Indian Small Passenger Cars In US

2
Market

Mradul Raj Pachouri | 08BS0001794

Section B
12/24/2009

IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t
 This Document consist of
the US Auto Industry
3 Indian Small of
Passenger Cars In US
analysis, Analysis India
Market
as an Exporter of
Passenger cars, and
strategies that will be
adopted by the author to Background
make the his Business of The automotive industry is the industry involved in the
Manufacturing and design, development, manufacture, marketing, and sale of
exporting small cars motor vehicles. In 2007, more than million motor vehicles,
including cars and commercial vehicles were produced
successfully to US
worldwide. In 2007, a total of 71.9 million new
Market. automobiles were sold worldwide: 22.9 million in Europe,
21.4 million in Asia-
Pacific, 19.4 million in
USA and Canada, 4.4 International
million in Latin
America, 2.4 million in
Marketing
the Middle East and 1.4 million in Africa. The markets in North Assignment
America and Japan were stagnant, while those in South America
and Asia grew strongly. Of the major markets, Russia, Brazil and China saw the most rapid growth.
IBS In 2008, withIrapidly
NDIAN SMALL PASSENGER CARS IN
rising oil prices, industries such as the automotive industry are experiencing a
PUNEcombination US pressures
of pricing MARKET from raw material costs and changes in consumer buying habits. The
industry is also facing increasing external competition from the public transport sector, as consumers
re-evaluate their private vehicle usage.

The United States is the world’s largest consumer market for light vehicles, passenger cars and light
trucks. The United States auto industry is dominated by the Big Three or General Motors, Ford Motors
and Daimler/Chrysler. These three account for roughly a little over half of the production of cars and
light trucks in the industry. What has currently started to happen in the recent years is that the Big
Three are starting to lose market share to other rivals within the industry. In 2006 the Big Three
accounted for 41.5% of light vehicle sales when compared to the top three foreign companies which
accounted for 36.6% (Toyota, Honda, & Nissan). Overall the Big Three account for 54.9% of the U.S.
market in 2006. This was down from 58.2% in 2005, 60.1% 2004 and 61.8% in 2003. This trend is
expected to continue but to taper off in the coming years.

Factors affecting the US Automobile Industry (PEST Analysis)

1. Political
Laws and government regulations have affected this industry since the 1960s. Almost all of the
regulations come from consumers increasing concerns for the environment and the concern for safer
automobiles.
These days Developed Government is providing special incentives to citizens who are buying small
cars by junking their earlier Big Behemoth car which are neither efficient nor eco friendly. Small cars

IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t
 Indian Small Passenger Cars In US
4
Market

from India or china, imbibing features like small size, high fuel efficiency & low pollution satisfying
all pollution norms.
Not only the consumer, even the manufacturer and Exporters which are exporting such cars can get a
heavy duty tax deduction because even government was like to promote such cheap, small, and fuel
efficient cars.

2. Economic

The automobile industry has a huge impact on every country’s economy. According to various studies
this industry is the major user of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics,
vinyl, and rubber. The study also showed that for every autoworker there are seven other jobs created
in other industries. These industries include anything from the aluminums to lead to vinyl.

3. Socio-cultural
Today’s society judges people on the type of car you drive. Society does not like to admit to this but it
is very true. Manufactures know this happens and targets their markets by these thoughts. Anyone who
drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of
junk because of what other people will think of him or her. Consumers also just feel better when they
are driving a nice or new car, if makes them feel better about themselves.

4. Technology
The internet has affected just about every industry in the world and has also had a huge impact on the
automobile industry. A study was conducted by J.D. Power and Associates in 2002 and involved more
27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before
making their purchases and out of that 60%, 88% went to the auto websites before going and taking a
test drive. Business-to-business marketplaces have given the industry many opportunities because of
the internet, such as more efficiency and lower cost.

5. Demographics
For many years now, the baby boomers generation has been the main target market for just about every
product. As their generation is getting ready to retire and spend less money, the automakers are looking
at the younger generations. Right now, the focus is starting to turn towards the baby boomers children
(Generation X) who are in their mid 20’s and 30’s. According to Analysts, five years from now Gen X
will account for at least 30% of vehicle sales.

6. Global
General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda,
and Nissan Motor Company come together to create a new trade association created the Alliance of
Automobile Manufacturers. The organization was to replace the American Automobile Manufacturers
Association that only consisted of American manufacturers, the goals of the associations were to work
IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t
 Indian Small Passenger Cars In US
5
Market

together on public policy matters of common interest to provide credible industry information and data,
and seek consistent global regulatory standards.

Export Trend from India

IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t
 Indian Small Passenger Cars In US
6
Market

My Strategies
Due to all these reasons Indian Companies can be a good exporter of small cars

My Company- XYZ Motors

My Small car (name) – XYZ – Sweety

Tagline – “Small is sensible”

My Strategies:

1. A world class product: Small car with all the safety features and Pollution norms.
2. Internet and Social Media support: As we know that in US, 60% of the buyers referred to the
internet before making their purchases and out of that 60%, 88% went to the auto websites
before going and taking a test drive. Business-to-business marketplaces have given the industry
many opportunities because of the internet, such as more efficiency and lower cost. So I will go

IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t
 Indian Small Passenger Cars In US
7
Market

for a beautiful 3 D java supported website where people can understand our car and buy that on
the very same moment.
3. Strong Collaboration with Governmental Bodies: In US if governmental bodies are once
convinced that our product is of supreme quality and can give many benefits like low emission,
less traffic problems due to size, High fuel efficiency then there is a possibility that US
government start giving incentives to our customers and giving us low tax import duties when
bringing the Car in their market.
4. Tie Up with different distributors, outlets so that I can promote my product by them also.

References:
• ICMR Publishers- International Marketing
• SIAM official Site- www.Siamindia.org
• Ibef Official Site- www.ibef.org
• http://www.realclearmarkets.com/news/ap/finance_business/2009/Dec/23/indian_super_compa
ct_car_market_overtakes_japan.html
• http://www.infodriveindia.com/India-Exports-Trade-Data.aspx

IBS Pune I n d i a n S m a l l c a r s i n U S M a r k e t