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UNIVERSITY OF PETROLEUM & ENERGY STUDIES College of Management and Economic Studies Dehradun

OPERATIONS AND MATERIAL MANAGEMENT PROJECT REPORT ON

Business & Operation Strategy of Hyundai Motor India Limited


SUBMITTED TO:
Mr. I K Murthy, Faculty Operation And Material Management

SUBMITTED BY:
Mithilesh Singh Rautela (R020211032) MBA (O&G) 2011-2013, RollNo.32 500017725 Semester :II

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INTRODUCTION

The given report is based upon the business strategies of Korea based Hyundai Motor Company (HMC) in India.

It describes in detail the product, entry, pricing, distribution and promotional business strategies of HMIL.

The report tells us the different challenges faced by the company and its operations and business strategy in future. It includes a comparative note on the Indian passenger car industry and marketing strategy.

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Acknowledgement

I feel great pleasure while working on this project work. There are some people who helped me a lot by providing valuable suggestions and time during this project work. First and foremost, I would like to express my sincere gratitude to my project guide Mr. I K Murthy who encouraged me boldly step into what was dark and unexplored before me. I thank the entire students of oil and gas, my friends and others who gave their precious time to provide data without whom it would have not been possible. Last but not least, I would like to thank the UPES staff members in general, for extending a helping hand at every juncture of need.

Mithilesh Singh Rautela MBA Oil and Gas Roll No. 32, 500017725

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Index

Sr. No

Title

Page No.

1 2 3

Abstract Issues Background

5 6 7

4 5 6

Entry Into Indian Market Factors Responsible for Success Comparative Chart Between Different Car Companies

8-9 10-13 17

7 8 9 10

Marketing Concept Business Strategy Latest Scenario Bibliography

19 22-25 26-27 28

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Abstract

Topic: In the following the brief information about entry of Hyundai Motor India Limited intoIndian Market and the marketing strategy it followed to obtain a strong ground for itself has been discussed.

Abstract: The Hyundai Motor Company (HMC) is a division of Hyundai Kia Automotive Group. It is South Korea's largest car maker. It is headquartered in Yangjae-Dong Seocho-Gu Seoul. It is world's sixth largest car maker and operates the world's largest integrated automobile manufacturing facility in Ulsan,South Korea.

In India the company is known by Hyundai Motor India Limited (HMIL). It is a wholly owned subsidiary of Hyundai Motor Company and is the second largest and the fastest growing car manufacturer in India. Currently the company markets 32 variants of passenger cars in six segments. Santro in the B segment, Getz in the B+, the Accent in the C segment, Elantra in the D segment, Sonata Embera in the E segment and the Tucson in the SUV segment.

HMIL recorded combined sales of 252,851 during calendar year 2005 with a growth of 17.26% over previous year. It is the country's fastest growing car company having rolled-out 10,00,000 cars in just 90 months since its inception and is the largest exporter of passenger cars with exports of over Rs. 1,800 crores. The company has recorded a growth of 27.2% in exports over the year 2004.

The company has been awarded the benchmark ISO 14001 certification for its sustainable environment management practices.

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Issues discussed in report:

To Understand the competitive scenario in the Indian passenger car industry and to study the marketing strategies of HMIL in comparison to other players.

To analyse the entry strategies of global car manufacturer HMIL in India.

To study the marketing mix of Hyundai Motors India Limited in the Indian passenger car industry.

To Compare and contrast the marketing strategy of Hyundai with other leading players in the Indian passenger car industry on a comparative chart.

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BCGON AK R UD

The Indian passenger car market just had two players till 1980: Ambassador Fiat Padmini The GOI gave the instructions as to what type of vehicle the 2 companies should manufacture.

Reason GOI s decision was to keep the car industry tightly protected.without any interference from the other domestic or foreign co. No one was allowed to enter the industry.

Disadvantages of Restriction: Technologically backward Indian cars. Car prices remained high as compared to the quality. This affected the growth of industry. CAGR over 2 decades(1960-80) was just 3.5%.

In thr year 1980 GOI allowed a joint venture b/w Suzuki & Maruti. In 1983, Maruti launched a small and affordable car called Maruti 800 at price of Rs 40000. This led to the growth of Industry. CAGR over 1 decade(1981-1990) was 18.6%..

