A STUDY ON PRODUCT DIVERSIFICATION IN AUTOMOBILE COMPONENT INDUSTRIES WITH RESPECT TO 2

8/7/2019 A STUDY ON PRODUCT DIVERSIFICATION IN AUTOMOBILE COMPONENT INDUSTRIES WITH RESPECT TO 2

1/64

A STUDY ON PRODUCT DIVERSIFICATION INAUTOMOBILE

COMPONENT INDUSTRIES WITH RESPECT TO 2&3WHEELER

With special reference toGhaziabad Precision Products Pvt. Ltd

(Project Report Submitted in Partial Fulfillment of the Requirements for the

Degree of Master of Business Administration in International Business)

BY

Mr. RAJU KUMAR

Under the supervision of

Mr. AkashAgarwalDr. M. BhanumathiExternal guide

Academic guide

Sales & MarketingDepartmentDepartment of International

Ghaziabad Precision Product Pvt. Ltd Business, School of ManagementGhaziabad, (India) Pondicherry University


2/64

PONDICHERRY CENTRAL UNIVERSITY

(DEPARTMENT OF INTERNATIONAL BUSINESS)

Department of International BusinessSchool of Management, Pondicherry University

Pondicherry 605014

Certificate

This to certify that Mr. RAJU KUMARastudent ofMBA-International Businesssession 2009-

11 has successfully completed his project inGhaziabad Precision Products Pvt. Ltd,

Ghaziabad (INDIA). His period of training was for seven weeks that commenced from

12th May 10 to 26th June, 2010. He has prepared the training report titledA STUDY ON

PRODUCT DIVERSIFICATION IN AUTOMOBILE COMPONENT INDUSTRIES

WITH RESPESPECT TO 2&3 WHEELER with special reference to Ghaziabad

Precision Products Pvt. Ltd, Ghaziabad (INDIA) for the requirement ofthe concern

and for the Master of BusinessAdministration (International Business) program in the

Department of International Business, School of Management, Pondicherry University.

Dr. M. BHANUMATHIDr. MOHAN K. PILLAI

Academic Guide Head of the Department

Department of International Business Department of International Business


3/64

School of Management School of Management

Pondicherry University Pondicherry University

DECLARATION

I herebystate that the Project Report titled A STUDY ON PRODUCT DIVERSIFICATION

IN AUTOMOBILE COMPONENT INDUSTRIES WITH RESPESPECT TO 2&3

WHEELER with special reference to Ghaziabad Precision Products Pvt. Ltd,

Ghaziabad (INDIA)submitted in partial fulfillment of the degree ofMasters ofBusiness

Administration (International Business) isan original work done entirely by me and is basedentirely on my own observations. It has not previously formed the basis for the award ofany

other degree, diploma, fellowship orany othersimilar title. The facts presented here are true to

the best ofmy knowledge.


4/64

Place: Pondicherry

Date: (RAJU KUMAR)

ACKNOWLEDGEMENT

My first and foremost unforgettable thanks to Almighty God who blessed me with powerand

will to complete this noble work .

I wish to express my deep sense of gratitude to my academic guide Dr. M.

Bhanumathi,Department of International Business, School Of Management.She inspired me

greatly to workin this project. Her willingness to motivate me contributed tremendously to my

project.

I express my sincere thanks to industrial guide Mr.Akash Agarwal ,Dy.Manager

Export,Ghaziabad Precision Product Pvt. Ltd ,who supported and advised me at all the time

to full extent extending hishelping hand inspite ofhis busyschedule and encourage me till the

completion ofmy project sucessfully.Beside thishe tought me how to lead asucessful corporate

life.

I express my sincere thanks to our Dean Dr.Ramadas, School Of Management and also I

express my sincere thanks to Department Head, Dr.MOHAN.K.PILLAI, Department of


5/64

International Business, School OfManagement. I humblysubmit my thanksfor thier guidence

and support through out this project. I also offer my thanks to Dr..P.Sridharan Senior

Lecturer, Department of International Business.In addition I would also like to thank other

previous faculties Dr. R. Maheswari, Ms. SADIKA SULTANA and Mr.S.KUMAR and our

current faculties Dr..RejeshVishwanath ,Dr.Bhusan, Dr.Tyagraganfor giving their valuable

advice on this project.

I take immense pleasure in thanking Mr.HENERRY, Marketing Head , Ghaziabad Precision

Product Pvt.Ltd, who tought me indirectly how to handle customer pressure and how to lead

team.

Finally, an honorable mention goes to my families and friends for their understandings and

supports on me in completing this project. Without helps ofthe particular that mentioned above,

i would face many difficulties while doing this project.

EXECUTIVE SUMMARY

Production ofauto ancillaries was estimated at US$10 bn in 2005-06 and has been growing at a

robust 20% per annum since 2000. Exports of auto components have been strong growing at

24% perannum since 2000. This growth in exports ifsustained foranother five years willsee

Indiasauto components exports will touch US$ 5 bn by 2011 from the US$ 2 bn at present.

Till the 1990s, the auto component industry was solely dependent on the domestic automobile

industry to drive the demand forancillary products. This composition of the market however is

undergoing radical changes with global outsourcing gaining momentum.


6/64

In recent times, exports has emerged as a significant driver of growth, and the demand

emanating from global OEMsand Tier I manufacturershas opened new opportunities for the

auto component industryin India. At the same time, a bright outlookfor the domestic automobile

industry also offers significant growth potential, given the fast rising income levels with a

rapidly growing middle and highincome consumers.

Share of exports in total production has risen from 10% in 1997 to 18% in 2006. The

composition ofexportsin terms ofthe proportion ofOEM and aftermarket hasalso undergone a

sweeping change since the past decade. The ratio ofOEM to aftermarket has changed from 35:65

in the 1990s to 75:25 in 2006. While exportshave been booming, there has been asharp rise in

imports ofauto componentsas well, especially in the last three years. From an import ofUS$

250 mn in FY03, theyhave gone up to US$750 mn in FY06. Thisisahealthy trend, indicative o

rising domestic demand.

TABLE OF CONTENT

CHAPTER NO. PAGE

NO.


