OPERATION STRATEGY OF

AUTOMOBILE INDUSTRY
•TATA
•BAJAJ 
 Automobile History in brief
 
• History of the automobile begins as early as 1769,
with the creation of steam-powered automobiles
capable of human transport in 1806. 
• The first cars powered by internal combustion
engines running on fuel gas appeared, which led
to the introduction in 1885 of the ubiquitous
modern gasoline or petrol-fueled internal
combustion engine. 
  TOP 10 MOTOR Vehicle Producing Countries
in World: 2009

 
 
 
 
Top 20 motor vehicle manufacturing companies by Volume 2009:
 AUTOMOBILE INDUSTRY OF INDIA :

• In February 2009, monthly sales of passenger cars

in India exceeded 100,000 units
• 2nd largest two-wheeler market,
• 11th largest Passenger Cars producers.
• 4th largest in Heavy Trucks.
• 2nd largest tractor manufacturer annual
production of over 2.3 million units.
• The monthly sales of passenger cars in India
exceed 100,000 units. 
Different Divisions of Indian Automobile
Industry
 Industry classified in Three phases

• 1) Before Liberalization – I phase till mid80s.

• 2) Liberalization- II phase post 1990.
• 3) Globalization: III phase -early 2000.
 
Players
Gross Turnover of Automobile Sector in India:
 Segment wise Market Share in 2009- 10
 The pie chart below illustrates the market share for 2007-2008 in percentages.
 

Maruti (small car) and M&M in SUV

 Factors affecting Vehicle Demand
• Economic Growth
• Interest Rates and Availability of Finance:
• Cost of Fuel:
• Taxes and Duties:
• Disposable Income of Consumers:
• Regulation of Safety and Emission Standards:
• Share of Road Transport:
• Restriction on Overloading:
• Price Sensitivity:
• Brand Building and New Product Launches:
 SALES TREND
• Sales (domestic as well as exports) of the Indian automotive
industry have grown from 7.3 million units in 2003-04 to 10.9
million units in 2007-08, at a CAGR of 10.5%.
• This impressive growth has been driven by a buoyant economy,
increasing purchasing power of the Indian middle class, new
product launches and attractive finance schemes from
automobile manufacturers and financial institutions and
increased focus on exports.
• Of the total sales, exports contributed 11.4% in 2007-08
compared to 6.6% in 2003-04. Exports have grown at a
phenomenal CAGR of 26.7%, while domestic sales have grown at
a CAGR of 9.1% during the same period.
 Strategy-TATA MOTORS

• Goal is to continue to strengthen position in

the domestic market, maintain operational
excellence and grow international business in
select countries.
• strategy to achieve these goals consists of the
following elements:-
 1. Further strengthening the product
portfolio
• extensive range of products in commercial
vehicles
• EXAMPLE:-strategic partnerships/joint
ventures with renowned companies such as
Cummins Engine Company Inc., Fiat S.p.A,
Marco polo and Thonburi , and our
acquisitions of TDCV, Hispano and Jaguar Land
Rover enable to expand product range and
extend geographical reach.
 2. Mitigating cyclicality
• strengthen our non- vehicle business, such as
spare part sales, annual maintenance
contracts, sales of aggregates for non-vehicle
businesses, reconditioning of aggregates, sale
of castings, production aids and tooling and
fixtures and vehicle financing to reduce the
impact of cyclicality.
3. Reducing costs and breakeven points
• The launch of the Tata Nano, we will be able to benefit from
global economies of scale in the passenger vehicle business as
well.
• Our vendor relationships also contribute to our cost reductions.
For example, we believe that the vendor rationalization
program that we are undertaking will provide economies of
scale to our vendors which would benefit our cost programs.
• We are also undertaking various internal and external
benchmarking exercises that would enable us to improve the
cost effectiveness of our components, systems and sub-
systems.
 4.Expand customer financing in India

