HYUNDAI MOTOR INDIA LTD

SALES AND
DISTRIBUTION
CHANNEL ANALYSIS
SUBMITED TO
Prof.MONICA GUPTA

SUBMITTED BY: Group No. 06

Group Members (Sec-A) Roll No.

Nagaraja 26
Munazza Nizami 25
Raj Pradeep T.N. 38
Rahul Kumar 37
Siddartha S.Choudhury 49
 CERTIFICATE FROM FACULTY

This is to certify that this project report has been accomplished under the
guidance of sales& distribution faculty Prof. Monica Gupta.

Signature:

Date:

Place:

2
 ACKNOWLEDGEMENT

We would like to thank DR. DN Murthy and Prof Monica Gupta for their guidance
and useful tips that how we should go on proceeding the project. We also would like
to thanks Prof Monica Gupta for the helpful comments and suggestions at various
stages of our project. We would like to thank for giving us the opportunity to be an
integral part of this sales and distribution project through the support of Hyundai
Dealers.

3
 DECLARATION

We hereby declare that this project report titled “sales and distribution channel
analysis- Hyundai motor India Ltd” submitted towards the completion of Sales and
Distribution Project in 3rd trimester of PGDM in Institute of Finance and International
Management, Bangalore is an authentic record of our work carried out under the guidance
of Prof. Monica Gupta, IFIM B-School, Bangalore.

Group Members:

DATE : 23-02-2009
PLACE: Bangalore

4
 CONTENTS

COMPANY PROFILE 6

COMPARATIVE STUDY 9

OBJECTIVE 10

RESEARCH METHODOLOGY 11

DISTTIBUTION CHANNEL ANALYSIS 17

PRIMARY DATA INFERENCE 21

SWOT ANALYSIS 23

CONCLUSION 26

5
COMPANY PROFILE;

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor
Company, South Korea and is the second largest car manufacturer and the largest
passenger car exporter from India. HMIL presently markets 37 variants of passenger cars
across segments. The Santro in the B segment, the Getz Prime, i10 and the Premium
hatchback i20 in the B+ segment, the Accent and the Verna in the C segment, the Sonata
Embera in the E segment and the Tucson in the SUV segment.

Hyundai Motor India Ltd, continuing with its tradition of being the fastest growing
passenger car manufacturer, registered total sales of 489,328 vehicles in the calendar year
(CY) 2008, an increase of 49.6 percent over CY 2007. In the domestic market it clocked a
growth of 22.4 percent as compared to 245,387 units in 2007 while overseas sales grew
by 92.5 percent, with exports accounting for 243,931 units in 2008.

HMIL's fully integrated state-of-the-art manufacturing plant near Chennai boasts of the
most advanced production, quality and testing capabilities in the country. In continuation
of its commitment to provide the Indian customer with global technology, HMIL
commissioned its second plant in February 2008 which produces an additional 300,000
units per annum, raising HMIL's total production capacity to 600,000 units per annum.

HMIL has invested to expand capacity in line with its positioning as HMC's global export
hub for compact cars. Apart from the expansion of production capacity, HMIL currently
has 251 strong dealer networks across India, which will be further bolstered in 2009.

In 2008, HMIL also successfully completed 10 glorious years of operations in India and
to commemorate its achievements, initiated a unique trans-continental drive from Delhi to
Paris in two of its hugely popular i10 Kappa cars. The drive created automobile history by
completing a distance of 10,000km in just 17 days after which the i10s were showcased at
the Paris Motor Show in October. In fact it was at the Paris Motor Show that HMIL first
unveiled the Hyundai i20 and the car received a phenomenal response from the auto
enthusiasts across the world. Hyundai Motor India also accomplished the landmark of
producing the fastest 20th lakh cars in India in 2008.

Like 2008, the year 2007 had also been a significant year for Hyundai Motor India. It
achieved a significant milestone by rolling out the fastest 400,000th export car. Hyundai
exported to over 95 countries globally; even as it plans to continue its thrust in existing
export markets, it is gearing up to step up its foray into new markets. 2007 also saw the
launch of the i10 and yet another path-breaking record in its young journey by rolling out
the fastest 1,500,000th car.

Hyundai's new model i10 made a clean sweep of all the 'Car of the Year 2008' awards
from the leading automotive magazines and TV channels like BS Motoring, CNBC-TV18
AutoCar, NDTV Profit Car & Bike India and Overdrive magazine. The i10 was also the

6
choice of the discerning automotive media of the country as they conferred the prestigious
'Indian Car of the Year' (ICOTY) award to the i10 as well.

