependence in other market structures. In aPC market there is zero interdependence because no firm is large enough to affect marketprice. All firms in a PC market are price takers, information which they roboticallyfollow in maximizing profits. In a monopoly there are no competitors to be concerned

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about. In a monopolistically competitive market each firm's effects on market conditionsis so negligible as to be safely ignored by competitors.

Demand curve

Above the kink, demand is relatively elastic because all other firms' prices remainunchanged. Below the kink, demand is relatively inelastic because all other firms willintroduce a similar price cut, eventually leading to aprice war. Therefore, the best optionfor the oligopolist is to produce at point E which is the equilibrium point and the kink point. This is a theoretical model proposed in 1947, which has failed to receiveconclusive evidence for support.

In an oligopoly, firms operate under imperfect competition. With the fierce pricecompetitiveness created by this sticky-upward demand curve, firms use non-pricecompetition in order to accrue greater revenue and market share.

"Kinked" demand curves are similar to traditional demand curves, as they are downward-sloping. They are distinguished by a hypothesized convex bend with a discontinuity at thebend"kink". Thus the first derivative at that point is undefined and leads to a jumpdiscontinuity in the marginal revenue curve.

Classical economic theory assumes that a profit-maximizing producer with some marketpower (either due to oligopoly ormonopolistic competition) will set marginal costs equal

to marginal revenue. This idea can be envisioned graphically by the intersection of anupward-sloping marginal cost curve and a downward-sloping marginal revenue curve(because the more one sells, the lower the price must be, so the less a producer earns perunit). In classical theory, any change in the marginal cost structure (how much it costs tomake each additional unit) or the marginal revenue structure (how much people will payfor each additional unit) will be immediately reflected in a new price and/or quantity soldof the item. This result does not occur if a "kink" exists. Because of this jump

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discontinuity in the marginal revenue curve, marginal costs could change withoutnecessarily changing the price or quantity.

The motivation behind this kink is the idea that in an oligopolistic or monopolisticallycompetitive market, firms will not raise their prices because even a small price increase

will lose many customers. This is because competitors will generally ignore priceincreases, with the hope of gaining a larger market share as a result of now havingcomparatively lower prices. However, even a large price decrease will gain only a fewcustomers because such an action will begin a price warwith other firms. The curve istherefore moreprice-elastic for price increases and less so for price decreases. Firms willoften enter the industry in the long run.

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TATA MOTORS SALES RESULT

Released on : 1st February, 2010

Tata Motors January sales at 65,478 nos.

Tata Motors total sales (including exports) of Tata commercial and passengervehicles in January 2010 were 65,478 vehicles, a growth of 77% over 36,931 vehicles

sold in January 2009. The companys domestic sales of Tata commercial andpassenger vehicles for January 2010 were 62,202 nos., a 74 % growth over 35,704nos. sold in January last year.

Cumulative sales (including exports) for the company for the fiscal at 498,108 nos.,recorded a growth of 24 % over 400,284 nos. sold last year.

Commercial Vehicles

The companys sales of commercial vehicles in January 2010 in the domestic marketwere 35,957 nos., the second highest ever and a 107% growth compared to 17,373

vehicles sold in January last year. LCV sales were 20,255 nos., the highest ever and agrowth of 75% over January last year. M&HCV sales stood at 15,702 nos., a growthof 170% over January last year.

Cumulative sales of commercial vehicles in the domestic market for the fiscal are291,125 nos., a growth of 37% over last year. Cumulative LCV sales are 174,276nos., a growth of 45% over last year, while M&HCV sales stood at 116,849 nos., agrowth of 26% over last year.

Passenger Vehicles

The passenger vehicles business reported a total sale and distribution offtake of28,547 nos. (26,245 Tata + 2,302 Fiat) in the domestic market in January 2010, thehighest ever and a 43% increase compared to 19,911 nos. (18,331 Tata + 1,580 Fiat)in January last year. Sales of Tata cars, at 22,707 nos. are the highest ever and agrowth of 47% over January 2009. Sales of the Tata Nano were 4,001 nos. The Indicarange sales were 11,448 nos., the highest this fiscal though flat over January last year.The Indigo range recorded sales of 7,258 nos., the highest ever since the Indigoslaunch in 2002 and a growth of 83% over January last year. The Sumo/Safari range

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accounted for sales of 3,538 nos., the highest this fiscal and a growth of 21% overJanuary last year.

Jaguar Land Rover sales continued their upward trend since launch in June with theirhighest sales in January.

Cumulative sales and distribution offtake of passenger vehicles in the domesticmarket for the fiscal are 200,573 nos. (180,184 Tata + 20,389 Fiat), against 162,425nos. (157,439 Tata + 4,986 Fiat) last year, a growth of 23%. Cumulative sales of theNano are 21,535 nos. Cumulative sales of the Indica range at 91,295 nos., reported agrowth of 6%. Cumulative sales of the Indigo family are 41,724 nos., higher by 3%,coming into the positive territory for the first time this fiscal based on the growingacceptance of the newly launched Indigo Manza. Cumulative sales of theSumo/Safari range are 25,630 nos., lower by 17%.

