PROJECT REPORT ON

STUDY ON MARKETING IN AUTOMOBILE

INDUSTRY AND CONSUMER BUYING BEHAVIOUR
WHILE PURCHASING CARS

SUBMITTED BY

UMANG PATEL

ROLL NO. 129

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

MASTERS IN MANAGEMENT STUDIES
2011-2013

UNDER THE GUIDANCE OF

PROF. NEHA YADAV DR. VANDANA

KHANNA

GUIDE MENTOR

UNIVERSITY OF MUMBAI

K.J. SOMAIYA INSTITUTE OF MANAGEMENT STUDIES & RESEARCH,

VIDYANAGAR, VIDYAVIHAR (E), MUMBAI 400 077

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 DECLARATION

I, UMANG PATEL, a student of MMS-Marketing, semester IV of University of

Mumbai 2011-2013 batch at SIMSR do hereby declare that this report entitled
STUDY ON MARKETING IN AUTOMOBILE INDUSTRY AND
CONSUMER BUYING BEHAVIOUR WHILE PURCHASING CARS has
been carried out by me during this semester under the guidance of PROF. NEHA
YADAV as per the norms prescribed by the University of Mumbai, and the same
work has not been copied from any source directly without acknowledging for
the part/section that has been adopted from published/non-published works.

I further declare that the information presented in this project is true and
original to the best of my knowledge.

Date: 28/03/2013
Place: Mumbai

UMANG PATEL

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 CERTIFICATE

I, PROF. NEHA YADAV, hereby certify that MR.UMANG PATEL studying in the
second year of the Master in Management Studies, batch 2011-2013 at the K.J.
Somaiya Institute of Management Studies and Research (SIMSR) has completed
the project on STUDY ON MARKETING IN AUTOMOBILE INDUSTRY AND
CONSUMER BUYING BEHAVIOUR WHILE PURCHASING CARS under my
guidance, as per the norms prescribed by the University of Mumbai, in the
academic year 2012-2013.

I further certify that the information presented in this project is true and original to
the best of my knowledge and belief.

Date: 28/03/2013
Place: Mumbai

PROF. NEHA YADAV

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 ACKNOWLEDGEMENT

I wish to express my gratitude towards my guide PROF. NEHA YADAV. Her able
guidance, valuable inputs and attention throughout the project have been of
immense help to me.

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Table of Contents
DECLARATION.....................................................................................
CERTIFICATE.......................................................................................
ACKNOWLEDGEMENT............................................................................
1. INTRODUCTION...............................................................................
A) HISTORY OF THE INDIAN AUTOMOBILE INDUSTRY.......................................................
B) FEATURES OF THE AUTOMOBILE INDUSTRY...............................................................
C) ADVANTAGE INDIA...........................................................................................
D) THE BIG PLAYERS IN THE INDIAN CAR MARKET:......................................................
2. THE MAJOR CHALLENGE:................................................................
A) CAR SALES SLUMP TO 12-YEAR LOW.....................................................................
B) POSSIBLE REASONS FOR THE DIP IN SALES..............................................................
3. MARKETING SCHEMES AND PROMOTIONS INTRODUCED:........................
A) MARUTI-SUZUKI:............................................................................................
B) TATA MOTORS:...............................................................................................
C) HYUNDAI:......................................................................................................
D) MAHINDRA & MAHINDRA:.................................................................................
E) VOLKSWAGEN:................................................................................................
F) FORD:...........................................................................................................
G) CHEVROLET:..................................................................................................
H) HONDA:........................................................................................................
I) SKODA:..........................................................................................................
4. CONSUMER BUYING BEHAVIOR WHILE PURCHASING CARS.....................
A) METHODOLOGY..............................................................................................
B) RESEARCH DESIGN AND INSTRUMENTATION............................................................
C) DATA COLLECTION...........................................................................................
D) VARIABLES UNDER STUDY.................................................................................
E) ANALYSIS......................................................................................................

5. REFERENCES:................................................................................
6. APPENDIX.....................................................................................

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 A.) QUESTIONNAIRE........................................................................................

1. Introduction

The Indian automotive industry has emerged as a 'sunrise sector' in the Indian
economy. India is being deemed as one of the world's fastest growing passenger car
markets and second largest two wheeler manufacturer. It is also home for the
largest motor cycle manufacturer and the fifth largest commercial vehicle
manufacturer.
India is expected to become the third largest automobile market in the world. By
2020, the luxury car segment is estimated to be around three per cent of the overall
passenger car market in India. So, there is huge opportunity for growth.