• With financing increasingly becoming a critical

factor in vehicle purchases and the rising
aspirations of consumers in India, we intend to
significantly expand our vehicle financing
activities to enhance our vehicle sales
• Tata Capital Limited, a financial services
company formed by Tata Sons, which also
undertakes financing of vehicles.
5. Expanding our international business
• We are expanding our operations into other select geographical
areas with similar characteristics as the Indian market where
our products are suitable. While we continue to export out of
India and South Korea into many of these markets, we are also
establishing a manufacturing footprint where it is beneficial to
do so. We have established a Subsidiary along with Thonburi in
Thailand to manufacture pickup trucks and have also received
approval from the Thailand government for the Eco-car project.
• Our international business strategy has resulted in a growth of
our international operations from 8% of consolidated revenues
in fiscal 2004 to 18.38% during fiscal 2008.
 6. Continuing to invest in technology and
technical skills
• We believe we are one of the most technologically
advanced indigenous vehicle manufacturers in India.
• Our research and development resources, which
include those at our Subsidiaries, like Tata Motors
European Technical Center plc. (“TMETC”), TDCV, TTL
and Hispano, together with the two advanced
engineering and design centers of Jaguar Land Rover
which, we recently acquired, will further increase our
capabilities in product design, manufacturing and
quality control.
7. Continuing focus on high quality standards
and enhancing customer satisfaction

• One of our principal goals is to achieve high

and international quality standards for our
products and services, and we are pursuing
various quality improvement programs, both
internally and at our suppliers’ premises.
 8. Enhancing capabilities through the
adoption of superior processes
• Tata Sons Limited, and the entities promoted by Tata
Sons, including us, aim at improving the quality of life
through leadership in various sectors of national
economic significance. In pursuit of this goal, Tata Sons
and the Tata Sons promoted entities have
institutionalized an approach, called the Tata Business
Excellence Model or TBEM, which has been formulated
on the lines of the Malcolm Baldridge National Quality
Award to enable it to drive performance and attain
higher levels of efficiency both in its businesses and in
discharging its social responsibility.
 9.Maintaining financial strength
• Our cash flow from/(used in) operations in
fiscal 2008, 2007 and 2006 was Rs. 55,955.5
million, Rs. (8,754.8) million and Rs. 1,104.6
million, respectively. The improved position in
our operating cash flows is primarily a result
of volume growth, implementation of cost
reduction programs, securitization of vehicle
financing portfolio and prudent working
capital management.
10. Continuing to leverage the Tata brands