The Santro and the Accent also received the 'TNS Voice of the Customer - 2008' award
for the Premium Compact Car (Santro) and the Entry Mid size Car (Accent). In March
2008 it achieved yet another milestone by rolling out the fastest 500,000th export car.

In 2007, the Hyundai Verna had also bagged some of the most prestigious awards starting
with the Overdrive magazine’s ‘Car of the Year 2007’, the ‘Best Mid-size Car of the
Year’ award from NDTV Profit Car & Bike India, the ‘Best Value for Money Car’ from
CNBC Autocar and 'Performance Car of the Year' from Business Standard Motoring.

Hyundai cars have been a favorite at all awards ceremonies and has won many awards.
The Sonata Embera won the 'Executive Car of The Year 2006' award from Business
Standard Motoring magazine and NDTV Profit Car & Bike India had declared the Tucson
as the 'SUV of The Year 2006'.

Not only this, HMIL has also been awarded the benchmark ISO 14001 certification for its
sustainable environment management practices.

Hyundai motor India achieved yet another milestone by sales landmark but also being the
fastest car manufacturer to achieve that figure since it rolled out the fist Santro in
September,1998.

Hyundai Motor India has always been the trend setter right from the day It started its
operations in India. From the record of setting up the plant in just 17 months to becoming
the 2nd largest car manufacturer in just 6 months to rolling out 150000 cars in about 25
months.

On this significant achievement,HS Leem, managing Director-HML said that Hyundai

Motor India has always been committed to the Indian customers needs since its inception
and has always brought out the best and latest in auto motive technology backed by
warranty and the much needed after-sales support .

He further added that this new milestone of producing the fastest 20 lakh cars will further
inspire HMIL to play a vital role in the growth of the Indian automotive industry and
thanked the customers in India and in over 95 countries across the world for choosing to
drive a Hyundai.

As a goodwill gesture, Hyundai Motor India donated the 20th lakh car to CRY (child right
and You), India’s leading advocate for child rights. Shah Rukh Khan, the brand
ambassador for Hyundai Motor India handed over the keys to Irwin Fernandes, Director
West and Volunteer A hyundai Motor India Limited country,s largest passenger car
exporter and second largest car manufacturer, achieved yet another milestone in its
remarkable decade old journey in India by exporting its first batch of shipment of i20, a 5-
door hatchback car to Europe.

7
I20, which was unveiled at the 2008 Paris Motor Show amid much fanfare, is built on all-
new platform and is tailored to European tastes both in terms of looks , ride and handling

The first consignment t of 2820 units of the Hyundai i20 headed for the
UK,Germany,Greece , Austria, Croatia, Spain, Belgium, Holland, and Hungry.

Designed at Hyundai’s European Design Centre in Russelesheim , Germany, i20 has a

longer wheelbase than the existing Getz, is roomier inside and has a more dynamic
appearance.

While ‘Made in India’ Hyundai cars ply in all five continents Europe has been a popular
destination accounting for almost 50 percent of the company’s total exports. HMIL
reached the first milestone of exporting 100000 cars in four years and ten months in
October 2004. In October 2005 it exported its 200000th car followed by its 300000th car
and 4000000th car in October 2006 and August 2007 respectively. In March’08 Hyundai
achieved another significant milestone with its cumulative exports crossing the half a
million mark and attained the 700000th mark in December 2008.

The new markets that Hyundai is aiming to tap are Asia Pacific( Australia , Singapore,
New Zealand ), Latin America (Martinique) , Africa , Middle East (Saudi Arabia , Israel,
Palestine) and Europe (Armenia , Georgia, Kazakhstan) while consolidating its foothold
in the currents markets.

The i20 is built at Hyundai’s modern facility at Sriperumbudur in Chennai, both for
export and domestic sale. It is available in 1.2 litre , 1.4 litre and 1.6 litre variants in both
petrol and diesel variants for exports market; while for domestic market i20 is available in
1.2 litre Kappa engine only.

ABOUT HMC:

Established in 1967, Hyundai Motor Co. has grown into the Hyundai-Kia Automotive
Group which was ranked as the world’s fifth-largest automaker in 2007 and includes over
two dozen auto-related subsidiaries and affiliates. Employing over 75,000 people
worldwide, Hyundai Motor posted sales of US$74.9 billion in 2007 on a consolidated-
basis and US$32.8 billion on a non-consolidated basis (using the average currency
exchange of 929 won per US dollar). Hyundai vehicles are sold in 193 countries through
some 6,000 dealerships and showrooms.

