Automobile Industry Strategies

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AUTOMOBILE INDUSTRY

STRATEGIES

PRESENTED TO:

MR. P.P.SINGH(FACULTY, P.C.T.E.)

PRESENTED BY:HIMANSHU SOOD

RAJAT GUPTA

SONU NATH

SUMIT THAPAR

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RESTRUCTURING

@

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PROBLEMS WITH NISSAN

No shared vision or common long term plan

Lack of a clear profit orientation;

Insufficient focus on customers and too much focus on

chasing competitors Culture that embodied the Japanese style of management

Lack of a sense of urgency

Absence of good product development and marketing,

with little control over finances Lack of cross-functional, cross-border, and intra-

hierarchical lines of work in the company

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IMPLEMENTING THE NRP One of the objectives of the NRP was to reduce the

purchasing costs by 20% by 2002.

Supply better products and services , raise new expectations

from customers, employees, and other stakeholders. In order to reduce purchasing costs, the NRP stated that it

would focus on:

y Centralizing purchasing activity

y

Including services in global purchasing strategyy Decreasing the number of suppliers

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NEW MANAGEMENT

Clear about the objectives that he wanted the company

to achieve

Flexible on giving his teams great freedom in choosing

the best courses of action

Several cross-functional teams with people from

different functional areas, to spearhead the turnaround

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PROFITABLE AT LAST

Targets achieved before time

After the implementation of the NRP, Nissan saw its marketshare slowly increasing with the launch of new products.

Increasing its capacity in the U.S and Restoring its oncedebt-ridden balance sheet.

Achieved a minimum consolidated operating margin of 4.5

percent

Consolidated net automotive debt reduced to less than 700billion yen by the end of FY 2002

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NO

PRIORITY

FOR

ELECTRIS VEHICALS

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New Fiat-Chrysler strategy is based on important

points:y Group consolidation with review of the entire value

chain, to increase efficiency in operations and

administration

y Increase of production volumes of the key technologies

y Exchange and further development of key technologies

y Global market presence and growth of the brands value

and consumers' perception.

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Fiat-Chrysler will limit investments in electric vehicles in2011

Strategy based on integration with Fiat, which includesexchange of key technologies and market developmenttarget

Chrysler had already dedicated resources to thedevelopment of electric vehicles

It gives clear indications of a solid strategy based onpriorities and risks/benefits analysis

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The electric vehicles will be introduced by almost all the

major makers in the next years

The market of electric vehicles is still very uncertain, both

for the necessary technological developments and for the

unclear acceptance from the consumers

Being a new market, new standards, also safety-related

will be defined, and this will require more investments inresearch and development

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The strategy of Fiat-Chrysler, focuses on creating a

solid group that owns important technologies, which

will continue to be used well beyond 2020

There will be risks associated to late research and

development of alternative vehicles; however, theserisks can be managed with the view of future

acquisitions or joint ventures, which will always be

possible supposed that the company can offer financial

solidity and innovative technologies.

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TATA

ACQUISITION

OF

JAGUAR & LAND ROVER

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Ford bought Jaguar for 1.6bn in 1989

Ford have invested about $10bn in Jaguar since it

bought

Ford bought the Land Rover from BMW for 1.7bn in

2000.

JLR - HISTOR

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PRICE OF THE

LUXURY BRANDS Analyst believe anything between $2.5bn to $3bn for jaguar

and Land Rover

Meryll Lynch analysts suggest that Jaguar and Land Rover

may fetch about $1.5bn (735m)

If you look at the financial position, [Jaguar and Land

Rover] are worth some $1bn to $1.5bn, Mr Dorris ananalyst said. Add a control premium, and the final sales

price could come in at about $2.5bn.

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WHAT MAY HAMPERTATAS?

Union leaders of both Jaguar and Land Rover have already

raised concerns about their job security because of the sale

Jaguars sales were down nearly 32 percent for 2006 in theUnited States, the companys largest market

Jaguar lost more than $715 million in 2006 and was expected

to lose $550 million in 2007

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ZERO EMISSION PROGRAM

IN

MADRID

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The Renault-Nissan Alliance is continuing to develop

the plan to promote its future electric vehicles, throughthe signing of an agreement with the Madrid city

council

The agreement has been inked by Alberto Ruiz-Gallardon, City Councilor, Olivier Paturet, Nissan

Europe Zero Emission Business Unit General Manager

and Jean Pierre Laurent, Managing Director and

President of Renault Espaa S.A.

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Both sides will develop a team that will use Renaults

Madrid headquarters as a test point for recharging

systems, make efforts to turn Madrid into one of the

first cities to offer a Renault car sharing EV

mobility system, promote electric mobility, develop acar parts charging infrastructure (through a third party

company), involve local institutions in the process,

present the program to fleet owners and analyze

potential incentives.

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This development will be part of the more than 50agreements signed by the Renault-Nissan

Alliance worldwide in an effort to become the zero

emissions mobility leader.

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COST

REDUCTION

STRATEGY

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Tata Motors was dependent on Ford for a bulk of

supplies of components after it was sold in early 2008

Tata Motors, which was recently sanctioned an

expensive European Investment Bank loan of 340

million at Libor plus 6 per cent, is working towards

making the two brands as cost competitive as possible

in the long run.

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Tata Motors has put in place an aggressive cost reduction

strategy for its luxury brands Jaguar Land Rover (JLR),which it acquired from Ford in 2008, involving a substantial

increase in sourcing vehicle parts from low-cost countries

As part of the plan, a third of JLRs component

requirements will be sourced from countries such as India,

China and eastern Europe within the next 12 months

The company plans to introduce some of its long-term

suppliers to a team of executives from JLR visiting India insearch of partners.

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The low cost of skilled labour and cheaper raw material

costs give these countries a 30 to 40 per cent cost advantageon component prices, which is key to JLRs new drive to

reduce manufacturing costs

Apart from the component sourcing plan, Tata Motors is

also working on reducing costs on every front such as in

areas like pension restructuring, employment costs for new

recruits, a plant closure and improved focus on IT

infrastructure\

The company has already reduced the employee headcount

to 14,000 from 16,000 since the takeover

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BAJAJ AUTO LTD.:

OVERTAKEN IN THE

INDIAN SCOOTERMARKET

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INTRODUCTION TO BAL

o Founded in 1926 by Jamnalal Bajaj

o In 1945, Kamalnayan Bajaj, Jamnalal's son, set up Bachraj

Trading Corporation Ltd. (BTCL) to import and sell two- and

three- wheelers

o Business continued till 1959.

o In 1959, the company secured a license to manufacture two- and

three-wheelers.

o In 1960, BTCL was renamed Bajaj Auto Ltd

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o Entered into a technical collaboration with Piaggio for the

manufacture of scooters

o started manufacturing Vespa brand scooters at its plant near

Pune,