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Transcript of 98188010-luca-tvs
SUMMER TRAINING REPORT SUBMITTED TOWARDS THE
PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN
INTERNATIONAL BUSINESS
MARKET POTENTIAL AND STRATEGIES TO
INCREASE MARKET SHARE OF LUCAS-TVS TWO
WHEELER STARTER MOTORS
SUBMITTED BY:
HARINARAYAN P
MBA-IB (2010-2012)
Roll No. : A1802010026
AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA
AMITY UNIVERSITY – UTTAR PRADESH
SUMMER TRAINING REPORT SUBMITTED TOWARDS THE
PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN
INTERNATIONAL BUSINESS
MARKET POTENTIAL AND STRATEGIES TO
INCREASE MARKET SHARE OF LUCAS-TVS TWO
WHEELER STARTER MOTORS
SUBMITTED BY:
HARINARAYAN P
MBA-IB (2010-2012)
Roll No. : A1802010026
INDUSTRY GUIDE FACULTY GUIDE
Mr. G. PRAVIN WINSTER Ms. POORVA RANJAN
ASST. MANAGER, BD & MARKETING
LUCAS-TVS, CHENNAI
AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA
AMITY UNIVERSITY – UTTAR PRADESH
TELEPHONE
TELECRAM
FAX
044 - 26258211LUCASUN, CHENNAI444 - 26259642044 - 262s7863
LUCAS.TVS LTD,, PADI, CHENNAI-6OO O5(}, INDIA.
TO WHOM IT MAY CONCERN
This is to certiflz that Mr. HARINARAYAN.P, a student of Amity International
Business School, Noida, undertook a project on ooMarket Potential and Strategies to
increase Market Share of Lucas-TVS Two Wheeler Starter Motors" at
LUCAS-TVS, Chennai
Mr. HARINARAYAN.P has successfully completed the project under the guidance of
Mr. G. PRAVIN WINSTER. He is a sincere and hard-working student with pleasant
manners.
We wish all success in his future endeavours
$0-uy4Manager (Training & Development)
Regd. Ofllce: ll, Potullo Rood, Chennql - 600 002, lndlo.Corp. Otllce : 'Aolim Cenlre' 82, U. Eodho Krishnon Soloi,
Chennol - 600 004. lelephone:28I10063 / 28110074. Fox:28115624.
CERTIFICATE OF ORIGIN
This is to certify that Mr. HARINARAYAN P a student of Post Graduate
Degree in MASTER OF BUSINESS ADMINISTRATION, Amity
International Business School, Noida has worked in the MARKETING
DEPARTMENT under the able guidance and supervision of Mr. G. PRAVIN
WINSTER, Asst. Manager, Business Development & Marketing, LUCAS-TVS
LTD
The period for which he was on training was for 8 weeks, starting from 13th
may
2011 to 30th
June 2011. This Summer Internship report has the requisite
standard for the partial fulfillment the Post Graduate Degree in International
Business. To the best of our knowledge no part of this report has been
reproduced from any other report and the contents are based on original
research.
SIGNATURE SIGNATURE
(Ms. POORVA RANJAN) (HARINARAYAN P)
ACKNOWLEDGEMENT
I express my sincere gratitude to my industry guide Mr. G. PRAVIN
WINSTER, Asst. Manager, Business Development & Marketing, LUCAS-TVS
LTD for his able guidance, continuous support and cooperation throughout my
project, without which the present work would not have been possible.
I would also like to thank Mr. N. KUMAR, Mr. VINOTH, Mr. V. MAHESH,
Mr. SUMIT and the entire team of MARKETING for their constant support
and help in the successful completion of my project.
Also, I am thankful to my faculty guide Ms. POORVA RANJAN of my
institute, for her continued guidance and invaluable encouragement.
SIGNATURE
(HARINARAYAN P)
TABLE OF CONTENTS
SUBJECT PG NO.
EXECUTIVE SUMMARY ......................................................................................................... 1
INTRODUCTION ...................................................................................................................... 2
INDUSTRY PROFILE ............................................................................................................... 3
LITERATURE REVIEW ................................................................................................................. 3
AUTOMOTIVE MISSION PLAN 2016......................................................................................... 5
MARKET SHARE ..................................................................................................................... 5
TWO WHEELERS INDUSTRY IN INDIA .......................................................................................... 7
KEY PLAYERS IN THE TWO-WHEELER INDUSTRY....................................................................... 7
DEMAND AND MARKET POSITION .......................................................................................... 8
AUTO COMPONENT INDUSTRY ................................................................................................ 11
AUTO-COMPONENTS MANUFACTURERS ASSOCIATION OF INDIA ........................................... 11
SEGMENT-WISE DIVISION: ................................................................................................... 12
CLASSIFICATION OF AUTO COMPONENT MARKET ................................................................. 13
MAJOR AUTO COMPONENT PLAYERS (TWO, THREE AND FOUR WHEELER PLAYERS)................ 14
MAJOR PLAYERS OPERATING IN THE PRODUCT SEGMENTS OF AUTO-COMPONENTS .............. 15
SWOT ANALYSIS: INDIA AUTO COMPONENT MARKET............................................................ 16
COMPANY PROFILE ............................................................................................................. 17
TVS GROUP............................................................................................................................. 17
TVS GROUP OF COMPANIES ................................................................................................. 18
LUCAS-TVS.............................................................................................................................. 20
PRODUCTS .......................................................................................................................... 20
CUSTOMERS........................................................................................................................ 20
AWARDS ............................................................................................................................. 23
SALES PERFORMANCE.......................................................................................................... 24
SWOT ANALYSIS .................................................................................................................. 24
ISSUES AND CHALLENGES.................................................................................................. 26
COMPETITOR ANALYSIS..................................................................................................... 27
COMPETITOR ANALYSIS IN TWO-WHEELER SEGMENT- STARTER MOTORS .............................. 27
COMPETITOR’S PROFILE .......................................................................................................... 28
DOMESTIC SUPPLY AND MARKET POSITION- MODEL WISE ........................................................ 30
DATA COLLECTION FRAMEWORK ............................................................................................. 31
RESULTS AND FINDINGS ..................................................................................................... 32
FAST MOVING TWO WHEELER MODELS IN MARKET.................................................................. 32
DATA ANALYSIS....................................................................................................................... 33
MOST FREQUENTLY SERVICED VEHICLE ................................................................................ 33
NUMBER OF STARTERS REPLACED IN A MONTH .................................................................... 33
AVAILABILITY OF THE PRODUCT ........................................................................................... 34
MOST PREFERRED PRODUCT IN MARKET .............................................................................. 34
CUSTOMER PREFERENCE IN BUYING AND SERVICING A PRODUCT .......................................... 35
SUGGESTION OF LUCAS-TVS STARTERS TO CUSTOMERS ........................................................ 36
OEM’s SATISFACTION LEVEL WITH LUCAS-TVS STARTER MOTORS .......................................... 37
HONDA: SATISFACTION SURVEY ........................................................................................... 37
HERO HONDA: SATISFACTION SURVEY .................................................................................. 38
YAMAHA: SATISFACTION SURVEY ......................................................................................... 39
RECOMMENDATIONS .......................................................................................................... 40
STRATEGIES TO BE ADOPTED ............................................................................................... 41
CONCLUSION ...................................................................................................................... 41
BIBLIOGRAPHY..................................................................................................................... 42
ANNEXURE ............................................................................................................................. 43
TABLES ............................................................................................................................... 43
QUESTIONNAIRE ................................................................................................................. 49
CASE STUDY .......................................................................................................................... 53
COMPETITIVENESS OF THE INDIAN AUTO COMPONENT INDUSTRY ........................................ 53
MOVING UP THE VALUE CHAIN ............................................................................................ 55
R&D CAPABILITY.................................................................................................................. 57
PRODUCT LIABILITY ............................................................................................................. 58
THE ROAD AHEAD ............................................................................................................... 58
SYNOPSIS................................................................................................................................ 59
1
CHAPTER 1
EXECUTIVE SUMMARY
1) This study analyses the market potential and competitiveness of Lucas-TVS two
wheeler starter motor in the Indian two wheeler industry. It is based on a field survey
and a quantitative analysis of secondary data. The field survey covers 15 two wheeler
dealers in Chennai, 11 mechanics and 5 Original Equipment Manufacturers (OEMs)
2) From 2002-2010, the Indian Automobile industry has grown at an average annual rate
of over 18 percent in terms of value of output and auto-component sector has grown
about 26 percent. During the same period in terms of domestic production in numbers,
two-wheelers have grown at a rate of 25 percent, three wheelers at more than 15
percent, commercial vehicles at about 25 percent per annum and the number of
passenger vehicles by 17 percent per annum
3) Development of Auto-Component industry depends on the development of
automobile industry. Due to the increased oil/ petrol price, there may be a downfall
expected in the sales of four wheelers and customers may prefer 150/180cc two
wheelers for their fuel efficiency.
4) Lucas-TVS, though a market leader in 4 wheeler segment, it had only 30 percent of
domestic market share with respect to the sale of products to OEMs and aftermarket.
In order to sustain in the two wheeler market and increase its net sales, it should have
the ability to meet the future demand.
5) Market potential for two wheeler segment should be analysed and the production
should be forecasted. Competitor analysis must be done in order to know their
strengths and weakness.
6) A Customer satisfaction survey must be done to know how Lucas-TVS starter motor
is rated against its rivals
7) A Field survey has been taken up in order to find out the aftermarket sales and
customer’s perception regarding the starter motor.
8) Future growth drivers for auto-component industry is also studied
2
CHAPTER 2
INTRODUCTION
The following objectives are set in order to obtain a proper flow to achieve the desired
results.