7/64

1. INTRODUCTIO

1.1 OBJECTIVES OF THE STUDY

1.2 SCOPE OF STUDY

1.3 LIMITATION OF THE STUDY

2. DYNAMICS OF INDIAN AUTO-COMPONENT INDUSTRY

2.1 FUNCTIONING OF AUTO-COMPONENT INDUSTRY

2.2 SECTORIAL PERFORMANCE OF AUTO-COMPONENY INDUSTRY

2.3 FRAGMENTATION OF AUTO-COMPONENT INDUSTRY

2.4 AUTO-COMPONENT MARKET TREND : IN INDIA

3. INTERNATIONAL AUTOMOBILE SCENARIO & INDIA`S INVOLVEMENT

3.1INDIA POSITION AT WORLD STAGE

3.2 FDI IN AUTOMOBILE COMPONENT INDUSTRY IN INDIA

3.3 INDIAS ADVANTAGE AND OPPORTUNITY

3.4 COMPANY PROFILE

4. MARKET ANALYSIS

4.1 INDIA AUTOMOTIVE MARKET REVIEW

4.2 PRESENT SCENERIO IN AUTO SECTOR

4.3 EXPORT TREND IN INDIAN AUTOMOBILE COMPONENT INDUSTRY

4.4 DESTINATION INDIA FOR AUTO SECTOR

4.4.1 GOVERNMENT POLICY INITIATIVE FOR AUTO SECTOR


8/64

5. RESEARCH METHODOLOGY

5.1RESEARCH DESIGN

5.2 COLLECTION OF DATA

5.3 STATISTICAL TOOLS

6. DATA ANALYSIS AND INTERPRETATION

7. FINDINGS AND SUGGESTION

8. CONCLUSION

BIBLIOGRAPHY AND WEBLIOGRAPHY


9/64

CHAPTER 1

INTRODUCTION

The auto component industryhas come ofage and now formsan important component of the

Indian economy. In recent years, it has grown more impressively, fetch double digit growth.

More interestingly, it has captured attention as wellas businessfrom leading auto makers ofthe

world. The industry plays a crucial role in the automobile sector. Manufacturing vehicles

typically involve assembling a large number of components out-sourced from number of

ancillaries or component manufacturers.

Competitiveness with qualityasa theme has been the watchword for the Indian industryand

especially the auto component industry ever since the Indian economy was opened up to the

world in the early 1990s. While economic revival, lower interest rates and better road

infrastructure are driving domestic demand for automobiles and, therefore, components,

increasing outsourcing by global automobile majors is creating a huge export opportunity for

Indian component manufacturers.

The automobile industryin the countryis one ofthe keysectors ofthe economyin terms ofthe

employment opportunities that it offers. The industry directly employs close to around 0.2

million people and indirectly employsaround 10 million people .The prospects of the industry

also hasa bearing on the auto-component industry which isalso a major sector in the Indian

economy directly employing 0.25 million people. Allis not well with the automobile industry the

world over currently with the slowdown that has gripped most of the major economies of the

world. The gap between the manufacturing capacity volume and the assembly volume is growing

by the dayand has worried the manufacturers. Thisstate ofaffairshas triggered alot ofcutthroat

competition and consolidation in the industry.


10/64

Cost reduction initiativeshave come to be the in thing in the globalindustry today. Towards this

direction, manyautomobile factoriesare being closed down. The Indian automobile industryisa

stark contrast to the global industry due to many of the characteristics, which are peculiar to

India. The Indian automobile industryis verysmallin comparison to the globalindustry, except

for two wheelersand tractorssegments.

Indian auto component industry is emerging asa global manufacturing hub forauto- component

manufacture. Indian auto component industryis one ofthe front runnersfor grabbing the global

auto component outsourcing market, estimated to be worth US$700 billion by 2015. Auto

components sector requires an incremental investment of Rs2,000-crores as per the report of

working group on automobile industry Eleventh Five Year Plan (2007-2012).

Today, Indiahas the potential to manufacture a range ofautomotive components(about 20,000 in

numbers) from fasteners to engine parts Apart from the foreign demand, the domestic car

production isalso growing withsales expected to be about 10 million by 2009. The exportsare

expected to touch US$5 billion by 2010.

The Indian auto component industry is receiving attention like never before. A great deal of

interest is being shown by globalautomobile and auto component manufacturers to outsource

components from Indian manufacturers. Auto component manufacturers in Indiaare looking to

replicate the success ofthe software sector.

Exporting is not new forauto component manufacturersin India. A classic example is Sundaram

Fasteners that has been exporting radiator caps to General Motors (GM) for the last few years.

Leading auto component manufacturers like Rane and TVS Group have been exporting

components to the extent of10 to 25percent of the companys turnoverin the past. The exports

were to countries in Europe and to the U.S. catering mainly to the aftermarket. Tire

manufacturershave traditionally been strong exporters. Exports of tireshave been growing at a

compound annual growth rate (CAGR) of 19 percent over the past 10 years.What has


11/64

transformed Indian auto component manufacturing? This market once feared the Chinese

dragons onslaught, and now is grabbing alarger pie ofthe exports market.

1.1TRENDS IN AUTO-COMPONENT INDUSTRY

The key trends that are shaping the fortunes ofthe auto componentsindustryin the export market

are:

y Strong engineering skills, high quality and relatively low cost of highly skilled man

power makes Indiaa preferred destination forautomakers.

y Increasing competitive pressure on globalautomakersforces them to outsource from low

cost manufacturers.

Automobile manufacturersin U.S. and Europe are facing pricing pressure and weak demand. To

improve competitiveness, manufacturers are looking to outsource components from countries

like India that produce comparable quality componentsat lower prices. As the global markets

continue to face sluggish growth, discounts and attractive finance options are used to attract

customers further bleeding the bottom line of automobile manufacturers. The only way to

achieve sustained cost reduction is to outsource to countries like India, whichhas inherent cost

advantages. Hence, this trend is expected to help Indian manufacturers in garnering more

outsourcing contractsfrom globalautomakers.


12/64

The opening up ofthe economy, even though calibrated, raised fears that Chinese manufacturers

would swamp Indian markets. This fear, in turn led to Indian manufacturers improving their

qualityand establishing systems to ensure low failure rate. Indian manufacturers were quick in

embracing quality certifications like ISO and QS to enhance their quality. The presence of

leading automakers like GM, Ford, Toyota, and Volvo hasalso helped Indian auto component

manufacturers to improve the quality of components supplied. These components meet global

standardsand Indian manufacturersare demonstrating that theyhave the necessaryskills to work

effectively with global manufacturers.

The rising confidence level ofglobalautomakershas translated into large ordersfor components

from companies like DaimlerChrysler, Deutz, and Navistar among others. The strong

engineering skills ofIndias workforce combined withhigh quality is expected to drive exports

business.

The Indian auto component companies are spreading their operations globally,

mainly throughacquisitions.

TABLE-1

Acquisition of foreign auto-component company

Name of Indian

Acquiring

Company

Acquired Company Country Acquisition value

In US $million

TataTechnologies Incat International UK 95

Bharat Forge ImatraKilsta AB Sweden 56

Amtek Auto GWK UK 37

Amtek Auto Zelter Germany 36


13/64

Bharat Forge Carl Dan Peddinghaus Germany 35

EL Forge Shakespeare Forgings UK 28

Ucal Fuel Systems Amtec Precision USA 28

Bharat Forge Federal Forge USA 9.1

Bharat Forge CDP Aluminiumtechnik Germany 7.5

Sona Koyo Steering 21% ofFuji Autotech France 6.15

Tata Auto Comp WundschWeidinger Germany 5.00

Systems SundaramFasteners

Cramlington Forge UK 2.60

1.2 OBJECTIVES OF STUDY

Primary Objective-

To understand the domestic and internationalsales ofTwo and Three wheeler

industry.

