Chapter-1
Introduction
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1.1 INTRODUCTION TO THE AUTOMOBILE INDUSTRY
The automobile industry has changed the way people live and work. The earliest of modern cars
were manufactured in the year 1895. As the century turned, 3 cars were imported in Mumbai
(India). Within decade there were total of 1500 cars in the city.
In the beginning of the 15th century, Portuguese arrived in China and the interaction of the two
cultures led to a variety of new technologies, including the creation of a wheel that turned under
the power. By 1600 small steam-powered engine models were developed, but it took another
century before a full-sized engine-powered vehicle was created.
Brothers Charles and Frank Duryea introduced the actual horseless carriage in the year 1893. It
was the first internal-combustion motor car of America.
One of the highest-rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that
featured a quiet 6-cylinder engine, leather interior, folding windscreens and hood,
and an aluminum body. Chauffeurs usually drove it and emphasis was on comfort and style
rather than speed but today modern cars are generally light, aerodynamically shaped, and
compact.
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1.1.1 AUTOMOBILE INDUSTRY IN INDIA
The Automobile industry in India is the seventh largest in the world with an annual production of
over 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea and Thailand By 2050, the country is expected to top
the world in car volumes with approximately 611 million vehicles on the nation's roads.
The dawn of automobile actually goes 4000 years back when the first wheel was used for
transportation in India. Following the independence, in 1947, auto industry was overlooked by
the then Government and the policies were also not favorable. However, the growth was
relatively slow in the 1950s and 1960s due to nationalization which hampered the Indian private
sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by
tractors, commercial vehicles and scooters. Cars were still a major luxury.
Then Japanese manufacturers entered the Indian market ultimately leading to the establishment
of Maruti Udyog. A number of foreign firms in it Following the economic liberalization in 1991
and the gradual strengthening of the liberalization policies, a number of Indian and multi-
national car companies launched operations. Since then, automobile manufacturing growth has
accelerated to meet domestic and export demand associated joint ventures with Indian
companies, which is currently growing at the pace of around 18 % per annum, has become a hot
destination for global auto players like Volvo, General Motors and Ford.
Over the last 10 years Indian car market has witnessed huge revolution in terms of quality,
styling, design and comfort. Gone are the days when car enthusiasts in India had to opt for the
import route. In fact, many international brands choose India as a launching pad for their newly
introduced cars for global market. Car lovers in India have wide range of choice not only in
terms of brands but also in price range. The unique market dynamics in India provides a great
platform for co-existence of super luxury models as well as India's domestic car brands.
The figures show that the automobile sector in India has been growing robustly. The market
shares of the different types of vehicles will clearly depict the demand pattern in this sector.
Domestic Market Share for 2008-09
Passenger Vehicles 15.96%
Commercial Vehicles 3.95%
Three Wheelers 3.6%
Two Wheelers 76.49%
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1.2 INTRODUCTION TO VOLKSWAGEN GROUP
Type: Public Company
Founded: May 28, 1937
Founders: Ferdinand Porsche, Adolf Hitler
Headquarters: Wolfsburg, Germany
Area served Worldwide
Industry: Automotive
Products: Cars, Truck
Revenue: €113.8 billion (2008)
Operating income €6.61 billion (2008)
Profit: €4.68 billion (2008)
Vehicle brand companies
Audi
Bentley motors ltd.
Bugatti automobile
Subsidiaries: Lamborghini
Seat
Skoda auto
Scania
Volkswagen passenger’s car
Volkswagen commercials vehicles
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1.2.1 HISTORY OF VOLKSWAGEN
In German, “Volks” (pronounced as folks), means people and “Wagen” means ‘Car’. Hence:
Volkswagen means "people's car" in German, in which it is pronounced fɔlksvaɡən.
And its current tagline or slogan is Das Auto (in English The Car).
When in 1937 the company known as "Gesellschaft zur Vorbereitung des Deutschen
Volkswagens" was founded, which later on September 16th, 1938 was renamed
“Volkswagenwerk” no one could have guessed that it would one day be Europe's largest
carmaker. The history of the company - with all its trials and tribulations - is first and foremost a
story of impressive success..
Adolf Hitler had a keen interest in cars even though he did not like to drive. In 1933, shortly
after taking over as leader of Germany, he teamed up with Ferdinand Porsche to make changes
to Porsche's original 1931 design to make it more suited for the working man. He used many
Tatra design features in the 1938 "KdF-Wagen", later known as the VW Beetle. Its design
enabled Mr. Porsche to finalize his design of the Beetle. On 22 June 1934, Dr. Ferdinand
Porsche agreed to create the "People's Car" for Hitler's mother.
After some time, they planned to change some features regarding various aspects. These changes
included better fuel efficiency, reliability, ease-of-use, and economically efficient repairs and
parts. The intention was that ordinary Europeans would buy the car by means of a savings
scheme ("Save five Marks a week, if you want to drive your own car"), which around
335,000 people eventually paid into.
