Module 1

Introduction
Indian automobile industry
Starting from the era when there was too slim of a variety of cars available in Indian market, Indian
automobile industry has come up a long way to have a diverse array of cars these days. There are a number
of top automobile companies running their operations in India, which again have a range of models in
different segments of cars. However, while looking for top 10 automobile companies in India, one name
that would always lead the list is Maruti Suzuki India. Maruti Suzuki has consistently been the dominant
leader in the Indian automobile industry. However, there are also other big names like Tata Motors,
Mahindra and Mahindra, Hyundai Motors, Hindustan Motors etc.
India is expected to be the world's third-largest automotive market in terms of volume by 2026.
The industry currently manufactures 26 mn vehicles including Passenger Vehicles, Commercial
Vehicles, Three Wheelers, Two Wheelers and Quadricycles in April-March 2020, of which 4.7 mn are
exported.

List of Top 10 Automobile Companies in India (Figures in Crores)

ET 500 Rank Company Turnover PAT MCRP CR Assets

7 Tata Motors Ltd. 123222.91 9273.62 56499.77 52209.48

21 Mahindra & Mahindra Ltd. 37026.37 3079.73 49945.17 36926.19

19 Maruti Suzuki India Ltd. 38140.69 2382.37 31475.63 14762.9

41 Hero MotoCorp Ltd. 19669.29 1927.9 40398.63 4447.22

46 Bajaj Auto Ltd. 17008.05 3454.89 46885.69 5154.96

67 Ashok Leyland Ltd. 11133.04 631.3 6653.15 6621.16

101 Sundaram Clayton Ltd. 7419.41 64.63 529.23 2428.87

110 TVS Motor Company Ltd. 6569.99 127.94 2985 1745.06

148 Eicher Motors Ltd. 5138.64 243.12 4448.27 474.14

396 Force Motors Ltd. 1574.05 58.62 730.05 58

Executive summary about Indian Automobile Industry

Segmented market Automobile sector split into four segments, each
having few market leaders.
Two-wheelers and passenger vehicles dominate
the domestic demand.
Two-wheelers accounted for 80.9% of the
domestic demand in FY20.

1. Segmented market
Automobile sector split into four segments, each
having few market leaders.
Two-wheelers and passenger vehicles dominate
the domestic demand.
Two-wheelers accounted for 80.9% of the
domestic demand in FY20.

2. Growth prospects
Indian automotive industry (including component manufacturing) is
expected to reach Rs 16-18 trillion (US$ 251-282 billion) by 2026. Strong
policy support from the Government.
The Indian auto industry is expected to record strong growth in 2021-22,
post recovering from effects of COVID-19 pandemic.

3. Fourth-largest automobile market

India became the fourth-largest auto market in 2019 displacing Germany with about 3.99 million
units sold in the passenger and commercial vehicles categories. India is expected to displace Japan as the
third-largest auto market by 2021

It was the seventh-largest manufacturer of commercial vehicles in 2019.

Presence of established domestic and international original equipment manufacturers (OEMs).
Strong market in terms of domestic demand and exports.
Advantage India
1 Growing demand
► Rise in middle class income and young population may result in strong growth.
► Indian automotive industry is targeting to increase export of vehicles by five times during 2016-26.
2 Rising Investments
► India has significant cost advantages. Auto firms save 10- 25% on operations vis-a-vis Europe and
Latin America.

► Cumulative FDI inflow of about US$ 24.62 billion in the automobile sector between April 2000 and
September 2020.
► The Government of India expects automobile sector to attract US$ 8-10 billion in local and foreign
investments by 2023.
3 Policy support
► Automotive Mission Plan 2016-26 shows clear vision of the Government.
► The Government aims to develop India as a global manufacturing centre.
► Reforms like GST to help boost the sector’s growth.
► Incubation centre to be set up for start-ups working in electric vehicles (EV) space.
4 Opportunities
► Focus shifting on electric cars to reduce emissions.
► Government aims to build India into a R&D hub.
► India could be a leader in shared mobility by 2030, providing opportunities for electric and
autonomous vehicles.
•Mopeds and •Light commercial
electric •vehicles (LCV)
•scooters •Medium & heavy
•Scooters •commercial
•Motorcycles vehicles
Two- Commercial
wheelers vehicles

Passenger Three-
vehicles wheelers

•Passenger cars •Passenger

•Utility vehicles carriers
•Multi-purpose •Goods carrier
•vehicles

Automobile Sector

Introduction on various OEM’s and different

products/models made by them

What is an Original Equipment Manufacturer (OEM)?

