Acknowledgement

It is indeed of great moment to pleasure to

express our senses of profound gratitude &
indebtedness to all the people who have been
instrumental in making it a rich experience. We
found it to be a challenging project that gave us
a real practical exposure to the corporate world
and it is almost impossible to do the same
without the guidance of peoples around us. It
gives us immense pleasure to acknowledge
HONDA MOTORS INDIA PVT. LTD. dealers,
who have been nice enough to give us a chance
to do our project and providing us wonderful
support throughout our project.

First and foremost, I would like to thank Ms. Bina

Patel , NIS Academy for his constant guidance
and support throughout this project. During the
project, we realized that the degree of relevance
of the marketing strategies being imparted in the
industry is very high.
 Table of Contents

➢ Company’s History
➢ Company’s Profile
➢ Head office
➢ Showcase Manufacturing Facility
➢ Sales and Distribution Network
➢ Sales performance
➢ Honda's vision and role
➢ Corporate Structure
➢ Corporate Governance
➢ The Indian Automobile Market
➢ Business Environment
➢ Competitive Analysis
➢ Consumer Analysis
➢ Core Competencies
➢ SWOT Analysis
➢ Strategies
➢ Bibliography
History of Company

The history of the Honda Motor Company began with the vision
of one man – Soichiro Honda. His dream was personal mobility
for everyone. Soichiro Honda founded the Honda Motor
Company in 1948. In the same year, he designed and
engineered the first product of this company - a 50 cc
motorized bike on a bicycle frame - in his small shed at
Hamamatsu. Today, Honda is a global company with a global
viewpoint that is reflected in a solid commitment to local
markets and economies.

Company Profile

Honda Siel Cars India Ltd., (HSCI) was incorporated in

December 1995 as a joint venture between Honda Motor Co.
Ltd., Japan and Siel Limited, a Siddharth Shriram Group
company, with a commitment to providing Honda's latest
passenger car models and technologies, to the Indian
customers. While the company sold its first 50,000 units in
nearly five years, it is today geared to sell more than 50,000
units in a single year. The Honda City, its first offering
introduced in 1997, revolutionized the Indian passenger car
market and has ever since been recognized as an engineering
marvel in the Indian automobile industry. Thereafter, HSCI
launched its high-end models the Accord and the SUV, CRV.
The City ZX, introduced in its new avatar in 2003, replicated
the success of the earlier car. The Honda Civic, launched in
India in July 2006, too has matched the success of other Honda
models and has proved to be a great hit with Indian customers.

Head Office

The Head Office pf Honda Siel is located at Plot#A1, Sector-

40/41, Surajpur KasnaRoad, Greater GautamBuddha Nagar,
Uttar Pradesh- 203207.
 India Four Wheeler Industry

The Four-Wheeler Industry in India has not quite matched up to the

performance of its counterparts in other parts of the world. The primary
reason for this has been the all-pervasive regulatory atmosphere prevailing
till the opening up of the industry in the mid-1990s. The various layers of
legislative Acts sheltered the industry from external competition for a long
time. Moreover, the industry was considered low-priority as cars were
thought of as unaffordable luxury". Post Liberalization, the car market in
India have been in a burgeoning stage with all types of cars flooding the
market in order to meet the demands of Indian customers who are
increasingly exposed to state of the world automobiles and want the best
when it comes to purchasing a car.

It is expected that by 2030, the Indian car market will be the 3rd largest
car market across the globe. The main encouraging factors for the success
story of the car market in India are the increase in the opportunity for new
investments, the rise in the GDP rate, the growing per capita income,
massive population, and high ownership capacity. The liberalization policies
followed by the Indian government had been inviting foreign players to
participate in the car market in India. The recent trend within the new
generation to get work in the software based sector has led to the rise in
the income level and change in the lifestyle significantly, which has further
led to the increase in the demand for luxurious cars among them.