Primary Objective:
To study the market potential and competitiveness of Lucas-TVS Starter Motor in domestic
two wheeler market and to device an optimal strategy to increase its market share in supply to
OEMs
Secondary Objective:
1) To analyse the competitiveness of Lucas-TVS’s products in Two-wheeler industry.
2) To study and analyse the two wheeler market.
3) To find the fast moving bike models in market and analyse Lucas presence on the
same
4) To study the service level provided by the two wheeler dealers in a month
5) To analyze the current repair practice in the market
6) To know the customer preferences on buying a product
7) To analyse the growth factors in two wheeler industry and to find out the gap between
the self (auto) start and manual start in two wheelers.
3
CHAPTER 3
INDUSTRY PROFILE
LITERATURE REVIEW
There are two distinct sets of players in the Indian auto industry: Automobile compone nt
manufacturers and the vehicle manufacturers, which are also referred to as Original
Equipment Manufacturers (OEMs). While the former set is engaged in manufacturing parts,
components, bodies and chassis involved in automobile manufacturing, the latter is engaged
in assembling of all these components into an automobile.
As noted by National Manufacturing Competitiveness Council (NMCC) 2006,
competitiveness of manufacturing sector is a very broad multi-dimensional concept that
embraces numerous aspects such as price, quality, productivity, efficiency and macro-
economic environment. The OECD (Organisation of Economic Co-operation and
Development) definition of competitiveness, which is most widely quoted, also considers
employment and sustainability, while being exposed to international competition, as features
pertaining to competitiveness.
The Indian auto components industry has experienced healthy sequential growth over the last
one-and-a-half years, following a period of de-growth in 2008-09. The recovery could be
attributed to factors such as strong buoyancy in the end-user industry; recovery of the global
economy; improved consumer sentiment and return of adequate liquidity in the financial
system. The revival of the auto industry was initially driven by the fiscal stimulus programme
of the government. Nevertheless, the fact that the growth momentum has sustained even after
withdrawal of such incentives in February 2010 highlights the strength of the underlying
domestic demand.
ICRA (Investment Information and Credit Rating Agency of India Limited) expects the trend
of automobile sales volume growth, and in turn the auto ancillary business growth to hold
over the short-to-medium term aided by strong underlying domestic demand across all
automobile segments [comprising two-wheelers (2W), three-wheelers (3W), passenger
vehicles (PVs) and commercial vehicles (CVs)], thrust on low-cost sourcing by Original
Equipment Manufacturers (OEMs) and Tier-1 players based from developed markets,
aggressive supply side push from automotive Original Equipment Manufacturers (OEMs) in
4
the form of new model launches and expected continuation of facilitators like easy access to
vehicle financing, notwithstanding possible challenges related to pressures on commodity
prices, interest rate hardening and fuel price deregulation.
While almost all segments of the automobile industry have posted a steady growth over the
last 18 months, the recovery in the Medium and Heavy Commercial Vehicle (M&HCV)
segment has been the slowest to gather momentum. The segment had also experienced the
sharpest volume decline in 2008-09, which had translated into significantly lower off- take
and losses for suppliers of M&HCV components - and had contributed to around 40% of
rating downgrades in the universe of auto and auto component manufacturers downgraded by
ICRA in 2008-09 and 2009-10. However, with domestic economic activity having gained
traction, ICRA expects the M&HCV segment volumes over the near term to surpass the
levels achieved in the pre-downturn period, which should result in improvement in the credit
profiles of auto component suppliers dependent on this segment.
On the whole, ICRA believes the Indian auto components industry is poised to sustain its
revenue growth momentum over the short-to-medium term. However, the industry
profitability may face pressures due to (a) pricing pressures from OEMs, which in turn are
entering into a phase of heightened competitive intensity constraining their pricing power; (b)
threat of rising commodity prices; (c) likely higher cost of funds consequent to hardening of
interest rates; and (d) import from other low-cost locations. In addition, companies engaged
in select product categories within the auto components industry are expected to incur large
CAPEX for enhancing production capacities to meet the growing demand, which could affect
the capital structure and return metrics of such companies over the short term.
However, in ICRA’s view, the anticipated strong business growth should result in healthy
cash accruals and enable such companies to tide over the short term pressures and emerge
with a stronger credit profile over the medium term. Other risks to growth and profitability of
the Indian auto components industry include increase in competition from other countries to
capture business opportunities both in the international as well as domestic markets;
uncertainty arising from currency volatility; and ability to acquire capabilities in tune with
technological advancements. The industry efforts to mitigate the above risks along with
policy measures of the government would determine the impact of the above risks on the auto
components industry going forward.
5
AUTOMOTIVE MISSION PLAN 2016
The Ministry of Commerce, with the help of SIAM (Society of Indian Automobile
Manufacturers) and ACMA (Automotive Component Manufacturers Association of India)
has devised automotive mission plan 2016 to emerge as the destination of choice in the world
for design and manufacture of automobiles and auto components with output reaching a level
of US$ 145 billion accounting for more than 10 percent of the GDP and providing additional
employment to 25 million people by 2016.
The Automotive Industry offers huge growth potential in terms of sales volume (including
exports) and also immense employment opportunities. The likely future volumes of different
vehicle categories were estimated on the basis of projections made by iMaCS (ICRA
Management consulting Services Limited), NCAER (National council of Applied Economic
Research) and AT Kearney. The value of projected domestic output was computed based on
historical average vehicle prices. The export potential was estimated on the basis of current
trends and possible opportunities in major export destinations.
The demand for after-market auto components and export output was also included in
computing growth potential of the industry. According to AMP, Government will encourage
collaboration of Industry with research and academic institutions like CSIR, IIT, and machine
tool industry for the development of appropriate technology and creation of IPR to meet more
stringent regulations as well as to develop relevant machine tools and equipment that improve
manufacturing processes and quality of the vehicles and components produced by the
industry. The interface with the Core Group on Automotive Research (CAR) would be
strengthened.
MARKET SHARE
Market share, in strategic management and marketing is, according to Carlton O'Neal, the
percentage or proportion of the total available market or market segment that is being
serviced by a company. It can be expressed as a company's sales revenue (from that market)
divided by the total sales revenue available in that market. It can also be expressed as a
company's unit sales volume (in a market) divided by the total volume of units sold in that
market.
Increasing market share is one of the most important objectives of business. The main
advantage of using market share as a measure of business performance is that it is less
6
dependent upon macro-environmental variables such as the state of the economy or changes
in tax policy. Market share is used by businesses to determine their competitive strength in a
sector as compared to other companies in the same sector. It also allows company to
accurately assess its performance from year to year.
There are four basic ways to improve market share.
1) Improving the quality of the Product, better than the competitors.
2) Product pricing factor is important
3) Should have Strong distribution Network
4) Product Promotion
Increased market share is not always the best solution for businesses. It might not be
profitable if it is associated with expensive advertising or a big price decrease. A company
may not be able to meet the demand of an increased market share without huge inves tments
in new equipment and employees. In some cases it can be to a company's advantage to
decrease market share, if the lower costs of lower market share can improve profitability.
Managing market share, therefore, is a very important aspect of managing a business
7
TWO WHEELERS INDUSTRY IN INDIA
The feeling of freedom and being one with the Nature comes only from riding a two wheeler.
Indians prefer the two wheelers because of their small manageable size, low maintenance,
price and easy loan repayments. Indian streets are full of people of all age groups riding a two
wheeler. Motorized two wheelers are seen as a symbol of status by the populace. Thus, in
India, we would see swanky four wheels jostling with our ever reliable and sturdy steed: The
two-wheeler.
India is the second largest producer and manufacturer of two-wheelers in the world. It stands
next only to Japan and China in terms of the number of two-wheelers produced and domestic
sales respectively. Indian two-wheeler industry has got spectacular growth in the last few
years
KEY PLAYERS IN THE TWO-WHEELER INDUSTRY
There are many two-wheeler manufacturers in India. Major players in the 2-wheeler industry
are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company
Ltd (TVS).
Break up of Two wheeler Industry
8
The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL),
Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha),
Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL), Mahindra 2 wheelers and
Honda Motorcycle & Scooter India (P) Ltd (HMSI).
Two-wheeler Industry Production Forecast
DEMAND AND MARKET POSITION
The total size of Indian two-wheeler industry increased at a CAGR of around 9.0 percent in
the last 5 years, and was pegged at Rs 360 billion with total volume of 10.5 million units in
2009-10. CRISIL research estimates the two-wheeler industry to grow at 8-10 percent in
volume terms during 2009-10 to 2014-15, with domestic two-wheeler sales growing at 7-9
percent and exports at 10-12 percent. In value terms, the two-wheeler industry is estimated to
post a CAGR of 9-11 percent to reach a size of Rs 720 billion by 2014-15.
The industry is dominated by three players- Hero Honda, Bajaj Auto and TVS Motors- and is
divided into three segments – motorcycles, scooters and mopeds. In volume as well as value
terms, motorcycles lead the two-wheeler market. The share of motorcycles in total sales
volume in 2009-10 was 80.3 percent, followed by scooters (14.2 percent) and Mopeds (5.5
percent).
9
Motorcycles can be further divided into three segments- economy, executive and premium.
The economy segment comprises lower- end motorcycles (priced at Rs 30-000-40,000),
whereas the executive segment (priced at Rs 40,000-50,000) and premium segment (priced
higher than Rs50, 000) constitute higher-end motorcycles. Now-a-days, due to the increased
oil prices, high interest rates and to satisfy the market demand, players are shifting their focus
to 110-125cc motorcycles. This has led to increase in the executive segment contribution
from 42.6 percent in 2005-06 to 59.1 percent in 2009-10.
