Mahindra and Mahindra Case Study

A
Atish ChattopadhyayS.P. Jain Institute of Management & Research

Mahindra and Mahindra Case Study

Mahindra & Mahindra exploring the Launch of a small SUV in India
Present affiliation of Authors

Dr. Atish Chattopadhyay, Professor of Marketing, SPJIMR, India, email: atishc@spjimr.org

Nitin Shrotri, Mahindta & Mahindra Ltd, email: nitinshrotri1@gmail.com

M&M is market leader in utility vehicle segment with a market share of 65%.There is huge market potential
(where competition has already entered into) for small Sports Utility Vehicle (Premier Automobiles’ Rio &
International Cars & Motors Ltd’s Rhino) /small cars (Tata Motors’ Nano). M&M presently does not have
presence in small SUV market. There is no product being offered by M&M in small car or small SUV segment
as of now & hence there is a gap in product portfolio. Is M&M in a position to tap the potential for small
SUV market in India?

Background of Automotive Industry in India - Passenger Segment:
With increasing number of introduction of new models along with the entry of global players, attracted by
the size and growth of India's car market competition has intensified in the small cars segment. Cost
pressure is mounting on small car manufacturers as they attempt to maintain market share through
frequent model introductions, in response to the competition. To maintain the margins, it is believed that
small car manufacturers would need to increase sales volumes per model rather than introduce more
models in the segment, which will diminish the benefits of scale efficiency.

The level of competition in India's small car market, particularly the A2 segment, has increased significantly
as its size and growth potential has attracted several global car manufacturers. Entry of new global players
or models is expected to continue over the medium term further intensifying the competition in this
segment (Exhibit B).

The A2 segment is expected to grow 11-13 per cent in 2010-11 compared with that of 10-12 percent for the
industry as a whole (excluding sales volumes of Tata Nano). However, sales volumes per model in the A2
segment will decline in 2010-11 as there have been a number of model introductions. Sales volumes per
model have been declining in the segment since the third quarter of 2006-07, although the total sales
volumes have increased (Exhibits C & D).

While the introduction of several models over the past few years has enabled car manufacturers to increase
sales volumes, their costs have increased significantly impacting their profitability. The higher costs are
primarily due to:
    • Increase in product development costs
    • Higher marketing and selling cost per unit of sales
    • Additional value added features (such as power windows, high-end music systems), without a
         commensurate increase in realisations.

It is estimated that the introduction of car models over the years has significantly increased car
manufacturers’ product development/royalty expenditure and marketing and selling expenses per unit of
sales. For instance, selling expenses per unit of sales have increased at 11 per cent CAGR over the past four
years up to 2008-09. This indicates car manufacturers are under greater pressure to attract and retain
customers in order to maintain market share. The estimate is based on a study of the number of car models
                                                                                                  Page 1 of 42
launched and costs per unit of sales (product development, and marketing and selling expenses) for a
leading car manufacturer over the past few years (Exhibit E).

The competition intensity has prompted players to offer more value added features (such as power
windows, high-end music systems). However, the average realisation (adjusted for inflation) has declined 32
percent over the past five years up to 2009-10 (Exhibit F). It is believed that small car manufacturers would
need to increase sales volumes per model rather than introduce more models in the A2 segment, which will
diminish the benefits of scale efficiency.

Company Background: Mahindra & Mahindra:


Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is now a US $6.3
billion Indian multinational. It employs over 1,00,000 people across the globe and enjoys a leadership
position in utility vehicles, tractors and information technology, with a significant and growing presence in
financial services, tourism, infrastructure development, trade and logistics. The Mahindra Group today is an
embodiment of global excellence and enjoys a strong corporate brand image.

Mahindra is the only Indian company among the top tractor brands in the world and has made an entry in
the two-wheeler segment, which is expected to see the company emerge as a full-range player with a
presence in almost every segment of the automobile industry.

The Mahindra Group expanded its IT portfolio when Tech Mahindra acquired the leading global business
and information technology services company, Satyam Computer Services. The company is now known as
Mahindra Satyam.

Mahindra's Farm Equipment Sector is the recipient of the Japan Quality Medal, the only tractor company
worldwide to be bestowed this honor. It also holds the distinction of being the only tractor company
worldwide to win the Deming Prize. The US based Reputation Institute ranked Mahindra among the top 10
Indian companies in its Global 200: The World's Best Corporate Reputations list.

Mahindra is also one of the few Indian companies to receive an A+ GRI checked rating for its first
Sustainability Report for the year 2007-08 and has also received the A+ GRI rating for the year 2008- 09.

The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the year ended 31st March 2010
is ` 20595.5 crores as against ` 14983.4 crores in the previous year – a growth of 37.5%. The Net Profit from
ordinary activities before tax for the current year is ` 2846.8 crores as against ` 1036.5 crores in the previous
year – a growth of 174.7%. After providing for tax the same is ` 2087.8 crores against ` 836.8 crores in the
previous year - a growth of 150%.

Mahindra & Mahindra is industry leader in utility vehicle (UV) segment (Sports, Pick up & Multi Purpose
vehicles).It holds 65% share in utility vehicle market. Mahindra & Mahindra Auto Sector’s product portfolio
& markets/segments are as below:

a) Commercial Transport:

Pick Ups -3 & 4 wheeler (MaXX Maxi Truck, Bolero Pik Ups, Scorpio Getaway, Bolero MaXXi Truck)-used for
short/medium distance transport of goods. Heavy & Medium trucks are in the process of development.

b) Passenger Transport:

                                                                                                   Page 2 of 42
a.   Jeeps (Commander, Major)
              b.   Sports Pick Ups (SUV) (Bolero, Scorpio)
              c.   Multipurpose vehicle (MPV) (Xylo)
              d.   Car (Logan)
              e.   3 wheeler/Auto Rickshaw (Alfa Passenger)

Competitive Scenario:
The small car & SUV market has emerged as the most attractive one over the last 5 years on account of low
buying & running/ maintenance costs, congested traffic conditions, parking space constraints, small /nuclear
families. On the other hand there is a challenge of meeting the customer expectations and dealing with
competitive pressure in terms of product cost, features and performance. For classification of vehicles in this
segment refer to Exhibit 15.

In the current scenario, many Indian as well as Foreign OEMs (local like Tata Motors Limited, Bajaj Auto
Limited, ICML, Premier Auto Limited & international like Toyota, Ford etc) are focusing on the small car/SUV
segment which is reflected through products introductions like Tata Nano, Bajaj Auto-Renault-Nissan’s Ultra
Low Cost car, Ford Figo, General Motors’ Beat, Sonalika Rhino, and Premier Auto’s Rio and so on.

According to experts, the critical success factors in the segment are:

    1. Product Pricing

    2. Time to market

    3. Capacity ramp up

    4. Distribution

    5. Product features & performance

Product Offerings -Cars and SUV (Exhibits 3, 4, 5)

Luxury SUV:

    1. Toyota Fortuner

    2. Volvo XC90

    3. BMW X5 series




                                                                                                  Page 3 of 42
Middle level SUV:

    1. Sumo Grande MkII

    2. New Scorpio

    3. New Bolero



Small SUV:

    1. ICML Rhino

    2. Premier Rio




Small Cars:

    1. Tata Nano

    2. Ultra low cost (ULC) car (By Bajaj Auto Limited in alliance with Renault-Nissan)



Recent Developments:

With the entry of global auto majors such as Volkswagen, Toyota and Honda in the domestic compact car
segment, it is anticipated competitive intensity will increase for market the leader Maruti Suzuki (over the
medium term. Most of the new launches would be positioned in the premium range of the A2 segment, with
reasonable levels of localization initially - VW Polo at 50% and Toyota Etios at 65-70%. Other models to hit
the market this year include the Ford Figo, GM Beat and the Nissan Micra. While most new launches would
be pegged against the mid and premium end of Maruti's A2 segment, ramp-up in Nano volumes from mid-
CY10, and launch of the Nano diesel in CY11, could impact Maruti Alto's dominance in the lower A2 segment
that has a current run-rate of ~18,000 units (Exhibit 1).

Opportunity Analysis

    a) Potential Customer Segment


        The potential customer segment identified was based on:

                                                                                                  Page 4 of 42
1) Price band - The customer of B2 segment car who wishes to buy a car/SUV at a price band of `

            4~4.5 lacs (Exhibit 2)


        2) Customer profile - The customer profile is the one of a power seeker-who wishes to

            demonstrate his authority/power (Exhibit 16).


        3) The possible ‘Target Group’ definition is shown below:


            a) Age - <35 yrs (if older at least Young at heart)


            b) Income bracket - Middle class with income of ` 25000 to ` 40000 per month


            c) Educational attainment – At least graduate or pursuing graduation


            d) Ownerships - Using a 2-wheeler or a bigger car/SUV & looking for an additional/alternate

                 vehicle


            e) Location – Urban (Including rural affluent with Urban mindset)


            f)   Employment


                     –     Salaried as their primary vehicle


                     –     Small businessmen buying as additional/alternate vehicle (For 2W or large 4W/SUV)


            g) Economic status- Sec A & B


    b) Competition Analysis (Exhibits 17, 18 & 19):

The current offerings analyzed are:

                               1. Premier Rio

                               2. ICML Rhino


                                                                                                Page 5 of 42
3. Ford Fusion

Additionally small cars (B segment) are also analyzed assumption being the small customer will shift to small
SUV & would like to have similar or better features than a small car.

