Chapter 1 Introduction Industries identified and practiced many best practices like Total Quality Management, KAIZEN - Continuous improvement, Just-In-Time etc. Benchmarking is also one of the best practices adopted by the Industries. They have made good improvements in many areas of operations namely Cost Reduction, Customer Satisfaction, Reduced defects etc. after implementing Benchmarking, because Benchmarking is findingth e weak areas and identifying the differences in practices and processes between the Benchmarking Organization and its competitors. The firms can realise why an organisation is able to achieve successes or what are the reasons for failure. Benchmarking is a tool for continuous improvement. Xerox has made improvements in all areas after implementing benchmarking. Benchmarking assists in identifying and differentiating one from another and also helps to identify the strengths and weaknesses of the organization. SWOT (Strengths, Weaknesses, Opportunities, Threat) analysis helps to identify which area of strength leads to competitive advantage/weaknesses to competitive disadvantage. Competitive Benchmarking is done to determine competitive strength and weaknesses. The process of benchmarking should be continuously reviewed to improve further, otherwise it results in short term gain only. The firms can surpass the best-in-class after implementing benchmarking. 1.1 Bacl^round of the research study Benchmarking has been known in the developing countries like for a decade. This concept is already practically and systematically implemented in the developed countries 25 to 30 years before. The reason for this new thought by the experts like Robert C. Camp was the sudden change in the Industry scenario of competition. Well known companies which were consistently shining suddenly started falling down in their business results whereas their competitors started capturing the market. Therefore the companies started comparing their product, process, strategy with their suitable partners and competitors. Best practices indicate outstanding business practices which are contributing mainly to improve performances in leading companies. Identifying key success factors (critical to success) help to choose the area in which the organizations have to improve. "Competitive benchmarking is a comparison against a competitor for the product, service or function of interest". Benchmarking is finding who is really the best. Companies should understand how strengths and weaknesses affect customer satisfaction and profitability. By concentrating on meeting the customer expectations and if possible, by exceeding the customer expectations, the firms will be able to delight the customers and retain its market share. Benchmarks are defined as models for excellence. Xerox support departments began with internal comparisons. Specially Xerox claims that with benchmarking, machine defects have decreased by 90%, labour cost dropped by 33%, customer satisfaction has also improved. After comparing with the competitors, it has been found that the products are themselves Industry Benchmarks in certain product groups. 1.2 History of Indian Automobile Industry Initial Years Manufacturing was licensed High customs duty on import Steep excise duties and sales tax 2 major players:- Automobiles Ltd. And Ltd. 1980s Entry of Maruti Udyog Ltd. better product with govermnent support. Sellers market Long waiting periods. Early to mid 1990s Sellers market and long waitmg periods DeUcensing in 1993 - Liberalisation Removal capacity restrictions Decrease in customs and excise Auto finance boom - more players (foreign banks and non banking companies better schemes). Mid 1990s-Early 2000s Buyers market Increase indigenisation Easy auto finance Manufactures diversifying into related activities: Finance lease, fleet management, insurance and used car market. Indian automobile industry is the fastest growing industry in the world. There are innumerable models available with the latest technology suitable to all market segments. There is continuous innovation in the designs of automobiles as there are many manufacturers entering into this area leading to tough competition. The technical / financial collaboration agreements with leading players abroad made our country prosper in the automobile sector. The liberalisation and modernisation in early 80's abolished manufacturing capacity licenses and there was change in the scenario from sellers market to buyers market. Technical collaboration gave birth to new categories and varieties of small cars and motorcycles.

History of Automobiles The first automobile was made by Guido da Vigevano in 1335. It was a windmill- type drive with gears and wheels. In the early 15* century Portuguese arrived in China and interaction of two cultures lead to a variety of new technology including creation of wheel that turned imder its own power. By the 1600 small steam power model engines were developed. The early steam powered automobiles were so heavy that they were only practical on a perfect flat circle as strong as iron. In 1769 the first road vehicle was military invented by French Engineer and Mechanic Nicolas Joseph Cugnot (1725 to 1804). Between 1832 to 1839 Robert Anderson of Scotland invented the first electric carriage. Electric cars used rechargeable batteries that powered a small electric motor. Carl Benz and Gottlieb Daimler both Germans shared the credit of changing the transport habits of the world. Carl Benz invented petrol engine in 1885 and Daimler made a car after a year driven by motor. France too had joined the motoring scenario by 1890 when two Frenchmen Panhard and Levassor began producing automobiles powered by Daimler engine. Charles Duryea built a car garage in America with petrol engine in 1892 followed by Elwood Haynes in 1894 thus paving the way for motorcars in that country. Around 1900 electric land vehicles outsold all other types of cars in America. Henry Ford revolutionised the manufacture of automobiles with his assembly line style of production and brought out the model T, a passenger car that was inexpensive, versatile, and easy to maintain. Herbert Austin and William Morris introduced mass production methods (for car makers) in UK thus paving the way for a revolution in the automobile industry.