Hero-Honda, the market leader, holds a dominant market share of 69.8 percent in the
executive segment, whereas Bajaj Auto leads the other two segments with a market share of
around 45.0 percent in both segments. Global players- Yamaha and Suzuki- also have a
presence in the Indian two-wheeler industry; however, they are yet to gain a significant
market share. Honda motorcycle & Scooter India Ltd (HMSI) leads the un-geared scooter
segment, with a 50.6 percent market share. TVS Motors holds a second position in the
scooters segments with a 20.5 percent share, followed by Hero Honda (14.3 percent). Electric
scooter is manufactured by only two players, TVS Motors and Electrotherm (India) Ltd, and
its share in the scooters segment is negligible as of 2010-11.
Mopeds, which are generally preferred in rural and semi urban areas, are manufactured only
by TVS motors. Over the past few years, Kinetic Motors, majestic motors and Kinetic
10
Engineering have discounted their business operations; TVS Motors enjoy monopoly in the
mopeds segment.
In domestic sales 2009-10, Hero Honda retains its market leadership with 48 percent overall
market share whereas Bajaj Auto grew at 38.8 percent, thus holds a market share of 19.1
percent, followed by TVS Motors, which holds 14.5 percent share.
In last few years, HMSI is emerging as a strong contender to TVS motors. HMSI grew by
17.3 percent and has a market share of 12.7 percent. Yamaha Motors, Suzuki Motorcycles
India and Mahindra & Mahindra are still struggling to gain a substantial market share.
Mahindra & Mahindra entered two-wheeler industry with the acquisition of Kinetic Motors in
2008-09, however, its presence only in the scooter segment.
Domestic Market Share of Two wheeler Players
Source: Annexure Table (v)
11
AUTO COMPONENT INDUSTRY
Indian auto component industry is emerging as a global manufacturing hub for auto
component manufacture. Indian auto component industry is one of the front runners for
grabbing the global auto component outsourcing market, estimated to be worth US$700
billion by 2015. Auto components sector requires an incremental investment of Rs 2,000-
crores as per the report of working group on automobile industry Eleventh Five Year Plan
(2007-2012).
Today, India has the potential to manufacture a range of automotive components (about
20,000 in numbers) - from fasteners to engine parts apart from the foreign demand, the
domestic automobile production is also growing with sales expected to be about 17 million
by 2012. The exports are expected to touch US$17.5 billion by 2015.
The Indian auto component Industry is highly fragmented:
Around 500 organized players account for the 77% of the value added in the sector.
Unorganized players are mainly replacement market players or tier ¾ component
manufacturers
Auto-Components Manufacturers Association of India (ACMA) represents the auto
component industry in India and has around 500 registered members.
AUTO-COMPONENTS MANUFACTURERS ASSOCIATION OF INDIA
The Automotive Component Manufacturers Association of India (ACMA) is the nodal
agency for the Indian Auto Component Industry.
Its active involvement in trade promotion, technology up-gradation, quality enhancement and
collection and dissemination of information has made it a vital catalyst for this industry's
development. Its other activities include participation in international trade fairs, sending
trade delegations overseas and bringing out publications on various subjects related to the
automotive industry.
ACMA is represented on a number of panels, committees and councils of the Government of
India through which it helps in the formulation of policies pertaining to the Indian automotive
industry.
12
For exchange of information and especially for co-operation in trade matters, ACMA has
signed Memoranda of Understanding with its counterparts in Australia, Brazil, Canada,
Egypt, France, Germany, Iran, Italy, Japan, Malaysia, Pakistan, South Africa, South Korea,
Spain, Sweden, Thailand, Tunisia, Turkey, UK, USA and Uzbekistan.
ACMA represents over 600 companies, whose production forms a majority of the total auto
component output in the organized sector. In the domestic market, they supply components to
vehicle manufacturers, Tier-1 suppliers, to state transport undertakings, defence
establishments, railways and even to the replacement market. A variety of components are
being exported to OEMs and aftermarket worldwide.
SEGMENT-WISE DIVISION:
The Auto components industry is predominantly divided into the following segments:
Engine parts: 31%
Drive Transmission & Steering Parts: 19%
Suspension & Brake Parts: 12%
Electrical Parts: 9%
Body and chassis: 12%
Equipments: 10%
Others: 7%
According to estimates available from industry association ACMA, the global automotive
component industry is estimated to be more than US$1trn. It is forecasted to hit US$1.9
trillion by2015. Out of the total auto-component market in 2015, around 40%, US$700 billion
market is expected to be driven by low cost countries globally. India is one of the fastest
growing low-cost manufacturers of auto components in the world. The auto-component
market is estimated to be US$19 billion in 2008-09 in India, of which US $3.8 billion is the
export market. With the growth in automobile sector, entry of new players in India, rising
income and export, auto component manufacturers in India has potential to rise at a CAGR of
13% to touch US$40 billion by 2015. In volume terms, two/three wheelers are the largest
customer segment of auto-component market (around 34%), followed by passenger cars
13
Auto-component industry production forecast
contributed nearly 33% and commercial vehicle (CV) components account for almos t 24% of
the auto-component market
CLASSIFICATION OF AUTO COMPONENT MARKET
The auto component industry can be classified into the 3 channels; as far as auto component
market is concerned. The classification of auto component market, as per the market spread,
is shown below:
Classification of Auto Component Market
Auto Component market
OEM Demand After market Demand Export Demand
Auto Components Auto Accessories
14
The OEM (Domestic and Export Demand) contributes to 70 percent of the turnover, rest 30
percent of the auto component demand is generated through aftermarket or replacement
demand.
Auto-Component’s demand in OEM and After Market
MAJOR AUTO COMPONENT PLAYERS (TWO, THREE AND FOUR WHEELER
PLAYERS)
There is not any distinction between the two wheeler and four wheeler automobile
component players in the Indian automobile component industry. The major organized
players who are catering to two wheeler OEMs are also catering to four wheeler OEMs.
However, for some niche commercial vehicle components, due to specialized load bearing
and design requirements, some automobile component players are the vendors only to
commercial vehicles.
The Indian automotive industry is characterised by a strong competition between increasingly
quality conscious manufacturers. The large, highly skilled but low cost manufacturing base
makes partnering linkages with overseas players attractive. These strengths coupled with
India’s well established strengths in IT/ Software combined together to make India an
emerging player in this sector.
15
MAJOR PLAYERS OPERATING IN THE PRODUCT SEGMENTS OF AUTO-
COMPONENTS
Product Segment Key Sub-Segments Major Players
Transmission and Steering
Gears and Drive Rico Auto Industries.
Clutches Automotive Axles
Axles Wheels India ltd. Others Sona Koyo Steer.
GKN Driveline (India)
Electrical Parts
Starter Motors, Generator, Denso
Distributor, Spark plugs, MICO
Ignition Coil, Flywheel Motherson Sumi
Magnet, Voltage Regulator, Minda Industries Electrical Ignition Lucas TVS
India Nippon
Engine Parts
Pistons Piston Rings Engine Valves Carburettors Fuel Delivery System
Escorts
India Pistons Geotze (India)
India Pistons Rane Engine Valves
Shriram Piston & Rings Space Carburettors
Ucal Fuel Lucas TVS MICO Germany
Equipment
Headlight Lumax, Autolite, Phoenix Lamps
Dashboard Premier Instruments & Controls
Sheet Metal Jay Bharat Maruti, Omax Auto, JBM tools
Suspension and Braking
Brake System Brake Linings Shock Absorbers
Automotive Axles Brakes India
Kalyani Brakes Allied Nippon
Rane Brake Lining Sundaram Brake
Gabriel India Munjal Showa
Others Fan Belts Rico Auto
Sheet Metal Rico Auto
16
SWOT ANALYSIS: INDIA AUTO COMPONENT MARKET
The classical tool to assess the industry environment is through SWOT analysis.
Strength
Is Globally Cost Competitive
Adheres to strict quality controls
Has access to latest technology
Provides support to critical infrastructure and metal industries
Weakness
Industry has low level of R&D capability
Industry is exposed to cyclical
downturns in the automotive industry
Most component companies are
dependent on global majors for technology
Opportunities
May serve as sourcing hub for global
automobile majors
Significant export opportunities may be
realised through diversification of export basket
Implementation of Value-added tax (VAT) in FY2004 will negate the
cascading impact
Continuous pressure on global OEMs to
reduce cost and source from low cost countries
Threats
The presence of a large counterfeit components market poses a significant
threat
Pressure on prices from OEMs
continues
Imports pose price based competition
in the replacement market
Further marginalization of smaller
players likely
With the growing sales of automobiles, new global OEMs are entering in the Indian
automotive industry which in turn provides the auto component industry the opportunity to
register robust growth over next 5-8 years. The component industry has not more than 50
players with turnover of more than US$ 500 million per annum. The growing automobile
demand and the increasing awareness to purchase genuine spare parts in the aftermarket
poses attractive market opportunities for the two and four wheeler auto component
manufacturers.
17
CHAPTER 4
COMPANY PROFILE
TVS GROUP
TVS is an Indian diversified industrial conglomerate with
principal base in Chennai and Madurai. Almost all the
companies in the group are privately held. The largest and the
most visible company is TVS Motors, one of the top 3 two-wheeler manufacturers in India.
From its humble beginning at the turn of the 20th century, the group has progressed to
become the largest manufacturer and distributor of auto components in India
TVS Group was established in 1911 by T.V.Sundaram Iyengar, one of the visionaries of the
Indian industry. His ideas were years ahead of their times. Three years before World War I,
when the automobile was still seen as some kind of intimidating “horse- less carriage”, he had
the vision to set up South India’s first ever rural bus service and over the years, this transport
company became the largest of its kind in the country, legendary for its punctuality and
service. In fact, the rules and regulations laid down by him later became the blue print for the
Motor Vehicles Act.