The purpose of competition analysis & benchmarking is to analyze the current offering to customer,
understanding the best & worst in class offerings in terms of features & technical specifications & further to
set the technical targets for proposed product offering.

    c) Process of New Product Introduction at M&M (Refer Exhibit 7)


            Market Research- Process (Refer Exhibit 11):

                   i.   Conduct Market research/QFD for understanding opportunity (segmentation),
                        demand & growth potential & competition [3] [4]

                  ii.   Understand customer needs, pains & values (targeting) [3][4]

                 iii.   Based on competition & customer needs identify the gaps in current offerings &
                        create multiple concepts of proposed product

                  iv.   Offer the concepts to potential customers to analyze the alignment between what is
                        required by customers & what is offered to each customer

                  v.    Select single concept based on above exercise (positioning) [3][4] & decide product
                        attribute leadership strategy (PALS) (which product attribute are leaders, which are
                        among leaders & which are competitive)

                  vi.   Develop subjective functional image (FI) targets based on jury & proposed concept
                        evaluation

                 vii.   Detail the technical specifications based on PALS, FI & benchmarking & feasibility
                        through simulation exercises

                The new product development process usually followed in the auto industry is illustrated in
                Exhibit 6. The general new product development process followed by automotive industry is
                based on gateway / stages with project phases (Exhibit 9) viz.

                            •   Initiation

                            •   Planning

                            •   Execution

                                                                                                  Page 6 of 42
•   Monitoring & Control

                              •   Closure

At M&M Product Development, the process followed is in line with what Auto industry follows-stage gate
process (Exhibit 10). The project life cycle goes through 12 gateways to ensure product & process validation
through different levels of prototypes. All the 9 knowledge areas of project management are taken care of
to make the project fully process compliant (Exhibit 10). Both the product & project life cycle concept are
integrated in M&M through the new product development system (Exhibit 8).

Over the last few years the sales of B1 class cars is on a high growth pattern (exhibits 12 to 14) and many
competitors are entering fast into this segment. However, there are both advantages and disadvantages of
entering this segment:

Advantages of Entering this Segment:

1. Many consumers find the pricing of compact SUVs attractive. For the most part, these vehicles are priced
affordably compared with larger SUVs.

2. Another reason consumers like compact SUVs is their fuel-thrifty nature when compared to larger SUVs.
Buyers can find many models in this segment with 4-cylinder engines, which generally provide higher
gasoline mileage per gallon of fuel than do bigger SUVs with larger engines.

3. Many buyers also prefer small SUVs because these vehicles tend to position drivers higher off the road
than they are in regular cars but typically not so high that they have to struggle to climb aboard. Drivers like
the better visibility—over and around traffic—that comes with this higher ride height.

4. Smaller SUVs often have more nimble handling than do bigger SUVs

5. Customers feel to be in a commanding position when they buy SUV compared to small car

Disadvantages of Entering this Segment:
1. Generally, consumers can't be expected expect to tow as much behind small SUVs as they might with
larger sport utilities that have larger engines.

2. Smaller SUVs also can't carry as much cargo. Generally, room behind the front seats for cargo ranges up to
72 cubic feet or so in compact SUVs. Large sport utilities offer more storage space. Maximum payload also is
greater in the bigger SUVs.

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3. Even though compact SUVs can be more fuel-efficient than their larger cousins, these SUVs typically are
not as fuel-thrifty as some other vehicles, such as five-passenger, compact sedans.

Should M&M get into this segment? If yes, how should they get into it? What strategy do you suggest to
M&M?




        Budget Estimation:




                                                                                                Page 8 of 42
Head                   Details                                Capital        Revenue
                                                              (` Lacs)       (` Lacs)
                                                              (With Taxes)   (With taxes)
Design & development   Vehicle Capitalization (200 veh. x     2000           0
                       ` 5 lacs per vehicle)
                       Test Equipments                        2000           0
                       Testing charges                        0              2000
                       Consultancy                            0              5000
                       Training & traveling                   0              200

Vendor Development     Hard Tooling                           10000          0
                       Parts Validation                       0              2000
                       Soft Tooling                           0              4000
                       Transportation                         0              1000

                       Dies, Tools-Body, Vehicle Assembly,    50000          0
Manufacturing          Logistics
                       Common Facilities - Paint, Press       40000          0
                       Shop, Civil, Mechanical & Electrical
                       and Plan Infrastructure

                       Utilities                              10000          0


                      Capital                                 Revenue
                      (` Lacs)                                (` Lacs)
                      (With Taxes)                            (With taxes)
                Total 114000                                  14200

    Contingency 5% on 6000                                    439
                Capex
                Gross 120000                                  14639




       a. Whether M&M should get i




                                                                                 Page 9 of 42
Exhibits
Exhibit A: SUV Segment & Product Offerings:




Exhibit B:




                                              Page 10 of 42
Exhibit C:




Exhibit D:




             Page 11 of 42
Exhibit E:




Exhibit F:




             Page 12 of 42
Exhibit 1:Market Trends: Launches in the compact car segment

                   Estimated price      Proposed launch                                   Capacity
Company/Model      (INR)                date                 Major models impacted        (nos.)
Ford Figo          450000~550000        Early 2010           Ritz, Swift, i10             100,000
                                                             Estilo , Wagon-R,A-Star,
GM Beat            340000~430000        Jan-2010             Santro                       140000
VW-Polo            500000               Mar-2010             Ritz, Swift, i10,Punto       110000
Toyota-Etios       500000~550000        Oct-2010             Ritz, Swift, i20             70000
Honda-Concept
Car                550000~600000        Jan-2011             Ritz, Swift, i20             100,000
Nissan-Micra       450000~550000        May-2010             Swift,Ritz,i10               200000

Source: Ambit Capital Research, Media Reports, Company Websites




                                                                                        Page 13 of 42
Exhibit 4: Models seriously considered by Entry Compact:




                                                           Page 14 of 42
Exhibit 5: Small Cars vs. UV’s:




Source: M&M internal data for portfolio analysis


Exhibit 6: Process for new product development followed in automotive industry:

In automotive industry the process followed for new product development is a stage gate process as
mentioned below: [2]




                                                                                            Page 15 of 42
Exhibit 7: Process for new product development followed in M&M (Source-M&M internal data):




Exhibit 8: Product & Project Life Cycle:




                                                                                  Page 16 of 42
Exhibit 9: Process Groups-Project Management:




Source: Project Management Body of Knowledge



                                                Page 17 of 42
Exhibit 10: 9 Knowledge Areas of Project Management:




Source: Project Management Body of Knowledge

Exhibit 11: QFD Methodology:


                                                       Page 18 of 42
Source: M&M internal process for market research

Sales data for SUV & Small Car segments for period from April 2009 to Dec 2009

                                                                                 Page 19 of 42
Exhibit 12: SUV:


                                                               % Market Share (Within
 Product Segment                             F10(3 quarters)   SUV segment)
 Semi Luxury Sports Utility Vehicle              132509                 80%
 Luxury Sports Utility Vehicle                    33755                 20%
 Total SUV                                       166264



Exhibit 13: Cars:

 Product Segment                             F10(3 quarters)   % Market Share
 A Class Cars                                     93258                  8%
 B Class Cars                                    798573                 71%
 C Class Cars                                    197989                 18%
 D Class Cars                                     24441                  2%
 E/F Class Cars                                    7264                  1%
 Passenger Car total market (A+B+C+D)           1121525                 100%




 Exhibit 14:B1 Class-Small Car

 (Price Bracket-2~4.5lacs)


                                           F10(3           % Market Share in B     % Market Share in Car
 Product Segment                           quarters)       Class                   Segment
 B1 Class-Small Car (Price Bracket-2~4.5
 lacs)                                        623392                78%                        56%
 B2 Class Car                                 175157                 22%                       16%
 B3 Class Car                                   24                    0%                        0%
 B Class Cars Total                           798573                100%                       71%




Source: M&M internal data for automotive industry sales


Exhibit 15:


                                                                                                Page 20 of 42
Source: M&M internal process for market research




Exhibit 16: Target Customer Segment:
                                                   Page 21 of 42
Source: M&M internal process for market research




Exhibit 17: Data analysis; Results & Interpretation: Competition Analysis, Benchmarking:
                                                                                    Page 22 of 42
1. Premier Automobile’s Rio-Small SUV: ( Link: http://www.premierrio.com/ )

             a. Technical Specifications:



DIMENSIONS
Overall Length                      3900 mm
Overall Width                       1555 mm
Overall Height                      1670 mm
Wheelbase                           2420 mm
Turning Circle Radius               4.7 mm
Ground Clearance                    195 mm

ENGINE                              Diesel
No. of Cylinders                    4
Engine cc                           1489 cc
Max Power                           64.8 ps@4000 rpm
Emission                            BSIII
Maximum Output                      47.6 kW @ 4000 rpm
Air Charging Systems                Fixed geometry turbo charger

CAPACITY
GVW (kgs)                           1530
Seating                             5
Fuel Tank Capacity (ltrs.)          46

WEIGHTS
Kerb Weight                         1145 Kgs.
TRANSMISSION                        5 speed manual
BRAKES
Front                               Disc
Rear                                Drum
TYRES                               205 / 70 R15
SUSPENSION
Front                               McPherson strut & coil spring
Rear                                5 rods system

             b. Price:       (EX Price In New Delhi)
                      i.      Premier Rio EX – Rs 5,25,000
                     ii.      Premier Rio DX – Rs 5,50,000
                    iii.      Premier Rio LX – Rs 5,95,000