Secondary Objective-


14/64

To know the customer behaviour on Two and Three wheeler in Ghaziabad &

Delhi region.

To understand Auto-component industriesin India.

1.3 SCOPE OF STUDY


15/64

The project report covers the India`sautomobile industry trendsand growth bothat domestic as

well as on international level. This will help to know how Indian automobile industry is

performing and whichsegments doing wellin respects ofothers.

As report covers the number of sales of all category of automobiles including heavy & light

vehicles so the demand pattern will help the new as well as existing industry to inter in

respective automobile segment & diversify their businessaccording to market trend .This project

report has covered detailanalysis ofmainly two automobile sectors i.e two & three wheelerso

the relative companiesas wellas new companies can map their needs, waysand strategies to

capitalize their business objective .


16/64

1.4 LIMITATIONS OF THE STUDY

Consumerbehavior pattern covered in studyisfrom Ghaziabad and some parts of

Delhi region only so might not be applicable to other part ofIndia.

Onlysecondary datais collected


17/64

CHAPTER 2

AUTO-COMPONENT INDUSTRY IN INDIA

The opening up ofthe auto sectorin India over the last decade has caught the attention ofglobal

auto majors as the only market rivaling China in terms of potential market size and growth

opportunity. As the automobile industry has grown and matured, the Indian auto components

industryhasalso grown tremendously, and is rapidlyachieving global competitiveness both in

terms of cost and quality. Infect industry observers think that while Indian automobile market

will grow at a measured pace, the auto componentsindustryis poised fora take-offand is one of

the handfuls ofindustries where Indiahasa distinct competitive advantage.

The business landscape and context is drastically changing worldwide as a consequence of

globalization, IT revolution and the emergence ofnew business models. Business organizations

are increasingly experiencing the heat of competition and Darwinian challenge for survival is

only possible through continuous innovation, diversification and application of newer

technologies.

To know the potential growth ofautomobile sectoranalysis is done by collecting all datafrom

the relevant available sources .Comparative growthisalso studied for knowing the segment wise

growthin past & present yearso that actual growth trend help in taking decision ifany company

islooking forany new segment for businessactivities.

Focus is done on the 2&3 wheeler auto-segment and respective growth

comparison is done with otherauto- segment sectors.


18/64

2.1 FUNCTIONING OF AUTO-COMPONENT INDUSTRY

The Indian auto components industry started out small in the 1940s supplying components to

Hindustan Motorsand Premier Automobiles, two largest manufacturers ofautomobiles in India

at that time. In the 1950s, the arrival of Telco, Bajaj, Mahindra& Mahindra led to steadily

increasing production. A closed market with high import tariffs characterized the Indian auto

component industry pre 1985.1985-91 saw significant JVsin the Indian auto component segment

with Japanese manufacturers. After 1991, the de-licensing of the sector led to global auto

manufacturersinitiating assembly operationsin India. Thissubsequentlyled to global

Tier I players entering the Indian auto space and the recognition of the potential in the Indian

auto component segment. The Automotive Component Manufactures Association (ACMA)

classifies the auto ancillaryindustryinto the following product segments:

Engine and engine parts: Pistons, piston rings, piston pins, gaskets, carburetors, fuel injection

pumps, etc.

Drive transmission and steering parts: Transmission gears, steering gears, crown wheelsandpinions, axles, wheels, etc.

Suspension and braking parts: Leafsprings, shockabsorbers, brake assemblies, etc.

Electricals: Spark plugs, starter motors, generators, distributors, voltage regulators, fly wheel

magnetos, ignition coils, etc.

Equipment: Dashboard instruments, headlights, horns, wipers, etc.


19/64

Others: Fan belts, sheet metal parts, plastic mouldings, etc.

The major playersin the auto ancillaryindustry can be classified between the ones catering to the

two wheeler industryand the four wheeler industry. MICO, Bharat Forge, Sundaram Clayton,

Sundaram Brakes, Rane Brakes, etc. mainly cater to commercial vehicles/tractors. There are

many companieslike Ucal Fuel, MothersonSumi, PRICOL, Subros, etc. whichsupply mainly to

car industry. Companies like Munjal Showa, Lakshmi Auto, Omax Auto, etc. cater to two-

wheelers.

2.2 SECTORIAL PERFORMANCE OF AUTO-COMPONENT INDUSTRY

The auto-ancillary was the best performing sector among the intermediate goods. Different

segments of the sector suchas bearing, casting, fasteners, batteriesand tyreshave grown in a

range of 25-40%.During the June quarter, global automobile majors have announced majorinvestment& domestic automobile companies such as General Motors (GM) and Honda in

fragmented auto-ancillarysector.

Global majorsare in a very critical condition; theyare loosing their market share because major

automobile companies are being attracted by India, China, & Taiwan. During first quarter of

FY07, exports ofautomobile components grew around 25% compared to the previous quarter on

a YoY basis. And exports registered a growthat around Rs 2833 crore compared to around Rs

3530 crore in the corresponding quarter ofFY06. The main reason for boost in export is that the

nature ofthe customer base ofoverseas market has been undergoing major change.

Indian companies are transforming into principal suppliers for the Original Equipment

Manufacturers (OEMs) from the aftersales market or replacement market. During that quarter,


20/64

production ofauto components increased by 15% YoY. And the result came out so far in this

quarteris, Shanthi Gears, witnessed a jump in net profits for the quarter ending in September,

2006. During the quarter, the company witnessed a jump in NP at 43.45%, Salesfor the quarter

rose 31.90% compared with the corresponding quarter, ayearago. The companyhas facilities

for manufacturing patterns, centrifugal castings of phosphor bronze rings, ferrous castings,

aluminum castings, heat treatment, forging, fabrications and cutter manufacturing in-house

which constitute the major raw materialsfor gearboxes.

Automotive Axles reported marginal improvement in the net profits for the quarter ended June

30, 2006. During the quarter, the company reported a 2.30% rise in profits and Sales for the

quarter rose 35.15% compared with the corresponding quarter.

2.3 FRAGMENTATION OF AUTO COMPONENT INDUSTRY

The Indian auto component Industryishighlyfragmented:-

y Around 500 organized playersaccount for the 77% ofthe value added in the sector.

y Unorganized players are mainly replacement market players or tier 3/4component

manufacturers.

y Automotive Manufacturers Association ofIndia (ACMA) represents the auto component

industryin Indiaand hasaround 500 registered members.