COMPARITIVE STUDY:

LEVEL OF IMPACT OF RECESSION ON HYUNDAI AS COMPARED TO TATA

MOTORS IN INDIA

8
Tata Motors overtook Hyundai to become the second largest automaker in India in March
2007

Maruti Udyog continues to head the charts in terms of number of cars sold per month.
Though, the Indian market now has a new player at the second spot. Indian automaker
Tata Motors has managed to overtake Hyundai to become the second largest automaker in
the Indian market.

They sold more cars compared to Hyundai India for three months in a row. The company
gained from the sales of their recently launched Tata Indica Xeta. This is the cheaper
version of the popular Indica car and sells for around Rs 2.29 lakh after discounts.

However, both the companies are struggling to sell sedans in the Indian market. Tata is
hoping to gain advantage in this segment after launching their Indigo XL, a long-
wheelbase version of the Indigo. Hyundai on the other hand is struggling due to slow
sales of their recently launched Verna.

Hyundai is expected to gain numbers after launching the diesel version of their Santro car
in the Indian market. Tata however would have their Rs. 1 lakh car ready for launch next
year which is likely to bring in huge sales for the company.

IMPACT OF RECESSION ON BOTH COMPANIES:

Tata Motors registered one of the biggest drops in domestic sales for the month of
December at 23,894 units. This is a decline of 44% compared to 42,977 units in
December last year. The company's total sales (including exports) for the month of
December 2008 were 25,219 vehicles, a decline of 47% compared to 47,678 units last
December.

The commercial vehicle segment of the company was severely hit as sales of commercial
vehicles in December 2008 in the domestic market were down 51%. The medium and
heavy commercial vehicle segment was most severely hit. Sales of the segment declined
69% as compared to December 2007. Tata Motors' exports also showed a huge decline of
72% at 1,325 vehicles in December 2008 compared to 4,701 vehicles in December 2007.
Domestic sales of Mahindra and Mahindra too dropped to 10,252 units in December 2008
from 14,267 in December 2007.

9
Overall, passenger car sales have been showing a decline for three consecutive months,
with November registering the biggest dip of 19.4%.

Hyundai Motor India (HMIL), the country's second largest car manufacturer, has
registered a 19.3% increase in domestic sales, bucking the downward trend in auto sales
in the country.

The company's exports grew 96.8% during the month of December compared to the same
period of the previous year. HMIL's total sales for December 2008 stood at 38,402 units.
The domestic market accounted for 15,602 units, 22,800 units were exported in the last
month of the year.

OBJECTIVE:

To make a detailed study on the sales and distribution strategies of Hyundai, and the
distribution channel of Hyundai and do swat analysis about the company.

SCOPE OF STUDY

• Our research is aimed at finding out the effective distribution channel and sales of
Hyundai motor India Ltd.

• It is limited to Chennai, Electronics City, Bangalore comprising of valuable data

from dealers.
• We have relied upon the sources collected from internet and from the local
dealers, and some higher officials in Hyundai India Ltd.

RESEARCH METHODOLOGY:

• Primary data is collected using questionnaire method.

• Analysis was done based on the responses given in questionnaire
• Through interaction with dealers and retailers.

10
 • Secondary data was collected through internet

DISTRIBUTION CHANNEL:

Distribution channels are all the sub-marketers or intermediate marketers of the company.
For example: selling agents, wholesalers, retailers, authorized representatives; showrooms
etc. are basically distribution channels.

The distribution channel for a particular product may be:

Manufacturer - Wholesaler - Retailer - User

Manufacturer - Distributor - Wholesaler - Retailer -User

All of these members of the distribution channels also want to sell the products that they
hold so they too try to market the products in their own small way.

For example: the showrooms might try to promote their showroom in the local papers and
sell more of the products they hold etc.

OR

An insurance selling agent may try to use word of mouth marketing to sell more insurance
policies.

OR

The local "banya shop" will keep his shop stocked with the Amul butter packets so that he
does not loose business from customer who asks for Amul butter.

Using these distribution channels the company can sub-market it's product at various
localized levels. Using these distribution channels, the company can market it's self in all
the local neighborhoods and streets of the country.

The company has to give some commission to the people along the distribution channel. It
also gives incentives to them if they sell more products. This way, the distribution and
marketing of the product takes care of itself to some extent.

In some cases having distribution channels may prove to be costly as the price of the
product rises at every level. So, a company may choose to by-pass all distribution
channels and directly market the product and deliver it to the consumer itself.