                                                                                   Page 23 of 42
c. Features:




       d. Product:




                                        Specifications




•
2. ICML Rhino: (Link: http://www.carwale.com/research/firstdrives/icmlrhinos2/default.aspx)

                                                                                    Page 24 of 42
a. Technical Specifications:


       Engine:2000cc, 4-cylinder, inline four turbocharged intercooled

       Bore x Stroke: 84 x 90 mm

       Compression Ratio: 21:01

       Max Power: 75 PS @ 4200rpm

       Max Torque: 152Nm @ 2500rpm

       Transmission: Five-speed manual

       Suspension: Independent double wishbone (Front), Semi Elliptical Leaf Spring (Rear)

       Tyres: 205/65 R15

       LxWxH: 4440x1645x1885mm

       Ground Clearance: 170mm

       Min Turning Radius: 5.6m

       Kerb Weight: 1603 kgs

       Fuel Tank Capacity: 50 litres

       Price (as tested, OTR Punjab): Rs 5,90,000




                                                                                Page 25 of 42
b. Features:




               Page 26 of 42
c. Product:




              Page 27 of 42
3. Ford Fusion: 1.4 TDCi (Price: ` 676657 Ex Show Room Mumbai):




         Dimensions and Weights
         Overall Length            3989 (mm)
         Overall Width             1720 (mm)
         Overall Height            1529 (mm)
         Wheel Base                2486 (mm)
         Ground Clearance          198 (mm)
         Front Track               1484 (mm)
         Rear Track                1444 (mm)
         Front Headroom            900 (mm)
         Front Legroom             1188 (mm)
         Rear Legroom              866 (mm)
         Rear Shoulder             -
         Boot Space                337 (liter)
         Gross Vehicle             -
         Kerb Weight               1180 (kg)
         Fuel Economy
         Mileage (Highway)         18 (km/liter)
         Mileage (City)            13 (km/liter )
         Mileage (Overall)         14 (km/liter)
         Capacities
         Seating Capacity          5 (person)

                                                                  Page 28 of 42
Fuel Tank Capacity       45 (liter)
No Of Doors              5
Performance
Maximum Speed            158 (kmph)
0-100kmph                17.9 (seconds)
1/4 Mile                 19.2 (seconds)
100kmph-0 (Braking)      57 (meters)
80kmph-0 (Braking)       35.2 (meters)
Engine
Engine Type              1.4L TDCi SOHC
Displacement             1399 (cc)
Power                    68@4000 (PS@rpm )
Torque                   160@2000 (Nm@rpm )
Valve Mechanism          SOHC
Bore                     73.7 (mm)
Stroke                   82 (mm)
Compression Ratio        18
No of Cylinders          4 (cylinder )
Cylinder Configuration   In-line
Valves per Cylinder      2 (valve)
Ignition Type            Electron
Engine Block Material    Aluminum
Block Head Material      Aluminum
Fuel Type                Diesel
Fuel System              High Pressure Common Rail
Transmission
Transmission Type        Manual
Gears/Speeds             5 (Gear)
Clutch Type              -
Final Reduction          3.82 (meters)
Suspensions
Front Suspension         Independent McPherson Strut with offset coil spring/
                         damper units and Lower L-arms with optimized
                         bushes mounted on separate cross member with
                         stabilizer bar. Dual path body mounts.


Rear Suspension          Semi-independent heavy duty twist beam with low
                         package height coil springs and separate twin tube
                         dampers.

Steering
Steering Type            Rack and Pinion

                                                                              Page 29 of 42
Power Assisted           Standard
Minimum Turning Radius
                         4 (meter)
Brakes
Brake Type               -
Front Brakes             258mm Ventilated Disc
Rear Brakes              203mm Self-Adjusting Drums
Wheels and Tyres
Wheel Type               Steel
Wheel Size               6JX15
Tyres                    195/60 R15
Features                 Availability

Air Conditioner




Power Windows
Power Door Locks
Power Steering

Anti-Braking System




Traction Control

Air-Bags Driver




Air-Bags Passenger
Immobilizer

Cup Holders




                                                      Page 30 of 42
Folding Rear-Seat




Rear Wash Wiper
Alloy Wheels
Tubeless Tyres

Central Locking




Remote Fuel-Lid

Steering Adjustment




Tachometer
Child Safety Locks

Front Fog Lights




Defogger (Rear)




Leather Seats
Power Seats
Radio

LCD Screen




                      Page 31 of 42
CD Player

Sun-Roof




Moon-Roof
Colors

     Panther Black     Mystic Wine

            Brus     Moon dust Silver




                                        Page 32 of 42
Exhibit 18: Small SUV Comparison:




                                      Ford-Fusion               Premier-Rio           Sonalika-Rhino Rx
                                  Price Rs. 6,76,657         Price Rs. 5,25,000
                              ( Ex. Showroom-Mumbai )   ( Ex. Showroom-Mumbai )




                                                                                  Page 33 of 42
Features                 1.4 TDCi   EX             DLX
 Air Conditioner
 Power Windows
 Power Door Locks
 Power Steering
 Anti-Braking System
 Traction Control
 Air-Bags Driver
 Air-Bags Passenger
 Immobilizer
 Cup Holders
 Folding Rear-Seat
 Rear Wash Wiper
 Alloy Wheels
 Tubeless Tyres
 Central Locking
 Remote Fuel-Lid
 Steering Adjustment
 Tachometer
 Child Safety Locks
 Front Fog Lights
 Defogger (Rear)
 Leather Seats
 Power Seats
 Radio
 LCD Screen
 CD Player
 Sun-Roof
 Moon-Roof




Dimensions and Weights   1.4 TDCi    EX              DLX

 Overall Length(mm)        3989     3900             4440
 Overall Width(mm)         1720     1555             1645
 Overall Height(mm)        1529     1670             1885
 Wheel Base(mm)            2486     2420             2541
 Ground Clearance(mm)       198      195              180
 Front Track(mm)           1484       -                -
 Rear Track(mm)            1444       -                -
 Front Headroom(mm)         900       -                -
                                           Page 34 of 42
Front Legroom(mm)                    1188                 -                         -
Rear Legroom(mm)                      866                 -                         -
Rear Shoulder(mm)                      -                  -                         -
Boot Space(liter)                     337                 -                         -
Gross Vehicle(kg)                      -                1530                      2310
Kerb Weight(kg)                      1180               1145                      1633
Fuel Economy                       1.4 TDCi              EX                       DLX

Mileage (Highway)(km/liter)           18                  16                        -
Mileage (City)(km/liter )             13                  12                        -
Mileage (Overall)(km/liter)           14                 13.5                       -
Capacities                         1.4 TDCi               EX                       DLX

Seating Capacity(person)             5                    5                         9
Fuel Tank Capacity(liter)            45                   46                       50
No Of Doors                          5                    5                         5
Performance                        1.4 TDCi               EX                       DLX

 Maximum Speed(kmph)                 158                 145                        -
 0-100kmph(seconds)                  17.9                 -                         -
 1/4 Mile(seconds)                   19.2                 -                         -
 100kmph-0          (Braking)         57                  -                         -
(meters)
 80kmph-0 (Braking)(meters)          35.2                  -                        -
Engine                             1.4 TDCi               EX                       DLX

Engine Type                     1.4L TDCi SOHC   Peugeot Turbo Diesel     4cylinder inline Turbo
                                                                           charged Intercooled
                                                                                  Direct
Displacement(cc)                      1399               1489                      1994
Power(PS@rpm )                     68@4000             64@4000                  101@4200
Torque(Nm@rpm )                   160@2000            152@2250                  220@2400
Valve Mechanism                       SOHC                 -                         -
Bore(mm)                               73.7                -                       84.4
Stroke(mm)                              82                 -                       88.9
Compression Ratio                       18                 -                        21
No of Cylinders(cylinder )              4                  4                         4
Cylinder Configuration               In-line               -                      inline
Valves per Cylinder(valve)              2                  -                         -
Ignition Type                       Electron               -                         -
Engine Block Material             Aluminum                 -                         -
Block Head Material               Aluminum                 -                         -
Fuel Type                            Diesel             Diesel                    Petrol



                                                                        Page 35 of 42
Fuel System                   High Pressure Common Rail                  -                Mechanical FIP, Rotary
                                                                                                 type
Transmission                            1.4 TDCi                        EX                         DLX

Transmission Type                       Manual                        Manual                     Manual
Gears/Speeds(Gear)                        5                             5                          5
Clutch Type                                -                            -                          -
Final Reduction(meters)                  3.82                           -                          -
Suspensions                             1.4 TDCi                        EX                         DLX

Front Suspension                Independent McPherson          McPherson strut & coil      Independent Double
                              Strut with offset coil spring/          spring               wish bone type with
                               damper units and Lower L-                                 torsion bar & telescopic
                              arms with optimized bushes                                      shock absorber
                              mounted on separate cross
                              member with stabilizer bar.
                                 Dual path body mounts.
Rear Suspension                Semi-independent heavy              5 rods system           Semi Elliptical Leaf
                               duty twist beam with low                                   spring with telescopic
                              package height coil springs                                    shock absorber
                                and separate twin tube
                                       dampers.
Steering                               1.4 TDCi                         EX                         DLX

Steering Type                       Rack and Pinion                   Power                   Rack & Pinion
Power Assisted                         Standard                      Standard                   Standard
Minimum             Turning                4                             5                          6
Radius(meter)
Brakes                                  1.4 TDCi                        EX                         DLX