The car Market in India is crowded with all varieties of car models like the
small cars, mid-size cars, luxury cars, super luxury cars, and sports utility
vehicles. Initially the most popular car model dominating the Car Market in
India was the Ambassador, which however today gave way to numerous
new models like Hyundai, Honda, Mercedes-Benz, BMW, Bentley and many
others. Moreover, there are many other models of cars in the pipeline, to
be launched in the car market in India. Some of the leading brands
dominating the car market in India at present are Hindustan Motors, Reva
Electric Car Co., Fiat India Private Ltd., Daimler Chrysler India Private Ltd,
Ford India Ltd., Honda Siel Cars India Ltd., General Motors India, Hyundai
Motors India Ltd., Skoda Auto India Private Ltd., and Toyota Kirloskar Motor
Ltd. Since the demand for foreign cars are increasing with time, big brands
like Mercedes Benz, Volkswagen, Aston Martin, Ferrari, and Rolls-Royce
have long since made a foray into the Indian car market.

Facts about Indian Car Market:

Although the Indian automobile industry has come a long way since the
deregulation in 1993, India does not rank well among its global peers in
many respects, viz., the contribution of the sector to industrial output,
number of cars per person, employment by the sector as a percentage of
industrial employment, number of months' income required to purchase a
car, and penetration of cars.

Figure:-Passenger vehicle stock per 100 people

India is far behind from other countries with just 6.9 cars per 100 persons,
while Unites States has 76.9 cars on per 100 persons. Among developing
countries, Russia also stands ahead than India and China with 16.3 cars
per 100 persons.

Showcase Manufacturing Facility

HSCI's manufacturing unit was set up in 1997 at Greater Noida,
U.P with an investment of Rs. 450 crore. The project is spread
across 150 acres of land (over 6, 00,000 sq. m.). The initial
installed capacity of the plant was 30,000 cars per annum,
which was recently increased to 50,000 cars. The capacity
expansion was possible because of the excellent performance
of all the Honda models in India. The expansion process
involved an investment of Rs.150 crores, with the covered area
increasing from 55,000 sq. m. to 1, 07,000 sq. m. The covered
area now constitutes 17 per cent of the total land area of the
plant.
The company plans to further raise its capacity to 100,000
units per annum by the end of 2007 and 150,000 units per
annum by 2010.

Sales and Distribution Network

Honda Siel Cars India has a strong sales and distribution

network spread across the country. The network includes 51
Honda Exclusive Authorized Dealerships in 21 cities. All HSCI
dealerships are based on the "3S Facility" (Sales, Service,
Spares) format, offering complete range of services to its
customers. The company is targeting 100 dealer outlets across
India by 2007, as per their expansion strategy which is based
on the '1 dealer per 1000 cars’ formula.

Sales Performance

HSCI closed the 2005-06 financial years with total sales of

42,727 units in the domestic market - a growth of 14% over the
previous financial year. The company's, Honda City, accounted
for 37,545 units in the year. Of this, the City ZX, which was
made available to the customers in the end of November 2005,
accounted for 17,165 units. Total Accord and CR-V sales for
2005-06 stood at 3,324 and 1,858 units respectively.

Honda's globally successful Civic, which was launched in July

2006, proved to be an immediate hit in India. In the first month
of its launch it has emerged the segment leader, posting
figures of 2441 units in a month. The company is targeting an
overall growth of 44% in the current Financial Year.

Honda's vision and role

Fulfilling the global needs of personal mobility in the new
automotive society - go hand in hand with the corporate
philosophy: maintaining a global viewpoint, they are dedicated
to supplying products of the highest efficiency and quality at a
reasonable price for worldwide customer satisfaction. In India, it
is through HSCI that customers can enjoy the benefits of
Honda's expertise. Soichiro's vision was international in
character. His desire was to lead the world in technology, and
make a significant contribution to the creation of a better
society. As a result, most of the products that Honda developed
started out by making a difference. Honda is a global company
with a global viewpoint and a four-region global strategy that is
reflected in a solid commitment to local markets and
economies.

However, the most enduring challenge has been to

satisfy the ever-changing needs of their customers. This
is the essential spirit of Honda.

The Company's vision is "To be a Company that the

Society would want to Exist". It strongly believes in Co-
existence and Co-evolution, wherever it operates.