The importance given by the founder of Trust, Value and Service-TVS, are the basic tenets of
the TQM framework even today. His philosophy of business reflected the kind of man he
was-simple and stern. It was based rigidly on four concepts – Quality, Service, Reliability
and a sense of Ethics. The TVS Group is the largest manufacturer and distributor of
automotive components in India, with a turnover in excess of 2.7 billion US$ and a family of
over 25000 members. Today, this renowned business conglomerate remains faithful to its
core ideals of trust, values, service and ethics.
The TVS Group is India's leading supplier of automotive components and one of the
country's most respected business groups. With a combined turnover of more than USD 5
billion, the TVS Group employs a total workforce of around 25,000. Charting a steady
growth in terms of expansion and diversification, it currently comprises around 43
companies. These companies operate in diverse fields ranging from two-wheeler and
automotive component manufacturing to automotive dealerships, finance and electronics.
18
Uniting these multiple businesses is a common ethos of quality, customer service a nd social
responsibility.
TVS GROUP OF COMPANIES
The TVS group, with a turnover of over one billion dollars, is the largest manufacturer of
automotive components in India. The group produces auto electrical, diesel fuel injection
systems, braking systems, automotive wheels and axle fasteners, powder metal components,
radiator caps, two wheelers and computer peripherals. Backed by five service and distribution
companies with an extensive network across the country, group has the largest distribution
network for automotive products in India
Company Products
Manufacturing Companies
Axles India Ltd Automotive axles
Brakes India Ltd Hydraulic brakes & clutch ignition systems
India Nippon Electricals Ltd Magnetos, two/three wheeler ignition systems
India Japan Lighting Ltd Headlamps, rear combination lamps &
various signal lamps for automotive & two
wheeler applications
Lakshmi Auto components Ltd Engine/transmission components
Lucas-TVS Ltd Auto electrical parts
TVS Srichakra Ltd Automotive tyres
Sundaram Brake Linings Ltd Brake linings & clutch facings
Delphi-TVS Ltd Diesel fuel injection equipments
Sundaram Clayton Ltd Air brakes
Sundaram Fasteners Ltd High tensile fasteners, cold extruded
products, sintered components, intelligent
systems, radiator caps
Sundaram Textiles Ltd Yarn
Turbo Energy Ltd Turbo chargers
19
TVS Interconnect Systems Ltd Electronic connectors
TVS Electronics Ltd Computer peripherals
TVS Sewing Needles Ltd Sewing needles
TVS Motor Company Ltd Two wheelers
TVS Cherry Ltd Precision miniature, sub-miniature, selector
switches, hall effect sensors, key switches
Wheels India Ltd Automotive wheels
Distributive Companies
India Motor parts & Accessories Ltd Distributors of automotive components
Lucas India Service Ltd Distributors of auto electrical, fuel injection
equipment, LISPART & batteries
TV Sundaram Iyengar & Sons Ltd Distributors of passenger cars, commercial
vehicles, automotive spare parts
Other Companies
Southern Roadways Ltd Freight services
Sunco Machines Ltd Precure tyre retreading equipment
Sundaram Industries Ltd Tyre retreading, coach building, rubber
components.
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LUCAS-TVS
Lucas - TVS established in 1961 as a joint venture between Lucas UK
and T V Sundram Iyengar & Sons (TVS), India to manufacture
Automotive Electrical Systems. Lucas-TVS is the Leader in Auto
Electricals in India today with 48 years experience in design and manufacturing. 4 out of 5
vehicles rolled out daily are fitted with Lucas-TVS products. 100% share of LUCAS-TVS is
now owned by the TVS group.
Lucas - TVS is a TS16949 and OSHAS 18001 certified company. Lucas-TVS have bagged
the Deming application price in 2004 from the Japanese Union of Scientists and Engineers
(JUSE).
Lucas-TVS has emerged as one of India's largest independent suppliers of automotive
components and it reaches out to all segments of the automotive industry such as passenger
cars, commercial vehicles, tractors, jeeps, two-wheelers, and off-highway vehicles, and also
caters to stationary and marine applications.
PRODUCTS
Lucas-TVS manufacture electrical components for the entire automobile industry (CVs,
LCVs, Cars, 3/2 wheelers) and provides wide range of products with various technical
features as per the demand in market. Various Products are:
1) Starter Motors
2) Alternators
3) Wiper Motors
4) Blower Fan Motors
5) Small Motors
6) Ignition
CUSTOMERS
Cars/Utility vehicle:
21
LCVs/CVs:
Tractors:
22
Earth movers:
Two/ Three Wheelers
23
Exports:
After Market Customers:
Australia, Austria, Bangladesh, Bahrain, Belgium, China, Doha, Dubai, Egypt, England,
Germany, Ghana, Ireland, Italy, Korea, Kuwait, Libya, Malaysia, Mauritius, Romania,
Russia, Serbia, Seychelles, Singapore, South Africa, Spain, Srilanka, Sultanate Of Oman,
Switzerland, Turkey, U.S.A, Zambia.
AWARDS
Lucas-TVS, believes that quality begins and ends with the customer. This means identifying
customer needs and comprehensively meeting them. For the company, quality is not just
conformance to drawings or specifications but ensuring customer satisfaction.
1. II PLACE IN NATIONAL ENERGY CONSERVATION, AWARDS - 2008 Auto-
motive sector Ministry of Power, Govt. of India
2. TATA CUMMINS Lucas-TVS is Awarded "OUTSTANDING SUPPLIER &
EXCELLENCE PERFORMANCE during the year 2007 by CUMMINS INDIA
LIMITED
3. Deming Application prize JUSE, Japan
4. Best Supplier Award Maruti Udyog
24
5. 100 PPM Award Hyundai motor India
6. Q1 Award From Ford
SALES PERFORMANCE
Lucas-TVS will retain its dominant position in the automotive electricals market over the
medium to long term, supported by its long-standing and established relationships with
domestic OEMs. However, revenue growth and profitability will remain under pressure
with sluggish off- take by OEMs, increasing competition, and pricing pressures from the
OEMs.
Net sales and Growth Trend of Lucas-TVS
Source: Annexure table (ii)
SWOT ANALYSIS
Strengths
Lucas- TVS reaches out to all segments of the automotive industry from two wheelers
to Heavy Commercial Vehicles (HCVs)
It has extensive distribution network comprising over 2000 outlets spanning the entire
length and breadth of the country.
25
Its focus on quality products combines with urge to constantly learn and improve
imparts it a unique strength, which cannot be easily initiated by its competitors
It has been successful in developing contacts with a host of service dealers over last
eleven and half decades.
The management style at Lucas-TVS allows participation at the worker level. Small
Group Activity (SGA) is just an example of this management style.
Weakness
Lucas-TVS have not been able to establish a backward integration. It has to further
develop its technologies to meet higher quality demand in market
Lucas-TVS is facing high pressure from OEMs in terms of pricing of the product
The company has to motivate development of quality products so as to bring down the
rejection levels
Opportunities
Rapid inflow of investments in the auto component sector resulting in new green field
sites near the vehicle-manufacturing units to ensure JIT delivery to OEMs. This will
further open new avenues for the company
With liberalization and the slashing of import duties both on automobiles and auto
components, world class automobile manufacturers have shown interest in entering
the Indian markets. Increased production of vehicles will stimulate the auto
components industry
Threats
Inability to match the technological capabilities of big foreign auto component
manufacturers like Delphi, MICO etc.
The company has established links with many collaborators which is not the case with
other Global players, hence might prove to be a threat in future.
26
CHAPTER 5
ISSUES AND CHALLENGES
ISSUES AND CHALLENGES
The Indian Auto-Component industry as a whole is engulfed with certain challenges. These
challenges can be dissected into two categories – internal factors i.e. the challenges faced at
organizations’ level and external factors where the other entities, issues outside the
organization / industry influence the growth of the industry.
Internal Factors
Sustaining Quality Levels
Under- investment in ERP (Enterprise Resource Planning) infrastructure leading to
inefficient stock planning and high inventory levels
Rising attrition rate which slows down the growth
Need for Innovation
Enhancement of share of Auto component in global trade
External factors
Poor logistics and power Infrastructure
Increasing cost of raw materials and labor wages
Increasing competition and high lead time for international contracts (from OEMs)
Managing M&A /JV / collaborations.
Tightening environmental & safety regulations leading to high capital investments
27
CHAPTER 6
COMPETITOR ANALYSIS
COMPETITOR ANALYSIS IN TWO-WHEELER SEGMENT- STARTER MOTORS
The two wheeler industry is going through a tremendous technological change where each
firm is engaged in changing its processes and technologies to sustain the competitive
advantage and provide customers with optimized products and services. Starting from engine
parts to drive train, chassis to body dimensions, OEMs are offering various types of models
with prices ranging from Rs30, 000 to Rs1, 00,000 and more. Now-a-days firms are
launching “sport” type bike models for day-today life use.
In olden days, people have to kick start their bikes, which in other way resemble as a stress
reliever. If the engine doesn’t pick up the first time or the second, people continue to kick as
much and the kick lever gets jammed. With new technologies in hand, vehicles are
manufactured without kick levers (i.e. Kick start). Self-Start in two wheelers has made the
industry to sustain continuous growth while satisfying customers in all sub-segments. It has
provided ease in starting a bike and has made ride smooth.
What is a self / electric start?
Self start or an electric start in a two wheeler is defined as a system that uses battery power to
automatically start an internal-combustion engine. Person, who rides a two wheeler, has to
just press the “Start” button and the vehicle’s engine is triggered on.
Self start mechanism works with the help of a Starter Motor. A starter motor (also starting
motor or starter) is an electric motor for rotating an internal-combustion engine so as to
initiate the engine's operation under its own power.
Lucas-TVS starters for two-wheelers have been introduced in the year 2002, and sales has not
picked up as expected by the firm. Given here are the details of other two-wheeler starter
motor supplier for the Indian two wheeler industry.