The Automotive Industry in India is one of the largest and is the fastest growing
industry, and has grown over 15% on average for the last 4 years driven mainly by
the domestic market. There has been a dramatic development and change in
Automobile industry, particularly for the last couple of years. With many
companies now concentrating more on customer needs and price factors, there has
been a sharp rise.

According to the data from UK Trade & Investment, India has also emerged as the
worlds largest small car manufacturing base and does not have any restriction on
FDI, thus the automotive sector is expected to grow by around 20% in 2013 and
quadruple from its current size by 2020.

Despite the recent slowdown, India remains one of the largest and fastest growing
economies in the world. Most analysts expect the Indian economy to grow between
7.1 to 7.3 % in FY 2012-13. The automotive industry is estimated to be around 46
billion; with 13% vehicles exportedvaluing around 4 billion and component
exports of around 3.5 billion. The sector accounts for 6.7% of Indias GDP and
22% of entire manufacturing GDP. The sector employs around 1 million directly
and around 17 million indirectly.

India is the largest base to export compact cars to Europe. Moreover, hybrid and
electronic vehicles are new developments on the automobile canvas and India is
one of the key markets for them. Global and Indian manufacturers are focusing
their efforts to develop innovative products, technologies and supply chains.

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Accumulated FDI inflows into the automotive sector over April 2000 - February
2012 were US$ 4.7 billion (4.1 per cent of total FDI).

a) History of the Indian Automobile Industry

India had its date with this wonderful vehicle first time in 1898. Then for the next
fifty years, cars were imported to satisfy domestic demand. Between 1910 and 20's
the automobile industry made a humble beginning by setting up assembly plants in
Mumbai, Calcutta and Chennai. The import/assembly of vehicles grew consistently
after the 1920's, crossing the 30,000 mark in 1930. In 1946, Premier Automobile
Ltd (PAL) earned the distinction of manufacturing the first car in the country by
assembling 'Dodge DeSoto' and 'Plymouth' cars at its Kurla plant. Hindustan
Motors (HM), which started as a manufacturer of auto components graduated to
manufacture cars in 1949. Thanks to the Licence Raj which restricted foreign
competitors to enter the Indian car market, Indian roads were ruled by Ambassador
Car from Hindustan Motors and the Fiat from Premier Auto Ltd. for many of the
initial years.
In 1952, the GOI set up a tariff commission to devise regulations to
develop an indigenous automobile industry in the country. After the commission
submitted its recommendations, the GOI asked assembly plants, which did not have
plans to set up manufacturing facilities, to shut operations. As a result General
Motors, Ford and other assemblers closed operations in the country. The year was
1954 and this decision of the government marked a turning point in the history of
the Indian car industry. The GOI also had a say in what type of vehicle each
manufacturer should make. Therefore, each product was safely cocooned in its own
segment with no fears of any impending competition. Also, no new entrant was
allowed even though they had plans of a full-fledged manufacturing program. The
restrictive set of policies was chiefly aimed at building an indigenous auto industry.
However, the restrictions on foreign collaborations led to limitations on import of
technology through technical agreements. In the absence of adequate technology

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and purchasing power, the car industry grew at a snail's pace in the 60s. The
demand for cars in 1960 was to the tune of 15,714. In the next two decades the
number increased to 30,989 i.e. a CAGR of only 3.5 per cent.

The other control imposed on carmakers related to production capacity and

distribution. The GOI control even extended to fixation of prices for cars and
dealer commissions. This triggered the start of a protracted legal battle in 1969
between some carmakers and GOI. Simply put, the three decades following the
establishment of the passenger car industry in India and leading upto the early
1980s, proved to be the 'dark ages' for the consumer, as his choice throughout this
period was limited to two models viz. Ambassador and Padmini. It was only in
1985, after the entry of Maruti Udyog, that the car makers were given a free hand
to fix the prices of cars, thus, effectively abolishing all controls relating to the
pricing of the end product.

In the early 80's, a series of liberal policy changes were announced marking
another turning point for the automobile industry. The GOI entered the car
business, with a 74% stake in Maruti Udyog Ltd (MUL), the joint venture with
Suzuki Motors Ltd of Japan. The very face of the industry was changed for ever in
1983 with the entry of public sector Maruti Udyog in a joint venture with the
Suzuki Corporation of Japan. Car sales grew by 42 per cent yoy in 1985 after
Maruti 800 was launched. Thanks to MUL car sales registered a CAGR of 18.6 per
cent i.e. from 1981 to 1990.