The two most important factors when considering physical distribution are:

11
1. The time taken for the product to reach the consumer.

2. The cost of delivering the product to the consumer.

Firstly, we do not want the consumer to wait for too much time when he is waiting for the
products to reach him. So we want to use the fastest product delivery system we can. But,
the problem with doing this is that the faster we try to make the product delivery, the
more the cost of product delivery will increase.

So, what needs to be done is to choose the "minimum service level"

MIMIMUM SERVICE LEVEL:

As we saw above, we cannot just reduce the time taken to delver the product and make the
delivery as fast as possible. This would mean a very fast but also very costly distribution
system. So, what need to be done is to decide what minimum level of service the
customers will be satisfied by.

In case of a car, for example, we may say that the minimum level of service is set to one
day. This means that, the car has to be delivered within one day to the consumer. So, the
distribution system/distribution channels of the company should be designed in such a
way that the car can reach the consumer within one day flat. One day is the minimum
level of service desired.

If a company keeps the minimum level of service too high, it risks loosing customers. In
today’s competitive environment, if a car manufacturer delivers a car in one week and it's
competitors deliver the car in one day; the care manufacturer will loose business to the
competitors. Today people will not wait a week if they can get something in a day.

The minimum level of service should be at least at par with your competitors. If it is not,
you better be selling some spectacular product or you are soon going to be out of
business.

On reading the above paragraphs, one may tend to think that the physical distribution
system is only related to transportation of goods from the company to the consumer.
However, physical distribution is a whole lot more.

Some of the major aspects of physical distribution are:

• Transportation

12
 • Warehousing
• Inventory Management
• The problem with Inventory and Warehousing

Transporting a car from the car manufacturer to the customer every time an individual
order is placed would be very costly. Not only would this be costly, but also it would take
too much time and the time of delivery would exceed the desired minimum level of
service.

For example: if a car manufacturer is situated in Pune and an order for the car is placed in
Delhi, it would take 3 days for the car to be delivered to Delhi. Also since only one car is
being delivered at a time, the cost of delivery would be very high.

Because of this the concept of warehouses and inventory is introduced. The car
manufacturer has a warehouse in Delhi or around Delhi. The warehouse is stocked with
cars. Whenever an order is placed in the Delhi showroom for the car, the car comes from
the warehouse instead of the company. This is obviously much faster.

However, there are some problems with this system. If the warehouses and the number of
cars in the warehouses (inventory) is not managed by the company properly, it could
prove to be very costly for the company.

For example: If the warehouse is not stocked properly, then a situation may arise where a
customer is waiting for the delivery of a car but there is no car available for delivery. He
may have to wait for the car to come in from the company. This will take a lot of time.
The customer will cancel his order and book a car somewhere else.

In the case of buying cars this is less likely to happen. However, in the case of a small
product, if the distribution system is not good, the products will not be available in the
local stores and if this happens the consumer will buy something else and that will be the
end of that consumer’s loyalty.

So, in conclusion, the warehouse/stores/retail outlets must never be under stocked.

However, even if they are over stocked there will be a problem. If a car manufacturer
keeps his warehouse overstocked and full of inventory, he has lot of money tied up in the
cars that are waiting to be sold in the warehouse. Because of this he has less money to run
his business and make the next batch of cars.

Also, since he has so many cars in the warehouse there are threats like, the warehouse
catching fire and these cars are being destroyed etc. For this he may choose to insure all
the cars in his warehouse but that too will add to the costs of overstocking the inventory
or overstocking the warehouse.

13
So warehouses cannot be overstocked either. In conclusion, warehousing and the amount
of inventory in the warehouses is a tricky subject. It must be managed effectively or it will
prove to be costly for the marketer.

HYUNDAI DEALERSHIP NETWORK:

With its second plant expected to be operational soon, Hyundai Motor India Ltd on
would ramp up its dealer network in the country to push sales for the increased
production. HMIL that had 167 dealers in January would be expanding it to 250 by
December from 190.

The company said that the new dealerships would be in the same formats with sales,
services and spares facility.

Hyundai that has models like Getz, Santro, Verna, had been witnessing almost flat or
declining sales in the last few months.

The company attributes it to the constraint in its production capacity as a result of which
sales in the domestic market suffered while there had also been export order backlogs.

The company has worked on not only doubling our production but also reaching out to the
customers through dealership network which will facilitate sales and service as well.

New plant

End of the year will also see the commissioning of Hyundai’s new plant in Sriperumbudur
adjacent to existing facilities which will double the production capacity to 600,000 units
from the current 300,000 units. This new plant will help Hyundai meet its customer
demands adequately.