1) Varroc Engineering Private Limited
2) Mitsuba Sical India Limited
3) Flash Electronics India Private Limited
28
COMPETITOR’S PROFILE
Varroc Engineering Private Limited
Trade Mark: Varroc Excellence
Products Manufactured: Engine valves, Crank shafts, Transmission
Assemblies, Front wheel hub Assemblies, Steering Assemblies, Catalytic Converters, Starter
and Wiper Motor, Capacitor discharge Ignition, Regulator rectifier, Magnetic AC Generators,
Body Switches, Lightning systems, Direction Indicators.
Principle Customers:
Domestic (OEM): Bajaj Auto Ltd., Suzuki Motorcycles India Ltd., Honda Motorcycle &
Scooter India Pvt. Ltd., India Yamaha Motors Ltd., Royal Enfield
Sales Turnover (2009-10 in US $ Mln): 192.55
Exports Turnover (2009-10 in US $ Mln): 12.45
Mitsuba Sical India Limited
Year of Commencing Production: 1986
Trade Mark: MSIL (MITSUBA SICAL INDIA LIMITED)
Products Manufactured: Wiper Motor and Link Motion Assembly, Windshield Washer
Assembly, Fan Motor Assembly, AC Generator, Starter Motor Assembly, Power window
Motor
Principle Customers:
Domestic (OEM): Hero Honda Motors India Ltd., Suzuki Motorcycles India Ltd. and Honda
Motorcycle & Scooter India Pvt. Ltd.
Sales Turnover (2009-10 in US $ Mln): 66.67
Flash Electronics India Private Limited
Year of Commencing Production: 1989
29
Trade Mark: FLASH
Products Manufactured: Automotive Sensors, Ignition Coils, Starter Motors, Stepper Motors,
Magneto Assembly, Alternators, RR Unit, CDI, DC Flashers, Spark Plug Cap & Complete
Automotive Solution for Electrical & Electronic Components
Principle Customers:
Domestic (OEM): Bajaj Auto Ltd., Honda Motorcycle & Scooter India Pvt. Ltd. and India
Yamaha Motors Ltd.
Sales Turnover (2009-10 in US $ Mln): 32.29
Domestic Market share of two wheeler Starter Motor Suppliers
Source: Annexure Table (v)
Currently, Mitsuba holds the dominant position in the two wheeler domestic automotive
electrical market as it supplies two wheeler starter motor to most of the bike models of two
wheeler market leader-Hero Honda. Mitsuba also supplies starter motor to all bike models of
Honda and Suzuki which holds 13 percent and 6 percent of the market respectively.
After the split between Hero and Honda, the Hero group is likely to expand its business
overseas which in turn is an opportunity to LUCAS-TVS to expand its supplies thereby
capturing the market. Honda Motorcycle & Scooter India, the country's fourth- largest two-
30
wheeler maker, can now take on the market leader in every segment, while other companies
will also try to make the most out of an expected weakening of Hero Honda's brand image
DOMESTIC SUPPLY AND MARKET POSITION- MODEL WISE
Starter Motor Supplier OEMs Bike Models
Mitsuba Sical
Hero Honda
Splendor Super Splendor
Passion Pro CD (Dawn, Deluxe) Glamour
Karizma CBZ
Hunk Achiever
Honda Motorcycles and Scooters India
Twister Shine
Stunner Unicorn
Unicorn Dazzler
Suzuki
Heat GS 150R Zeus
Slingshot Access
Varroc Excellence Bajaj Auto
Discover 150cc
Pulsar Platina
Flash Bajaj Auto
Discover 125/135 cc
Pulsar Platina
Lucas-TVS
Hero Honda Pleasure
Honda motorcycles and
Scooter India
Activa
Aviator Dio
Bajaj Auto Discover 100cc
TVS Motors
Pep+ Teenz
Wego Apache
Victor Star City Flame
Jive
Yamaha
Fazer Entizer
Gladiator FZ16
31
DATA COLLECTION FRAMEWORK
Three sets of questionnaire were prepared to find out the performance of Lucas-TVS starter
motors in two wheeler market. One set of questionnaire (Customer Satisfaction Survey) is to
the OEMs, to find out the level of satisfaction with Lucas-TVS products. The second set and
the third set of questionnaire is to the Authorized two wheeler dealers and to the mechanics
respectively, to find out the top selling bike models and customer preference in buying/
repairing a faulty starter motor.
Questionnaire to OEMs:
Questionnaire were given to the OEM representatives and were asked to rate the performance
of Lucas-TVS products with respect to Quality, Delivery, Line rejections, After sales support,
Product Improvements and New product Development in comparison with other suppliers.
Questionnaire to Dealers (Sales and Service):
Q1 & Q2 explicitly asked to the respondent to specify the top 3 selling bike models for the
month of May and June and if possible the volume sold is also noted.
Q3 to Q5 of the questionnaire are used to get general details regarding the number of vehicles
serviced per month and replacement of faulty starter motor.
Q6 explicitly asked to the respondent about the price of Lucas-TVS products when compared
to others and their recommendations
Questionnaire to Mechanics
Q1 & Q2 explicitly asks the respondents regarding the number of vehicles serviced per
month and number of starter motor replaced.
Q3 & Q4 asks about the availability of product spares and the discount price given by the
nearby dealers on starter motors.
Q7 & Q8 explicitly asks the respondent regarding the customer preference regarding the
quality, price and servicing a starter motor.
Q9 to Q12 of the questionnaire are used to get the general details regarding the awareness of
Lucas-TVS products and its recommendations.
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CHAPTER 7
RESULTS AND FINDINGS
FAST MOVING TWO WHEELER MODELS IN MARKET
COMPANY MODEL CAPACITY
AVERAGE
VOLUME SOLD/
MONTH
CURRENT
SUPPLIER
TVS
Scooty Pep + 110cc 45 LTVS/
Chengudu Streak 110cc
Apache 150/180cc 5
HERO HONDA
Splendor plus 100c
60 Mitsuba Sical Splendor pro 100cc
Passion pro 100cc
HONDA
Twister (with Disc brakes)
110cc
100 Mitsuba Sical Unicorn 150cc
Shine 125cc
BAJAJ
Pulsar 150cc 50
Flash/ Varroc Discover 125cc/150cc 15
Platina 100cc
YAMAHA
FZ16 150cc
5-15 LTVS Enticer 125cc
Fazer 125cc
SUZUKI Access 125cc 25 Mitsuba Sical
Honda’s sale is on increasing line compared to last year. Unicorn (Standard and Dazzler) is
on the top selling bike list. Due to the increase in oil/ petrol price, customers prefer 100-
150/180cc bikes which give good mileage. TVS, Honda, Suzuki have also stated the
increasing sale on scooter segment i.e. Scooty Pep+, Activa and Access as many customers
who travel through heavy traffic areas prefer gearless vehicle compared to geared ones.
33
DATA ANALYSIS
MOST FREQUENTLY SERVICED VEHICLE
It is seen that Scooty pep+ is serviced more in a month than other vehicles. Service dealers
quoted that, in a month they service over 100 Pep+, which comes for general service and with
minimal complaints.
NUMBER OF STARTERS REPLACED IN A MONTH
Most of the mechanics say that around 50-100 two wheeler starters are replaced per month.
The average life time of a two wheeler starter motor is 3 years.
34
Number of Starter Motor Replaced per month
Attributes Number of Respondents Percentage
50-100 5 45.45%
100-150 2 18.18%
150-200 3 27.27%
>200 1 9.09%
AVAILABILITY OF THE PRODUCT
Most of the respondents responded that the product spares are available in the market.
Distributors offer at a nominal discount rate (8-10 percent) and spares are available with 6
months to 1 year warranty.
MOST PREFERRED PRODUCT IN MARKET
Attributes Percentage preferred
Varroc 46%
Mitsuba Sical 19%
Lucas-TVS 27%
Chinese Products 8%
35
It is seen that Varroc starter motor is highly preferred in the market. 46% of the respondents
have voted for varroc starter motor.
CUSTOMER PREFERENCE IN BUYING AND SERVICING A PRODUCT
Attributes Number of Respondents
Price 1
Quality 10
Servicing a old Product 2
Buying a New Product 8
.
36
From the analysis it is clearly seen that customers prefer buying a new product than servicing
and importance is given to quality and not price of the product. However, some customers
prefer Chinese products because of its low prices in the aftermarket
SUGGESTION OF LUCAS-TVS STARTERS TO CUSTOMERS
64 percent of the respondents responded that they suggest Lucas-TVS two wheeler starter
motor to the customers whereas 36 percent of them said they will not suggest it to the
customers.
37
OEM’s SATISFACTION LEVEL WITH LUCAS-TVS STARTER MOTORS
A Customer satisfaction survey was done, where the questionnaire was given to
representatives of the respective OEMs through mail or through direct meeting and
information obtained is shown below:
HONDA: SATISFACTION SURVEY
It is seen that, there is a gradual increase in quality of the product and product rating given by
Honda motorcycles and Scooter India Limited on Lucas-TVS two wheeler starter Motor.
38
It is seen that the delivery performance and the Price of the product are stable from 2006.
Though Lucas-TVS face pressure from OEMs regarding the reduction of price on their
product, steps have to be taken to bring a win-win situation favoring the both.
HERO HONDA: SATISFACTION SURVEY
There is a steady rise seen product rating as well as the quality of the product. Price seems to
be steady, that is no alteration in price has been done so far.
39
YAMAHA: SATISFACTION SURVEY
It is seen that, there is a gradual increase in quality of the product and product rating given by
Yamaha on Lucas-TVS two wheeler starter Motor. Price seems to be steady, that is no
alteration in price has been done so far. It is also seen that the delivery performance, sales and
service provided by Lucas-TVS are rated high. Currently Lucas-TVS has 100 percent share
on supply of starter motor to Yamaha.