Corporate Structure

President and CEO

Regional operations of India

Automobile Operations

Customer Service Operations

Product Operations

Purchasing Operations

Business Management Operations

CORPORATE GOVERNANCE
HSCI practices high standards of Corporate Governance and
there is a strong emphasis on transparency in its transactions
and Code of Conduct for all Associates. It believes very strongly
in the practice a unique work culture, which has a sound
foundation right from the time of inception of the company .The
management style, is founded on the principle of “Respect for
the individuals.”

The Associates are trained by way of working, which is very

participative and based on Initiative, Equality and Trust.
Regular Training programmes, including behavioural trainings,
are being arranged/conducted for all levels. It encourages its
Associates to be innovative at Work and practice Quality Circle
activities in their respective work areas. Need based overseas
training are also a part of the training system whenever
required. Periodic Employee Satisfaction Surveys (ESS) are
being carried out and due credence is given to the feedback
from the Associates.

BASIC MODELS /PRODUCTS SOLD BY HSCI

HSCI currently produces the Honda City, Civic and Accord

models in India and the CRV is sold as a full import from Japan.
The company operates under the stringent standards of ISO
9001 for quality management and ISO 14001 for environment
management. Company's products include the 7th Generation
Honda "ACCORD", launched in August, 2003 and New Honda
"CITY", launched in October, 2003. The company is also
engaged in selling its CR-V model through the CBU importation
programmed from Japan.

THE INDIAN AUTOMOBILE MARKET

There is a cutthroat competition existing in India particularly in
the Indian Automobile market today and this has particularly
happened because of the liberal policies of the government.
The consumers of today have become aware of what actually
they want particularly in an automobile. For example,
consumers now demand the fuel efficient vehicles and they
have started showing concerns towards the environmental
pollution. Therefore the car manufacturers have to consider the
consumer preferences. Extensive research and development,
option of alternate fuels, clean technologies and quality control
to oversee adherence to product conformance will shape the
future of
automobile sector in India. The Government of India is slowly
catching on to this trend and would soon demand of the
automobile sector such advanced technologies.
Business environment

THE ECONOMIC ENVIRONMENT

– Rising GDP and per capita Income indicates growth of
economy and hence rises in demand.

– Segmentation: Younger generation has more disposable

income with increasing salaries & they are also perceived
to be more technology savvy & ecologically conscious.
58% of Indian population is youth population!! (+) This will
be the target market for the next few coming years.

SOCIO CULTURAL ENVIRONMENT

– Today’s society judges people on the type of car you
drive. Society does not like to admit to this but it is very
true. Manufactures know this happens and targets their
markets by these thoughts. For example, anyone who
drives a mini van is perceived as a soccer mom. This is
because the manufactures target mini vans to mothers.
Anyone who drives a nice vehicle is thought to be wealthy.
No one wants to be seen driving an unattractive piece of
junk because of what other people will think of him or her.
Consumers also just feel better when they are driving a
nice or new car; it makes them feel better about
themselves. Therefore the car you buy reflects your social
status also.
 – Another aspect of the sociocultural is the environmental
concerns for the need of fuel-efficient vehicles.

TECHNOLOGICAL ENVIRONMENT
– Opening up of Indian market to foreign investors
has created a rush of new technologies. There is a thirst to
grasp more and more of latest technologies by the car
manufactures. However, the R&D expenditure of HONDA
has reaped good benefits, making the cars best among its
league. (+) and also coming up with newer and newer
models.

POITICAL ENVIRONMENT
– Open Economy: India has recently opened up the
economy and hence there is tremendous scope in terms of
growth here. As one of the emerging markets in Asia, it
has a lot of potential as the earning power of people
increases.

– Liberalization policy of Congress: The liberalization

policy of the government started in 1990s has reaped
tremendous benefits at this stage. The Indian economy
has opened up and if such policy continues to be the
agenda of the government then it would pave the way for
one of the most exciting markets for cars.

Political environment – Largest democracy, era of coalition

governments, fair amount of political stability, political
consensus on economic reforms and higher target of growth of
the economy, sound legal system – a factor contributing to a
large foreign direct investment.

Economic environment – continued economic liberalization,

encouragement to foreign investment, big growth in services
sector, controlled inflation in recent time, reasonably stable
exchange rate, scarce and costly energy, abundance of skilled
low cost labor, easy availability of raw material being a major
producer of steel.