CHART-1

Segment-wise division of auto-component industry


21/64

Source: ACMA

The Auto componentsindustryis predominantly divided into the following segments:

Engine parts: 23%

Drive Transmission & Steering Parts: 23%

Suspension & Brake Parts: 11%

Electrical Parts: 7%

Equipment: 8%

Others: 36%

2.4 AUTO-COMPONENT MARKET TREND: IN INDIA

TABLE-2

Auto Component Industry Statistics

(Value in

US $

million)

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Turnover 6,730 8,700 12,000 15,000 18,000 17,756

Exports 3,615 2,873 2,469 1,692 1,274 2,101


22/64

Imports 4,938 3,328 2,482 1,902 1,428 1,423

Investment 3,100 3,750 4,400 5,400 7,200 7,001Source: SIAM

The Indian auto component industry reached asize ofUS$ 15 billion in 200607, growing at a

CAGR ofnearly 29% in the last fouryears.

The exports of auto components industry has reached around US$ 2.9 billion in 2006-07,

having grown at a rate of40% CAGR over the last fouryears.

The industry crossed a total turnover ofover US $ 15 billion (Rs 64,500crore), with exports of

US $ 2.9 billion (Rs.12,643crore) during 2006-07.

According to the Automotive Component Manufacturers' Association of India (ACMA), the

domestic Indian auto component manufacturing industryisheading fora whopping 18% growth

in the coming years compared to the export market which is estimated to reach $2.7 bn by the

year 2010.

The sectorisset to grow at a CAGR of15 per cent tillfiscal 2012.

2.5 INDIA POSITION AT WORLD STAGE

The following is Indias position in world production:

1st position in 3 wheeler


23/64

2ndin two wheelers

11thin commercial vehicles

13thin passenger car

AUTO-COMPONENT CONTRIBUTION

More than a third (36 per cent) of Indian auto component exportshead for Europe, with North

Americafeaturing a close second at 26 per cent.

LEADING CONTRIBUTORS IN AUTO TRADE

Some leading manufacturers ofauto componentsin Indiainclude the following:

Motor Industries Company ofIndia

Bharat Forge

Sundaram Fasteners

Wheels India

Amtek Auto

MothersonSumi

Rico Auto

Subros


24/64

LOCALIZATION OF THE INDUSTRY IN INDIA:

The regional base ofauto component manufacturersis mostly concentrated in the West, North

and South ofIndia. The main auto component manufacturing hubsin Indiaare situated in Pune,

Gurgaon and Chennai.

The following are the majorautomotive clusters:

Western India: Mumbai - Pune - Nasik Aurangabad

Southern India: Chennai Bangalore Hosur

Northern India: Delhi-Gurgaon Faridabad- Ghaziabad

The state of Uttaranchal is also turning into an auto-hub, because of the industry friendly

government policy.


25/64

2.6 FDI IN AUTOMOBILE COMPONENT INDUSTRY IN INDIA

The auto parts industry with a turnover of US$15 billion offer excellent scope for FDI.

Automatic approval for foreign equity investment up to 100 per cent of manufacture of

automobilesand component is permitted. The Import of components is freely allowed Global

auto majorsand domestic giantsare pulling out their pursesand putting their money where the

production linesare.

Auto parts maker Robert BoschofGermany willinvest $ 201.4 millionin its Indian subsidiaries

over two years. Bulk of the investment will be in Motor Industries Co Ltd (Mico) -- the Bosch

flagship in India.

Japanese electronic major, Hitachi Ltd. is planning to start auto component manufacturing in

India when its OEMs-Isuzu Motorand Nissan Motor-- start manufacturing their carsin India.

Dubai-based auto ancillary major Parts International Companyhas plans to invest approximately$ 3.6 millionin India over three years. Thisincludessetting up a manufacturing facilitymeant to

service exports to CIS and SAARC countries.

Fiat India is taking baby steps in becoming a global sourcing hub for components. Fiat has

exported componentsworth $ 8.3 million last year to its operationsin South Africa.

General Motors has decided to increase sourcing of components from Indian suppliers and

intends to ship parts worth $ 1000.7 million to its global production units by 2010.

2.6.1 FDI AND FOREIGN COLLABORATIONS:

According to the ACMA, 95.5 percent of its members (401 of420 companies) are currently in

collaboration withforeign companies through technical, financial collaboration or joint venture.


26/64

The growing presence ofglobalsuppliers in the Indian auto component industryhas coincided

withasignificant increase in localization in auto production. Fiat India, for example, imported

around 70 percent of needed auto components in 1999, but its dependence on imported

components declined to 42 percent in 2000, 20 percent in 2001 and to 15 percent in 2002

2.7 INVESTMENT IN AUTO SEGMENT

MagnetiMarelli, the auto component maker ofFiat group, has forayed into the country'sspare

partsaftermarket by entering into a partnership with Carnation Auto, a multi-brand carservicing

facility. The companyalso plans to increase its revenue from India to around US$ 429.66 million

by 2015, and expects the country to grow faster compared to other global markets.

Hyundai Wia, the car component subsidiary ofHyundai Motor Company, plans to set up an auto

component facilityat Nellore, Andhra Pradesh withan investment ofUS$ 259.72 million. Thefacilityis expected to be set up in two phasesand would become operational by April 2011.

Rane Group, a Chennai based auto component manufacturer, is planning to invest US$ 56.11

million foraugmenting capacityfor meeting increasing demand during 2010-11.

Ashok Minda Group, an auto component manufacturer plans to raise private equity ofaround

US$ 26.8 million for expanding its business.

German automotive components company, Wallstabe& Schneider, has established its Indian

presence by signing a joint venture (JV) agreement with Thane-based Mecnam Products and

Mumbai-based Deshmukh Rubber Works Pvt Ltd.


27/64

The world's largest automotive component manufacturer, Bosch, plans to invest US$ 433.5

million in India over the next three years. "India will be an important market for the companyin

the immediate future," said Bernd Bohr, Chairman of the Stuttgart-based Bosch Automative

Group.

Tyre manufacturer, Apollo Tyres Ltd, isset to make Chennaiits manufacturing and researchand

development (R&D) hub and is establishing a US$ 433.6 million manufacturing facility, which

islikely to see an additionalinvestment ofUS$ 130.09 million.

The Tamil Nadu government has cleared the proposal oftyre manufacturer, JKTyre& Industries

Ltd, for setting up a new production facility in the state, which would attract around US$ 346

million in investment.

2.8 INDIA`S ADVANTAGES & OPPORTUNITY

Steered here by the country's high engineering skills, established production lines, a thriving

domestic automobile industryand competitive costs, globalauto majorsare rapidly ramping up

the value ofcomponents theysource from India. The industryis poised to jump from exports of

Rs 61 billion in 2005-06 to Rs. 296 billion in 2011-12. According to the Automotive Component

Manufacturers Association of India, more than a third (36 per cent) of Indian auto component

exportshead for Europe, with North Americaa close second at 26 per cent.

Opportunities:

Indiais emerging asa global manufacturing hub forauto component manufacture.

Indiaisamong the most competitive manufacturers ofauto componentsin

the world. Auto component industry in Indiahas potential to grow at a CAGR of13% to reach

US$40 billion by 2015.