40
CHAPTER 8
RECOMMENDATIONS
From the above analysis it is visible that Lucas-TVS is on path to success. But still
competitors like Mitsuba and Varroc are playing a tough game by holding major shares in
two wheeler market. After the analysis on fast selling bike models, it can be inferred that
Lucas-TVS is having an opportunity to supply starter motors to these models in order to
increase its sales. Further, the split of Hero Group and Honda Motorcycle has widened the
path of growth for auto-components companies to take steps for the supply.
New technological Improvements have to be done to enter new markets. New product
development has to be tuned so as to introduce many products in a short span of time to
attract OEMs. Pricing has to be made optimal so that Chinese products don’t eat away the
share in aftermarket. The firm must create Uniqueness in their marketing strategy and their
product ranges so that the people in the distribution channel get attracted and the sales of the
product can be increased. Extensive marketing of the product has to be done; Niche
marketing will be highly suitable. Also company has to employ exclusive distributors for
distributing the product and can provide training programs for dealers involved in the process
of distribution.
Further the company can negotiate with the OEMs for the future supply of starter motor to
41
the bike models which will be launched in future. This will increase the domestic market
share as well as the net sales of the company.
STRATEGIES TO BE ADOPTED
Focus on niche segments and niche export markets is an innovative marketing
strategy followed by some component firms. For example, Manual Rack and Pinion
(R&P) Steering Gears is in high demand in the Middle East and Africa, while they are
not preferred in most other parts of the world. Hence, a Chennai based steering
manufacturer, whose core strength lies in manual R&P steering gears, has decided to
focus on this niche export market.
Low-cost manufacturing and targeting East Asian countries for exports
Lucas-TVS can target the blooming segment in two wheelers, that is electric two
wheelers (battery operated)
Acquisition of leading foreign brands and plants is believed to be a strategy that gives
access to new markets and technologies. When this value addition is blended with
existing cost advantage in plants located in India, overall competitive advantage is
enhanced. Further, this also serves as a brand-promotion strategy.
Technical collaborations with international technology leaders will help Lucas-TVS
to rise up to global standards.
CONCLUSION
According to a study conducted by IMRB (Indian Market Research Bureau) the domestic
automotive component market holds promising potential for the domestic industries and for
the players from china and ASEAN countries.
Domestic two wheeler players will soon start their ventures outside India. Lucas-TVS, with a
varied opportunity, can collaborate with technological leaders and produce starters which
adhere to the global quality thereby increasing its exports, Market share and soon becoming a
Market Leader in two wheelers’ segment. Lucas-TVS can supply their products to non-auto
industries such as industrial machinery manufacturers, so as to ensure that their market risk is
minimized.
42
BIBLIOGRAPHY
REFERENCES
1) “Global Competitiveness of Indian Auto Component Industry & Its Sustainability”
Auto Component Manufacturer’s Association (ACMA) Member book 2011
2) “INDIAN AUTO COMPONENTS INDUSTRY: RIDING THE TIDE”- Investment
Information and Credit Rating Agency of India-“December 2010
3) “Defining the Role of the Government in the Transnationalisation Efforts of the
Indian SMEs in the Auto Components Sector”- Department of Scientific & Industrial
Research (DSIR), August 2008
4) Automotive Mission Plan 2006-2016
5) Badri Narayanan G. “Determinants of Competitiveness of Indian Auto Industry”-
Indian Council of Research on International Economic Relations (ICRIER)-2008
6) Hari K. Nagarajan “The Evolution and Structure of Two wheeler Industry in India”-
IIM Bangalore
7) “Demand Forecast for Indian Automobile Industry”-Society of Indian Automobile
Manufacturers (SIAM)
8) Vision 2015’ for the Indian supplier industry: how achievable is it?’ A Report of
ACMA-McKinsey.
WEB LINKS
1) SIAM: http://www.siamindia.com/scripts/gross-turnover.aspx
http://www.siamindia.com/scripts/production-trend.aspx
2) FADA: http://www.fadaweb.com/vision_2015.htm
3) IBEF: http://www.ibef.org/industry/autocomponents.aspx
4) India Infoline: http://content.indiainfoline.com/wc/archives/sect/attw/ch07.html
5) Know India: http://www.knowindia.net/auto.html
43
ANNEXURE
TABLES
(i) Table showing the two wheeler production forecast
Year 2008-09
2009-10
2010-11
2011-12*
2012-13*
2013-14*
2014-15*
2015-16*
Sales 7.43 9.37 11.995 14.994 16.328 17.773 19.151 20.683
Exports 1.004 1.14 1.653 1.845 2.07 2.333 2.608 2.908
Production 8.434 10.51 13.648 16.839 18.398 20.106 21.759 23.591
Growth 24.61% 29.86% 23.38% 9.26% 9.28% 8.22% 8.42% Source: SIAM
(ii) Table Showing Lucas-TVS Net sales growth Analysis
Year 2005-06
2006-07
2007-08
2008-09
2009-10
2010-11*
Net
sales 543 715 886 1020 1310 1400 Growth 31.68% 23.92% 15.12% 28.43% 6.87%
Source: Lucas-TVS Annual Report 2002-2009
(iii) Table showing current and estimated Domestic market Share
Year 2010-11 2011-12 2012-13* LTVS 29.30% 31.64% 38.07%
Mitsuba 39.63% 38.22% 35.09%
Varroc/Flash 17.87% 18.06% 15.40%
Chengudu 11.02% 8.69% 8.38%
Others 2.18% 3.39% 3.06% Source: Refer table
(iv) Table Showing Preferred Starter Motor in aftermarket
Preferred product
Product No. of Respondents Percentage
Varroc 5 45.45%
Mitsuba 2 18.18%
Lucas-TVS 3 27.27%
Chinese products 1 9.09%
Total 11
44
(v) Table showing the current supplier of two wheeler starter Motor to various bike models of two wheeler market players
2 Wheeler projections and Volume
OEMs
Bike / Scooter Model
Engine Capacity 2010-11
LTVS Supply 2011-12
LTVS Supply 2012-13*
LTVS Supply
Current Supplier of Starter Motor
ES ES ES
Hero Honda
Bike Splendor 100cc 450000 0 550000 0 600000 0 Mitsuba
Bike Passion Pro 100cc 950000 0 1000000 0 1050000 105000 Mitsuba/ Taigene
Bike CD 100cc 380000 0 400000 0 430000 0 Mitsuba
Bike Super Splendor 125cc 150000 0 200000 0 220000 0 Mitsuba
Bike Glamour 125cc 240000 0 280000 0 290000 0 Mitsuba
Bike Karizma 225cc 50000 0 60000 0 70000 0 Mitsuba
Bike CBZ 150cc 200000 0 260000 0 280000 0 Mitsuba
Bike Hunk 150cc 100000 0 110000 0 100000 0 Mitsuba
Bike Achiever 150cc 30000 0 40000 0 40000 0 Mitsuba
Bike New model 0 0 0 0 100000 0
Scooter Pleasure 102cc 350000 350000 500000 500000 600000 600000 LTVS
Scooter New model 108cc 0 0 60000 60000 150000 100000 LTVS
Total 2900000 350000 3460000 560000 3930000 805000
HMSI
Bike Twister 110cc 210000 0 270000 0 290000 0 Mitsuba
Bike Shine 125cc 240000 0 360000 20000 400000 100000 Mitsuba
Bike Stunner 125cc 70000 0 100000 0 110000 0 Mitsuba
Bike Unicorn-Std 150cc 60000 0 70000 0 60000 0 Mitsuba
Bike Unicorn Dazzler 150cc 50000 0 60000 0 70000 0 Mitsuba
Bike New Model 0 0 35000 0 60000 60000 Mitsuba
Scooter Activa 109cc 710000 710000 880000 880000 1030000 1030000 LTVS
Scooter Aviator 109cc 140000 140000 140000 140000 150000 150000 LTVS
45
Scooter Dio 109cc 90000 90000 80000 80000 80000 80000 LTVS
Total 1570000 940000 1995000 1120000 2250000 1420000
Bajaj Auto
Bike Discover 100cc 900000 500000 1100000 700000 1100000 800000 LTVS
Bike Discover 125/135cc 120000 0 170000 0 210000 100000 Flash
Bike Discover 150cc 90000 0 110000 0 140000 0 Varroc
Bike Pulsar 135/150cc 600000 0 700000 0 800000 150000 Varroc/Flash
Bike Pulsar 200cc 100000 0 140000 0 150000 0 Varroc/Flash
Bike Pulsar 220cc 50000 0 70000 0 80000 0 Varroc/Flash
Bike Platina 100/125cc 200000 0 280000 0 332000 0 Varroc/Flash
Bike New Model 0 0 100000 0 150000 0 Varroc/Flash
Total 2060000 500000 2670000 700000 2962000 1050000
TVS Motors
Bike Apache 150/180cc 180000 72000 190000 80000 200000 90000 LTVS/Chengudu
Bike Victor 110/125cc 30000 30000 40000 40000 50000 50000 LTVS
Bike Star City 110cc 120000 36000 160000 60000 180000 LTVS/Chengudu
Bike Flame 125cc 330000 40000 360000 130000 400000 180000 LTVS/Chengudu
Bike Jive 110cc 140000 20000 180000 72000 200000 100000 LTVS/Chengudu
Scooter Pep+ 110cc 300000 100000 330000 130000 360000 150000 LTVS/Chengudu
Scooter Teenz 60cc 180000 80000 220000 100000 240000 120000 LTVS/Chengudu
Scooter Wego 110cc 100000 40000 140000 60000 180000 80000 LTVS/Chengudu
Total 1380000 418000 1620000 672000 1810000 770000
Yamaha
Bike Fazer 125cc 80000 80000 90000 90000 110000 110000 LTVS
Bike Enticer 125cc 40000 40000 50000 50000 60000 60000 LTVS