The company plans to export 40 per cent of its total production to Latin America, Europe
and West Asia.

Hyundai Motor India Limited was chosen for the prestigious ‘Niryat Shree’ award for
2005-2006 for its export performance. The award function was organized by the
Federation of Indian Export Organizations. Hyundai Motor India which is the largest
exporter of passenger cars form India accounts for around 78% of the total exports of
passenger cars from India and exports to as many as 95 countries spread across the globe.

Hyundai started its exports in 1999 with a batch of around 25 cars to neighboring Nepal
but within the next five years it saw its exports grow to over 100000 cars (2004) which
increased to 200000 by October, 2005. the export numbers increased every year and by
2006 it was 300000 units and 400000 units by 2007. Hyundai crossed the export target of
half million in 2008 which has left a significant mark on the Indian export market.

14
HYUNDAI FINANCIAL SERVICES:

HYUNDAI Motor India Ltd has launched Hyundai Finance, a branded finance product
that seeks to do away with intermediaries and thus bring down the rate of interest for
those purchasing its cars.

The scheme will be operated directly through its dealers, for which Hyundai Motor has
tied up with leading financial institutions and banks such as ICICI, Kotak Mahindra,
Standard Chartered Bank and Sundaram Finance, according to company officials.

As an introductory offer, valid till February 26, loans will be available at a rate of 8.26 per
cent per annum for a loan amount of Rs 1.5 lakh for a two year period. The same loan will
attract an interest of around 12 per cent with lending agencies, according to one of
Hyundai Motor's dealers in Chennai.

According to company officials, Hyundai Motor felt the need for launching a branded
finance product so that customers benefited from lower borrowing rates. Hyundai Finance
does not constitute a lending or deposit taking operation.

Of the whole interest rate component, the intermediaries accounted for nearly 2-3 per
cent. By doing away with these intermediaries, the customers will get funds that much
cheaper, according to the officials.

The officials said that Hyundai Motor had obtained feedback from its customers who felt
that there was a lack of clarity and some sudden surprises in the financing schemes
available in the market. Following this, the company held discussions with financial
institutions and banks to introduce the scheme.

Through this scheme, the company will have knocked off the role of intermediaries. What
the customers will get is the actual bare bone interest rate.

They said that some car manufacturers resorted to giving incentives to the intermediaries,
because of which the intermediaries pushed that particular car model and did not inform
the customers of the options available to them.

The company is trying to bring in some semblance of transparency in the market.

Customers are also loyal to a brand and not to an intermediary.

IMPORT FLOW:

Vehicles are either (1) directly imported from the overseas manufacturers (official import)
or (2) imported through overseas dealers (parallel import).
The official import is only for new cars, but parallel import is for both new and used cars.

15
PARALLEL IMPORT:

A parallel import is a non-counterfeit product imported from another country without the
permission of the intellectual property owner. Parallel imports are often referred to as
grey product, and are implicated in issues of international trade, and intellectual property.

The practice of parallel importing mainly occurs for two reasons:

1) Different versions of a product are produced for sale in different markets, eg Top Gear
Magazine (UK Edition) is officially sold in UK and Top Gear Magazine (Australia
Edition) is officially sold in Australia. But some unofficial distributors in Australia also
sell Top Gear Magazine (UK Edition).

2) Companies, either the manufacturer or the distributor, set different price points for their
products in different markets. Parallel importers ordinarily purchase products in one
country at a price (P1) which is cheaper than the price at which they are sold in a second
country (P2), import the products into the second country, and sell the products in that
country at a price which is usually between P1 and P2.

DISTRIBUTION CHANNEL:

Imported cars are distributed either (A) through importers’ own sales channels or (B)
through distributors or dealers with sales networks.

Flow of Passenger Car Import and Distribution Channel

16
　
　

Procedures from Import to Registration

Finished vehicles are transported to a port for shipping with special coating to protect the
body from dust and salty breeze during transportation. These vehicles are transported to a
maintenance workshop after the customs clearance procedures are completed in about a
day. (In some cases, after the customs clearance, vehicles are left in a port for an
arrangement of transportation or due to a change in the schedule.)
After the vehicles are brought in at the maintenance workshops of importers, they check
and repair scratches made in transit, make minor adjustments, exchange parts and control
the quality of the product. First, they remove waxed coating (protection for sea breeze and
dust while shipping) from the vehicles with a steam-washer and then, according to the
respective country’s quality standards chart, check out scratches, finish their interior and
exterior, fit doors and trunks and adjust the protuberant difference between a bonnet and
fender, and between a fender and door.