28/64

Indiasshare in world Auto Componentsis expected to grow over 2.5% by 2015.

Domestic market projected to grow at around 8-10% p.a. in the next 10 years

Exports projected to grow at over 30% p.a.

Indiaamongst the most competitive manufacturers ofAuto Components; especially,

Metal Intensive components: Forgings, Stampings, Castings

Skilled Labour-intensive components: Machining, wiring -harness, other electrical components

Hi-tech components: Electronic Fuel Injectors.

Opportunity to address the global Auto Components market while leveraging Indiaslarge and

growing domestic market

Opportunity to set up R&D centresin India.

Potential ofover US$5 billion forinvestment in India .

Highlevel ofsourcing ofauto componentsfrom low cost countries (LCCs) to act asa driver

for growth .

Besides, the announcement of'Automotive Mission Plan'for the period of2006 2016 isa

majorstep taken to make Indiaa globalautomotive hub.

The Mission Plan aims to make India emerge as the destination ofchoicein the world for design

and manufacture ofautomobilesand auto components, with output reaching alevel ofUS$ 145

billion.

2.9 INDUSTRY AND COMPANY PROFILE

About GPP (Ghaziabad Precision Product Pvt. Ltd)

Ghaziabad Precision Product Pvt. Ltd is a leading world class automobile- component

manufacturing( certified as TS 16949(ISO): 2002) company, located at the industrial city of

Ghaziabad in Uttar Pradesh .The inception ofGPP dates back to 1988 when the first plant was

established to manufacture Push Rods. Since the modest beginning, the group has grown leaps


29/64

and boundsadding continuously on its manufacturing capabilitiesand exploring newerhorizons

with each passing year. Over the year , GPP hasachieved many milestonesand today one ofthe

preferred suppliers of engine parts like Rocker Arm shaft, Lever, Push Rods ,Rocker Lever &

Shifter Rails, Springs- (Compression ,Tension ,Torsion, Wire form ) & Complete Assembly

strictly as per APQP and PPAP Standards for renowned domestic & international OEMs like

AshoK Leyland, Telco, Hino, Simpson, Cater Pillar, Perkins, CNH, Lister Petter , Eicher,

SCMJapan,Thai Automotive Ind.Kirloskar Oil Engine, SwarajMazda,Case New

Holland,TataMoters Cummins India Ltd etc.

Business Type :- Auto Component Manufacturing Industry

Main Market :- USA, Europe, Asia

Year of Establishment:- 1988

Number of Employees:- 550

Chairman & CEO:- Mr. I. C. Agarwal

Website:-www.gpp-india.com

Certificate:- TS16949,ISO 9002,QS 9000,SQEP

Brief History

1988- Establishment ofPush Rod facility - GPPL

1992 - Establishment ofExports Division


30/64

1997- Establishment ofRocker Arm shafts and Shifter Railsat GPPL

1999- Establishment ofthe Rocker Arm Shaft Assemblysection

2001 -Establishment ofIn House Heat treatment facilities

2002-Relayout offacilitiesforline and product based concept

2003

QS 9000 certification at GPPL

ACT-UNIDO Cluster Project

2004-Six SigmaTraining from CAT

- 2006- TS 16949 certification at M/s G.P.P.

- 2008

y Signing ofJV with M/s Kasuya Seiko Co., LTD

y New Facilityat Sitarganj

y SQEP certification FOR Bronze Levelfrom CATERPILLAR


31/64

Group Units of GPP:

Plant 1

Ghaziabad Precision Products Pvt. Ltd

D-32, Bulandshahar Industrial Area

Plant 2

Kasuya GPP Auto Products Pvt. Ltd.

D-31, Bulandshahar Industrial Area

Plant 3

Ghaziabad Precision Products Pvt. Ltd. (Sitarganj Unit)

D-50,EldeoSidul Industrial Park

Products of GPP:

Push Rods

Solid

Induction Hardened

Direct Hardened

Projection Welded

Drilled Holesat Both Ends

Cup and Ball

Bothsides Ball

Press Fit


32/64

Rocker Shaft Assemblies

Rocker Arms - Nodular Cast Iron,

Chilled Cast Iron,

Forged with Bush/Socket/ Seat/Toe

Supports: Aluminum, Cast Iron, Forged,Cross

Shifter Rails

Rocker Shafts

Drilled /Tubular

Induction and Nitrided

Up to 800 mm Length

Super Finished

Pins King Pin

Shackle Pi

U-Bolt Toughened

Springs Compression

Tension

Torsion

Wire Form

Spiral


33/64

INTERNATIONAL CUSTOMERS OF

GPP Push Rods

Rocker

Shafts

Rocker Lever

Assembly

Rocker

Shafts

Assembly


34/64

TABLE-3

Case New Holland , UK YES YES YES

Caterpillar- LEC , USA YES

Caterpillar MEC,USA YES

Deutz, Germany YES

JCB, U.K. YES

John Deere, USA YES

ListerPetter, UK YES YES

MHI JAPAN YES

MTU Friedrichshafen , Germany YES

Perkins, U.K. YES

SCM Japan, ThruCIPL YES

Thai Automotive Ind ( Nissan)Thailand YES

Domestic Customers

Of GPP

Push

RodsRocker

Shafts

Rocker

Lever

AssemblyRocker Shafts

Assly.Transmission

Shafts


35/64

Ashok Leyland Ltd YES YES YES YES

Avtec ( Lancer/ IsuzuDiv) YES

Caterpillar India Pvt.Ltd. YES

Cummins India Ltd YES

Eicher Motors Ltd YES YES YES

EicherTractors (TMTL) YES YES YES

Escorts Ltd YES YES YES YES

Greaves Cotton YES YES

InternationalTractors YES YES YES

Indo Farm YES YES

Kirloskar Oil Engines YES YES

Lombardini India YES YESMahindra Gujarat YES

New Holland Tractors YES

Royal Enfield Motors YES

Same YES

Simpsons & Co YES YES

Swaraj Engines YES YES

Swaraj Mazda YES YES YES YES


36/64

Vision

To Remain a Cost Efficient World Class Supplier of Valve Train components and Precision

Springs by Continuous Improvement and reacha turnover of30 Million USD by 2011

Future Plans

Triple the Turnoverin the next three years.

Utilize additional capacityfor Push Rods, Rocker Levers, Rocker Shaft assembliesand

Springs

Standard Combine YES YES YES

Tata Motors YES


37/64

2.10 INDIA AUTOMOTIVE MARKET REVIEW

India automotive market review - forecasts to 2014

In 2008/09, Indiasautomotive industry generated a turnover ofUS$55bn. Thisincluded vehiclesales of US$36bn and component, tyre and aftermarket sales of US$19bn. In value terms,

passenger carsaccounted for 45% ofindustry turnover, while commercial vehiclesaccounted for

27%. The balance wasattributed to two wheelersand three wheelers.