• We believe the Tata brand name is associated

by Indian customers with reliability, trust and
value and is gaining significant international
recognition due to the international growth
strategies of various Tata Companies. The Tata
brand is used and its benefits are leveraged by
Tata companies to their mutual advantage.
 Automotive Operations
• The revenues from our automotive operations
before intersegment eliminations were Rs.
323,456.5 million, Rs. 299,241.4 million and
Rs. 222,120.5 million in fiscal 2008, 2007 and
2006, respectively, before intersegment
elimination. Our main market is the Indian
market, which accounted for 90.7%, 90.8%
and 88.9% of our unit sales in fiscal 2008,
2007 and 2006, respectively.
 Sales and Distribution of Vehicles
• Our sales and distribution network in India as of
June 30, 2008 comprised of over 1,500 sales outlets
for our passenger and commercial vehicles business.
• Most of our sales outlets are exclusive Tata Motor’s
sales outlets. In line with our growth strategy, we
formed a 100% Subsidiary, TML Distribution
Company (“TMLD”), to act as a dedicated logistics
management company to support the sales and
distribution operations of our vehicles.
 CONT….
• TMLD will take over and/or set up stocking points, for both
commercial vehicles and passenger vehicles, in the places
of manufacture and also at different places in the country.
It will help improve planning, inventory management,
transport management and on-time delivery.
• In the South Korean market, TDCV uses Daewoo Motor
Sales Corporation’s distribution network, the largest in
South Korea. After-sales service is made available through
68 service centers and over 110 parts outlets. Exports are
carried out through TDCV’s own international distribution
channel.
 CONT…..
• In the South Korean market, TDCV uses
Daewoo Motor Sales Corporation’s
distribution network, the largest in South
Korea. After-sales service is made available
through 68 service centers and over 110 parts
outlets. Exports are carried out through
TDCV’s own international distribution channel.
 Vehicle Manufacturing Facilities
• MAINLY FOUR
• FIRST WAS JAMSHEDPUR.
Components and Raw Materials
 Suppliers
• We have established a supply chain for procuring various
components. We also outsource many of our manufacturing
processes and activities to various suppliers. In such cases, we
provide training to outside suppliers who design and
manufacture the required tooling and fixtures.
• Tata AutoComp Systems Limited (“TACO”), our associate
company, manufactures auto components and encourages the
entry of internationally acclaimed auto component
manufacturers into India by setting up joint ventures with them.
Some of these joint ventures supply components for our
products such as seats, commercial vehicle air brakes, wiring
harnesses, pressed components and radiator assemblies.
 Employees
• a fair and objective performance management system
linked to the performance of the businesses which
identifies and differentiates high performers while offering
separation avenues for non- performers;
• a common pool of talented managers across the Tata
Group with a view to increasing their mobility through
inter-company job rotation;
• performance-based compensation packages to attract and
retain talent within the Tata Group; and
• comprehensive training programs to impart and
continuously upgrade the industry/function specificskills.
 Training and Development
• We are committed to building the
competencies of our employees and improving
their performance through training and
development.
• Our focus is on identifying gaps in our
employees’ competencies and preparing
employees for changes in competitive
environments, as well as to meet
organizational challenges.
 Intellectual Property
• Tata Motors Limited has 170 trademarks
registered in India and approximately 186
trademark applications which are currently
pending registration. In addition to this, our
significant trademarks are registered, or are in
the process of being registered in other
countries. We currently hold approximately
331 of these registrations worldwide and have
made 67 applications out of India.
 CONT….
• The registrations mainly include trademarks
for each of our vehicle models. Further, we
also use the “Tata” brand, which has been
licensed to us by Tata Sons Limited.
Additionally, Tata Sons has applied for 9
trademarks in the name of the Company. The
Company has applied for 4 trademarks in the
name of Telcon.
 Other Operations
• In addition to our automotive operations, we
are also involved in various other business
activities primarily consisting of information
technology services and construction equipment
manufacturing. Our non- automotive segment
recorded revenues before inter-segment
eliminations of Rs. 37,038.1 million, Rs. 27,078.9
million and Rs. 18,093.9 million for the year
ended March 31, 2008, 2007 and 2006.
BAJAJ
 Highlights for 2009-10 versus 2008-09: Bajaj
Auto standalone
• 2009-10 has been a record year for Bajaj Auto in terms of
highest ever sales, exports, profits and margins.
• lNet sales and other operating income grew by 35% to
Rs.119.21 billion.
• lThe year saw record sales of 2.85 million units – over 2.5