In 1985, the GOI announced its famous broadbanding policy which gave
new licenses to broad groups of automotive products like two and four-wheeled
vehicles. Though a liberal move, the licensing system was still very much intact.
MUL introduced 'Maruti 800' in 1983 providing a complete facelift to the Indian
car industry. The car was launched as a "peoples car" with a price tag of Rs
40,000. This changed the industry's profile dramatically. Maruti 800 was well
accepted by middle income families in the country and its sales increased from
1,200 units in FY84 to more than 200,000 units in FY99. However in FY2000, this
figure came down due to rising competition from Hyundai's 'Santro', Telco's Indica
and Daewoo's 'Matiz'.

MUL extended its product range to include vans, multi-utility vehicles

(MUVs) and mid-sized cars. The company has single handedly driven the sales of
cars in the country cornering around 79.6% market share. With increasing
competition from new entrants, this market share has plummeted to almost 62% in
FY2000.
A brief 3-year downturn till 1993 and car sales bounced back to register a 17
per cent growth rate in 1997.Since then, the economy slumped into recession and
sales of cars remained quite stagnant FY97 and FY99. The Financial year 2000 has,
however, been the turnaround year for the Auto industry with the economy looking
up. The automobile industry, crossed the half million mark for the first time in
FY2000. Overwhelmed by newer models from new and existing players had led to
an impressive shift from a constrained supply situation to a surplus one. Within the
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past decade, about 30 models have entered the Indian market with a number of
models still awaiting launch. The de-licensing of auto industry in 1993 opened the
gates to a virtual flood of international auto makers into the country with an idea to
tap the large population. Also the lifting of quantitative restrictions on imports by
the recent policy is expected to add up to the flurry of foreign cars in to the country.

The Indian Automobile industry registered one of the strongest growth rates
in FY11. Aided by sustained economic recovery, the industry registered high
growth rates in all major segments.

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 b) Features of the automobile industry

The structure of the auto market has been changing at a faster pace along
with the global changes in the Industry. There are several global automobile
companies who were averse to come and invest in India ten years ago, now have
kept India as a priority destination for their investment. Along with the entry of
multinational auto companies, the profile of domestic auto companies too
witnessed a structural change. The stiff competition to access market prompted
companies to go for different models with differing qualities and efficiency. The
market too expanded at a rapid pace with the entry of soft financial assistance from
several financial institutions to middle income households.
MNCs need to carefully plan their entry into emerging markets. Early
commitment to a market often results in first mover advantages that are difficult to
replicate. On the other hand, later entrants have the opportunity to learn from the
mistakes of the first entrant. The Indian car market offers useful lessons in this
context. In the 1990s, the Indian Government removed several restrictions in a bid
to attract foreign investors into the automobile industry. Among the first to enter
was Daewoo of South Korea, with its model Cielo, targeted at the upper end of the
market. Other MNCs such as Ford and General Motors also entered the Indian
market, followed by Hyundai, Honda, Toyota, Volkswagen etc.
Most MNCs began their operations in India as joint ventures with local
partners. Examples include Suzuki, G.M, Ford and Daewoo. With the exception
of Suzuki, these joint ventures have become fully owned subsidiaries of the
foreign partners. In all these cases, the local partners have just not had enough
resources to chip in whenever the equity base has been expanded. Consequently,
the foreign partners have pumped in the additional capital and raised their equity
stakes

With the liberalization of the India economy, the Rs 18,500 crore Indian car
market is being opened up to foreign investors. Several companies are setting up or
have already set up operations in India to cater to the Indian market. There are
several strategies by which a foreign enterprise can set - up Indian operations. This
module aims to give the various entry options available to a foreign investor,
especially for foreign direct investment. This module does not deal with portfolio
investments.
Broadly, entry strategies may be classified into two major types :-
A foreign investor may directly set up its operations in India through a branch
office or a representative office or liaison office or project office of the foreign
Company ; or
It may do so through an Indian arm i.e. through a subsidiary company set - up in
India under Indian laws.
Generally, setting up operations through an Indian arm is advisable,
especially if the quantum of investment is huge.
The impact of Indias initiatives in economic liberalization and
globalization (post 1991) is most apparent in the automotive sector. Automotive