Such adjusting, repairing and polishing are made in accordance with the check-up results.
After a user buys a vehicle, which is merchandised through the above process (certified in
accordance with the Vehicle Certification System), the vehicle is inspected at the
Transport Branch office according to the Vehicle Inspection System and registered on the
license registration file after paying taxes. Then a number plate is issued and sealed. The

17
vehicle is allowed to run on public roads after all those procedures are completed.
　

HYUNDAI SELLING STRATERGY:

Hyundai still has aggressive growth plans despite the global economic crisis. Many
automakers are reducing their forecasts in response to the crisis, which has hit consumer
confidence and reduced car sales. But Hyundai is targeting global sales of 6 million units
by 2010, up from 4.2 million in 2008.

The Korean carmaker will focus its medium-term efforts on high growth markets such as
Brazil, Russia, India and China. Oles Gadacz, Hyundai's global spokesman, told
Automotive News Europe that these countries have the strongest growth potential in the
world and would still increase in size, although maybe at a slower rate. "We are well
positioned to weather the storm with that strategy," Gadacz said during an event here.

In Europe, Hyundai is targeting sales of 350,000 units during 2009, not including Turkey
and Russia, or about 10 percent above the 320,000 units sold in 2008. "We are still aiming
to increase our sales volumes next year, we have no plans to reduce production, or reduce

18
the sales target," said Rae-Su Cho, marketing director of Hyundai Motor Europe. "We
will be very aggressive with our sales volumes next year," Cho told ANE. Cho said the
crisis is pushing customers toward more economical cars, such as the i20 small car and
i10 mini car. "When the economic situation becomes difficult, it means the smaller car is
more attractive," Cho said.

Gadacz said 60 percent of Hyundai’s installed production capacity is devoted to cars in

the mini, small and lower-medium segments. "That is the ideal product mix for an
economic downturn where consumers trade down to smaller cars," Gadacz said.

Hyundai will maintain output at its new factory in Nošovice, Czech Republic, which has
capacity of 200,000 units, and will rise to 300,000 units by 2010. The Nošovice plant
produces the i30 lower-medium car and could also produce a minivan version of the car.
"We are keeping with our original plan. Most manufacturers are changing their production
and reducing their sales targets compared to
the original plan, but we don't," Cho said. "We still plan to use our full capacity in the
next two years."

Hyundai said the additional volume will serve markets in Europe, Eastern Europe and
Russia.

INCREASING PENETRATION INTO RURAL AREAS:

IN a major thrust to increase penetration into rural areas and expand its customer care
services, Hyundai Motor India Ltd plans to deploy 1,000 technicians across the country
for carrying out car maintenance apart from setting up around 300 service points during
the year.

The company had tied up with Indian Oil Corporation (IOC) for deploying Hyundai
certified technicians at their petrol stations across the country.

This would help car owners to get certain repair jobs done even at remote places.

The company planned to set up 50 more workshops in the country. Currently there are
around 320 workshops in the country.

Hyundai's initiative to sell cars in the rural areas had started yielding results. Hyundai
expect lot more people in rural areas to start buying because of our initiative.

The company expects its B segment Santro and its diesel Accent CRDi to sell in large
numbers in rural areas. It has already started road shows comprising a convoy of six to

19
seven cars in major cities of Punjab, Haryana, Uttar Pradesh, Maharashtra, Kerala and
Andhra Pradesh, where there is a sizeable affluent rural population.

The company also offers test drives and options for upgrading cars.

Hyundai has also tied up with financial institutions to give on the spot finances for buyers
in rural areas. "This allows them to have easier access to funds without taking the trouble
of going to cities".

According to a study conducted by the National Council for Applied Economic Research
(NCAER) in 2001, the number of middle and high-income group households is expected
to grow to 111 million by 2009 from 80 million in 2001.

The study said that there were an equal number of `middle-income and above' households
in the rural areas as there were in the urban areas and about twice as many `lower middle-
income' households.

At the highest level, there are 2.3 million urban households compared with 1.6 million
urban households in rural areas.

SERVICES OFFERED:

Hyundai motors ensure that even when a customer has left the showroom they are taken
well care off. With this in mind MHI has decided to continue with its Free Car Care clinic
for the fourth year in a row. The free Car Care clinic offered a comprehensive 80 point
check up and through examination of the engine, electrical, under body, AC etc.
Customers also availed of a free car wash and attractive discounts on all spare parts.
The campaign also offered customers a chance to win attractive prizes.