Finally In 1993, the GOI de-licensed the automobile industry and entry of domestic and foreign car manufacturers. Was allowed.

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Entry of Hyundai In the Indian Market Scenario

Hyundai Entered the Indian market in 1996 through HMIL

It studied the market scene for one year before venturing into the market. Talked to vendors, dealers and customers to get a thorough knowledge of the industry. They did a survey, where customers were asked to rank their preference for cars by the country of origin.

Iinitially Accent was to be its first car in India. However they ended up launching Santro as the first car.

May26, 1996 HMC established its plant in Tamil Nadu , near Chennai @ 614Mn. Plant had a capacity of producing 1.2 lakh cars and 1.3 lakh engine trans. units PA.

HMC s foray into Indian car market was unique in 2 ways: HMC set up its whollyowned subsidiary, HMIL. It first foreign car manufacturer to establish a manufacturing unit .

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S c e sSo y uc s t r

HMIL s first car, Santro came out of the plant in less than 17months. It was Priced at Rs 2,89,000 , was placed in B segment of the Indian car industry. The success was not predicted, because it was felt the car lacked an elegance, appealing look, moreover the B - segment was dominated by Maruti zen at that time.

Contrary to expectations, Santro became a major success, selling 75,000 vehicles between April 1999 to March 2000 becoming the largest selling car in B segment.

With the success of just one model, Hyundai became second largest automobile manufacturer in India, across segments

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Factors contributing to Hyundai success in India

They did a close study of the Indian market.

A complete market research was carried out the Company top officals.

Ideas and other information was taken from vendors, dealers and customers.

Surveys in detail was carried out.

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Analysis of the mindset of the customers and their demands

Launched Santro instead of Accent.

Products with advanced technology was introduced

Newly innovated marketing technology

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Some USP of Hyundai

Hyundai came into the Indian Scenario through its own subsidiary HMIL.

It was the first foreign company to establish its won manufacturing unit

Hyundai also launched a complete new product unlike other players.

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Innovation and attractiveness introduced in design and features.

An attractive and intelligent advertising strategy was carried out

Emphasis on Customer satisfaction was given.

Elaborate procedure for dealer selection which included:


Education background

Financial net worth Income details Investment and loan details

They studied their dealers credibility in detail

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Marketing Mix

Product

Its first B-Segment Car SANTRO was launched in 17 months. This was newly innovated with latest technology car for for Indian Market. It had far more better features than its competitor cars Features like AC, Heater, Power steering, Power Windows, and Central Locking for a B segment car. ACCENT was launched targeting the C-Segment category in 1999 Accent had technology and Luxury on par with Japanese Mitsubishi Lancer. It was launched in both Petrol and Diesel Versions. It rapidly became 3rd in terms of Market Share.

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In the year 2002 they launched Sonata in D-Segment category. Due to volatility and increase in competition and price wars they came up with a Improved version of Santro known as Santro Xing. Elantra was launched on 15th April 2004 for the D-Segment to be moreaccessible. By the mid of the year 2004 HMIL became the second largest company with its 4 models Santro, Accent, Elantra, Sonata with 19% Market Share. Finally They Launched Getz in 2004,for Upper B-Segment so that counter the competition imposed by Wagon-R of Maruti Suzuki Limited The latest models they launched for Indian market are i-10 and i-20 and Hyundai Accent Executive.

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Price

Santro was launched at Rs 2,89,000 far below Zen which was priced at Rs.3,45,000. They kept there pricing Based on Customer Value Perception. Their C segment car The Accent was priced at Rs. 5,35,000 much below what Lancer was Priced at Rs.7,80,000 targeting C-Segment. They launched Accent CRDi at Rs. 7,25,000 much below any one would have expected. Experts were quick on commenting CRDi technology is a Leap not a Step. Sonata was launched at Rs.16,00,000 which was again priced below Honda Accord which was priced at Rs17,00,000.

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Launched Elantra at Rs.8,69,000 so as to fill up the gap between C and D Segment. It also competed in terms of Value for Money with Toyota Corolla , Skoda Octavia, And Optra. They launched Getz at a price of Rs.4,30,000 to get a car between Santro and Accent targeting Upper B-

Segment.