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industry is a key driver of economic growth contributing around four to five
percent to the Indian GDP. Introduction of reforms and entry of international
companies has intensified competition in the Indian automotive sector. This has
resulted in the transformation of a sellers market (created mainly due to the Indian
governments protectionist policies) into a buyers market. The changing structure
of this industry has posed many challenges and opportunities to the market
participants.
Previously, Indian automotive market was characterized by weak air
pollution regulations. In addition, low labor cost of maintenance and the psyche of
Indian consumer to delay the discarding of the old vehicle reduced the scrap rate.
All these factors resulted in prolonged operational existence of vehicle on Indian
roads. The benefit of this practice is the comparatively higher revenues for
automotive component suppliers, due to increased demand in the aftermarket. But
recent pronouncement of GoI to prohibit polluting vehicles in the National Capital
Region (NCR) is likely to force the old polluting vehicles off road. This will reduce
the average life span of vehicles on road and the overall impact would be reduced
per vehicle parts consumption.
Two wheelers generate the highest volumes and are more popular in rural
and semi urban markets primarily due to lower income levels and poor road
conditions. Therefore, these could be classified as entry-level vehicles. Within two
wheeler segments, progressively mopeds are likely to be replaced by motorcycles.
With the growth in the family income of these rural and semi-urban buyers and the
option of numerous used cars, it is expected that a significant shift would take place
from two wheelers (mainly scooters) to four wheelers. Lucrative finance schemes
have made the purchase of mid-sized cars really affordable. The present owners of
the small car are likely to graduate to mid-size cars mainly due to declining
importance of small car as status symbol and the marginal increment in repayment
installment in the finance options.

Good performance of the economy has led to higher all round growth
leading to high GDP growth of 8%. Excise duty reduction on passenger vehicles
helped to reduce the ultimate price to the customer. Brisk activities on
infrastructural development will give a boost to the automobile industry. Softening
of interest rates and improved financing of second hand vehicles have made the
purchasing of cars financially viable. Availability of finance in rural and semi-
urban areas have led the low-end customers to put money in the purchase of
vehicles. Emergence of India as a manufacturing hub for the automobile industry is
a good sign for the countrys future prospects.

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The Automotive Market is split into 4 Segments:

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 c) Advantage India

India holds huge potential in the automobile sector including the automobile
component sector owing to its technological, cost and manpower advantage.
Further, India has a well-developed, globally competitive Auto Ancillary Industry
and established automobile testing and R&D centers. The country enjoys natural
advantage and is among the lowest cost producers of steel in the world.

The Indian automobile industry today boasts of being the second largest two
wheelers manufacturers in the world, second largest tractor manufacturer in the
world, fifth largest commercial vehicle manufacturer in the world and fourth largest
Car market in Asia. World largest Motorcycle manufacturer is in India.

India has largest three wheeler market in the world, second largest two wheeler
market in the world, fourth largest passenger vehicle market in Asia, fourth largest
tractor market in the world, fifth largest commercial vehicle market in the world.
India became fastest growing car market in the world in 2004

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Indian automobile sector in top gear:

Leading the pack:

Indian Automobile market is one of the largest markets in the world

It is the largest 3-wheeler market in the world and the 2nd largest 2-
wheeler market
It is also 4th Largest passenger-vehicle market in Asia

All aspects of the Indian auto business is thriving:

Car makers are banking on huge growth with international majors
ramping up production
Two- wheeler market has seen astronomical growth
Commercial vehicles are also on a rise with companies like Tata
Motors putting a renewed focus on them

Largest market in the world by 2050

India overtook Italy in 04
The Goldman Sachs Report predicts sales of 1million + every
year through 2050
There is huge potential for growth since penetration of cars is very
low with just over 6 cars per 1000 population compared to a
nation like Malaysia with 230

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 By volume, two wheelers account for more than three-fourths of the entire
market. India is the world's second largest two wheeler producer

15
 However, Cars account for the largest share of revenues

Growth Drivers:

The Sector has over the last few years, benefitted from strong demand and product
innovations.

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Rising Incomes and a growing middle class are driving domestic demand growth:

Personal (nominal) disposable income is expected to rise annually at 8.5

per cent over FY11-15

Rising middle class size of the middle class expected to touch 550 million
by 2025 from 50 million in 2010

Favourable demographics a young population is also driving up the

demand for cars

Easier access to credit has also been a key determinant of growth in automotives:

Greater access to credit makes purchases of both passenger and commercial

vehicles easier

The auto finance industry has grown at an average annual rate of 13 per
cent during FY08-12

The private sector banks like ICICI, HDFC are also showing increasing
interest in the segment which was previously dominated by public players

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d) The Big Players in the Indian Car market:

1.) Maruti-Suzuki:

Biggest player in the Indian Car market with a market share of around 40%

Maruti Suzuki has the highest number of sales and service outlets in the
country. In FY 2011-12, it opened its 1000th sales outlet.

The company with over 2950 service outlets reaches its customers across
1400 cities

Popular Models : Swift, Wagon-R, Ertiga, Dzire, Alto etc.

2.) Hyundai:

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 The second largest player with a current market share of around
14-15%

India's number one exporter for seven years in a row

Has a network of 346 dealers and around 800 service points

across India

Strong presence across all segments with both Petrol and Diesel
engines

Popular models include : i10,i20,Fluidic Verna, Eon and Elantra

3.) Mahindra & Mahindra:

In 2012, Mahindra overtook Tata Motors to become the 3rd

largest car maker in the country

Leader in the SUV segment

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 Popular Models: XUV 5oo,Bolero, Xylo etc.