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1.2.2 VOLKSWAGEN IN INDIA
With its headquarters in Pune, Maharashtra (India), the Volkswagen Group is represented by
three brands in India: Volkswagen, Audi and Skoda. Amongst these Volkswagen brand was
launched in 2007. Volkswagen presents itself in a variety of segments as a premium
manufacturer of high-volume models. As a first step, the Volkswagen brand launched the
globally successful Passat in 2007. To expand its portfolio and cater to the mid segment,
Volkswagen launched one of the brand’s bestselling models, the Jetta, in India in July 2008.
Both the sedans are being assembled locally. The iconic New Beetle and the high-end SUV
Touareg were introduced in December 2009. Also available is the high-end automobile Phaeton.
From December 12, 2009 the new Pune plant has started rolling-out the hatchback version of the
Volkswagen Polo.
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1.2.3 VOLKSWAGEN POLO IN INDIA
Volkswagen, Europe’s largest car maker, launched its much-awaited premium hatchback, the
New Polo in Mumbai. Polo is the first small car offering by Volkswagen for the Indian market.
Polo will be available in two variants — petrol and diesel. Both the variants are equipped with
1.2L engine and are available in three trims - Trend line, Comfort line and Highline. Pricing is
the key element, which Volkswagen has carefully studied to give tough competition to its rivals
like Maruti Swift, Maruti Ritz, Fiat Punto, Hyundai i10 and Hyundai i20.
Polo have been glittering the Europe’s roads since very long time. The first-generation Polo, a
modified version of the Audi 50, was introduced in 1975. Since then Polos were produced
worldwide and remained a car for the next generation that wants style, advanced technology,
power, and comfort all in one package.
The all-new platform for the Polo has been designed keeping Indian road
conditions in mind. That’s the reason that in India it is called New Polo.
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Volkswagen Polo flaunts a striking design, uncompromising quality, and a powerful new 1200
cc engine. It also features 15 inch alloy wheels, ABS, dual air bags, CD and MP3 player
with 4 speakers, height adjustable driver seat, power steering, and central locking. Polo is
outfitted with unique boot opener, Trend setting design, boundless dynamism and stimulation
luxury of the New Polo is attractive and appealing all the car lovers. And finally this elegant
wagon is available from March 2010 and was a Hot Cake at WORLD CLASS AUTOMOBILE
(Volkswagen showroom at Delhi West)
This was clearly seen by the Waiting period for the delivery of cars which was up to 4 months
for the petrol variant and up to 2-3 months for the diesel variant.
VW Polo has successfully modified its appeal to become arguably the most "classless" car of the
modern age, with a broad appeal to all levels of society, underpinned by a reputation for fine
engineering and consistently effective advertising, which features regularly among the winners at
awards ceremonies around the globe. As a result, it remains well and truly the "people's car" it
was originally designed to be. In other words it can be said that The New Polo is dressed with
many comfort features that keep the convenience to passengers on top of its check list.
1.3 SWOT ANALYSIS OF THE COMPANY
A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths or
weaknesses, and those external to the firm can be classified as opportunities or threats. Such an
analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection.
SWOT Analysis of World Class Automobiles (Volkswagen Delhi West Showroom) is
presented below on the basis of my study.
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Strengths
First of all it has to be Strong brand name of Volkswagen.
It has a reputation for value for money -Which improved market standing in consumers
mind.
Excellent technology, superb interiors and exteriors, great presentation and main focus on
the safety, so it’s an all in one deal.
Well recruited staff i.e. right person on the right job.
Metro connectivity and prime location in West Delhi.
Weaknesses
Relatively the VW cars are bit expensive than the other brands.
Low level of After sale services i.e. less number of service stations.
Advertising techniques are lacking.
Opportunities
Volkswagen have just entered India, lots of scope is there for expansion.
Increasing number of Road Shows in every area possible, from Lodi Road to Ashok
Vihar and to Paschim Vihar.
VW is coming up with low priced cars such as New Polo and Vento
People these days have craze and taste for International Brands
The attractive design of new Beetle has injected buzz into the brand, luring buyers to visit
where they're also snapping up Passat, Jettas and other cars in the showroom.
Threats
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Presence of many car dealers like Toyota, Mahindra, Skoda, Ford etc. in the same area
Increased rates of cars due to the excise duty and tax.
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1.4 COMPETITORS ANALYSIS
Competitor analysis in marketing and strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. This analysis provides both an offensive and
defensive strategic context through which to identify opportunities and threats. Competitor
profiling coalesces all of the relevant sources of competitor analysis into one framework in the
support of efficient and effective strategy formulation, implementation, monitoring and
adjustment.
Carpet-bombing can be fun but isn't it much more fulfilling to take charge one block at a time?
Bleed the entire sector inch by inch and gradually take over the market over a period of time... A
few years back when Volkswagen landed in India with their sedan, Passat, nobody would have
imagined what their plans for the future would be. But 2010 has got to be the year of the German
carmaker that with the launch of the Polo has stamped its mark. Fresh, never-seen-before kind of
advertising campaigns, a massive production and a marketing strategy which seems to be
succeeding with every passing day, it won't be long before the common man's brand creates
some serious dent in its competitor's share of the market.