HMIL recently organized a rally but it was a rally with a difference. Not only did it
incorporate the element of speed so essential for motoring event but also it did not require
a special track or a scheduled road. HMIL felt that it must play an active role in
promoting the cause of fuel efficiency and with this in mind it is regularly organizing the
Miles & Smiles rally for its customers.

Recently HMIL came up with another idea which might make a big difference. To protect
its customers from the electro magnetic waves that are emitted by many instruments
ranging from cell phones to computers which we use, HMIL decided to gift its customers
with an anti magnetic sticker which will absorb 95% of the harmful waves. This is in the
form of a 99.9% Gold plated sticker which can be attached to almost any device which is
perceived to emit these waves thus rendering the instrument safe.

20
 PRIMARY DATA

Intermediaries:

There are no intermediaries between HYUNDAI Manufacturing plant and HYUNDAI

dealer. The Cars will be sent by HYUNDAI Manufacturing Plant to Dealers directly by a
Truck. Normally one truck carries six cars.

Targets to Dealers:

In case of Hyundai, Dealers have to pay Full amount for the cars along with the orders. Once the
cars have reached the Dealers’ showroom, suppose the dealers could not sell the cars within 60
days; they have to forego some interest on the amount paid by the dealers for the cars. Suppose
dealers sell the cars after 60 days, they will get the commission on the amount paid by them for the
cars less interest forgone.

Determining the Distribution:

The distribution of cars mainly depends upon the Demand in the market, Geographical location
(Distance between manufacturing plant and Dealers’ showroom), and performance of Dealers.

Generally it takes 2-3 days for the car to reach from the manufacturing unit to the Dealer after the
order has been placed. Again it depends upon the availability of cars in the manufacturing plant and
number of orders placed.

Delivery to customers:

Once the customers place orders to the Dealer, it takes 2-4 days to reach the customers. Again it
depends upon the availability of cars for which the orders have been received. After checking or
test drive and registration process, the cars will be reached to the customers.

Dealer’s performance where we have contacted:

TRIDENT HYUNDAI & ADVAITH HYUNDAI: On an average TRIDENT HYUNDAI sells 180-
200 cars per month & ADVAITH HYUNDAI sells 280-300 cars per month.

21
Mediums used by Hyundai Dealers to advertise HYUNDAI are:

• News papers & Magazines

• Televisions
• Events
• Internet

USP OF HYUNDAI:

• Better quality
• Low maintenance cost
• More choices

Dealers’ commission:

Dealers’ commission depends on the sales target fixed by the HYUNDAI and it varies from
segment to segment.

Hyundai’s Exports:

HYUNDAI is also exporting the cars to other countries. Recently HYUNDAI exported 97000
HYUNDAI i10 cars to 98 countries.

Normally it takes 5 to 15 days for the cars to reach importers depends on the distance or
Geographical location.

Dealers in Bangalore:

There are two main Hyundai dealers in Bangalore. Each dealer has 3 branches. In other words,
there are two main Hyundai dealers and six branches in Bangalore.

SWOT ANALYSIS

22
Strengths

The Quality Advantage

Hyundai owners experience fewer problems with their vehicles than any other car
manufacturer in India (J.D. Power IQS Study). The Santro was chosen the best in the
premium compact car segment and the Getz in the entry level mid - size car segment
across several parameters. This study measures owner in terms of design, content, layout
and performance of vehicles across several parameters.

A Buying Experience like No Other

Hyundai has a sales network of 250 state-of-the-art showrooms across 189 cities,
with a workforce of over 6000 trained sales personnel to guide our customers in finding
the right car. Our high sales and customer care standards led us to achieve higher
nameplate in the J.D. Power SSI Study.

Quality Service across 1036 Cities

In the J.D. Power CSI Study Hyundai scored the highest across all 7 parameters:
least problems experienced with vehicle serviced, highest service quality, best in-service
experience, best service delivery, best service advisor experience, most user-friendly
service and best service initiation experience.

The 92% of Hyundai owners feel that work gets done right the first time during
service. The J.D. Power CSI study also reveals that 97% of Hyundai owners would
probably recommend the same make of vehicle, while 90% owners would probably
repurchase the same make of vehicle.

Weaknesses

Commodity Price Risks

Hyundai commodity price risks to higher costs due to changes in prices of inputs
such as steel, aluminum, plastics and rubber, which go into the production of
automobiles.