The other major players in the market are:

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2. The Major Challenge:

a) Car sales slump to 12-year low

Car sales in India slumped an annual 25.7 percent in February, the biggest fall in
more than 12 years and the fourth consecutive monthly slide, an industry body said
on Monday, as sluggish economic growth continues to weigh on demand in the
once-booming market.

Automakers sold 158,513 cars in India in Feb13,

according to data from the Society of Indian
Automobile Manufacturers (SIAM).

Car sales were down 4.6 percent for the first 11

months of the fiscal year ending in March, SIAM
said, with the industry bracing for its for first annual
sales fall in a decade.

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Domestic passenger car sales in India hit a 12-year low for the month of February
2013 when they fell by 25.71 percent to 1,58,513 units in comparison to the same
month last year. In February 2012, domestic passenger car sales were at 2,13,362
units. This is the biggest decline in domestic passenger car sales since December
2000, when sales had declined by 39.9 percent.

The problems are also exacerbated by the fact that March is always the best month
for car sales and manufacturers generally jack up production and increase inventory
both at factories and dealerships.

Early indications, however, are that this year the March automobile sales may be
even lower than frightful February, which saw a steep sales fall of 26% year-on-
year the worst decline in 12 years. The mismatch has led to many companies to
temporarily shut down their factories to ensure that inventory does not pile up more
than can be avoided.

b) Possible reasons for the dip in sales

It is a reflection of the overall state of the Indian economy, which is slowing

down considerably.

Household savings have gone down from 25.2 percent of GDP in 2009-10
to 22.3 percent in 2011-2012

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 A straightforward explanation for this is the high inflation that has prevailed
over the last few years.

So people have been saving lesser over the last few years. A straightforward
explanation for this is the high inflation that has prevailed over the last few
years. Consumer price inflation for the month of February 2013 stood at
10.91 percent in comparison to 10.79 percent in January. Food prices in
February 2013 rose at a much faster 13.73 percent.

People are possibly spending greater proportions of their income to meet

the rising expenses due to high inflation and this has in turn led to a lower
savings rate. High inflation would not have been a problem if incomes also
had been growing at a fast rate. But that doesnt seem to be the case.

When people have to spend more on essentials, the first things they will cut
down on are inessentials. Buying a new car, or upgrading to a bigger one
are the first casualties in this scenario.

High inflation and lower household savings has also led to higher interest
rates, which in turn has meant higher EMIs on automobile loans. This has
had its impact on car sales.

But the greater impact has been because of the government deciding to
allow the price of petrol and diesel to go up. With the government holding
back the price of petrol and diesel for a very long time, prospective car
buyers kept buying cars because they were not feeling the pinch of higher
fuel costs. Now any prospective car buyer also needs to take the high cost
of fuel into account while making a decision.

People expect the bad times to either continue or get even worse in the
months to come. And this makes them hold on to the money they would
have otherwise used to buy high cost items like a car

Also, Car is a depreciating asset. So, in these hard times people tend to
invest whatever savings they have in Gold, Real Estate which are
appreciating assets.

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 It also means that they do not want to commit to an EMI right now. Given
these reasons car sales have slowed down.

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3. Marketing Schemes and Promotions introduced:

In these difficult and challenging times, car manufacturers have undertaken

aggressive and segment focused sales promotion campaigns to improve
sales and increase market share

In the midst of a crisis when car sales are expected to fall for the first time
in 10 years, manufacturers are coming up with innovative schemes. The
plan is to keep the plants running and reduce inventories that are at an all-
time high.

From a low Rs. 10,000 to a phenomenal Rs. 3.75 lakh, everything can be
bought at a bargain
a) Maruti-Suzuki:

Here's proof that the Indian car market has hit a new low: Maruti
Swift is available at a discount for the first time since its launch, and
there's no waiting for delivery.

Swift which maintained strong sales traction ever since its launch in
June 2005 to become one of Suzuki's biggest global successes ended
its discount-free run this month.
 Indias largest passenger car maker Maruti Suzuki India Limited is
also selling its Estilo hatchback at a price of Rs. 3.4 lakh and offering
freebies worth Rs. 40,000 on its Multi Purpose Vehicle (MPV) Ertiga

Maruti Suzuki India is also offering a discount on its

flagship hatchback, Ritz diesel and petrol versions up
to Rs 45,000 and Rs 25,000 respectively.

Apart from these, two schemes are being considered.

 The first is a pure buy-back scheme wherein it agrees to buy the car after 3
or 5 years at a pre-determined price.