Since the mid 1970s, the rising cost of fuel increased the demand for smaller cars. Small cars were produced in Japan, Europe and in the United States. Today stepping into the 21^* century, the computerised cars have been made that are beyond imaginations with best features in suspension, weight, speed, control, navigation etc. Currently the use of CNG and LPG is legitimate on all vehicles. Reva, an electric car has made a limited success. With the advent of internet, the customer could place the customised order and expect the manufacturer to fulfill his needs with minimum time.

There was a boom in demand for all types of vehicles in India. Hence, many multinational automakers fi-omJapan , USA and Europe entered the Indian market through joint ventures. Customer preferences and demands have also undergone change.

The total production of vehicles increased from 4.2 million 1998-99 to 7.3 million in 2003-04. There was a greater preference for motorcycles followed by scooters but mopeds have registered a low or negative growth. The fastest growths have come fi-omcommercia l vehicles against passenger cars.

The US automobile industry produced 12.8 million vehicles in 2000. The three major automobiles in the United States - Corporation, Ford Motor Company and Daimler Chrysler AG provide 3/4ths of the industries total direct employment in the United States. 1.2.1 10 Year Comparative study of Total Automobile Production, Sales and Export of all types of Vehicles - using 3 yearly moving average, simple line graph and bar graph and pie chart.

Ten Year Comparative studv of Production trend of all Vehicles from 1977 to 2006 LineGraph-1

12000000 108987081 10000000

8000000

6000000

4000000 ^4156684-

2000000 408747 1725544'

0 • 1087 * 1007 • 20Qfe

The ten year study of production of vehicles shows that there was a tremendous demand for road transport and hence there is increasing demand for all types of automobiles for more than three decades. Ten Year Sales trend of all Vehicles from 1977 to 2006 Line graph 2

The total sale of all vehicles shows the increase in demand for all types of vehicles because of increasing purchasing power of population. The demand for the vehicles shows consistently increasing trend and it is more than double, during the recent study between 1997 - 2006.

1.3 Recent trends in the Automobile Industry The automobile manufacturers including two wheelers were playing in a highly competitive environment in India. India has today emerged as the second largest two wheeler producer, the fifth largest commercial vehicles and 11* largest in Car production.

Ashok Leyland registered a turnover of Rs.83,047.17 million during 2006-07 a rise of 35%. Its market share in Medium & Heavy Commercial Vehicles segment rose by 0.8 % to 28%. International operations grew by 23.5 % over the previous year with sales of 6025 vehicles (4879).

The Indian Automobile industry, particularly in the commercial vehicle segment, witnessed the entry of several new players into the highly competitive Indian market by setting manufacturing facilities alone or in collaboration with their counter parts in India. The major entrants include heavy weight champions like MAN in collaboration with , SCANIA with L&T, with Swaraj Mazda, International Trucks with Mahindra & Mahindra and Asia Motor Works. , a Japanese leader in Trucks and Buses will reach out customers worldwide through original strengths. It achieved a share of 30.5% in sale of Japanese mediimi and heavy duty trucks, thus achieving the top rank in the Japanese market for the 34* consecutive year since 1973. Its technological capabilities and reliability enabled the company to have a firm position in the world of Motor sports. In Australia, it imveiled the very first hybrid truck to the masses at the Queensland Truck and Machinery show.

PIAGGIO has launched the much awaited APE truck; a four wheeled truck is competing against the TATA ACE. Piaggio enjoyed a reputation when VESPA scooter was introduced and then came up with APE three wheeler, now it is maintaining its reputation with APE truck. It can be used for transporting large volumes of cargo delivering right at the door of the consumer at low cost. It has a wide range of four wheeled mini trucks like QUARGO and Porter for the Global market. These vehicles are sold in Europe, Latin American markets.

Daimler Chrysler started collaboration for trucks in India, then it also became the pioneer for the luxury car market in India. In 2006, it sold 2121 vehicles achieving growth of 11% (2005). In the first quarter of 2007, the company recorded further growth of 17%. Daimler Chrysler entered in 1994, started out on a quality journey in 1997 with ISO 9001. It has a world-class net work spread across 27 cities in India.

Honda Siel Cars India Ltd., has sold atleast 40% of its total sales in North India. It operates in different regions and aims to contribute significantly towards the economic development, employment opportunity and also look at upgrading training institutes.