In order to mitigate these risks, the company continues to attempts to enter into
long term contracts based on its projections of prices. In a volatile commodity market,
where your company gives top priority to ensuring smooth availability of inputs, long

23
term contracts are helpful. They also help minimize the impact of growing input prices.
Conversely, long term contracts dilute the benefits, if any of a decline in input prices.

Exchange Rate Risk

The company is exposed to the risks associated with fluctuations in foreign

exchange rates mainly of import of components & raw materials and export of vehicles.
The company has a well structured exchange risk management policy. The company
manages the exchange risk by using appropriate hedge instruments depending on the
prevailing market conditions and the view on the currency.

Opportunities

Leading Growth

As the market leader, company led the growth in the passenger car sector last
year. Hyundai sales went up 30% to 4,72,000 units. This, as I said earlier, is the highest
annual sale since company began operations 20 years ago. Hyundai also gained market
share, mainly on account of its performance in the competitive A2 segment where it
increased its share from 40.3% in 2005-06 to 47.7% in 2006-07. The record sales
performance was reflected in the financials. Net Sales (excluding excise) grew by 31% to
Rs 93,456 million. Operating Profit Margin increased from 0.8 % in 2005-06 to 4.7 % in
2006-07. Profit after Tax jumped 270% to Rs 5421 million.

Threats

Risk Factors

In the course of its business, Hyundai is exposed to a variety of market and other
risks including the effects of demand dynamics, commodity prices, currency exchange
rates, interest rates, as well as risk associated with financial issues, hazard events and
specific assets risk. Whenever possible, we use the instrument of insurance to mitigate the
risk.

Business Risks

The automotive industry is very capital intensive. Such investments require a

certain scale of operation to generate viable returns. These scales depend on demand.
Although 2005-06 was year of continued growth for the Indian economy, whether this
growth momentum will continue has to be seen.

24
Threats from competitors:

Maruti Udyog Limited

For the fiscal year ended December 2006, Maruti generated revenues of $193,517
million, an increase of 4.3% from the previous year. The company reported a net income
of $2,805 million for fiscal 2005, down 26.6% from the previous year.

Tata Motors Limited

In the 2006 fiscal year, Tata Motors generated revenues of $3,542.2 million
(INR154, 935.2 million). The company made a net profit of $185 million (INR8, 103.4
million) in the 2006 fiscal year.

CONCLUSION:

We found out that Hyundai is a car company which focuses on the varied segment
keeping in mind its different customers needs as it is the second biggest
manufacturer in India. Quality and low maintenance cost being its uniqueness it is
growing day by day. It caters to all the three segments of consumers mainly its car
SANTRO which is mostly talked about in the minds of middle class customers.

The newly launched i20 named UBERCOOL focuses mainly on the youth. Recently
it also going to launch i30. Hyundai is also the largest exporter of pass angers cars of
from India. Recently Hyundai has exported 97000 i10 cars to 98 countries.

25
 WEBLIOGRAPHY:

www.hyundai.co.in

www.santroxing.com

www.advaithhyundai.com

www.pacificohyundai.com

www.tridenthyundai.com

26
ANNEXURE:

QUESTIONNAIRE
RESEARCH ON MARKETING STRATEGIES OF HYUNDAI

1. Name of the HYUNDAI Dealer: ………………………..

2. Address of the showroom:

3. How many intermediaries are there between HYUNDAI Manufacturing plant &
the HYUNDAI Dealer?

4. On what factors the Distribution depends upon?

o Demand by Dealer
o Geographical location
o Capacity of showroom
o Equal Distribution

27
5. How many Days it takes for the car to reach from the manufacturing unit to the
Dealer after the order has been placed?
o 0-2
o 2-4
o 4-6
o 6-10
o Others Specify………

6. How many Days it takes for the car to be delivered to Customers?

o 0-2
o 2-4
o 4-6
o 6-10
o Others…….

7. What are the mediums used for the Advertising of HYUNDAI?

o Newspaper
o Television
o Internet
o Brochures
o Hoardings

8. How unique are the Selling strategies of Hyundai?

9. How much Commission would you get from selling a car? Depends on what?
(Number of cars sold or Profit?)

10. What is the Distribution channels used for the export of HYUNDAI Cars?

11. How many Days it takes to reach Importer?

a. 0-5
b. 5-10
c. 10-15
d. 15-20
e. If others please specify………..

12. Are you sure you are getting the share from all the profitable distribution channel
available?

o YES

28
 o NO

. 13. How unique are the Distribution Strategies of HYUNDAI?

29