Brake Type                              -                                -                          -
Front Brakes                    258mm Ventilated Disc                   Disc                 Ventilated Disc
Rear Brakes                     203mm Self-Adjusting                   Drum                      Drum
                                      Drums
Wheels and Tyres                        1.4 TDCi                        EX                         DLX

Wheel Type                               Steel                           -                        Steel
Wheel Size                              6JX15                       205/70 R15                  15 inch
Tyres                                 195/60 R15                     Tubeless                 205 / 65 R 15




                                                                                        Page 36 of 42
Exhibit 19: Tech Specification-Competition-B1 Car Segment
       Product Name                         Maruti 800          Alto        Tata Indica Xeta GL           Santro

Body                                      Two Box 4 door   Two Box 4 door    Two Box 4 door            Two Box 4 door
                                Unit        Hatchback        Hatchback         Hatchback                 Hatchback
Exterior Dimensions
Overall Length                  mm            3335             3495                3675                    3565
Overall width                   mm            1440             1475                1665                    1525
Overall height (at K.W)         mm            1405             1460                1485                    1590
Wheel Base                      mm            2175             2360                2400                    2380
Front Track                     mm            1400             1290                1400                    1315
Rear Track                      mm            1380             1290                1380                    1300
ground clearance (at K.W)       mm             170              166                170                      172
Kerb Weight                      kg            650              725                995                      854

                                                                                                  Page 37 of 42
Gross Vehicle Weight         kg              1000                 1165                    1395
Boot Space                  liter                                                         217                      218
Boot/Cargo Width(min)        mm              965                 100.5                    940                      985
Boot Depth/Cargo length      mm              505                  60.5                    515                      585
Cargo Height/Loading
height                       mm
No of Doors                                    4                    5                       5                       4
Interior Dimension
Seating Capacity           person              4                    5                       5                       5
Front Headroom               mm                                                           955
Rear Headroom                mm              910                   91                     920                      920
Front Legroom(Max/Min)       mm              1130                 1190                 1080/990
Front Knee room
(Max/Min)                    mm                                                         760/580
Rear Legroom(Max/Min)        mm              790                  900                   820/660
Front Shoulder Room          mm                                                           1350
Rear Shoulder                mm              1160                 1220                    1335
Front Hip Room
Rear Hip Room                mm              1170                 116                     1390                    1270
ENGINE


                                                                                 475 SI Multi Point Fuel
                                        Water cooled        FC engine/32 bit     injection System with        4 stroke cycle,
Engine Type/Model                       SOHC (1C2V)            computer          32-bit microprocessor        Water cooled

                                       In line, Naturally   In line, Naturally
                                        aspirated, front     aspirated, front       In line, Naturally
Layout / Position                         ,transverse          ,transverse           aspirated, front
Power                     PS@rpm          38@5000              47@6200                 70@4800                  63@5500
Torque                    Nm@rpm          59@2500              62@3000                 122@2600                 89@3000


        Product Name                     Maruti 800               Alto            Tata Indica Xeta GL            Santro

Body                                   Two Box 4 door       Two Box 4 door          Two Box 4 door            Two Box 4 door
                            Unit         Hatchback            Hatchback               Hatchback                 Hatchback


Specific Output           bhp/liter   46.48 bhp per liter


Power to Weight           bhp/tonne   55.63 bhp per liter                                                         73.77


Torque to Weight          kgm/tonne   9.03 kgm per tonne
No of Cylinders            cylinder            3                    3                       4                       4
Cylinder Configuration                      Inline               Inline                  In-line                  Inline



Injection                                    MPFI                 MPFI                    MPFI


                                                                                                         Page 38 of 42
Distributor less
                                                                                                             ignition system
Ignition                                  Transistorized      Transistorized                                       (DLI)
Valves per Cylinder           valve               2                 4                      2                        3
Valve Mechanism                               SOHC                SOHC                   SOHC
Displacement                    cc               796               796                   1396                     1086
Bore                           mm                68.5             68.5                    75                       66
Stroke                         mm                72                72                    79.5                      77
Compression Ratio                             8.8:2                                       9:1                      8.9



Fuel Type                                     Petrol              Petrol                 Petrol                 Gasoline


Fuel Tank Capacity             liter             28                35                     37                       35
Turbocharger                   No                No                No                     No                       No
Supercharger                   No                No                No                     No                       No
Construction
Engine Block Material        Material     Cast Iron Block    Cast Iron Block        Cast Iron Block             Cast iron
Block Head Material          Material    Aluminum Alloy      Aluminum Alloy        Aluminum Alloy              Aluminum
Fuel Economy
Mileage (Highway)            km/liter            18.7             18.3                   15.3                     16.8
Mileage (City)               km/liter            13.1             13.6                   11.1                     11.8
Mileage (Overall)            km/liter            14.2             14.5                   11.9                     12.7
DRIVE TRAIN
Drive System                            Front wheel         Front wheel drive   Front wheel                Front wheel drive
Transmission Type                       Manual              5 speed, all        Manual                     Manual/Automatic
                                                            synchromesh,
                                                            manual

         Product Name                      Maruti 800             Alto            Tata Indica Xeta GL           Santro
                                         Two Box 4 door      Two Box 4 door         Two Box 4 door           Two Box 4 door
Body
                              Unit         Hatchback           Hatchback              Hatchback                Hatchback
Gears/Speeds                  Gear                4                 5                      5
Rear Differential                                NA                NA                     NA                       NA
Gear Box
Final Reduction Gear Ratio                    4.35:1                                     3.76:1
Maximum Speed                 kmph               132               137                    152                      137
Acceleration from Rest
70 kmph                      seconds          10.96
80 kmph                      seconds          14.19               12.1                                            11.23
90 kmph                      seconds          18.28
100kmph                      seconds          25.15               20.38                  17.4                     17.9
CHASSIS                                    Monocoque                                 Monocoque                Monocoque
Steering


Steering Type                                    R&P              R&P                    R&P                      R&P

                                                                                                        Page 39 of 42
Steering Ratio                                                                            4.3:1
Minimum Turning Radius     meter             4.4                   4.6                     4.9                     4.4
Turns Lock To lock         number           3.27
Suspension



                                                                                   Independent, Wish
                                                            McPherson Strut          Bone type with
                                     McPherson strut &      with torsion type       McPherson strut,        Mc Pherson Strut
Front Suspension                        coil spring           anti-roll bar            Antiroll Bar         with Stabilizer Bar



                                                                                   Independent, Semi
                                                              Coil spring with    trailing arm with coil    Torsion Beam Axle,
                                     Coil spring with gas      double action       spring mounted on         3-Link Offset Coil
                                          filled shock       telescopic shock        hydraulic shock             Springs &
Rear Suspension                            absorbers            absorbers                absorbers          Hydraulic Dampers
Braking and Traction


                                                              Powerful 8-inch
                                                             booster assisted
                                                             front disc brakes   Dual Circuit, diagonally
                                                             halt instantly on   split, vacuum assisted
Brake Type                                                        braking           with PCR valves
                                                                                   231mm Ventilated
Front Brakes (Dia)                     Disc (215mm)            Disc brakes              Discs                Ventilated Discs
Rear Brakes (Dia)                    Drum (180 mm)          Drum                 180mm Drums                Self Adjusting
                                                                                                            Drums (Vacuum
                                                                                                            Assisted)
Braking Distance Meters
        Product Name                    Maruti 800                Alto            Tata Indica Xeta GL           Santro
                                      Two Box 4 door         Two Box 4 door         Two Box 4 door           Two Box 4 door
Body
                            Unit        Hatchback              Hatchback              Hatchback                Hatchback
100-0 kmph                 meters           ------                                        60.1
80-0 kmph                  meters           31.54                  35.8                   34.8
60-0 kmph                                   16.85
Wheels & Tyres


Tyres Size                              145 / 70 R-12          145 / 80 R12       165 x 65 R13 Radial       155/70 R 13 Radial
Wheel Size                                  4Jx12                  12"                  4.5J x 13"               13 Inch
Wheel (Alloy/Steel)                         Steel                 Steel                   Steel                    Steel
Maintenance
Oil filter                   `               55                     55                                              61
Fuel filter                  `               168                   168                                             168
Air filter                   `               104                   104                                             107
Headlight assembly           `               607                  1292                                             1300
Warranty/ km              Month/km       24/Un-ltd.          24mnth/Un-ltd.            18/Un-ltd.               24/50000
Features