It enjoys fierce completion in the form of Hyundai i20, Skoda Fabia, Tata Indica Vista, Fiat
Punto, Suzuki Swift and the recently launched Ford Figo. Volkswagen has priced both the Polo
variants around the price band of its competitors though its higher than that of the Figo and
Drande Punto. VW can claim to justify the high price tag by virtue of the great build quality
and top notch German Engineering on offer.
Upcoming Volkswagen Vento, belongs to a segment which has seen cars like Honda City,
which has always been people's favorites; Suzuki SX4, the butch man amongst the crowd; Ford
Fiesta, the stingy fuel spender, and many more-is all set to welcome the German sedan Vento.
Built on their hatchback Polo's platform, in simple terms its Polo with a boot!
For starters, it comes with both a petrol and diesel engine which easily negates the City and
SX4's edge to an extent. As far as Fiesta is concerned, somehow people are so concerned about
Ford's maintenance reputation that a car this good has also got to prove its mettle time and again.
New Polo V/S Figo
The Polo is the fresher car here, no doubt about that. Penned by a design team headed by design
legend Walter Da Silva, its Audi-esque bumper and smart head lamps sway your attention in its
direction. The Figo on the other hand looks a bit traditional and it's only its bright colours like
the lime-green number you see here that gives it a feeling of youth.
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On the inside, it's the Polo that trumps the Figo for space. The seats are nicely bolstered and
comfortable, while at the rear there is marginally more legroom and headroom in the Vee Dub.
The Figo's lack of power windows at the rear and the fact that they roll down only 60 per cent
make the rear feel a bit claustrophobic. The small Ford's build quality is quite good for the price,
borrowing pretty much the entire dashboard and switchgear from the Fiesta with changes to its
silver shroud on the centre console and the addition of a music system with blue tooth. The red
treatment to the dash is optional, though not to everyone's liking. The Polo on the other hand
feels slightly better built but spec to spec lacks critical features such as vanity mirrors and audio
controls for the steering even on the Highline. It's boot too is smaller than the Figo's.
New Polo V/S Maruti Suzuki Swift
The Volkswagen Polo’s design is more graceful and elegant while the Suzuki Swift looks sporty
and squat. The Polo is longer than the Swift in length by 210mm but in the width department the
Swift beats the Polo but not by much.
On the other hand the Suzuki Swift scores over the VW Polo as it’s a proven work horse from
the Maruti stable. Recently Maruti upgraded its engine to the BS IV complaint K-Series engine
which is 1197 cc and rated at 85 bhp. While the Volkswagen Polo makes do with a 1198 3pot
petrol engine which makes 75bhp. If you want a more powerful, super reliable car, the
answer still the Maruti Suzuki Swift. Related: Volkswagen Polo 1.2 petrol road test
The Suzuki Swift is also a lighter car as compared to the Polo. Drivability of the Swift is superior
as compared to the Volkswagen Polo where the drive is more tuned for within city and traffic
conditions, the Swifts engine feels more at home on highways where the Polo misses the 4th
cylinder during quick overtaking attempts – otherwise no flaws with the German car.
The Swift is a much taller car as opposed to the Polo but the Polo gets the seat height adjuster
which comes to its rescue. Rear seat comfort is better in the Polo as the overall seat fabric and
design comes to aid on those long journeys.
Head room on the Swift is more as it’s a much taller car. The boot of the Polo is slightly more
than the Swifts.
Not many cars can beat the Volkswagen Polo for its best in class ride quality, while the Swift
comes close but the Polo wins here. Ride quality, handling the Polo comes trouncing while the
Swift wins in the acceleration and top speed department. Ride and interior quality, Polo wins.
Fuel efficiency of the VW Polo is better and is benefited by the 3 cylinder engine which scored
17 kmpl while the Swift does 15kmpl. If fuel efficiency is critical, the Volkswagen Polo wins
the comparison.
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Price wise Distribution of cars
Price range of 3-7lakhs 7-12lakhs 12-20lakhs 20-30lakhs 30+lakhs
cars
No. of cars 449 352 84 22 24
Percentage 48% 38% 9% 2% 3%
Range wise Distribution of Cars
450
400
3-7 lakh
350 7-12 lakh
300 12-20 lakh
250 20-30 lakh
200 30+ lakh
150
100
50
0
No. of cars Percentage
Interpretation
From this analysis it came to know that the cars with range 3-7lakhs holds 48% of the market
while the cars with range 7-12lakhs holds 38% of the market and rest of the market is holed by
other range of cars. Which means most of the market is hold by 3-7lakhs and 7-12lakhs cars.
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We can make it out that Volkswagen is a tough competitor for other cars at every level
In 3-7 lakhs category it has got New Polo
In 7-12 lakhs category it has upcoming Vento
In 12-20 lakhs category it has got Jetta
In 20-30 lakh category it has got Passat
In 30 and above category it has got New Beetle, Touareg and Pheton
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