Exports

The company's sales from exports at 3,276 vehicles in January 2010 registered agrowth of 167% compared to 1,227 vehicles in January last year. The cumulativesales from exports for the fiscal at 26,799 nos. are lower by 12% over 30,293 nos. inthe same period last year.

HONDA SALES RECORD

Honda's profit doubles on solid sales despite yen

Christine Tierney

Honda Motor Co. raised its full-year profit forecast today after reporting a surge in earningsfor the July-September quarter on the back of higher sales.

Tokyo-based Honda beat analysts' estimates, reporting net profit of 135.93 billion yen, or$1.7 billion, up from 54 billion yen, or $680 million, despite a rise in the yen to near-recordlevels.

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Honda's operating profit also more than doubled, to $2 billion, in the second quarter of theJapanese fiscal year.

Sales rose across all of the company's main businesses. Best known as the manufacturer ofthe Accord and Civic cars, Honda also is the world's largest motorcycle maker and it sellsmotors for products ranging from boats to lawnmowers.

Honda raised its net profit forecast for the year ending March 31 to 500 billion yen, or $6.25billion, up from a previous forecast of 455 billion yen, or $5.7 billion, disclosed in July.

Honda is the first of the so-called "Japan Three" to report its earnings. Nissan Motor Co. andToyota Motor Corp. will issue their quarterly results next week.

Although the rise in the yen has raised the cost of Japanese vehicle exports, Japan'sautomakers have benefited from a sales recovery in most markets.

Global auto sales have risen 14 percent in the first nine months of 2010, to 52.5 million carsand light trucks, Deutsche Bank said today, citing figures compiled by Renault SA.

Helped by higher car sales in Japan and the United States, Honda's quarterly revenue rose 9.5percent to 2.25 trillion yen, or $27.9 billion.

The much smaller Mazda Motor Corp. reported a tenfold jump in profits Friday to 7.62billion yen, or $94.4 million, for the second quarter, from 707 million yen, or $9 million, a

year earlier. It sales were up 3.1 percent at 579.7 billion yen, or $7.18 billion.

Last week, Mitsubishi Motors Corp. announced that it had narrowed its loss in the first halfof the fiscal year to 4.9 billion yen, or $61 million, from 36.4 billion yen, or $455 million.

Mitsubishi Motors expects to be profitable by the end of the year, but lowered its earningsforecast because of the yen's strength, according to Bloomberg News.

After appreciating more than 30 percent since 2007, the Japanese currency is flirting with arecord high of 79.75 yen to the dollar set in 1995.

Honda said it has been hurt by the rising yen, which was trading at 86 to the dollar, onaverage, during the second quarter, up from 94 to the dollar a year earlier. Recently, thedollar has been trading around 80 yen, raising major concerns in Japan about the country'sexporting sectors.

Although Honda raised its earnings projections for the year, it trimmed its vehicle salesforecast, to 3,615,000 from its July forecast for 3,640,000 unit sales. Honda also trimmed its

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overall revenue forecast.

Although its results exceeded most analysts' forecasts, investors may be disappointed by thecautious full-year forecasts.

"Some parts of the market were expecting big upward revisions, so the cautious full-yearcompany numbers may come as a negative," said Noriyuki Matsushima, Tokyo-based analystfor Citi Investment Research and Analysis.

Honda is developing more hybrids and alternative-energy models to spruce up its lineup. Ithas introduced a hybrid version of its Fit subcompact, which is available now only in Japan.

At the Los Angeles Auto Show next month, it will show a prototype of an electric car that itplans to sell in the United State and Japan in 2012.

REASONS FOR GROWTH IN SALES

Increasing demand of the products

Companies has reduced prices in the case of special offers

More and more advertisements done by the company.

The demand for the company's product is increasing because the company is able

to create the distinct position of its products by spending aggresively on theadvertising and sales promotion activities of their products and they are offeringreduced prices in the case of some events or special offers.

FOLLOWING IS THE EXAMPLE SHOWING THE PRICES OF DIFFERENT CARS

OF TATA AND HONDA DURING DIFFERENT TINE SETS

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FOLLOWING IS THE ANALYSIS OF THE ADERTISEMENT

EXPENDITURE DONE BY DIFFERENT COMPANIES

Both the companies are spending heavily on the advertisements so as to create a distict

position of their product in the minds of the customers.

EXPENDITURE 2007-08 2008-09 2009-10

TATA 39.4 Cr 42.9 Cr 65.3 Cr

HONDA 42.3 Cr 51.2 Cr 60.3 Cr

As both the companies are increasing their advertisement expense their sales are also

proportionately increased , this shows that the advertisement have the positive impact on

the sales of both the companies.