Most global OEMsalreadyhave a presence in India, however, the supply base isstill restricted.

A key reason behind the relatively smaller presence of global suppliers is low production

volumes. Maruti Suzuki, Hyundaiand Tata Motors togetheraccount for 76% of the passenger

car market (in terms of volume). Hence, suppliers with strong linkages to South Korean and

Japanese OEMsfind it easy to procure orders.By 2015/16, automotive industry turnoverin India

is expected to reach US$150-200bn.

This brand new report from just-auto takes a look at this growing and important automotive

market, covering key market drivers, vehicle sales trends bysegment and manufacturer, export

trendsand sales forecasts. The report also reviews the OEMsand suppliers most active in the

market.

PRESENT SCENARIO IN AUTO SECTOR

The Indian automotive components market has experienced 5 years of rapid growth, driven by

strong growth in consumer demand for vehicles, exports and an increasingly supportive

regulatory environment.


38/64

The industryisstill relativelyfragmented withhundreds ofsmall component manufacturers - but

the largest players now have the scale and capability to compete in international marketsand

meet the growing domestic demand. Through collaborating with technically sophisticated

overseas manufacturers, theyhave developed the design and manufacturing expertise to become

OEM and Tier 1 suppliers.

Foreign investment rulesallow overseas players to establish 100% owned subsidiaries; thishas

helped to integrate the India into the world market and also forced domestic players to enhance

the quality oftheir products.

The industry doesface a number ofchallengesincluding poor powerand transport infrastructure,

counterfeit components, currency riskand increasing competition from other emerging countries

(particularly China, Vietnam and Malaysia).

Domestic demand is the primary ' long term' growth driver for the automotive components

industry - both due to India's current, modest level of car ownership and also the commercial

vehicles market. As middle class Indians purchase more sophisticated cars, they are also less

likely to buy replacement componentsfrom the 'unorganized sector'. Lowerincome groupsare

now able to afford 2 wheelersand carssuchas the Rs 1 lac (US$2,000) Tata Nano car.

EXPORT TRENDS IN THE INDIAN AUTOMOBILE COMPONENT INDUSTRY

Since deregulation, Indiahas become an emerging production site ofauto componentsfor global

markets. The limited size of the domestic market has forced both auto companies and their

suppliers to look for exporting markets. The automobile industryhas been exporting more than

10% of its output to OEMsand Tier 1 suppliersfor the last few yearsshows the total value as

well as the percentage share of exports and imports in the total value of auto component

production. It clearlyshows that although exportshave grown while importshave declined in the

recent years, the magnitude of imports is much higher than exports, highlighting the import

intensive nature ofcomponent production.


39/64

The compound annual growth rate for production and exports ofauto componentsfor 1990 to

2003-04 were 11.3% and 15.3% respectively. In the year 2003-04, the industry exported $ 1

billion worth of components. Until a decade ago, a major proportion of exports were to the

replacement market with only 20 per cent direct exports to OEMs. In the recent times direct

exports to OEMs comprise almost 55 per cent oftotal exports (The Hindu, May 2004).

Many OEMsare sourcing components directly from Indian suppliers for their plants in other

locations. For instance, Kalyani Brakes supplies drum brakes to Mercedez-Benz for its

operationsin Indonesia while Goetze exportsits products to vehicle manufacturersin South-east

Asiaand African countries (ICRA report, 1999). However, replacement market continues to be

the major destination for exports because of long validation processes and tougher quality

requirements by OEMsand higher volume requirement as well.

Principal export items include replacement parts; tractor parts; motorcycle parts; piston rings;

gaskets; engine valves; fuel pump nozzles; fuel injection parts; filter and filter elements;

radiators; gears; leaf springs; brake assembliesand bearings; clutch facings; head lamps; auto

bulbsand halogen bulbs; spark plugs; and body parts.

Another noticeable change can be seen in the direction ofexportssince deregulation. While the

US, Germany and the UK are still major export destinations of auto components; new

destinations have emerged in the past decade including Mexico, Italy, Nepal, South Africa,

Netherlands, Belgium, France, and Japan. In contrast, some African and Asian countries, suchas

Sudan, Iran, Jordan, Thailand, Tanzania, Kenya, and Iraq, which have been importing

components foragricultural equipments, mopeds, and scooters, have dropped out of the top 20

list. According to the latest ACMA report, U.S and Europe account for 31.13 % and 30.15 % of

auto component exports from India. Asia and Africa account for 18.33% and 10.71%

respectively, while the Middle East accountsfor 7.61% oftotal exports.

DESTINATION INDIA FOR AUTO SECTOR

According to the Investment Commission of India, India is among the most competitive

manufacturers ofauto componentsin the world. Indiaisalso becoming a globalhub for research

and development (R&D). Companies like Daimler Chrysler, Bosch, Suzuki and Johnson

Controlshave set up development centres in India. Many internationalauto-component majors

including Delphi, Visteon, Bosch and Meritor have set up operations in India. Auto


40/64

manufacturers including GM, Ford, Toyota, etc. as wellasauto component manufacturershave

set up International Purchasing Offices (IPOs) in India to source their global operations.

Further, increased demand for the passenger vehicles in the country created positive impact for

the auto component manufacturers. The component manufacturers registered 55 per cent growth

on ayear-on-year basis during the quarter ending March 2010. The growth wasattributed to the

increasing demand of the original spare parts by the customer. On an overall basis, 30

component makers saw rise in revenue in spite of global slowdown in the auto sector. Major

players like Bosch, MothersonSumi and Amtek Auto reported nearly 50 per cent growth in

topline, with double-digit surge in profit.

GOVT. POLICY INITIATIVES FOR AUTO SECTOR

The government has taken many initiatives to promote foreign direct investment (FDI) in the

industry.

y Automatic approval for foreign equity investment up to 100 per cent ofmanufacture of

automobilesand componentsis permitted

y The automobile industryis delicensed

y Import ofcomponentsisfreelyallowed

The Ministry ofHeavy Industriesand Public Enterpriseshas envisaged the Automotive Mission

Plan 2006-2016 to promote growthin the sector. It targets to:

y Increase turnover to US$ 122 billion US$ 159 billion by 2016 from US$ 34 billion in

2006

y Increase export revenue to US$ 35 billion by 2016

y Provide employment to additional 25 million people by 2016

y The automotive sectoris expected to contribute 10 per cent ofthe country's GDP by 2016

The auto component industry welcomed the government'sannouncement ofexcise duty rollback

being limited to 2 per cent during the Union Budget 2010. The government also announced the

increase ofthe deduction limit for Researchand Development (R&D) in the sectorfrom 150 per

cent to 200 %.


41/64

CHAPTER 3

RESEARCH METHODOLOGY

3.1RESEARCH DESIGN


42/64

Research design is one of the important areas of the survey as it facilitate to collect the

information from dealer, showroom & wholesaler to know automobile market trend and

consumer preferences to achieve the objectives.