                                                                                                        Page 40 of 42
Additional body
reinforcements
                                          Yes              Yes                Yes                      Yes
Air conditioner                         Optional         Optional             Yes                    Optional
Airflow controls                          Yes              Yes                Yes                      Yes
Alloy Wheels                              No               No                  No                      No
AM/FM Radio                               No               No                  No                      No
Anti-Braking System                       No               No                  No                    Optional
Back door lock                            Yes              Yes                Yes                      Yes
Cabin light (3 positions)                 Yes              Yes                Yes                      Yes
Cassette Player                           No               No               Optional                   No
CDÂ Player                                No               No               Optional                   No
Center box with lid                       Yes              Yes                 No                      No
Central Locking                           No               No               Optional                   No
Child Safety Locks                        No               Yes                Yes                      Yes
Clear lens headlamps *                    Yes              Yes                Yes                      Yes
Clear lens rear combination
lamps *
                                          Yes              Yes                Yes                      Yes
Coin receptacle                           Yes              Yes                Yes                      No
Collapsible steering column
                                          Yes              Yes                Yes                      Yes
Cup Holders                               No             Optional             Yes                      Yes
Defogger (Rear)                           No               No               Optional                   No
Dual Tone Interior
Upholstery *
                                          Yes              Yes                Yes                      Yes
Floor & luggage room
carpets
                                          Yes              Yes                Yes                      Yes
       Product Name                    Maruti 800          Alto        Tata Indica Xeta GL           Santro
                                     Two Box 4 door   Two Box 4 door     Two Box 4 door           Two Box 4 door
Body
                              Unit     Hatchback        Hatchback          Hatchback                Hatchback
Folding Rear-Seat                         Yes              Yes                Yes                      Yes
Front & rear assist grips                 Yes              Yes                Yes                      Yes
Front and rear seats belts                Yes              Yes                Yes                      Yes
Front door pocket (only
LHS)
                                          Yes              Yes                Yes                      Yes
Front Fog Lights                          No               No               Optional                   No
Front wipers (2 speed +
Intermittent)
                                          Yes              Yes                Yes                      Yes
Glove compartment                         Yes              Yes                Yes                      Yes
Green tinted glasses                    Optional         Optional             Yes                    Optional
Halogen bulbs                             Yes              Yes                Yes                      Yes
Head lamp leveling device *
                                          Yes              Yes              Optional                 Optional
High mount rear stop lamp                 Yes              Yes                Yes                      Yes
Immobilizer                               No               No                  No                      No
Inside rear view mirror                   Yes              Yes                Yes                      Yes

                                                                                             Page 41 of 42
Laminated windshield        Yes     Yes        Yes               Yes
Leather Seats               No      No         No                No
Lockable fuel lid           Yes     Yes        Yes               Yes
Molded roof lining          Yes     Yes        Yes               Yes
Outside rear view mirror
(RHS)
                            Yes     Yes        Yes               Yes
Power Door Locks            No      No         No              Optional
Power Seats                 No      No         No                No
Power Steering              No    Optional   Optional            No
Power Windows               No      No       Optional            No
Rear Wash Wiper             No      No       Optional            No
Reclining & Sliding front
seats
                            Yes     Yes        Yes               Yes
Remote Fuel-Lid             No    Optional     Yes               Yes
Side impact beams           Yes     Yes        Yes               Yes
Stay type fuel gauge        Yes     Yes        Yes               Yes
Steering Adjustment         No      No         No                No
Sun visors on both sides    Yes     Yes        Yes               Yes
Tachometer                  No      No       Optional            No
Tubeless Tyres              No      No         No                No
Windshield washer           Yes     Yes        Yes               Yes




                                                        Page 42 of 42

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Mahindra and Mahindra Case Study