Social environment – large middle class, major changes in

life style, a major
increase in urbanization, consumption, both parent working,
nuclear families,
leisure activities, and trend of using credit cards.
Technological environment – technology import liberalized
and a significant effort in internal technology development.
– Increasing affluence of urban consumers would ensure
reasonable demand for cars. The changing lifestyles
indicated an increase in demand for cars in the mid price
segment.
– The changing buying behavior of the consumers shows
that they are becoming choosy and looking for styling,
comfort, etc, and fuel efficiency conforming to
environmental standards.
Technologically the industry is experiencing major
changes. The technology
rests with very few players in the world.
Intense competition is indicated in the coming years.

PORTERS 5 FORCES MODEL:

We’ve used the Porters 5 Forces Model to gauge the industry
attractiveness
– Threat of new entrants
• The threat of new entrants is very low in the automobile
industry. The industry is very mature and it has
successfully reached economies of scale. In order to
compete in this industry a manufacture must be able to
achieve economies of scale. For this to occur,
manufacturers must mass-produce the automobiles so
that they are affordable to the consumer.

• Another barrier to entry is that it takes an incredible

amount of capital to manufacture the automobiles. It
takes an extreme amount of capital not only to be able to
manufacture the products but also to keep up with the
research and development that is necessary for the
innovation requirements.

• Access to distribution channels is another high barrier

to entry. A company must find a dealership to sell their
 automobiles or have their own dealership. Space in the
dealerships lots is very limited making it difficult to have a
wider variety of inventory.

• Brand Identity: Honda brand name is almost known all

over the world and its reputation in India is very strong.

• Government Policy: The government has a very open

policy in theautomobile sector with almost negligible
control over the companies(major companies) coming to
India Hence, there would be no control overwho can come
up with a new technology and a new model in the Indian
market.

• Learning curve: HONDA has a huge learning curve in the

Indian market and since it has been here long enough to
know its customers, it can envisage their needs in a better
way than any other new entrant.

SWOT Analysis
 Strength

• Familiar brand name

• New age design.
• Reputation for producing high quality products.
• Honda has won many awards for initial quality and
customer satisfaction
• Automobiles are reliable and generally fuel efficient
• Strong research and development which has afforded
them competitiveness in quality products.
• They were a pioneer in engineering low emissions internal
combustion and hybrid technology.
• Honda is the only other manufacturer outside of Mitsubishi
to branch out into
• many other areas outside of automobiles
• Huge learning curve.

Weakness

• Prices are higher for non-luxury vehicles than comparable

modals by other manufactures.

Opportunities

• To continue progressing low emission vehicles and

alternative power sources. While they have made progress
in this area, the technology is still overpriced for the
consumer, and the infrastructure does not exist.
• Another area of opportunity would be developing nations
like china and India. These are large markets, and cheap
dependable transportation would be a hot seller.
• Easy Financing

Threats
• If continuous innovations are not done, then competitors
will beat you with
• last year’s technology.
• Strict environmental Laws like EURO III Norms.
• Liberal Government Policies.
➢ FUNTIONAL & COOPERATIVE STRATEGIES
 Till date, HSCI’S strategy has been to create value through
expanded sales via innovation in research and manufacturing.
Instead of having one large manufacturing plant, it uses an
idea of “manufacturing products where they are sold”. In this
way manufacture is increased in areas where sales increase.
This practice has led to over one hundred manufacturing plants
in over thirty countries, a process they call “globalization”.
They also are guided by a commitment to the future. This ideal
is reflected in several ways. Low emissions vehicles are one
example, anther are manufacturing plants that are focused on
environmental friendliness as well as efficiency and quality.

Till now the focus is on the premium segment in India for the
time being as it was bringing in the required volumes. They can
focus on C and D segment cars where they have a market
share of 14%.

However, they should not ignore the other segment in order to

avoid threats from their competitors.

➢ Till date the implementation of ideas in a planned manner

has helped the company in achieving the progress it has
achieved. The work culture at Honda has made the
implementation of ideas possible At the concept level, IT
projects are discussed with department heads, functional
heads and the management; at the user level different
kinds of technical training is also carried out. The
company also invites some IT companies to share their
thoughts about the benefits of IT with certain users.