An Original Equipment Manufacturer or OEM is a company that manufactures and
sells products or parts of a product that their buyer, another company, sells to its own
customers while putting the products under its own branding. OEMs commonly
operate in the auto and computer industries.

What is an Original Equipment Manufacturer (OEM)?

An Original Equipment Manufacturer or OEM is a company that manufactures and
sells products or parts of a product that their buyer, another company, sells to its own
customers while putting the products under its own branding. OEMs commonly
operate in the auto and computer industries.

• Robust growth in auto component

 • Rising indigenisation
• Growing automobile industry
• Demographic advantage
• Expanding middle class
• Among top steel producers

Advantage in India

1. Growing Robust demand

Growing working population and expanding middle class are expected to remain
key demand drivers

India is set to break into the league of top five vehicle producing nations

2. 2Competitive advantages

A cost-effective manufacturing base keeps costs lower by 10-25 per cent

relative to operations in Europe and Latin America

Presence of a large pool of skilled and semi-skilled workforce amidst a strong

educational system

Fourth largest steel producer globally hence a cost advantage

3. Export opportunities

India is emerging as global hub for auto component sourcing

Relative to competitors, India is geographically closer to key automotive markets like

the Middle East and Europe

4. Policy support

Continued policy support in the form of Auto Policy 2002 and National

Automotive Mission Plan 2002-16

Strong support to R&D through establishment of NATRiP centres

Automotive market and roles of dealerships.
The Indian automotive industry (including component manufacturing) is projected to get to US$
251.4-282.8 billion by 2026. The 4th largest in the world, sales in the Indian auto industry increased
9.5 per cent year-on-year to 4.02 million units (excluding two wheelers) in 2017. Domestic
automobile production saw an increase of 7.08 per cent CAGR between FY13-18 where 29.07
million vehicles were manufactured in the country in 2018. April-July 2018 witnessed a production
increase of 16.69 per cent year-on-year to reach 10.88 million vehicle units.[i]

Growth enablers

Manufacturing Push to Sales

According to the Automotive Component Manufacturers Association of India (ACMA), the 2018
Union Budget’s spending boost to infrastructure development, connectivity and the rural
economy augurs well for the auto industry with expected increase in sales across vehicle
types- commercial vehicles, entry level two-wheelers, farm-machinery and entry level cars.

Many in the Micro, Small & Medium Enterprise (MSME) sectors have been enthused by steps such
as an increase in customs duty on imported components from the existing maximum limit of 10
percent to 15 percent, and a drop to 25 percent on corporate tax for companies with a turnover of up
to Rs 250 crore. Other welcome measures include an enhanced budgetary allocation of Rs 3,794
crore as priority finance for credit support, capital and interest subsidy and a simplified process for
acquiring credit via an online system for SMEs.

Dealership Landscape
There are 25,000 dealerships in India employing around 25 lakh people directly and 15 lakhs
indirectly.ii To enable and sustain growth in the automotive sector Indian dealerships face challenges
and opportunities to espouse a holistic approach for revenue growth and diversification, at the heart
of which lies operational excellence driven by people capabilities.

Ashish H Kale, the newly appointed president of Federation of Automobile Dealers Associations
(FADA) recently spoke about manpower being the biggest cost for dealerships- an increase of 60-
120 percent depending on the region. The era of a low-cost workforce at dealerships appears to be
fading as other areas of jobs growth such as e-commerce lure employees away.[ii]

A problem area is the lack of or limited skills training for professional development at dealerships
leading to a high attrition rate. However, there exists a demand for a quality workforce- what with
new product lines and players in the commercial vehicles space, and increased customer expectations
of service levels for the passenger vehicle market. Selling a vehicle is not the end goal anymore for a
business to grow. Dealerships need to build insight into a customer’s total cost of ownership and
commit to training their workforce to meet new demand. This requires upskilling and re-skilling
across functions such as sales, marketing, operations and customer service.

Case in point- in response to a sharp decline in profitability of one of its major dealerships due to stiff
competition, operational inefficiencies and low staff skills to deal with these changes, a leading
Indian automobile manufacturer initiated a restructuring process of the dealership structure focusing
on building capability across sales and service process staff to be future ready. The success of this
initative has now been replicated across all full service dealerships for the OEM across India. [iii]

Ultimately, dealerships and automotive service centres are run by entrepreneurs for whom a capable
workforce will make a big difference to their bottom line. ‘Understanding after-sales service
expectations and concerns can help service dealers build a more engaging relationship with
customers,’ says Kaustav Roy, Director at J D Power. ‘Doing so is not only prudent for improved
customer satisfaction it can also create loyalty for the brand and lead to increased revenue streams for
the dealer,’ he adds.