The Maruti SX4 pitched against the Honda City, Ford Fiesta, Hyundai Vema and Chevy Aveo. It also embarked on developing global cars like SWIFT and SX4 and tune to domestic requirements of Indian markets. India's total car sales was 1.8 million units compared to China's more than 7 million. More than 80 % of the market in India comes from compact car segment. In the entry level car market segment Al, Maruti has 100% market share. In the A2 segment, it has 58.5% market share. The SX4 Sedan is positioned in the mid sized premixrai A3 segment where Maruti has Esteem at entry level and Baleno at mid range. It has aheady laimched 5 new models.

General Motors manufactures the , Aveo, U-VA, Optra, Optra SRV, Tavera and new Spark mini car. India's projected growth of exports from 2,40,000 units last year to 1 million imits in 2010. The global vehicle production will grow to about 1.3 billions by 2030 focusing on low cost automobiles.

Tata Motors Ltd. introduced its Indica car in 1997. It has revolutionalised the thinking on passenger car with introduction of low cost Nano. Now almost all world players are planning to introduce low cost Nano type cars.

Mahindra & Mahindra dominates utility vehicle segment with 47% market share. The gross revenues during the year ended 31*' March 2007 is Rs.l 1558 crores as against Rs.9451.4 crores during the corresponding period last year, registering a growth of 22.3%. It sold 1,27,856 utility vehicles against 1,14,694 units sold last year, a growth of 11% as against a industry growth of 14%. The new SCORPIO launched in the beginning of the year (2007) and Maxi truck launched in the third quarter of the year has been well accepted by the market. In the three wheeler segment it sold 14,146 units against 18,112 units in the previous year, a decline of 21.9%, which is however much lower than industry decline of 28.3 %. In the smaller 3 wheeler segment, it entered in 2006 with CHAMPION ALFAS, sold 19,554 units against 4,307 units sold in the previous year. It also commenced manufacturing of LOGAN - a product of its joint venture with RENAULT. The tractor industry sales showed a total of 3,18,317 units against 2,62,621 units last year resulting in growth of 21.2%. It maintained its full domestic market share at 29.9%.

The market share of Ltd., in motorcycle increased from 31% in 2005- 06 to 34% in 2006-07. The turnover of Bajaj Auto Ltd., a leader in 2 & 3 wheeler segment is at Rs.l00.76 billion, the increase of 24% over 2005-06. It has introduced BAJAJ PULSAR a new model and BAJAJ DISCOVER continue to gain while BAJAJ PLATINA was introduced in April 2006. Three wheeler sales for the year grew by 28%. It continues to be the No.l exporter of two and three wheelers in the country. Exports were up by 88% at Rs.l6.9 billion. It registered the highest ever two wheeler export of over 3 lakhs units and three wheeler exports of approximately 1.40 lakh units. They have also plans for passenger car segment.

The Indian Automobile Industry continued to grow registering 30% increase over the past decade, 1995 to 2005. It generated employment covering over 5% of world's total manufacturing employment. Auto Industry is the single largest industry for the cause of economic growth in the world. It also gives chance to other allied industries to grow like Iron & Steel, Aluminium, Glass, Plastics, Computer Chips, Rubber etc. as Autos are built using these goods.

The Auto Industry is committed to be environmental friendly by improving on quality and using hybrid technology like Gasoline, Diesel engines and electric power. Automobiles have futuristic safety system to prevent accidents. In addition to direct employment, more than 50 million people earn their living from cars, trucks, buses and coaches. The Auto Industry is one of the largest investor in Research & Development. It also contributed to government revenues, around the world over 430 billion Euros. Pune is called the Detroit of India and has become an Automobile hub. Category-wise share of domestic sales for 2006-07 - Pie Chart - 1 (i)

1345%

a Passenger Vehicles • Commercial Vehicles nTtiree wheelers D Two wheelers

77.73% Two wheelers were having ll.l'i% market share in the Indian market, in the automobile sector. The remaining 22.27 % was shared by other types of vehicles in the automobile sector. Category-wise share of domestic sales for 2007-08 - Pie Chart - 1 HO

4% 5%

• Commercial vehicles • Total passenger \ehicles D Total two wheelers ( ' D Three wheelers

75%^ ^"^

Domestic market stiare for 2007-08 - Categorywise in percentage

Two wheelers were having 75% market share in the Indian market, in the automobile sector. The remaining 25% was shared by other types of vehicles in the automobile sector.