The second provides for 'EMI (equated monthly instalment for financed
cars) holidays' where a customer trades in an old car and starts paying for
the new one after a year.

In the 'zero down payment' model, a customer walks in with an old car and
walks out with a new model without paying any money upfront, but just
pays the EMI.

The schemes will target buyers who already own a car this group is large
accounting for 53% of total sales today.

Such incentives will be a first for Maruti Suzuki, which so far had not faced
as much trouble as its competitors

b) Tata Motors:

Tata Motors, the countrys largest automaker by revenues, has

reduced the prices of its all passenger cars, excluding Nano, by Rs.
29,000 to Rs. 50,000, in order to lure the price sensitive Indian
buyers.

Tata Motors, has devised an immensely attractive scheme for its mid
sized sedan Manza Club Class in the domestic passenger car market.

As per the new 'Club Class Buyback Assurance', the company is

offering a 60 per cent buy back on the Manza model if its owner
wishes to sell the sedan back to Tata Motors after a period of three
years.
 India's most affordable car, Tata Nano has now come with an
industry first offer, customers can simply swipe their credit card and
bring home a Tata Nano, on the same day. Making the offer
irresistible, customers can also convert the entire amount in monthly
installments at 0% interest, over a period of 12 months, at an EMI of
Rs.8,333 per lakh.

Tata Nano has partnered with five banks for this special scheme --
Axis Bank, HSBC Bank, ICICI Bank, Kotak Mahindra Bank and
Standard Chartered Bank. Customers in India, who have credit cards
belonging to these banks can avail of this special scheme in 26 cities,
across 75 Tata Motors Dealerships.

Tata Motors is also offering a whooping 2-lakh

discount on its MPV model, Aria.
 Rs 2 Lakh discount on Tata Aria vehicles manufactured between July
& December 2012 (indicates inventory buildup)

c) Hyundai:

The country's second largest car manufacturer has come with an exciting
scheme, on the entire range of its cars.
 The South-Korean brand is offering flat discount on its complete line-up.
Buying Hyundai cars might save Rs. 42,500 (on Hyundai i10).

Hyundai is offering different schemes that include cash discounts, exchange

bonus, loyalty bonus and many more. The scheme is also applicable on its
best-selling cars like i10, i20 and Verna.

Hyundai Santro: Saving of Rs. 26, 350

Hyundai EON: Saving up to Rs. 19,250
Hyundai i20: Saving of Rs. 15,000
Hyundai Accent: Total saving of Rs. 30,700
 Hyundai Verna: Saving up to 15,000
Hyundai Sonata: Special Financing scheme at 6.66%
Hyundai Elantra Diesel: Save up to Rs. 25,000
Hyundai Santa Fe: Enjoy Financing Scheme at 5.55%

d) Mahindra & Mahindra:

Just 6 months after its launch, Mahindra Mini SUV Quanto Joins Discount
Race

Insurance @ Rs. 9000. Saving upto Rs. 21,000

+ Exchange Benefit upto Rs. 20,000
+ Government Employee Discount upto Rs. 10,000
 All models of Mahindra Xylo are being sold with free insurance, except
for the E9 variant, on which one can avail an insurance discount of 30 per
cent and a cash discount of Rs. 45,000.

Also, the Verito is available with free insurance, an exchange bonus

of Rs. 10,000 and a Rs. 7,000 corporate discount on both petrol and diesel
versions.

e) Volkswagen:

Volkswagen has an offer where the Vento could be driven away from a
company showroom by paying just Re 1 while exchanging an old car and
customers could pay the balance a year later either in full or in 36 EMIs.
 Volkswagen has been offering discounts on the Polo hatch since the
beginning of 2013. For the month of January, savings between Rs. 10,000
and Rs, 50,000 were available. In February, total savings between Rs.
14,000 to Rs. 18,000 were on offer, along with free insurance. In March,
savings worth Rs. 25,000 can be availed, which includes an exchange bonus
of Rs. 10,000, along with a gift cheque of Rs. 15,000. Insurance is offered
free with the total savings amount.

f) Ford:

Ford has announced discounts on all its cars.

Ford Fiesta Sedan, which is available starting at Rs. 7.42 lakh, here you can
save up to Rs. 74000

Ford Endeavor is priced for Rs. 19.65 lakh, a massive Rs. 97000 can be
saved during the celebration time.

Rs. 37000 can be saved on Ford Figo, which is priced for Rs. 3.89 lakh.