FINDING OUT THE ELASTICITIES OF DEMAND

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CARS INITIAL PRICE CHANGED PRICE INCREASE/DECREASE

TATA ARIA 14,13,001 13,13,901 DECREASE

TATA MANGZA 5,12,732 5,20,732 INCREASE

HONDA CITY 8,15,000 8,62,000 INCREASE

HONDA JAZZ 7,36,912 7,20,500 DECREASE

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PRICE ELASTICITY OF DEMEND

Price elasticity of demand (PED or Ed) is a measure used in economics to show the

responsiveness, orelasticity, of the quantity demanded of a good or service to a change inits price. More precisely, it gives the percentage change in quantity demanded in responseto a one percent change in price (holding constant all the other determinants of demand,such as income).

PED is a measure of the sensitivity (or responsiveness) of the quantity of a good orservice demanded to changes in its price. The formula for the coefficient of priceelasticity of demand for a good is:

Taking the case of HONDA JAZZ when the company changes the price of the car on thedepawli event the resultant change in demend is :

HONDA JAZZ INITIAL CHANGED % CHANGE

PRICE 7,36,912 7,20,500 2.22%

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http://en.wikipedia.org/wiki/Elasticity_(economics)http://en.wikipedia.org/wiki/File:Price_elasticity_of_demand.svghttp://en.wikipedia.org/wiki/Elasticity_(economics)

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DEMAND 24,567 30,412 17.7%

PRICE ELASTICITY IN THIS CASE IS : (17.7/2.22) = 7.97%

INCOME ELASTICITY OF DEMAND

In economics, income elasticity ofdemand measures the responsiveness of the demandfor a good to a change in the income of the people demanding the good, holding all pricesconstant. It is calculated as the ratio of the percentage change in demand to thepercentage change in income. For example, if, in response to a 10% increase in income,the demand for a good increased by 20%, the income elasticity of demand would be20%/10% = 2.

CROSS ELASTICITY OF DEMAND:

In economics, the cross elasticity of demand or cross-price elasticity of demandmeasures the responsiveness of the demand for a good to a change in the price of anothergood. It is measured as thepercentage change in demand for the first good that occurs inresponse to a percentage change in price of the second good

News regarding change in prices of TATA NANO :

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http://en.wikipedia.org/wiki/Elasticity_(economics)http://en.wikipedia.org/wiki/Supply_and_demandhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Demand_(economics)http://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Percentage_changehttp://en.wikipedia.org/wiki/File:Income_elasticity_of_demand_-_inferior_goods.svghttp://en.wikipedia.org/wiki/Elasticity_(economics)http://en.wikipedia.org/wiki/Supply_and_demandhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Demand_(economics)http://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Percentage_change

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Tata Motors raises Nano car price by Rs 9,000 from Nov 1Related Industry : Auto

By Vishwanath NairMUMBAI, OCT 29 (TickerNews Service): Tata Motors has raised prices for its cheapestcar Nano by Rs 9,000 (ex-showroom) on an average effective from Nov 1 to partiallyneutralise the steep increase in input cost in the past two years.The company began open sales of the car in Kerala in August and in Karnataka,Maharashtra, Uttar Pradesh and West Bengal since October.Nano which is advertised as the 'people's car', and is currently the world's cheapest, is produced from Tata Motors' Sanand plant in Gujarat.Tata Motors shares today ended at Rs 1,159 on National Stock Exchange, down 2.8%from previous close. (End)

Filed by Rajesh Menon

Phone: +91 (22) 6147 5100. feedback@tickerplantindia.com

Copyright (c) TickerPlant Ltd.

So, as the price of the product has been increased i.e tata nano hasincreased , there may be possibility that the demand for the othercompetitors product increases as AJANTA is also going to enter in the low

price car segment in indian market in direct competition with TATANANO .

CONCLUSION

So, the automobile industry is competing in the oliogoboly type of themarket condition , in which two or more players enjoy the major marketshare such as TATA HAVING 60% MARKET SHARE IN AUTOMOBILESECTOR IN INDIA and HONDA IS HAVING AROUND 30% MARKETCAP , and the all the major players adopt different set of strategies in orderto gain the competitive edge over the other for eg if one seller introduce new

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product in the market the other seller also countermoves the action by givingsome new offering , if one gives discounts the other one might adopts thestrategy of giving free gifts with the same price tag , so it is a type of marketsituation where the action of one is countermoved by the strategic actions ofthe other persons.

REFRENCES

www.Carcostmenia.com.

www.hondamotors india.com.

www.tatamotors.com.

http://www.businessweek.com/magazine/content/10_16/b4174024664807.htm

http://en.wikipedia.org/wiki/Honda

http://www.cardekho.com/india-car-news/tata-motors-to-increase-uv-market-share-in-gujarat-2829.htm

http://www.cardekho.com/upcomingcars