million motorcycles and 340,937 three-wheelers.
• lExports rose by 15% to 891,002 units.lThe Company’s
operating EBITDA stood at Rs.25.93 billion – a growth of 116%
over last year.
• The operating EBITDA margin was 21.7% of net sales and
other operating income for 2009-10.
 CONT..
• Operating profit before tax (PBT) grew by
170% to Rs.22.89 billion.
• lProfit after tax (PAT) grew by 160% to
Rs.17.03 billion.
• lSurplus cash and cash equivalents in the
Company’s balance sheet as on 31 March
2010 stood at Rs.32.6 billion, versus Rs.9.3
billion on 31 March 2009.
Industry’s sale of Two-Wheelers (Domestic +
Exports)
Bajaj Auto’s Sales of Motorcycles (Domestic +
Exports)
Product-wise Exports of Bajaj Auto (in
numbers)
Exports, Geographical Spread
 Operations
• Plants During the first half of 2009-10, a
number of improvement activities were
initiated at the shop floor level across all plants
of the Company. Thanks to these initiatives,
Bajaj Auto could produce 32% higher volume
of output without any significant investments.
• Table gives the plant-wise capacities for the
last two years.
Plant-wise capacities (in numbers)
Activities Across the Various Plants
 Processes
• R&D has been working on improving its operations in
number of areas, such as:
• Manpower: Expanding the team size in areas of
design, analysis and validation to keep up with the
rapidly expanding aspirations of the Company.
• Facilities: Enhancing R&D’s design, computing and test
facilities. A notable addition has been a world class
NVH (Noise, Vibration and Harshness) laboratory,
which has been commissioned. This will give Bajaj
Auto the ability to make even more refined products.
 CONT…
• Technology: R&D has developed the 4V DTS-i
technology for outstanding engine
performance. Design optimisation has enabled
it to be used on the Pulsar 135 LS, which
competes at a lower price point. The DTS-i is
controlled by a new generation CDI (Capacitor
Discharge Ignition), which takes continuous
load and temperature inputs to compute the
optimum timing of each spark plug.
 TPM
• Bajaj Auto started its Total Productive Maintenance
initiative ten years ago with its manufacturing plants.
In March 2007, it achieved a milestone of having all
its manufacturing facilities awarded as ‘TPM
Excellence Category –1’ winners by JIPM (Japan
Institute of Plant Maintenance).
• Last year, TPM and quality initiatives at vendor plants
gathered further momentum. Since inception of Bajaj
Auto’s Vendor Quality and Vendor TPM awards, the
tally of Quality and TPM award winners is as follows:
 CONT…
• 1.Quality award ‘Bronze’: 2009-10: 24 winners
(cumulatively, 108)
• 2.Quality award ‘Silver’: 2009-10: 30 winners
(cumulatively, 89)
• 3.Quality award ‘Gold’: 2009-10: 16 winners
(cumulatively, 44)
• 4.Quality award ‘Platinum’: 2009-10: 3 winners
(cumulatively, 3)
• 5.‘BAL TPM’ award: 2009-10: 11 winners (cumulatively,
29)
• Over 50% of BAL’s vendors have achieved a status of
supplying zero defect components to the Company’s
plants for six straight months at least once during last
four years (‘Bronze’).
• Almost 40% achieved zero defect supplies for 12
straight months (‘Silver’).
• 25% have had zero defect supplies for 24 straight
months (‘Gold’).
• Three vendors have supplied zero defect components
for more than 36 straight months (‘Platinum’).
 Products
• Pulsar 220 F: The Pulsar 220 F was re-defined to be
the best performing sports bike in India. It became
the fastest Indian bike. Work was done to enhance
its power while reducing its fuel consumption. The
bike was also made more affordable.
• Pulsar 180 UG: The bike was loaded with new
features and style along with higher performance.
It has, in effect, expanded the greater than 150 cc
segment.
 CONT….
• Pulsar 150 UG: Pulsar 150 – the backbone of the Pulsar brand
– was upgraded with a more powerful engine and new
features like clip on handle bars and tank flaps. These features
have made the Pulsar 150 the best seller in its category.
• Pulsar 135 LS: The Pulsar 135 LS was built to create a light
sports offering in the Pulsar family. It was designed to be true
to the Pulsar character of aggression, technological
predisposition and outstanding style. This bike is powered by a
4V DTS-i engine which is the first of its kind. The four valves
allow the engine to breathe well, generating superb
performance, while DTS-i gives it excellent fuel economy.
HONDA
 MISSION
• The Mission Statement of Honda is try to maintain
a global point of view, with the dedication to supply
the highest quality products at a reasonable price
for worldwide customer satisfaction. Moreover,
taking new challenges with the pursuit of Initiative,
Technology and Quality, Honda is pursuing their
2010 Vision: Striving to be a company society
wants to exist through creating new value,
globalization, and commitment for the future.
 STRATEGY
• Automobile Industry – Superior Fuel economy –
Optimum safety – Driving Pleasure – Worldwide
• Motorcycle Industry – to customer –28 plant,
21 countries, R&D 6 countries
• Power Business –First business of Honda –
Expanded –11 plant, 9 countries, sold 156
countries, used by 5.5M people – ASIMO –
Honda jet