Last but not the least, on Ford Classic (Rs. 5.64 lakh), discount of up to Rs.
49000 can be availed.

g) Chevrolet:

All variants of the Chevrolet Cruze come with free insurance that works out
to around Rs. 58,000 depending on the variant you plan to buy. Also, the
exchange bonus of Rs. 20,000 will save you money if you sell your existing
car to them.
 GM India has reduced the prices of its newly launched Sail U-VA
hatchback to 4.19 lakh. The car was launched in November at a price of
4.44 lakhs, a discount of Rs 25,000 is available after just four months.

The Beat Diesel is available with major benefits of Rs. 40,000, while the
Beat petrol gets benefits worth Rs. 38,000.

Mega benefits of up to Rs. 20,000 can be availed on the new Tavera Neo 3
BSIII and BSIV.

h) Honda:

Honda is offering loans for the Brio and City at 0.01% interest.

Insurance for all the models @ 1rupee

Honda is also offering a loyalty bonus of up to Rs 20,000 a car to anyone

owning a Honda branded motorcycle or scooter.

i) Skoda:

Skoda India has been coming up with different finance schemes to lure
buyers

They have introduced an exciting offer, according to which customers can

buy a Rapid and pay the EMI a year after the purchase. As a result of the
new campaign, consumers can now avail a premium sedan without
worrying about paying the EMI in the first year.

The balance amount can be paid through unique repayment options

thereafter.
 A Skoda India dealer operating in Gujarat, Torque Automotive Pvt Ltd, has
come up with a very unique offer. The offer that has appeared on a newspaper
in Gujarat states that a car buyer buying a Skoda Rapid Sedan will get a Skoda
Fabia free after five years. The offer is valid on both petrol and diesel variants
of the Skoda Rapid. To avail of this offer, a car buyer needs to shell out the non
discounted price for the Skoda Rapid
Conclusion:

High interest rates, fuel prices and an overall slowdown in the economy has
spooked car buyers and kept them away from showrooms. The uncertainty in the
economy has resulted in consumers postponing their purchasing decisions, at best
an uneasy situation for the industry.

In the midst of a crisis when car sales are expected to fall for the first time in 10
years, manufacturers are coming up with innovative schemes. The plan is to keep
the plants running and reduce inventories that are at an all-time high.

Together with prevailing discounts, the innovative schemes are expected to drive
up car sales and bring down burgeoning inventories with dealers and in factories

However, how far these marketing schemes and offers go to bring up the sales and
along with it the fortunes of the car manufacturer remains to be seen
4. Consumer buying behavior while purchasing
Cars

a) Methodology

An Online survey was conducted that had 40 responses, and keeping in mind the
various parameters like gender, age, location etc.

b) Research Design and instrumentation

Research Instrument Questionnaire

Type of questionnaire Structured
Type of question Close ended
Sample size 40
Sampling Target Recent Car buyers
Contact method Online

c) Data Collection

The questionnaire has been administered using the Google docs and
SurveyMonkey web services.
Data collection is done online with the target group of people who had purchased a
car in the recent past. The questionnaire included various scales like 2 way scales,
Likert scales
The questionnaire keeping in mind the various parameters that a customer
considers while buying a car
The time frame for the collection of data was 15 days.

d) Variables under study

We are trying to look at various parameters that come into picture while making a
purchase decision:

1. From where does a customer gather information about the car?

2. Who are the influencers while purchasing the car?
3. Does brand image of the car manufacturer matter?
4. Does celebrity endorsements influence the buyers decision?

e) Analysis

I. Resources used to find the information about the cars:

Product Trials 29

Experienced Users 12

Sales Representatives 26

Online Sources 22

Newspapers & Magazines 14

TV Advertisements 4

0 5 10 15 20 25 30

Inference:

We can see that most of the people use multiple sources while
gathering information about the car

Most of the people we asked feel that the best way to know more
about the car is by taking a test drive of the car

People also feel that the sales representatives have the best
knowledge about the vehicle and prefer asking them
 Also, interestingly, increasing number of people these days are using
the Internet to find out the details about the car. This medium is
popular since abundant information is available on the internet and
car manufacturers have well maintained and up to-date websites.

II. The factors most important in a car:

We asked people to rank in the order of their preference, the factors they
considered most important while purchasing a car. (In order 1-5 with 1 being the
most important factor)

Average Rank

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Style Comfort Mileage Price Safety Features

Inference:

Not surprisingly, the most important factor while buying a car was the Price
of the car

The 2nd most important factor was the mileage given by the car

The average ranking for Comfort and Safety Features is almost same
 Amongst these factors, the looks or style of the car came in the last place.

III. Does Easy availability of Spare parts and service matter to

people while buying a car?