  • 1. Mahindra & Mahindra exploring the Launch of a small SUV in India Present affiliation of Authors Dr. Atish Chattopadhyay, Professor of Marketing, SPJIMR, India, email: atishc@spjimr.org Nitin Shrotri, Mahindta & Mahindra Ltd, email: nitinshrotri1@gmail.com M&M is market leader in utility vehicle segment with a market share of 65%.There is huge market potential (where competition has already entered into) for small Sports Utility Vehicle (Premier Automobiles’ Rio & International Cars & Motors Ltd’s Rhino) /small cars (Tata Motors’ Nano). M&M presently does not have presence in small SUV market. There is no product being offered by M&M in small car or small SUV segment as of now & hence there is a gap in product portfolio. Is M&M in a position to tap the potential for small SUV market in India? Background of Automotive Industry in India - Passenger Segment: With increasing number of introduction of new models along with the entry of global players, attracted by the size and growth of India's car market competition has intensified in the small cars segment. Cost pressure is mounting on small car manufacturers as they attempt to maintain market share through frequent model introductions, in response to the competition. To maintain the margins, it is believed that small car manufacturers would need to increase sales volumes per model rather than introduce more models in the segment, which will diminish the benefits of scale efficiency. The level of competition in India's small car market, particularly the A2 segment, has increased significantly as its size and growth potential has attracted several global car manufacturers. Entry of new global players or models is expected to continue over the medium term further intensifying the competition in this segment (Exhibit B). The A2 segment is expected to grow 11-13 per cent in 2010-11 compared with that of 10-12 percent for the industry as a whole (excluding sales volumes of Tata Nano). However, sales volumes per model in the A2 segment will decline in 2010-11 as there have been a number of model introductions. Sales volumes per model have been declining in the segment since the third quarter of 2006-07, although the total sales volumes have increased (Exhibits C & D). While the introduction of several models over the past few years has enabled car manufacturers to increase sales volumes, their costs have increased significantly impacting their profitability. The higher costs are primarily due to: • Increase in product development costs • Higher marketing and selling cost per unit of sales • Additional value added features (such as power windows, high-end music systems), without a commensurate increase in realisations. It is estimated that the introduction of car models over the years has significantly increased car manufacturers’ product development/royalty expenditure and marketing and selling expenses per unit of sales. For instance, selling expenses per unit of sales have increased at 11 per cent CAGR over the past four years up to 2008-09. This indicates car manufacturers are under greater pressure to attract and retain customers in order to maintain market share. The estimate is based on a study of the number of car models Page 1 of 42
  • 2. launched and costs per unit of sales (product development, and marketing and selling expenses) for a leading car manufacturer over the past few years (Exhibit E). The competition intensity has prompted players to offer more value added features (such as power windows, high-end music systems). However, the average realisation (adjusted for inflation) has declined 32 percent over the past five years up to 2009-10 (Exhibit F). It is believed that small car manufacturers would need to increase sales volumes per model rather than introduce more models in the A2 segment, which will diminish the benefits of scale efficiency. Company Background: Mahindra & Mahindra: Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is now a US $6.3 billion Indian multinational. It employs over 1,00,000 people across the globe and enjoys a leadership position in utility vehicles, tractors and information technology, with a significant and growing presence in financial services, tourism, infrastructure development, trade and logistics. The Mahindra Group today is an embodiment of global excellence and enjoys a strong corporate brand image. Mahindra is the only Indian company among the top tractor brands in the world and has made an entry in the two-wheeler segment, which is expected to see the company emerge as a full-range player with a presence in almost every segment of the automobile industry. The Mahindra Group expanded its IT portfolio when Tech Mahindra acquired the leading global business and information technology services company, Satyam Computer Services. The company is now known as Mahindra Satyam. Mahindra's Farm Equipment Sector is the recipient of the Japan Quality Medal, the only tractor company worldwide to be bestowed this honor. It also holds the distinction of being the only tractor company worldwide to win the Deming Prize. The US based Reputation Institute ranked Mahindra among the top 10 Indian companies in its Global 200: The World's Best Corporate Reputations list. Mahindra is also one of the few Indian companies to receive an A+ GRI checked rating for its first Sustainability Report for the year 2007-08 and has also received the A+ GRI rating for the year 2008- 09. The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the year ended 31st March 2010 is ` 20595.5 crores as against ` 14983.4 crores in the previous year – a growth of 37.5%. The Net Profit from ordinary activities before tax for the current year is ` 2846.8 crores as against ` 1036.5 crores in the previous year – a growth of 174.7%. After providing for tax the same is ` 2087.8 crores against ` 836.8 crores in the previous year - a growth of 150%. Mahindra & Mahindra is industry leader in utility vehicle (UV) segment (Sports, Pick up & Multi Purpose vehicles).It holds 65% share in utility vehicle market. Mahindra & Mahindra Auto Sector’s product portfolio & markets/segments are as below: a) Commercial Transport: Pick Ups -3 & 4 wheeler (MaXX Maxi Truck, Bolero Pik Ups, Scorpio Getaway, Bolero MaXXi Truck)-used for short/medium distance transport of goods. Heavy & Medium trucks are in the process of development. b) Passenger Transport: Page 2 of 42
  • 3. a. Jeeps (Commander, Major) b. Sports Pick Ups (SUV) (Bolero, Scorpio) c. Multipurpose vehicle (MPV) (Xylo) d. Car (Logan) e. 3 wheeler/Auto Rickshaw (Alfa Passenger) Competitive Scenario: The small car & SUV market has emerged as the most attractive one over the last 5 years on account of low buying & running/ maintenance costs, congested traffic conditions, parking space constraints, small /nuclear families. On the other hand there is a challenge of meeting the customer expectations and dealing with competitive pressure in terms of product cost, features and performance. For classification of vehicles in this segment refer to Exhibit 15. In the current scenario, many Indian as well as Foreign OEMs (local like Tata Motors Limited, Bajaj Auto Limited, ICML, Premier Auto Limited & international like Toyota, Ford etc) are focusing on the small car/SUV segment which is reflected through products introductions like Tata Nano, Bajaj Auto-Renault-Nissan’s Ultra Low Cost car, Ford Figo, General Motors’ Beat, Sonalika Rhino, and Premier Auto’s Rio and so on. According to experts, the critical success factors in the segment are: 1. Product Pricing 2. Time to market 3. Capacity ramp up 4. Distribution 5. Product features & performance Product Offerings -Cars and SUV (Exhibits 3, 4, 5) Luxury SUV: 1. Toyota Fortuner 2. Volvo XC90 3. BMW X5 series Page 3 of 42
  • 4. Middle level SUV: 1. Sumo Grande MkII 2. New Scorpio 3. New Bolero Small SUV: 1. ICML Rhino 2. Premier Rio Small Cars: 1. Tata Nano 2. Ultra low cost (ULC) car (By Bajaj Auto Limited in alliance with Renault-Nissan) Recent Developments: With the entry of global auto majors such as Volkswagen, Toyota and Honda in the domestic compact car segment, it is anticipated competitive intensity will increase for market the leader Maruti Suzuki (over the medium term. Most of the new launches would be positioned in the premium range of the A2 segment, with reasonable levels of localization initially - VW Polo at 50% and Toyota Etios at 65-70%. Other models to hit the market this year include the Ford Figo, GM Beat and the Nissan Micra. While most new launches would be pegged against the mid and premium end of Maruti's A2 segment, ramp-up in Nano volumes from mid- CY10, and launch of the Nano diesel in CY11, could impact Maruti Alto's dominance in the lower A2 segment that has a current run-rate of ~18,000 units (Exhibit 1). Opportunity Analysis a) Potential Customer Segment The potential customer segment identified was based on: Page 4 of 42
  • 5. 1) Price band - The customer of B2 segment car who wishes to buy a car/SUV at a price band of ` 4~4.5 lacs (Exhibit 2) 2) Customer profile - The customer profile is the one of a power seeker-who wishes to demonstrate his authority/power (Exhibit 16). 3) The possible ‘Target Group’ definition is shown below: a) Age - <35 yrs (if older at least Young at heart) b) Income bracket - Middle class with income of ` 25000 to ` 40000 per month c) Educational attainment – At least graduate or pursuing graduation d) Ownerships - Using a 2-wheeler or a bigger car/SUV & looking for an additional/alternate vehicle e) Location – Urban (Including rural affluent with Urban mindset) f) Employment – Salaried as their primary vehicle – Small businessmen buying as additional/alternate vehicle (For 2W or large 4W/SUV) g) Economic status- Sec A & B b) Competition Analysis (Exhibits 17, 18 & 19): The current offerings analyzed are: 1. Premier Rio 2. ICML Rhino Page 5 of 42