3.2 COLLECTION OF DATA

PRIMARY DATA:

The primary data collected with the help of questionnaire and respondent were automobile

dealer, showroom and wholesalers.

SECONDARY DATA:

This data is collected from reports of ACMA(Automobile Component Manufacturing

Association),SIAM(Society of Indian Automobile Manufacturers) different auto magazines like

Auto Monitor, DFAT STAR Data base and various auto company websites.

SAMPLING SIZE:

Total 75 questionnaires were collected asa datainformation from showroom, dealer&wholesaler

for knowing the market growthand trend in automobile sector mainlyin 2 & 3 wheeler.

SAMPLING AREA:

Showroom & wholesaler ofauto-sectorlocated in Ghaziabad &Delhi region.

3.3 STATISTICAL TOOLS


43/64

The dataanalysis was done using Excel; the data were analyzed using the following statistical

methods-

1) Quantitative Descriptive Analysis(QDA)

2) Percentage Analysis

3.4 PROCEDURE OF ANALYSIS:

Company turnover is studied with respect to each domestic & international customers ofpassenger vehicles(PVs),commercial vehicles(CVs), two wheeler, 3 wheeler.

Auto-components (i.e Push Rods, Pins, Rocker Shaft assemblies, Springs, Lever etc.) sale

growth isstudied in segment wise and future demand is observed in eachsegment. Along with

thissecondary datafrom auto magazine& website are analyzed then recommendationsare made

for diversification ofmaking auto component and to know customer behavior market survey is

done through questionnaire.


44/64

CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

Quantitative Descriptive Analysis(QDA)

For doing analysis through QDA allautomobile sectorsare taken into account and data collected

from each segments like passenger vehicle, medium and heavy vehicles, light vehicles, two

wheeler and three wheeler. Domestic as well as International sales of number of vehicles are

analysed and interpretation is done for getting inference .


45/64

Table-4

Domestic sales of Automobile in India

(In Number)

Category 2007 2008 2009 2010

Passenger Vehicles 993,975(15.3%)

1,004,885(15.2%)

1,220204(15.7%)

1,521,269(18.5%)

Medium & Heavy

Vehicles

163,073(2.5%)

135,542(2.1%)

132,307(1.7%)

136,427(1.7%)

Light Vehicles 135,035(2.1%)

134,678(2.0%)

171,326(2.2%)

182,651(2.2%)

Three Wheeler 249,537(3.8%)

241,123(3.6%)

255,311(3.2%)

270,102(3.3%)

Two Wheeler 4,924,390(76.1%)

5,109,760(77.1%)

5,970,922(77.0%)

6,110,642(74.3%)

Chart-2


46/64

Inference

From the above Table we can infer that the total number ofauto vehiclesare increasing from 64

lakh to 82 lakhand the contribution ofTwo Wheelersegment isalwayshigharound 75%. The

contribution ofPassengerisalso increasing from 15.3% to 18.5% in 2007 to 2010 period.

Table-5

Export of Automobile Vehicles of India

(In Number)

Category 2007 2008 2009

Passenger Vehicles 135,529

(7.0%)

225,500

(21.1%)

288,779

(25.5%)Medium &Heavy

Vehicles13,787(2.0%)

12,007(1.1%)

12,628(1.2%)

Light Vehicles 22,355(2.7%)

21,669(2.0%)

12,468(1.1%)

Three Wheeler 92,915(11.6%)

103,776(9.7%)

94,259(8.3%)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2007 2008 2009 2010

Domestic Sales of Automobile in India

P,V

H.V

L.V

3 Wheeler

2 Wheeler


47/64

Two Wheeler 535,816

(7.0%)701,836(65.9%)

720,339(63.8%)

Chart-3

Inference

From the above table it is clear that PassengerVehiclesare increasing from 17% to 25.5%. Ifwe

lookat two wheeler then it is decreased from 70% to 63.8%.

Table-6

Manufacturer Wise Total Sales Of Three wheeler (In Number)

Manufacturers 2007 2008 2009

Atul Auto 8,871(1.7%) 11,503(2.3%) 12,345 (2.0%)

Bajaj Auto 290,301(57.3%) 274,526(55.1%) 340,936 (55.5%)

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Passenger

Vehicles

Heavy

Vehicles

Light

Vehicles

Three

Wheeler

Two

Wheeler

Export of Automobile Vehicles of India

2007(Apr_Nov)

2008(Apr-Nov)

2009(Apr-Nov)


48/64

Force Motor 6,874(1.3%) 2,859 (0.5%) 2,310 (0.3%)

M&M 34,076( 6.7%) 44,803 (9.0%) 45,428( 7.4%)

Piaggio Vehicles 153,595(30.3%) 148,350 (29.8%) 185,796 (30.2%)

TVS Motors 78(0.1%) 4,613 (0.9%) 15,116 (2.4%)

Scooter India 12,211(2.4%) 11,139 (2.2%) 11,719 (1.9%)

Total 506,006 497,793 613,650

Chart-4

Inference

The above table infer that the India three wheeler manufacturing is dominated by Bajaj Auto

55% followed Piaggio with 30% and Mhindre&Mhindra with 7%. Other manufacturerlike Autul

Auto, TVS Motor Scooter Indiaall together contribute 6%.

Table-7

Companies wise Export Sales of Two-Wheeler (In Number)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

07-08(Apr-Mar)08-09(Apr-Mar)

09-10(Apr-Mar)

Atul Auto

Bajaj Auto

Force Motor

M&M

Piaggio Vehicles

TVS Motors

Scooter India


49/64

Manufacturer 2010 2009 2008 2007

Bajaj Auto 726,189 (63.3%) 633,463 (63.1%) 482,026 (58.7%) 298,769 (48.2%)

TVS Motor

Company

165,414 (14.5%) 193,320 (19.2%) 137,012 (16.7%) 103,013 (16.6%)

Hero Honda 97,699 (8.5%) 81,193 (8.0%) 90,571 (11.1%) 97,645 (15.7%)

Honda

Motorcycle

79,504 (6.9%) 53,807 (5.3%) 35,442 (4.3%) 24,065 (3.8%)

Yamaha 65,123 (5.7%) 38,537 (3.8%) 61,352 (7.4%) 61,395 (9.9%)

Others 6255 (0.5%) 3,854( 0.3%) 13,444 (1.6%) 34,251 (5.5%)

Total 1,140,184 1,004,174 819,847 619,138

Chart-5

Inference

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Bajaj Auto

TVS Motors

Hero Honda

Honda Motorcycle

Yahma

Others


50/64

From the above table and graph we can conclude that the two wheeler manufacturerin Indiaare

exposed to various countries out of which Bajaj Exports 60% followed by TVS 15%, Hero

Honda 8% and Yamaha 6%.