Customer Expectations – More Than Just Sales

What customers expect when they walk into a service centre or dealership defines the service
experience. Factors such as soft skills, service initiation, accessories and customisation options,
product and technical knowledge, service quality and service facility are high on the list of
importance.

Customer expectation extends beyond sales- such as maintenance and related services, remote
assistance, resale, automatic reminders, roadside assistance, etc.

A McKinsey article[iv] found that high performing dealerships employed formal talent management
practices and provided formal training to their employees including long-term incentives to retain top
talent. Conversely, low performing dealers paid less attention on recruitment and training.
Improvements in the service department such as a tour of the service facilities, building rapport with
a customer by sending reminders for repeat service visits, and vehicle pick-up went a long way in
building loyalty and reducing the dealer’s customer acquisition costs.

Talent Management is Key

High value skills at a dealership are sales including after sales service, product knowledge, inventory
management, financing and insurance knowledge, customer service, accounting, industry software
skills, service advisory and service managerial skills.

Also, the capabilities of service and repair technicians form a crucial part of a dealership. Not only
must they have a basic understanding of vehicle repair & maintenance but of increasing complex
vehicle technology and diagnostic equipment. Technicians are integral to customer satisfaction
through the quality of their workmanship.

Training comes in different forms, and apprenticeships are a key component given their highly
specialised approach.

Industry Training & Apprenticeships

Rohit Suri, president and MD, Jaguar Land Rover (JLR) India, feels training of personnel to the
highest standards and superior after-sales service is core to their company’s efforts in India. For the
third year in a row, JLR India won the Jaguar Land Rover Everyday Legend Global Technician and
Apprentice Technician Award of the Year 2018 at a ceremony held in the UK. Sajeesh Kumar
Palat, an employee at JLR’s retailer in Kochi, Muthoot Motors won the “Global Technician of the
Year 2018” award. He was judged on five different parameters – powertrain, electrical, procedure,
chassis and knowledge. The contest was between 26 countries and approximately 16, 000 service
technicians drawn from JLR’s global retailer network.

Toyota Kirloskar Motor (TKM) recently inaugurated the Toyota Centre of Excellence at the
Global Academy of Technology in Bangalore, its third in Karnataka. To provide hand -on skills
training to engineering students, TKM provides engine kits to augment practical knowledge and
boost their employability skills. For instance, the engine assembly kit provides real orientation in
dismantling and re-assembling techniques leading to high quality skill sets in engine operating
mechanism.

Naveen Soni, Vice-President TKM believes such partnerships with colleges and institutes in the
country are vital to skill building at the classroom level to develop a highly skilled workforce to
match with evolving skill demands of the automotive industry.

The first batch of 215 students who received a two-year Craftsmen Training in trades such as
Automotive Service & Repair, offered by Maruti Suzuki India were felicitated in September 2017.
This is part of an MoU between Maruti Suzuki and Directorate General of Training to impart skills
training to 10th and 12th pass youth.
The customised training curriculum– 80 per cent practical and 20 per cent theory imparts skills to
students to be future employed as workshop mechanics, sales representatives or become
entrepreneurs.

The training is imparted through a learn and earn model, with the company bearing all training
costs. As of September 2017, 2,000 students were enrolled in these two-year training courses at the
Maruti Suzuki Training Academy.

Other initiatives[v]:

• Toyota Technical Education Program provides technical training to ITI students through
on-the-job experience at Toyota dealerships.
• Toyota Tantrajna, is a comprehensive apprenticeship-like blended training module of 13.5
months consisting of basic, on-the-job and classroom training. Toyota provides a stipend
and other incentives for trainees during the training period.
• The Toyota Apprentice Scheme has trained over 12,000 apprentices since 2002.

Future Focus

On an average, a car buyer devotes 60 percent of their time researching online. A third of customers
will consider buying a car online. Dealership services will need to adapt and develop online and
mobile-based marketing, sales and customer service practices to reach their customers. Training and
apprenticeships in automotive servicing need to adapt and include such lines of demand in skills
alongside the more traditional skills as outlined in the industry examples above.