Bike Gladiator 125cc 30000 30000 40000 40000 50000 50000 LTVS
Bike Fz16 150cc 200000 200000 220000 220000 240000 240000 LTVS
Total 350000 350000 400000 400000 460000 460000
46
Suzuki
Bike GS150R 150cc
50000
0
120000
0
160000 30000
Mitsuba
Bike Heat 125cc 0 0 Mitsuba
Bike Zeus 125cc 0 0 Mitsuba
Bike Slingshot 125cc 0 0 Mitsuba
Bike New model 110cc 0 0 15000 0 70000 0 Mitsuba
Scooter Access 125cc 230000 0 260000 0 300000 100000 Mitsuba
Total 280000 0 395000 0 530000 130000
Mahindra
Bike Stallio 110cc 20000 0 120000 0 150000 30000 Imported (Chinese)
Bike Mojo 300cc 10000 0 30000 0 40000 0 Imported (Chinese)
Scooter Rodeo/Duro/Flyte 125cc 160000 0 220000 0 280000 60000 Imported (Chinese)
Total 190000 0 370000 0 470000 90000
Total vehicles 8730000 2558000 10910000 3452000 12412000 4725000
47
(vi) Table Showing Most frequently serviced vehicle in a month
Most frequently serviced vehicle
TVS Pep+ 40% Honda Activa 35%
Bajaj Pulsar 10%
Hero Honda Pleasure 10%
Others 5%
(vii) Table showing Number of starters replaced in a Month
Number of Starters replaced Starters Replaced
No. of Respondents Percentage
50-100 5 45.45%
100-150 2 18.18% 150-200 3 27.27%
>200 1 9.09%
Total 11
(viii) Table Showing Honda’s Customer Satisfaction survey
Year
Product
Rating Quality
Sales &
Service
Delivery
Performance Price
2007 77 77 80 100 80
2008 84 80 86 100 80
2009 90 86 86 100 80
2010 91 93 93 93 80 2011 97 97 95 100 80
(All in Percentages-%)
(ix) Table showing Hero Honda’s Customer satisfaction survey
Year
Product
Rating Quality Price
Sales &
Service
Delivery
Performance 2007 80 85 80 80 100
2008 84 87 80 86 100
2009 90 87 80 94 100
2010 90 87 80 94 93
2011 90 90 80 98 100 (in %)
48
(x) Table showing Yamaha’s Customer Satisfaction Survey
Year Product Rating Quality Price
Sales & Service
Delivery Performance
2007 77 77 80 80 100
2008 83 90 80 83 100
2009 90 96 80 90 100
2010 90 93 80 94 100 2011 100 95 80 98 100
(in %)
(xi) Customer’s Preferences
Attributes
No of
respondents Percentage Price 2 18%
Quality 9 82% Servicing a old
product 3 27% Buying a new
product 8 73%
(xii) Product Availability and Recommendation
Availability of the product
Attributes No. of Respondents Percentage
Yes 9 81.82%
No 2 18.18%
Recommendation
Attributes No. of Respondents Percentage
Yes 7 63.64%
No 4 36.36%
49
QUESTIONNAIRE
Questionnaire-OEMs
1) How do you rate our quality in when compared to others?
Starters from Performance Features
Life time of a starter
Rejection rate
Lucas Tvs
Others
( Rate 1-5, where 1 is very poor and 5- Excellent)
2) How do you rate our delivery Performance compared to others?
Products from Adhering to
schedule
On time delivery Ability to Meet
Fluctuation
Lucas Tvs
Others
( Rate 1-5, where 1 is very poor and 5- Excellent)
3) What do you say about the pricing of Lucas TVS Starters when compared to others?
4) If you have any suggestion for the above, please explain
5) How do you rate Lucas-TVS product reliability in terms of warranty failures?
6) How do you rate the after sales services?
Products from Technical Support Customer
Support/After sales service
Warranty
services
Lucas Tvs
Others
( Rate 1-5, where 1 is very poor and 5- Excellent)
7) Would you want Lucas-TVS to improvise in the current product?
a) Yes b)No
8) If yes, in what aspect?
50
9) Would you want Lucas-TVS to Increase the New product Introductions?
a) Yes b)No
10) How would you rate the quality of the New products, that are introduced by Lucas-
TVS when compared to others?
New Products
from
Quality Product
Modifications
Procedures Responsiveness
Lucas Tvs
Others
( Rate 1-5, where 1 is very poor and 5- Excellent)
11) Would you recommend Lucas-TVS starters to all of your two wheelers?
a) Yes b)No
12) If no, what you expect from Lucas-TVS
Questionnaire- Dealers
Name:
Place:
1. Please specify the top 3 selling bike models for the entire year?
a)
b)
c)
2. How much vehicles are sold per month?
Model Volume
51
3. How many vehicles are serviced per month?
a) 50-100 b) 100-150 c) 150-200 d) More than 200
4. How many Starters are replaced in a month?
a) 0-2 b) 2-4 c) 4-6 d) More than 6
5. Which Company’s Product is preferred more in the market?
a) Varroc b) Flash c) Mitsuba d) Lucas-T.V.S
6. Is the price of Lucas-T.V.S parts high when compared to its competitors?
a) Yes b) No
7. The parts of which company’s product are replaced more? ____________
a) Varroc b) Lucas-T.V.S c) Chinese Products d) Mitsuba
8. Would you recommend Luvas-tvs starter to any other two wheeler model
a) Yes b)No
Questionnaire-Mechanics
1. How much vehicles are serviced per month?
a) 50-100 b) 100-150 c) 150-200 d) More than 200
2. How many number of two wheeler Starters are replaced in a month?
a) 50-100 b) 100-150 c) 150-200 d) More than 200
3. Are the Products/Spares available with the nearby dealers, if not time required to
deliver the same?
a) Yes b) No
52
4. Discount Percentage getting on spare parts or full units on MRP?
a) 7% b) 8% c) 9% d) 10%
5. From where are you buying the spare parts?
a) Distributors b) Outside Dealers
6. How frequently the starters in vehicles are repaired?
a) 3 months b) 6 months c) Yearly d) Once in 2 years
7. How do customers rate the product? (Based on)
a) Price b) Quality
8. What do customers prefer?
a) Servicing an Old Product b) Buying a new Product
9. Which products customers prefer more?
a) Original Products b) Local Products
10. How many days of warranty the competitors and local players provide for their product?
a) 6months b) 1 year c) 2 years d) More than 2 years
11. Are you aware of Lucas-T.V.S 2 wheeler Starters?
a) Yes b) No
12. Do you recommend Lucas-T.V.S 2 wheeler starters to your customers?
a) Yes b) No, because __________
53
CASE STUDY
COMPETITIVENESS OF THE INDIAN AUTO COMPONENT INDUSTRY
“The Indian auto component industry could be the next big success story after software,
pharmaceuticals, BPO and textiles.”
The size of the global auto component industry is approximately $1trillion. The leading auto
component manufacturers (OEMs) in the world are Ford Motors, General Motors (GM),
Delphi Corporation, Caterpillar, International Truck and Engine Corporation and Cummins.
The US is the world's biggest auto component market. In 2002 it imported auto component
worth $69 bn. In India, Chennai, Pune and Gurgaon are the three big clusters for the auto
component manufacturers. The approximate size of the Indian auto component industry is
25,000 crore (approx. $5 bn). The size of the Indian auto component industry is still very
small; it is just one-sixth the size of the world's largest auto component maker, the $28 bn
Delphi Corporation.
Major US Auto Component Imports (In $mn) Year 1998 1999 2000 2001 2002
Mexico 14,574 16,814 18,791 18,402 20,397 Brazil 1,082 1,147 1,086 824 1,137
China 863 1,041 1,368 1,483 1,884 Thailand 309 374 362 380 516
India 99 117 150 141 177 Source: US Census Bureau's Foreign Trade Statistics 2003
For the year ended March 2004, the domestic auto component sector had registered revenues
of $1.1 bn (Rs 4,800 crore) from exports. This was 38.8% higher compared to export
revenues during the FY 2002-03. According to Automotive Component Manufacturers'
Association of India (ACMA), the projected compounded annual growth rate (CAGR) for the
domestic industry is 18% and the export projections for 2010 is $2.7 bn. India falls way
behind other developing countries when it comes to auto component exports. Indian auto
component manufacturers don't have the scale of production required to beat the global
majors. For example, Kayaba, world's biggest shock absorber maker, produces 240 mn
units/year whereas, Gabriel India, India's largest shock absorber maker, manufac turers only 9
mn units/year. Low scale of production acts as a hindrance for Indian auto component
manufacturers from getting large export orders. Most of the export orders Indian
54
manufactures receive are worth less than $100 mn. In global standard any export which is
less than $100 mn is considered insignificant.
Major Auto Component Exporting Nations in 2004 (In $bn)
Country India Mexico China Thailand Brazil
Export 1.1 16 3 2 4 Source: Compiled from Businessworld 23rd February 2004
The auto component industry in India has seen high growth in recent years. There are three
major reasons behind the recent robust growth of auto component industry. First, the
domestic automobile industry (two-wheelers, commercial vehicles and passenger cars) has
registered good growth. High demand for automobiles has subsequently fuelled the demand
for auto component from automakers. Second, the replacement market is growing rapidly as
more and more new vehicles hit the road.