  • 6. 3. Ford Fusion Additionally small cars (B segment) are also analyzed assumption being the small customer will shift to small SUV & would like to have similar or better features than a small car. The purpose of competition analysis & benchmarking is to analyze the current offering to customer, understanding the best & worst in class offerings in terms of features & technical specifications & further to set the technical targets for proposed product offering. c) Process of New Product Introduction at M&M (Refer Exhibit 7) Market Research- Process (Refer Exhibit 11): i. Conduct Market research/QFD for understanding opportunity (segmentation), demand & growth potential & competition [3] [4] ii. Understand customer needs, pains & values (targeting) [3][4] iii. Based on competition & customer needs identify the gaps in current offerings & create multiple concepts of proposed product iv. Offer the concepts to potential customers to analyze the alignment between what is required by customers & what is offered to each customer v. Select single concept based on above exercise (positioning) [3][4] & decide product attribute leadership strategy (PALS) (which product attribute are leaders, which are among leaders & which are competitive) vi. Develop subjective functional image (FI) targets based on jury & proposed concept evaluation vii. Detail the technical specifications based on PALS, FI & benchmarking & feasibility through simulation exercises The new product development process usually followed in the auto industry is illustrated in Exhibit 6. The general new product development process followed by automotive industry is based on gateway / stages with project phases (Exhibit 9) viz. • Initiation • Planning • Execution Page 6 of 42
  • 7. Monitoring & Control • Closure At M&M Product Development, the process followed is in line with what Auto industry follows-stage gate process (Exhibit 10). The project life cycle goes through 12 gateways to ensure product & process validation through different levels of prototypes. All the 9 knowledge areas of project management are taken care of to make the project fully process compliant (Exhibit 10). Both the product & project life cycle concept are integrated in M&M through the new product development system (Exhibit 8). Over the last few years the sales of B1 class cars is on a high growth pattern (exhibits 12 to 14) and many competitors are entering fast into this segment. However, there are both advantages and disadvantages of entering this segment: Advantages of Entering this Segment: 1. Many consumers find the pricing of compact SUVs attractive. For the most part, these vehicles are priced affordably compared with larger SUVs. 2. Another reason consumers like compact SUVs is their fuel-thrifty nature when compared to larger SUVs. Buyers can find many models in this segment with 4-cylinder engines, which generally provide higher gasoline mileage per gallon of fuel than do bigger SUVs with larger engines. 3. Many buyers also prefer small SUVs because these vehicles tend to position drivers higher off the road than they are in regular cars but typically not so high that they have to struggle to climb aboard. Drivers like the better visibility—over and around traffic—that comes with this higher ride height. 4. Smaller SUVs often have more nimble handling than do bigger SUVs 5. Customers feel to be in a commanding position when they buy SUV compared to small car Disadvantages of Entering this Segment: 1. Generally, consumers can't be expected expect to tow as much behind small SUVs as they might with larger sport utilities that have larger engines. 2. Smaller SUVs also can't carry as much cargo. Generally, room behind the front seats for cargo ranges up to 72 cubic feet or so in compact SUVs. Large sport utilities offer more storage space. Maximum payload also is greater in the bigger SUVs. Page 7 of 42
  • 8. 3. Even though compact SUVs can be more fuel-efficient than their larger cousins, these SUVs typically are not as fuel-thrifty as some other vehicles, such as five-passenger, compact sedans. Should M&M get into this segment? If yes, how should they get into it? What strategy do you suggest to M&M? Budget Estimation: Page 8 of 42
  • 9. Head Details Capital Revenue (` Lacs) (` Lacs) (With Taxes) (With taxes) Design & development Vehicle Capitalization (200 veh. x 2000 0 ` 5 lacs per vehicle) Test Equipments 2000 0 Testing charges 0 2000 Consultancy 0 5000 Training & traveling 0 200 Vendor Development Hard Tooling 10000 0 Parts Validation 0 2000 Soft Tooling 0 4000 Transportation 0 1000 Dies, Tools-Body, Vehicle Assembly, 50000 0 Manufacturing Logistics Common Facilities - Paint, Press 40000 0 Shop, Civil, Mechanical & Electrical and Plan Infrastructure Utilities 10000 0 Capital Revenue (` Lacs) (` Lacs) (With Taxes) (With taxes) Total 114000 14200 Contingency 5% on 6000 439 Capex Gross 120000 14639 a. Whether M&M should get i Page 9 of 42
  • 10. Exhibits Exhibit A: SUV Segment & Product Offerings: Exhibit B: Page 10 of 42
  • 11. Exhibit C: Exhibit D: Page 11 of 42
  • 12. Exhibit E: Exhibit F: Page 12 of 42
  • 13. Exhibit 1:Market Trends: Launches in the compact car segment Estimated price Proposed launch Capacity Company/Model (INR) date Major models impacted (nos.) Ford Figo 450000~550000 Early 2010 Ritz, Swift, i10 100,000 Estilo , Wagon-R,A-Star, GM Beat 340000~430000 Jan-2010 Santro 140000 VW-Polo 500000 Mar-2010 Ritz, Swift, i10,Punto 110000 Toyota-Etios 500000~550000 Oct-2010 Ritz, Swift, i20 70000 Honda-Concept Car 550000~600000 Jan-2011 Ritz, Swift, i20 100,000 Nissan-Micra 450000~550000 May-2010 Swift,Ritz,i10 200000 Source: Ambit Capital Research, Media Reports, Company Websites Page 13 of 42
  • 14. Exhibit 4: Models seriously considered by Entry Compact: Page 14 of 42
  • 15. Exhibit 5: Small Cars vs. UV’s: Source: M&M internal data for portfolio analysis Exhibit 6: Process for new product development followed in automotive industry: In automotive industry the process followed for new product development is a stage gate process as mentioned below: [2] Page 15 of 42
  • 16. Exhibit 7: Process for new product development followed in M&M (Source-M&M internal data): Exhibit 8: Product & Project Life Cycle: Page 16 of 42
  • 17. Exhibit 9: Process Groups-Project Management: Source: Project Management Body of Knowledge Page 17 of 42
  • 18. Exhibit 10: 9 Knowledge Areas of Project Management: Source: Project Management Body of Knowledge Exhibit 11: QFD Methodology: Page 18 of 42
  • 19. Source: M&M internal process for market research Sales data for SUV & Small Car segments for period from April 2009 to Dec 2009 Page 19 of 42
  • 20. Exhibit 12: SUV: % Market Share (Within Product Segment F10(3 quarters) SUV segment) Semi Luxury Sports Utility Vehicle 132509 80% Luxury Sports Utility Vehicle 33755 20% Total SUV 166264 Exhibit 13: Cars: Product Segment F10(3 quarters) % Market Share A Class Cars 93258 8% B Class Cars 798573 71% C Class Cars 197989 18% D Class Cars 24441 2% E/F Class Cars 7264 1% Passenger Car total market (A+B+C+D) 1121525 100% Exhibit 14:B1 Class-Small Car (Price Bracket-2~4.5lacs) F10(3 % Market Share in B % Market Share in Car Product Segment quarters) Class Segment B1 Class-Small Car (Price Bracket-2~4.5 lacs) 623392 78% 56% B2 Class Car 175157 22% 16% B3 Class Car 24 0% 0% B Class Cars Total 798573 100% 71% Source: M&M internal data for automotive industry sales Exhibit 15: Page 20 of 42
  • 21. Source: M&M internal process for market research Exhibit 16: Target Customer Segment: Page 21 of 42
  • 22. Source: M&M internal process for market research Exhibit 17: Data analysis; Results & Interpretation: Competition Analysis, Benchmarking: Page 22 of 42
  • 23. 1. Premier Automobile’s Rio-Small SUV: ( Link: http://www.premierrio.com/ ) a. Technical Specifications: DIMENSIONS Overall Length 3900 mm Overall Width 1555 mm Overall Height 1670 mm Wheelbase 2420 mm Turning Circle Radius 4.7 mm Ground Clearance 195 mm ENGINE Diesel No. of Cylinders 4 Engine cc 1489 cc Max Power 64.8 ps@4000 rpm Emission BSIII Maximum Output 47.6 kW @ 4000 rpm Air Charging Systems Fixed geometry turbo charger CAPACITY GVW (kgs) 1530 Seating 5 Fuel Tank Capacity (ltrs.) 46 WEIGHTS Kerb Weight 1145 Kgs. TRANSMISSION 5 speed manual BRAKES Front Disc Rear Drum TYRES 205 / 70 R15 SUSPENSION Front McPherson strut & coil spring Rear 5 rods system b. Price: (EX Price In New Delhi) i. Premier Rio EX – Rs 5,25,000 ii. Premier Rio DX – Rs 5,50,000 iii. Premier Rio LX – Rs 5,95,000 Page 23 of 42
  • 24. c. Features: d. Product: Specifications • 2. ICML Rhino: (Link: http://www.carwale.com/research/firstdrives/icmlrhinos2/default.aspx) Page 24 of 42
  • 25. a. Technical Specifications: Engine:2000cc, 4-cylinder, inline four turbocharged intercooled Bore x Stroke: 84 x 90 mm Compression Ratio: 21:01 Max Power: 75 PS @ 4200rpm Max Torque: 152Nm @ 2500rpm Transmission: Five-speed manual Suspension: Independent double wishbone (Front), Semi Elliptical Leaf Spring (Rear) Tyres: 205/65 R15 LxWxH: 4440x1645x1885mm Ground Clearance: 170mm Min Turning Radius: 5.6m Kerb Weight: 1603 kgs Fuel Tank Capacity: 50 litres Price (as tested, OTR Punjab): Rs 5,90,000 Page 25 of 42
  • 26. b. Features: Page 26 of 42
  • 27. c. Product: Page 27 of 42
  • 28. 3. Ford Fusion: 1.4 TDCi (Price: ` 676657 Ex Show Room Mumbai): Dimensions and Weights Overall Length 3989 (mm) Overall Width 1720 (mm) Overall Height 1529 (mm) Wheel Base 2486 (mm) Ground Clearance 198 (mm) Front Track 1484 (mm) Rear Track 1444 (mm) Front Headroom 900 (mm) Front Legroom 1188 (mm) Rear Legroom 866 (mm) Rear Shoulder - Boot Space 337 (liter) Gross Vehicle - Kerb Weight 1180 (kg) Fuel Economy Mileage (Highway) 18 (km/liter) Mileage (City) 13 (km/liter ) Mileage (Overall) 14 (km/liter) Capacities Seating Capacity 5 (person) Page 28 of 42
  • 29. Fuel Tank Capacity 45 (liter) No Of Doors 5 Performance Maximum Speed 158 (kmph) 0-100kmph 17.9 (seconds) 1/4 Mile 19.2 (seconds) 100kmph-0 (Braking) 57 (meters) 80kmph-0 (Braking) 35.2 (meters) Engine Engine Type 1.4L TDCi SOHC Displacement 1399 (cc) Power 68@4000 (PS@rpm ) Torque 160@2000 (Nm@rpm ) Valve Mechanism SOHC Bore 73.7 (mm) Stroke 82 (mm) Compression Ratio 18 No of Cylinders 4 (cylinder ) Cylinder Configuration In-line Valves per Cylinder 2 (valve) Ignition Type Electron Engine Block Material Aluminum Block Head Material Aluminum Fuel Type Diesel Fuel System High Pressure Common Rail Transmission Transmission Type Manual Gears/Speeds 5 (Gear) Clutch Type - Final Reduction 3.82 (meters) Suspensions Front Suspension Independent McPherson Strut with offset coil spring/ damper units and Lower L-arms with optimized bushes mounted on separate cross member with stabilizer bar. Dual path body mounts. Rear Suspension Semi-independent heavy duty twist beam with low package height coil springs and separate twin tube dampers. Steering Steering Type Rack and Pinion Page 29 of 42
  • 30. Power Assisted Standard Minimum Turning Radius 4 (meter) Brakes Brake Type - Front Brakes 258mm Ventilated Disc Rear Brakes 203mm Self-Adjusting Drums Wheels and Tyres Wheel Type Steel Wheel Size 6JX15 Tyres 195/60 R15 Features Availability Air Conditioner Power Windows Power Door Locks Power Steering Anti-Braking System Traction Control Air-Bags Driver Air-Bags Passenger Immobilizer Cup Holders Page 30 of 42
