Indian Small Car Industry

In: Business and Management

Submitted By Aarvikay
Words 10775
Pages 44

Prof. Tapan Panda

A Case Study on the Indian Small Car Industry


If there is one big market that is forcing the global auto majors to think small, it is India. Until yesterday, all the world's auto-manufacturers expected to create success out of their midsize products. There were as many as five players in the mid car segment and just one--the Rs 7,956-crore Maruti Udyog Ltd (MUL)--in the small car segment. Suddenly Daewoo Motors India and Hyundai Motors India--are changing lanes midway, making the small car market as the pivot of their marketing strategy in India. Couple that with the fact that two domestic manufacturers--the Rs 10,074-crore Tata Engineering & Locomotive Co. (TELCO) and the Rs 223-crore Kinetic Engineering--are ready with similar indigenously-designed products to compete in this market The last two years has really been the period of war in the small car market The story Behind…. The auto majors read the market wrong. Since the small segment was dominated by MULwith a market share of 96 per cent and given that the Trans –national brands already had tried-and-tested mid-size models in Indian market, this segment was more attractive than the existing ones. This perceptual change was because of two reasons. • • The clutter in the large and midsize segment due to entry of many international players. The small segment grew faster than the mid-size one, driven by the price-sensitive customer. Both the above factors had an enormous impact on mid-size car manufacturers. Stung by a sharp 80 per cent drop in sales between April and November 1997, over the corresponding period in 1996, Daewoo Motors slashed the price of its mid-size car, Cielo, by an unbelievable 21 per cent. It was the fate of many players in the mid and large car segment in India.


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