Moreover, the product life cycle of automobiles is becoming shorter. As more new models hit
the road the demand for auto component keeps rising. The increasing number of vehicles
means an expanding market for replacement components. Third, the global automobile
industry is going through its worst phase ever. To cut production cost, the world's leading
automobile companies are sourcing cheaper auto components from countries like India and
China. To become globally competitive, Indian auto component industry has to learn the best
manufacturing practices, be quality consciousness and adhere to strict delivery schedules.
The Indian auto component industry is also highly fragmented. Of the 400 odd players
present in the market, only 30 record revenues higher than Rs 150 crore. Two third of the
industry players have annual revenues less than 50 crore. And out of 400 companies, only 15
generate export revenues over $10 mn.
The Indian auto component manufacturers serve major OEMs as Tier II or Tier III suppliers.
China is the hottest destination for auto component sourcing as it has many Tier I suppliers.
China has over 500 Tier I auto component manufacturer. Tier I manufacturers have enormous
advantage over Tier II or Tier III suppliers. The major advantage is that Tier I suppliers are
the first to get orders for components from vehicle makers. Getting early orders help the Tier
I supplier to recover the investments very quickly. Moreover, when there is vehicle sales
raise, they earn profits. Unlike Chinese manufacturers, the Indian auto component
manufacturers lack the high-end designing, manufacturing and development skills. According
to Deep Kapuria, CMD, Hi-Tech Gears: "To succeed, you need greater integration with the
55
original equipment manufacturer and the tech partner (design integration and R&D);
innovation and indigenous technology; and a global mindset (product liability/logistics). We
are learning the ropes in the latter two, but are yet to get to the first”.
Comparison of labor Costs
Indian Companies
Developed
Country Global Companies
Skilled labor
cost/hour $8 $20
Labor cost forging industry 9.4% of Sales
Dana-38.8% of
sales and UEF-37.9% of sales
Total Labor Cost 3-15% of sales 20-40 % of sales Source: Compiled from different sources
Indian Auto Component Industry in 2002 (ACMA)
337 Companies with ISO 9000 Certification
Companies with ISO 14001 Certification
193 Companies with QS-9000 Certification
25 Companies with TS 16949
2 Deming Prize winning companies
1 Japan Quality Medal winning company
Export of auto components from India as % of Production (in Rs Crore)
FY Year Production Exports %
2000-01 17,246 2,706 15.7
2001-02 21,602 2,802 13
2002-03 25,535 3,496 13.7
2003-04 30,640 4,500 14.7 Source: Business Line, May 1st 2004
MOVING UP THE VALUE CHAIN
The Indian auto component manufactures are moving up the value chain to integrate them
with the global auto component industry. In recent times, the industry has adopted three-
pronged strategy to go global. First, giving thrust to exports. Exports are growing at a
compounded annual rate of 20-25%. Second, Indian companies have started acquiring plants
56
abroad. Third, many Indian manufacturers have started collaborating with foreign players. By
collaborating with foreign companies, the Indian companies are learning the high-end
designing and development skills of the major auto component manufacturers in the world.
Reverse engineering is one area where the Indian auto component manufacturers have proved
successful. Recently, the Pune-based Commercial Vehicles Systems Research Centre of
Anand Group added two new products - a self-steer axle and an air suspension for its partner
Dana Corporation of US. These products were developed within seven and nine months
respectively, against the 22 months it takes to manufacture these products in the US. Ten
more products are under development in the research labs of Anand Group for its partner
Dana Corporation.
Many Indian companies are trying to become Tier I suppliers to the global automakers.
Bharat Forge, India's largest auto component exporter is trying to exploit its available
resources and expertise to become a Tier I supplier. The company has indigenous design and
development capability; it has the world's largest single location plant. Bharat Forge has
some inherent strength like it takes 3-4 weeks to market a product against the global standard
of 6-12 months and it has the experience of working with the world's leading clients like
Toyota, Ford, Honda and Volvo. Bharat Forge has 50% of the US market for front axle
beams for trucks. Recently the company has made some overseas acquisitions to expand its
customer base in original equipment market. In the auto component industry original R&D is
a highly capital intensive. The global tier I players invest 5-7% of their turnover in R&D
whereas; Indian companies spend less than 1% of their turnover on R&D.
According to Suresh Krishna, Chairman and Managing Director, Sundram Fasteners, there
are three basic reasons that prompted Indian component companies to venture abroad. First,
having established a reasonable domestic presence, big Indian component makers are now
looking for an international presence. Second, having improved their productivity, quality
and reliability, Indian companies feel more confident venturing abroad. Third, the Indian
government's investment friendly policies and hassle- free environment for overseas
acquisitions have encouraged Indian companies to take the acquisition route. With these
overseas acquisitions, the Indian companies can tap the original equipment (OE) market
abroad. The Indian companies can supply their own products to these customers.
57
Acquisitions by Major Indian Players
Indian Company Company/Plant acquired/Set-up abroad Located in
Size of the deal ($ mn)
Amtek Auto Smith Jones Inc. US 20
Amtek Auto GWK Group UK 37
Bharat Forge Carl Dan Peddinghaus GmBH* Germany 116# (euro)
Sundaram Fasteners
Dana Spicer Europe* (Forging unit) UK 2.6
Sundram Fasteners
Sundram Fasteners (Zhejiang)** China 5
G. G. Automotive Gears
Name not disclosed. US company that manufactures high precision custom gears and planetary gears. US 110
Source: Businessworld, 23rd February 2004 * Plant **Plant set-up #Approximate
R&D CAPABILITY
In recent years the world's leading automakers and Tier I suppliers have opened their R&D
centers in different parts of the country. The cost of R&D in India is low compared to any
developed country and skilled manpower is available. In the long run the entry of foreign
companies would benefit the Indian industry as people working in foreign firms would
acquire insights and skills which otherwise would be impossible to acquire.
In India there is not a single auto component manufacturer which does original R&D. Only a
few companies have recently started design and development (D&D). D&D is the initial
stage of R&D and it works as a support function for R&D in auto component industry. Every
major auto component manufacture starts with D&D before venturing into full scale R&D.
R&D in auto component industry involves developing a component as per the requirement of
vehicle maker/OEMs/Tier I supplier. It involves developing the original design of the
component, making prototypes and testing and then mass production of the component. R&D
in auto component industry requires high technological capabilities and Indian companies are
on a learning curve.
The Indian companies have also proved their competence in making minor modifications to
existing products that either result in new uses for the product or significant cost cutting. For
example, Bangalore-based Motor Industries Company (Mico) has indigenously developed a
58
high-pressure single cylinder pump for its parent company, Bosch. The newly developed
pump was highly advanced compared to the existing pump. Though Bosch did not handhold
Mico by providing drawings, the product was derived from an existing product. Today, Mico
has been designated Bosch's global development centre for single-cylinder, multi-cylinder
and mechanical rotary pumps.
PRODUCT LIABILITY
The Indian auto component companies need to adhere to strict quality control to prevent any
defects in the designing and manufacturing of their products. The World's leading OEMs
follow strict product liability rules while going for any contract with their suppliers. Under
product liability rules any supplier could be penalized by its client if the product fails to meet
the set quality standards and results in line stoppages, recalls and claims. In India the
domestic insurance companies such as Tata AIG started providing product liability insurance
to the Indian auto component makers. This will give the Indian auto component
manufacturers the confidence to do more business with foreign automakers. With product
liability insurance in place the acquisition and execution of export contracts will be easier for
the Indian companies.
THE ROAD AHEAD
World's major automakers have announced their intention to develop India as a major
sourcing hub for auto components. Indian enjoys enormous cost advantage in manufacturing,
R&D, skilled labor and software. However, it can't rely on its low cost advantage for a long
time. Countries like China, Thailand and Mexico are also becoming very competitive so far
as cost is concerned. Moreover, over the years these countries have built large scale of
production and technological competence. The recent success of Indian auto component
industry is partly due to the fact that major automakers in the world were compelled to
outsource from countries like India and China to cut costs. Sooner or later the global auto
industry will come out of recession. Then cost won't be the only deciding factor for the
automakers while sourcing components. The majority of the Indian auto component
companies operate in the lower end of the value chain (like casting and forging) of the
industry. Globally, the product life cycle and the product lead time is shrinking fast. To
succeed, Indian auto component companies should develop capabilities to keep pace with
major automakers
59
SYNOPSIS
MARKET POTENTIAL AND STRATEGIES TO INCREASE MARKET SHARE OF LUCAS-
TVS TWO WHEELER STARTER MOTOR
STUDENTS’S NAME: HARINARAYAN P
INDUSTRY GUIDE: Mr. G. PRAVIN WINSTER
FACULTY GUIDE: Ms. POORVA RANJAN
BRIEF SUMMARY OF THE PROJECT:
OBJECTIVE:
To study the market potential and competitiveness of Lucas-TVS Starter Motor in domestic
two wheeler market and to device an optimal strategy to increase its market share in supply to
OEMs
FINDINGS AND CONCLUSION
Market potential for two wheeler segment was analysed and its production was forecasted.
Competitor analysis was done in order to know their strengths and weakness. A Customer
satisfaction survey with OEMs was also done to know how Lucas-TVS starter motor is rated
against its rivals. Field survey has been taken up in order to find out the aftermarket sales
and customer’s perception regarding the starter motor. After the analyses, it is clear that,
Lucas-TVS should optimize their pricing factor and need to cope up with the technological
advancement so as to meet global quality.
STUDENTS’ PERCEPTION ABOUT INDUSTRY GUIDE
Mr. G. Pravin Winster, Asst. Manager (Business Development & Marketing) holds a post
graduate degree- MBA, in the field of International Business and Marketing. He is open-
minded, positive and has excellent knowledge about Indian Automobile industry. He is very
much available for interaction and highly assistive.
I would like to thank Mr. N. Kumar, Mr. Vinoth, Mr. V. Mahesh, Mr. Sumit and the entire
marketing for their hearty support for the completion of this project.