The result of all this is that IT at Honda Siel has helped the
company cut costs and save on manpower generation of
different IT projects easier.

➢ It was Honda's policy not to offer discounts to push sales

as such a strategy lowered the image of the product.
However Honda Siel did reduce the prices because of
excise cut. Honda should follow the same strategy of not
giving any discounts but it can come up with new lower
priced models.
Since it has a great threat from Toyota which has a competitive
pricing, therefore HSCI needs to produce the cars at low prices
also so as to cater other segments as well as it can come up
with the new products say with Hybrid technology cars which
are few in number in India. Therefore it can go for
diversification where it can cater to newer markets with new
products or it can serve the same segment with newer products
like the hybrid cars.

➢ In tandem, Honda Siel Cars India has decided to increase

its sales network from the existing 55 dealerships to 100
outlets by 2008. It has dealerships in metros and Tier I
cities (Ahmedabad, Jaipur, Chandigarh, Ludhiana Surat,
Kochi, etc) and will now focus on Tier II cities (Jammu,
Hubli, Jamshedpur, Jodhpur, etc) to service a production
plan to make one lakh medium sized luxury vehicles apart
from small cars. The company has set up additional
regional sales office in Mumbai and Chennai. Its existing
offices in Greater Noida and New Delhi are currently
looking after the north and east.

Toyota and Honda have taken nine and 11 years to have a

chain of 57 and 55 dealerships respectively. Analysts believe it
is a tough call though not as difficult as the initiative of Tata
Motors to scale up to 600 outlets from the existing 140
dealerships by 2008.

➢ Honda Siel Cars India Ltd (Honda) is firming up marketing

plans to attain a turnover of Rs 850 crore in fiscal 2000-01
up from Rs 700crore in 1999-00. The marketing focus for
the fiscal: to expand into secondary towns, focus on
enhancing market share in the south, maintain adequate
level of media-spending, rope in consumer finance
companies with strengths in local markets, associate with
the hospitality sector for inviting prospects and build an
interactive Website.
 ➢ Consolidating organized financing with consumer finance
accounting for around 65 per cent of sales, Honda is now
planning to consolidate organized financing -- at present it
has tie-ups with ICICI and Standard Charted. ``Halfway
through the year, they may go for regionalize-ups with
players having strengths in local markets,'' says Gupta.
The tie up with Standard Chartered and ICICI gives Honda
an internal rate, which is less than one per cent of the
market rate (15 per cent now).

MARKETING STRATEGY
The company can opt for penetration pricing in order to capture
a larger market share. This can be done through rapid
technological development and new innovations in which they
can develop new products which are low priced and through
this it can cater to the needs of other segments also.

PRODUCT DEVELOPMENT STRATEGY

Since Honda Siel Cars India is having a strong edge in Research
and development, therefore they can focus on this to come up
with newer and newer products as per the customer’s
requirements.

ADVERTISING AND PROMOTIONS STRATEGY

They can use the pull strategy in order to attract more
customers through offers and lower price models. The Brand
promotions can be done through using the distribution network.

RESEARCH AND DEVELOPMENTS

They should continue to follow the same strategy in research
and development as they are following now i.e. continuously
investing in R&D and keep coming up with new innovations and
products so as to maintain their leadership position in R&D.

OPERATIONAL STRATEGY
In this they can go for modular manufacturing strategy i.e.
preassembled subassemblies. The parts of the car can be made
and stored in different units. As per the order of the customer a
group of workers can assemble the cars at a high speed mode
and can make the car available within the short period of time.
This will enable the company to follow and enhance Just in
Time approach.

Consumer Buying Behavior

The bargaining power of suppliers is very low in the automobile
industry. There are so many parts that are used to produce an
automobile, that it takes many suppliers to accomplish this.
When there are many suppliers in an industry, they do not have
much power. There are so many suppliers to this
industry; manufactures can easily switch to another
supplier if it is necessary.

➢ The bargaining power of the buyers is moderately high.

The buyers being consumers purchase almost all of the
industries output. The manufacturers depend on them to
stay in business. The buyers also are a significant portion
of the industries revenue. If they can not keep their
buyers happy then there is a risk of losing them to their
competitors. The buyers have low switching cost because
if they are not happy, they can easily switch. All the buyer
has to do is sell the car they own and purchase a new one.