  • 31. Folding Rear-Seat Rear Wash Wiper Alloy Wheels Tubeless Tyres Central Locking Remote Fuel-Lid Steering Adjustment Tachometer Child Safety Locks Front Fog Lights Defogger (Rear) Leather Seats Power Seats Radio LCD Screen Page 31 of 42
  • 32. CD Player Sun-Roof Moon-Roof Colors Panther Black Mystic Wine Brus Moon dust Silver Page 32 of 42
  • 33. Exhibit 18: Small SUV Comparison: Ford-Fusion Premier-Rio Sonalika-Rhino Rx Price Rs. 6,76,657 Price Rs. 5,25,000 ( Ex. Showroom-Mumbai ) ( Ex. Showroom-Mumbai ) Page 33 of 42
  • 34. Features 1.4 TDCi EX DLX Air Conditioner Power Windows Power Door Locks Power Steering Anti-Braking System Traction Control Air-Bags Driver Air-Bags Passenger Immobilizer Cup Holders Folding Rear-Seat Rear Wash Wiper Alloy Wheels Tubeless Tyres Central Locking Remote Fuel-Lid Steering Adjustment Tachometer Child Safety Locks Front Fog Lights Defogger (Rear) Leather Seats Power Seats Radio LCD Screen CD Player Sun-Roof Moon-Roof Dimensions and Weights 1.4 TDCi EX DLX Overall Length(mm) 3989 3900 4440 Overall Width(mm) 1720 1555 1645 Overall Height(mm) 1529 1670 1885 Wheel Base(mm) 2486 2420 2541 Ground Clearance(mm) 198 195 180 Front Track(mm) 1484 - - Rear Track(mm) 1444 - - Front Headroom(mm) 900 - - Page 34 of 42
  • 35. Front Legroom(mm) 1188 - - Rear Legroom(mm) 866 - - Rear Shoulder(mm) - - - Boot Space(liter) 337 - - Gross Vehicle(kg) - 1530 2310 Kerb Weight(kg) 1180 1145 1633 Fuel Economy 1.4 TDCi EX DLX Mileage (Highway)(km/liter) 18 16 - Mileage (City)(km/liter ) 13 12 - Mileage (Overall)(km/liter) 14 13.5 - Capacities 1.4 TDCi EX DLX Seating Capacity(person) 5 5 9 Fuel Tank Capacity(liter) 45 46 50 No Of Doors 5 5 5 Performance 1.4 TDCi EX DLX Maximum Speed(kmph) 158 145 - 0-100kmph(seconds) 17.9 - - 1/4 Mile(seconds) 19.2 - - 100kmph-0 (Braking) 57 - - (meters) 80kmph-0 (Braking)(meters) 35.2 - - Engine 1.4 TDCi EX DLX Engine Type 1.4L TDCi SOHC Peugeot Turbo Diesel 4cylinder inline Turbo charged Intercooled Direct Displacement(cc) 1399 1489 1994 Power(PS@rpm ) 68@4000 64@4000 101@4200 Torque(Nm@rpm ) 160@2000 152@2250 220@2400 Valve Mechanism SOHC - - Bore(mm) 73.7 - 84.4 Stroke(mm) 82 - 88.9 Compression Ratio 18 - 21 No of Cylinders(cylinder ) 4 4 4 Cylinder Configuration In-line - inline Valves per Cylinder(valve) 2 - - Ignition Type Electron - - Engine Block Material Aluminum - - Block Head Material Aluminum - - Fuel Type Diesel Diesel Petrol Page 35 of 42
  • 36. Fuel System High Pressure Common Rail - Mechanical FIP, Rotary type Transmission 1.4 TDCi EX DLX Transmission Type Manual Manual Manual Gears/Speeds(Gear) 5 5 5 Clutch Type - - - Final Reduction(meters) 3.82 - - Suspensions 1.4 TDCi EX DLX Front Suspension Independent McPherson McPherson strut & coil Independent Double Strut with offset coil spring/ spring wish bone type with damper units and Lower L- torsion bar & telescopic arms with optimized bushes shock absorber mounted on separate cross member with stabilizer bar. Dual path body mounts. Rear Suspension Semi-independent heavy 5 rods system Semi Elliptical Leaf duty twist beam with low spring with telescopic package height coil springs shock absorber and separate twin tube dampers. Steering 1.4 TDCi EX DLX Steering Type Rack and Pinion Power Rack & Pinion Power Assisted Standard Standard Standard Minimum Turning 4 5 6 Radius(meter) Brakes 1.4 TDCi EX DLX Brake Type - - - Front Brakes 258mm Ventilated Disc Disc Ventilated Disc Rear Brakes 203mm Self-Adjusting Drum Drum Drums Wheels and Tyres 1.4 TDCi EX DLX Wheel Type Steel - Steel Wheel Size 6JX15 205/70 R15 15 inch Tyres 195/60 R15 Tubeless 205 / 65 R 15 Page 36 of 42
  • 37. Exhibit 19: Tech Specification-Competition-B1 Car Segment Product Name Maruti 800 Alto Tata Indica Xeta GL Santro Body Two Box 4 door Two Box 4 door Two Box 4 door Two Box 4 door Unit Hatchback Hatchback Hatchback Hatchback Exterior Dimensions Overall Length mm 3335 3495 3675 3565 Overall width mm 1440 1475 1665 1525 Overall height (at K.W) mm 1405 1460 1485 1590 Wheel Base mm 2175 2360 2400 2380 Front Track mm 1400 1290 1400 1315 Rear Track mm 1380 1290 1380 1300 ground clearance (at K.W) mm 170 166 170 172 Kerb Weight kg 650 725 995 854 Page 37 of 42
  • 38. Gross Vehicle Weight kg 1000 1165 1395 Boot Space liter 217 218 Boot/Cargo Width(min) mm 965 100.5 940 985 Boot Depth/Cargo length mm 505 60.5 515 585 Cargo Height/Loading height mm No of Doors 4 5 5 4 Interior Dimension Seating Capacity person 4 5 5 5 Front Headroom mm 955 Rear Headroom mm 910 91 920 920 Front Legroom(Max/Min) mm 1130 1190 1080/990 Front Knee room (Max/Min) mm 760/580 Rear Legroom(Max/Min) mm 790 900 820/660 Front Shoulder Room mm 1350 Rear Shoulder mm 1160 1220 1335 Front Hip Room Rear Hip Room mm 1170 116 1390 1270 ENGINE 475 SI Multi Point Fuel Water cooled FC engine/32 bit injection System with 4 stroke cycle, Engine Type/Model SOHC (1C2V) computer 32-bit microprocessor Water cooled In line, Naturally In line, Naturally aspirated, front aspirated, front In line, Naturally Layout / Position ,transverse ,transverse aspirated, front Power PS@rpm 38@5000 47@6200 70@4800 63@5500 Torque Nm@rpm 59@2500 62@3000 122@2600 89@3000 Product Name Maruti 800 Alto Tata Indica Xeta GL Santro Body Two Box 4 door Two Box 4 door Two Box 4 door Two Box 4 door Unit Hatchback Hatchback Hatchback Hatchback Specific Output bhp/liter 46.48 bhp per liter Power to Weight bhp/tonne 55.63 bhp per liter 73.77 Torque to Weight kgm/tonne 9.03 kgm per tonne No of Cylinders cylinder 3 3 4 4 Cylinder Configuration Inline Inline In-line Inline Injection MPFI MPFI MPFI Page 38 of 42
  • 39. Distributor less ignition system Ignition Transistorized Transistorized (DLI) Valves per Cylinder valve 2 4 2 3 Valve Mechanism SOHC SOHC SOHC Displacement cc 796 796 1396 1086 Bore mm 68.5 68.5 75 66 Stroke mm 72 72 79.5 77 Compression Ratio 8.8:2 9:1 8.9 Fuel Type Petrol Petrol Petrol Gasoline Fuel Tank Capacity liter 28 35 37 35 Turbocharger No No No No No Supercharger No No No No No Construction Engine Block Material Material Cast Iron Block Cast Iron Block Cast Iron Block Cast iron Block Head Material Material Aluminum Alloy Aluminum Alloy Aluminum Alloy Aluminum Fuel Economy Mileage (Highway) km/liter 18.7 18.3 15.3 16.8 Mileage (City) km/liter 13.1 13.6 11.1 11.8 Mileage (Overall) km/liter 14.2 14.5 11.9 12.7 DRIVE TRAIN Drive System Front wheel Front wheel drive Front wheel Front wheel drive Transmission Type Manual 5 speed, all Manual Manual/Automatic synchromesh, manual Product Name Maruti 800 Alto Tata Indica Xeta GL Santro Two Box 4 door Two Box 4 door Two Box 4 door Two Box 4 door Body Unit Hatchback Hatchback Hatchback Hatchback Gears/Speeds Gear 4 5 5 Rear Differential NA NA NA NA Gear Box Final Reduction Gear Ratio 4.35:1 3.76:1 Maximum Speed kmph 132 137 152 137 Acceleration from Rest 70 kmph seconds 10.96 80 kmph seconds 14.19 12.1 11.23 90 kmph seconds 18.28 100kmph seconds 25.15 20.38 17.4 17.9 CHASSIS Monocoque Monocoque Monocoque Steering Steering Type R&P R&P R&P R&P Page 39 of 42
  • 40. Steering Ratio 4.3:1 Minimum Turning Radius meter 4.4 4.6 4.9 4.4 Turns Lock To lock number 3.27 Suspension Independent, Wish McPherson Strut Bone type with McPherson strut & with torsion type McPherson strut, Mc Pherson Strut Front Suspension coil spring anti-roll bar Antiroll Bar with Stabilizer Bar Independent, Semi Coil spring with trailing arm with coil Torsion Beam Axle, Coil spring with gas double action spring mounted on 3-Link Offset Coil filled shock telescopic shock hydraulic shock Springs & Rear Suspension absorbers absorbers absorbers Hydraulic Dampers Braking and Traction Powerful 8-inch booster assisted front disc brakes Dual Circuit, diagonally halt instantly on split, vacuum assisted Brake Type braking with PCR valves 231mm Ventilated Front Brakes (Dia) Disc (215mm) Disc brakes Discs Ventilated Discs Rear Brakes (Dia) Drum (180 mm) Drum 180mm Drums Self Adjusting Drums (Vacuum Assisted) Braking Distance Meters Product Name Maruti 800 Alto Tata Indica Xeta GL Santro Two Box 4 door Two Box 4 door Two Box 4 door Two Box 4 door Body Unit Hatchback Hatchback Hatchback Hatchback 100-0 kmph meters ------ 60.1 80-0 kmph meters 31.54 35.8 34.8 60-0 kmph 16.85 Wheels & Tyres Tyres Size 145 / 70 R-12 145 / 80 R12 165 x 65 R13 Radial 155/70 R 13 Radial Wheel Size 4Jx12 12" 4.5J x 13" 13 Inch Wheel (Alloy/Steel) Steel Steel Steel Steel Maintenance Oil filter ` 55 55 61 Fuel filter ` 168 168 168 Air filter ` 104 104 107 Headlight assembly ` 607 1292 1300 Warranty/ km Month/km 24/Un-ltd. 24mnth/Un-ltd. 18/Un-ltd. 24/50000 Features Page 40 of 42
  • 41. Additional body reinforcements Yes Yes Yes Yes Air conditioner Optional Optional Yes Optional Airflow controls Yes Yes Yes Yes Alloy Wheels No No No No AM/FM Radio No No No No Anti-Braking System No No No Optional Back door lock Yes Yes Yes Yes Cabin light (3 positions) Yes Yes Yes Yes Cassette Player No No Optional No CDÂ Player No No Optional No Center box with lid Yes Yes No No Central Locking No No Optional No Child Safety Locks No Yes Yes Yes Clear lens headlamps * Yes Yes Yes Yes Clear lens rear combination lamps * Yes Yes Yes Yes Coin receptacle Yes Yes Yes No Collapsible steering column Yes Yes Yes Yes Cup Holders No Optional Yes Yes Defogger (Rear) No No Optional No Dual Tone Interior Upholstery * Yes Yes Yes Yes Floor & luggage room carpets Yes Yes Yes Yes Product Name Maruti 800 Alto Tata Indica Xeta GL Santro Two Box 4 door Two Box 4 door Two Box 4 door Two Box 4 door Body Unit Hatchback Hatchback Hatchback Hatchback Folding Rear-Seat Yes Yes Yes Yes Front & rear assist grips Yes Yes Yes Yes Front and rear seats belts Yes Yes Yes Yes Front door pocket (only LHS) Yes Yes Yes Yes Front Fog Lights No No Optional No Front wipers (2 speed + Intermittent) Yes Yes Yes Yes Glove compartment Yes Yes Yes Yes Green tinted glasses Optional Optional Yes Optional Halogen bulbs Yes Yes Yes Yes Head lamp leveling device * Yes Yes Optional Optional High mount rear stop lamp Yes Yes Yes Yes Immobilizer No No No No Inside rear view mirror Yes Yes Yes Yes Page 41 of 42
  • 42. Laminated windshield Yes Yes Yes Yes Leather Seats No No No No Lockable fuel lid Yes Yes Yes Yes Molded roof lining Yes Yes Yes Yes Outside rear view mirror (RHS) Yes Yes Yes Yes Power Door Locks No No No Optional Power Seats No No No No Power Steering No Optional Optional No Power Windows No No Optional No Rear Wash Wiper No No Optional No Reclining & Sliding front seats Yes Yes Yes Yes Remote Fuel-Lid No Optional Yes Yes Side impact beams Yes Yes Yes Yes Stay type fuel gauge Yes Yes Yes Yes Steering Adjustment No No No No Sun visors on both sides Yes Yes Yes Yes Tachometer No No Optional No Tubeless Tyres No No No No Windshield washer Yes Yes Yes Yes Page 42 of 42