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Place
India was chosen for a Number of reasons: The Indian Government De-Licensed the automobile Industry and the liberialzation was introduced in Indian Economy. It had a huge potential for growth as Indian market and especially the rural market was untapped There was only one player in the market Maruti which had cars for B-Segment. Therefore on May 26,1996 there first plant in Irrungattukottai Near Chennai at a cost of 614 million dollars was opened. It had a capacity to produce 1,20,000 cars and 1,30,000 engine transmission.initially

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It got the first major advantage as it became the first foreign company to set up its Manufacturing Unit in India. The labor cost in India is low. The manufacturing cost is less in India. Selected dealers react fastly to the changing market needs HMIL decided to Tap Rural Market. In the MID 2003 Capacity of production in India less as compared to MUL.

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Promotion

Since it was a new Brand they emphasized more on Promotion Saatchi & Saatchi handled the promotion of Santro. It was Promoted in 4 phases as explained by the Videos. It was a campaign that used Humor to remove ignorance about Hyundai. New Customer Satisfaction Campaign. Was launched Promotion of Accent was done more by Print Media than on Television. Accent was positioned with a baseline The Next Step.

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Accent Promotion was handled by Grey Worldwide India. Film celebrities like Preety Zinta and ShahRukh Khan were used for promotion of the new version of

Santro Xing The Sunshine Car. Various RoadShows were organized in Rural Market to promote Santro. A Young man driving Accent CRDi.was shoed in its ad showing its popularity among youth. Tie up with PNB for financing of there cars. And to promote the brand

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Business Strategy

Hyundai entry into the Indian market was unique in every sense. It initially positioned itself as a B-Segment car manufacturing company by launching SANTRO. Technologically superior products which provided Value for money. In order to develop a better image it launched Innovative marketing strategies positioning at better safety, better product and better features. The Indian Middle Class was targeted by providing a affordable family size car. They basically focused at providing a car satisfying Indian Needs instead of importing a successful model. It surveyed the market before entering. The dealer selection was done with great care and they regularly interacted with the dealers.

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They established themselves as a company providing cars that had better features, Better Technology and was safe. It positioned itself in stages as a company having cars for the entire market segment. Launched Accent CRDi which was one of the best Diesel Car in its segment. It was considered as a Leap and Not a step. Sonata was Positioned as a Premium car that was Dreamt about by everyone, Owned by a select few. They decided to reposition Santro as a Sunshine Car targeted for the age group

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SantrosDecline

Getz posed a threat to sales of Santro because: o It a wider price band o Newer design o Production line of Santro employed towards Getz Production Other factors o Price cut of MULs Alto o HMIL did not have a varied product portfolio to match that of MUL o Plant lacked production Capacit2Lvs.5Lpa

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New year New Car

Rationale

o Sustain excitement in the market for its cars Fight competition posed by MUL and others o Establish a base with Santro o Explored rural market o Wanted a presence in every segment

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Latest Scenario

Hyundai Motor signs MoU with Allahabad Bank. Its domestic sales growing at 12% for the month of November, 2010.

Hyundai Motor India fastest to reach 20 lakh Domestic production & sales milestone. Hyundai bags two prestigious awards at the 12th FIEO Niryat Shree- Awards for 2008-09. Receives the Gold Trophy for excellence in exports Receives the Silver Trophy for Highest Foreign Exchange

Hyundai i20 crosses landmark sales of 2.5 lakh units. First in its segment to achieve this milestone Introduces factory-fitted GPS-based Audio Visual Navigation (AVN)system

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Hyundais Luxury SUV Santa Fe receives 535 bookings in two weeks . Hyundai Motor signs MoU with Oriental Bank of Commerce. Hyundai opens 300th dealership Targets 610 sales outlets, 625 workshops by Dec 10.

Hyundai Motor India Launches 9th Nationwide Free Car Care Clinic 10 day Free Car Care Clinic at 429 dealer workshops across India Attractive discounts and exciting prizes on offer for privilege customers

Hyundai Motor India Ltd receives EEPC All India Award for Export Excellence for the year 2008-09 Received the award for the 4th consecutive year

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Bibliography

www.hyundai.co.in www.overdrive.com www.carmag.co www.motortrend.com, www.googlepages.com

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