6.1 Percentage analysis Description ofthe sample

Profile of the Respondents

Table-8

Types of business of the respondent

Channel of business activities % of

respondents

Number of

respondents

1. showroom (automobile) 57.33 43

2. wholesaler (auto-component) 24.00 18

3. retailer (auto-component) 18.66 14

Total 75

Chart-6


51/64

Inference

From theabove table we can infer that 57% ofrespondent out of75 were belong to Automobile

Showroomsfollowed by 24 % ofwholesaler and only 18% from retailer.

Table-9

Segments of Automobile Industry

Types of vehicles % of

respondents

Number of

respondents

1. 2 wheeler 56.00 42

2. 3 wheeler 30.66 23

3. 4 wheeler 13.33 10

Total 75

Chart -7

57%24%

19%

showroom

wholesaler

retailer


52/64

Inference

56% ofthe respondent were dealing with two wheelerfollowed by three wheeler 30% and four

wheeler by 13% whichindicates that two wheelerand three wheeler respondent were around

80%.

Table-10

Market growth information from respondent

Trend of sale of business % of

respondents

Number of

respondents

1. going smoothly 32 24

2 wheeler, 563 wheeler, 30.66

4 wheeler, 13.33


53/64

2. high 20 15

3. average 30.66 23

4. low 17.33 13

Total 75

Chart-8

Inference

Out of respondent covered 32% of them felt that business is going smoothly,30% of them felt

that it isaverage and only 17% ofthem felt the businessis nt doing well.

Demand Pattern of Automobile in Market

going smoothlyhigh

average

4. low

32

20

30.66

17.33

Business trend


54/64

Table-11

Current automobile demand in

present market

% of

respondents

Number of

respondents

1. seasonal 12.00 92. regular 41.33 31

3. fluctuating 17.33 13

4. increasing 22.66 17

Total 75

Chart-9

Inference

12% ofthe respondent felt the businessisseasonaland 22% ofthem felt trend isincreasing but

40% ofthem believe that the businessis regular.

seasonal, 12

regular, 41.33fluctuating, 17.3

3

increasing, 22.6

6


55/64

Decision Affecting the Final Selection of Product

Table-12

Deciding factors of product % of

respondents

Number of

respondents

1. Budget 24 18

2. Features 17.33 13

3. Brand 26.66 20

4. Market achievement of product 32 24

Total 75

Chart -10

Inference

24%

17%

27%

32% Budget

Features

Brand

Market achievement of

product


56/64

From the table isfound that 32% ofthe customer buy the product the market influence and 26%

them lookat the brand followed by budget 24%. Only 17 % ofthem lookat the features ofthe

product while they were buying automobile.

Brand Loyalty Followed by Automobile Customer

Table-13

Trends showing loyalties towards

existing brand.

% of

respondents

Number of

respondents

1. Not always 36 27

2. Always 16 12

3. Depends on product 28 21

4. Can`t say 20 15

Total 75

Chart-11

36%

16%

28%

20%

Not always

Always

Depends on product

Can`t say


57/64

Inference

The above table gives the detailsabout customerloyaltyin automobile segment. Only 16% them

alwayslookfor brand while purchasing automobile products , around 36% ofthem dont look

for brand always.

CHAPTER 5

FINDINGS AND SUGGESTION

From the Analysis of the results and based on the objectives of the

study the following findings can be ascertained.

Findings:-

Total export and domestic sale in terms of quantity is high in 2wheeler auto

segment.

Domestic market for 3wheeler is at growing stage of 23%

With changing economy P.V segment is showing upward growth both in domestic &

international market .

In 2 wheeler export business other companies are not giving good competition to

Bajaj Auto, who is as a whole market leader if we combine 2&3wheeler.


58/64

Hero-Honda is doing well in domestic market with high growth and covers about

48% market share.

Out of 75 showrooms & dealers 56% of them were dealings with 2 wheeler and

around 30% dealings with 3 wheeler.

83% dealers felt that 2 & 3 wheeler market is going smoothly and only 12% felt that

the market is very low.

24% of the customer decided to buy product based on budget 27% on brand.

SUGGESTIONS AND RECOMMENDATIONS:-

2 & 3 wheeler domestic and international market is growing so GPP can target this

field.

GPP can supply component to HERO-HONDA because its domestic market share

is 48%.

GPP can target Bajaj for 3 wheeler components as it covers 55% share.

GPP can manufacture different types of auto component for passenger vehicles also


59/64

CONCLUSION 6


60/64


61/64

BIBLIOGRA& WEBLIOGRAPHY

Stern, I. and Henderson, A. D. (2004). Within-business diversification in

technology-intensive

Szeless, G., Wiersema, M. and Muller-Stewens, G. (2003). Portfoliointerrelationshipsand financial performance in the context ofEuropeanfirms. European Management Journal,21(2), 146-163.

Wan, W. and Hoskisson, R. E. (2003) Home country environment,corporate diversificationstrategies, and firm performance. Academy of

Management Journal, 46(1), 27-45.

R. Panneerselvam (2007) Research Methodology, Prentice-Hall ofIndia, New Delhi.

Philip Kotler , Millennium Addition

www.motorindiaonline.com

www.wikipedia.com

www.google.com

www.automonitor.co.in

www.investopedia.com

www.yahoofinance.com

www.researchandmarkets.com


62/64

APPENDIX

QUESTIONNAIRE

Dear Respondent,

We are conducting a survey to know the growth of automobile market and

demand trend in potential market. This survey would help us in taking decision for

diversification of products in different auto segment. Please fill the questionnaire with

due care and attentiveness and to the best of your knowledge to help us in getting the

information. The questionnaire has instructions to facilitate you while filling up the

questionnaire. Please feel free to ask though, wherever necessary.

Name of showroom/shop-

City

mark in appropriate box

1)You are doing your business activities through

showroom wholesaler retailer


63/64

2)Your business is mainly

2 wheeler 3 wheeler 4 wheeler

3)Your showroom/ shop is located in the area of

urban semi-urban4)You are doing auto sector business for last how many years

5years

5)What is the trend of sale in present condition?

going smoothly high average low

6)How was your business during 08-09 period

difficult a little low good no effect

7)Product demand in the market now a days

seasonal regular fluctuating increasing

8)What range of products are in demand now a days

low average high v. high

10.Customers are buying product with support of

banks own financing mediators

11. Which group of customers are visiting in your showroom/shop in

recent days

18-25 years 25-35 years < 50years

12. In recent period customer who are coming mainly

new customer old customer no specific

13. On what basis customer finally decide products

budget features brand market achievement


64/64

14. Purchasers are paying price to advanced tech. used in products

easily according to need not willing to pay not easily

15. Customers are limiting their purchasing power up to real need

onlynot necessary always depend on price depend on product

16.Customer shows loyalties towards existing brand

Not always always depends on product

Thanks for filling up the questionnaire and for your valuable time.

Have a great day!!!!

Documents

A STUDY ON PRODUCT DIVERSIFICATION IN AUTOMOBILE COMPONENT INDUSTRIES WITH RESPECT TO 2