4%
15%
Highly Influenced Influenced Neutral Less Influenced
41%

Not Influenced 41%

An overwhelming 82 % of respondents felt that easy availability of spares

and service influenced or highly influenced their buying decision

IV. How many cars does a buyer test before making the
purchase?
 60.00% 59.30%

50.00%

40.00%

30.00%

20.00%
22.20%
14.80%
10.00%

0.00%
<2 cars
3-5 cars 3.70%
5-8 cars
>8 cars

Inference:

Buying a car is a big-ticket purchase for most people and also a relatively
long-term commitment.

Around 60% of the people we surveyed said that test drove 3-5 cars and
another 22% said that they tested 5-8 cars.

Only 15% people said that they made their made their decision by test
driving less than 3 cars.

V. Did celebrity endorsements have any effect on the buyers?

 90.00%

80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
Yes No Cant Say

Just 15% of the people felt influenced by celebrity endorsements

VI. Which features of a car matter the most to a buyer?

 80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%
Very Important Important Moderately Important Not Important Least Important
10.00%

0.00%

Almost 3/4th majority felt that boot-space was a feature which is

Important in a car

88.8% of the respondents felt that After Sales & Service was either
Very Important or Important

Half of the respondents felt that Availability of variety of colors was

Moderately Important

More than 50% people felt that Leather Seating is a feature which
they consider Not Important or Least Important

Also majority of the people we surveyed drove their cars

themselves. Hence good driving position and Comfort is something
they consider as an Important feature
VII. Does Brand Image of the Car manufacturer matter to
buyers?

19%

Yes No

82%

VIII. Does buying a new car raise your social status?

70.00%
63.00%
60.00%
50.00%
40.00%

30.00%
20.00%
11.10%
3.70% 14.80%
10.00% 7.40%

0.00%

Interestingly, 85% of the people we surveyed felt that buying a new car will
raise their Social status
5. REFERENCES:

http://www.indianexpress.com/news/maruti-moves-to-offer-buybacks-
discounts/1093583/0

http://www.indianexpress.com/news/cars-windfall-sliding-sales-force-
heavy-discounts-at-tata-motors-hyundai-others/1085020

http://www.ibef.org/industry/india-automobiles.aspx

http://www.team-bhp.com/

http://www.siamindia.com/

http://www.hindustantimes.com/Autos/Latest-News/Unseasonal-rain-of-
discounts-in-cars/Article1-1029514.aspx

http://www.cartrade.com/car-bike-news/auto-makers-coming-up-with-
freebies-and-goodies-in-march-to-lure-buyers-120182.html

http://www.skoda-auto.co.in/

http://www.tatamotors.com/

http://www.cardekho.com/india-car-news/just-swipe-your-credit-card-and-
bring-home-a-tata-nano-9845.htm
6. APPENDIX

a.) QUESTIONNAIRE

NAME : ________________________
LOCATION : ________________________
AGE : ________________________
SEX: ____________________
OCCUPATION : ________________________

1. How long have you been using this car?

Below 3 months 3-6 months

6-12 months >1 year

2. From which resource did you find the information for making your purchase
decision?
TV Advertisements
Newspapers & Magazines
Online Sources
Sales Representatives
Experienced Users
Product Trials

3. Rank in the order of your Preference, factors most important in a car (in order 1-
5)

Style

Comfort

Mileage

Price

Safety Features
 4. Please rate the importance of the following factors while choosing a car

Very Importa Moderat Not Least

Importa nt ely Importa Impo
nt Importa nt rtant
nt

In-Car Entertainment
(Music System)
After Sales & Service
Leg Room
Reverse Parking
Assistance
Driving Position &
Comfort
Power Windows
Availability of variety
of Colors
Boot Space
Automatic Climate
Control
Leather Seating
Presence of A.B.S and
E.B.D

5. Did easy availability of service and spare parts influenced your choice?
Highly Influenced o Influenced o Neutral o Less Influenced o Not Influenced o

6. Does the brand image of the manufacturer have any influence on your buying
decision?
Yes No

7. Does celebrity advertisement influence your buying decision?

Yes No Cant Say

8. Who uses the car most of the time?
Self Spouse Parents

9. Who influenced you to buy your Car?

Family Friends& Relatives

Colleagues Others

10. How many cars did you see/test-drive before making the purchase?
<2 cars 3-5 cars
5-8 cars >8 cars

11.To what extent did you discuss with your family and friends about purchasing a
car?
Never
Sometimes
Regularly
Often

12. To what extent, do you think purchasing a car can raise your social status?
Strongly disagree
Disagree
Neutral
Agree
Strongly agree

13.What kind of payment would you prefer to adapt?

Cash
Loan

14. What is the overall satisfaction level with the purchase?

Very Satisfied
Somewhat Satisfied
Neutral
Somewhat dissatisfied
Very dissatisfied