➢ The reasons why the power is not completely high is that

the buyers are not large and few in number. The buyers
do not have the ability to integrate backwards into the
industry. If they want a car then they have to purchase it
from a dealership.

Threat of Substitute Products

➢ There are not many substitute products for automobiles.
Some of the substitutes are walking, riding bike or taking
a train. Substitutes products all depend on the geographic
location of the consumer. In some cities such as New York
or Chicago, a car is not as necessary. In cities such as
those, the subway is the most effective means of
transportation. However, in most places a person must
have to access to an automobile in order to get around.

 Intensity of Rivalry among Competitors

– Rivalry among the competitors is very strong is this

industry. The major competitors are so closely balanced
that it increases the rivalry. In order to gain market share
in the automobile market, one must gain market share by
taking it from their competitors.

– One of the other reasons there is such high rivalry is that

there is a lack of differentiation opportunities. All the
companies make cars, trucks or SUV’s. The competitors
are compared to one another constantly. The price,
quality, durability, and many other aspects of different
manufacturers are greatly taken into consideration when
deciding what type of vehicle to purchase. When the
different manufacturers advertise they even compare
their products to their competitors. For example, the
commercials will focus on areas where the company
outperforms its competitors.
 Customer Analysis
Who buys the product?

➢ Individuals: People who buy it and use it for them.

➢ Taxi Services and Rentals: They would be interested in
buying a car which provides maximum luxury and fuel
efficiency at the same time.

What is bought?
➢ Car, convenience, comfort, luxury, peace of mind

Where do they buy?

➢ From the company’s showroom and dealers.

When do they buy?

➢ When a genuine need arises or maybe a gift on birthday,
festival (e.g. In Diwali when they get bonus), on New Year
etc.

How is it bought?
➢ When the need arises: When they need to
travel, additional car for the family as the luxury
item or as a status symbol. There is a growing
trend among the customers to posses the latest
gadgets.

➢ Information Search: Customers will visit dealers,

websites, company’s websites, refer auto magazines, peer
 reviews, TV shows (CHALTI KA NAAM GAADI on CNBC),
Documentaries etc. to obtain maximum information about
the car and its technology.

➢ Evaluation: Customer will be influenced by Performance,

Fuel Economy, Luxury, Brand Name and many other
factors before coming to a decision.

CORE COMPETENCIES:

➢ Honda has a core competency in building small petrol

engines with efficient profiles.

➢ Apart from it the other core competencies are

✔ The cars performance in terms of fuel efficiency

✔ Delivery/guarantee of quality and reliability
✔ Research and Development into the Hybrid Technology

However, what differentiates it from the other auto makers in is

the performance of its car. Thus it needs to focus on improving
the performance of its car by keeping up with the R & D work.

➢ Threat of Substitute Products

There are not many substitute products for automobiles. Some

of the substitutes are walking, riding bike or taking a train.
Substitutes products all depend on the geographic location of
the consumer. In some cities such as New York or Chicago, a
car is not as necessary. In cities such as those, the subway is
the most effective means of transportation. However, in most
places a person must have to access to an automobile in order
to get around.

➢ Intensity of Rivalry among Competitors

Rivalry among the competitors is very strong is this industry.

The major competitors are so closely balanced that it increases
the rivalry. In order to gain market share in the automobile
market, one must gain market share by taking it from their
competitors.
➢ One of the other reasons there is such high rivalry is that
there is a lack of differentiation opportunities. All the
companies make cars, trucks or SUV’s. The competitors
are compared to one another constantly. The price,
quality, durability, and many other aspects of different
manufacturers are greatly taken into consideration when
deciding what type of vehicle to purchase. When the
different manufacturers advertise they even compare
their products to their competitors. For example, the
commercials will focus on areas where the company
outperforms its competitors.

Bibliography
1. www.hondamotors.com
2. http://world.honda.com/HondaSielCarsIndia/
3. www.google.com

Books Referred

PGDAM (Post Graduate Diploma in Applied

Management) Book - 1st Semester Courseware
3