10 Automobile Production Trend 2007-08 Bar Chart-1 Category-wise of vehicles Automobile production trend -2007-08 in no. of vehicles

Two wheelers 8026249

Three wheelers 500592

CVs 11545176

PVs 1762121

0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 9000000

Automobile Sales trend - 2007-08 Category-wise, number of vehicles Bar Chart-2

Two wheelers 7248589

Three ] 364703 Two wheelers wheelers Three wheelers I CVs CVs •486817 PVs

PVs 1^7985

No of units. 0 2000000 4000000 6000000 8000000

11 Automobile Export trends for 2007-08 Category-wise number of vehicles. Bar Chart -3

Two wheelers n81984 7

Three wheelers 141235

CVs J5(i999

Automobile export trends PVs 218418 -2007-08- No.of vehicles 100000 200000 300000 400000 500000 600000 700000 800000 900000 No. of Units

The demand for two wheelers was much greater than other types of vehicles in 2007-08 because large section of population still prefer two wheelers inspite of introducing different models in other types of vehicles. The two wheeler record of production / domestic sales / export was continuously in demand, which was due to convenience, easy start, very much suitable to middle class segment of population. Even the rich class also would like to purchase two wheelers in addition to owning cars and other types of vehicles. Hence two wheeler records show much better than other types of vehicles. Milestones Ashok Ley land: One of the largest manufacturers of commercial vehicles in India. Piaggio: was the first in the world to develop scooter. Luna Moped is the first vehicle made in India without foreign collaboration and manufactured without any imported component.

TVS: entered business in 1912 as a bus operator. In 1922 began selling its cars and now introduced luxury buses and dealing two wheelers.

12 Premier Automobiles Ltd., amiounced a new forward look K series of Dodge and Fargo trucks (1944-47). 1954 : Government of India gave its approval to Mahindra & Mahindra for the manufacture of jeeps in India. 1958 : Bajaj Tempo entered into a collaboration agreement with Germany with Vidal Sohn of Germany to import tempo Han seat three wheeler chassis and manufacture vehicles with specialized bodies for 3 wheeled autorikshaws and pick up trucks. 1961 : Association of Indian Automobile Manufacture«(AIAM) completed 10 years. 1973 : Bajaj Auto collaboration with Honda of Japan to manufacture of motorcycles and mopeds. 1981 : Motor Corporation the largest automobile company in Japan and DCM come together to form a company in India for the manufacture of light commercial vehicles. 1982 : Fuel efficient people's car and pick up vans were introduced by Maruti Udyog Ltd., and Suzuki Motor company of Japan. 1983 : Hero Honda Motors Ltd., introduced motorcycles with technical collaboration with Honda Motor Company Ltd. of Japan. 1984 : The proposal of Bajaj Tempo Ltd., to take up manufacture a new series of light commercial vehicles with Daimler Chrysler of West Germany has been cleared by high power foreign investment board. Bajaj Auto Ltd. and Kawasaki Heavy Industries Ltd., Japan entered into technical collaboration for manufacture of motorcycles in India. Luxury car standard 2000 introduced by Standard Motor Products India Ltd. 1985 : Maruti rolls out 50,000* vehicle.. AIAM & ACMA (Automotive Components Manufacturers Association) celebrates Silver Jubilee. Eicher Mitsubishi venture to make multipurpose LCVs in Dhar district of . Hero Honda Motorcycle plant inaugurated. 1986 : First Kinetic Honda rolls out.

13 1990 : Bajaj laimches first 4 stroke bike at Waluj, Aurangabad. 1991 : Tata Sierra launched by Telco. 1992 : The Italian multinational FIAT keen in investing in India for manufacturing , farm equipment, commercial vehicles and two of its latest model passenger cars UNO (feTempra. Maruti Zen launched. 1994 : Maruti rolled out its millionth vehicle. New generation truck fi-omAsho k Leyland. The cargo, a worldclass vehicle built with the technology from IVECO. General Motors enters India. Benz E-Class vehicle launched. 1996 : The first FORD Escort rolled off the Mahindra & Mahindra assembly line (Nasik). Hindustan Motors - car project. Mahindra & Mahindra introduced 9-seater Voyager in India. Honda City (Car) launched by Honda Siel Cars Ltd. 1997 : The Swedish Automobile giant Volvo - One of the largest manufacturers of heavy Vehicles in the world. Telco - Launched 5 door sports utility vehicle, unveiled Indica and Tata Safari 8 seater. PAL (Premier) teaming up with FIAT of Italy to manufacture 3 box version of Fiat Palio, Sienna Santro the Korean based Hyundai Motors Co. Ltd. Small car version commenced pilot production. 1998 : The Toyota Kirloskar joint venture manufactured Toyota Qualis Tata Indica laimched by Telco AIAM renamed Society of Indian Automobile Manufacturers (SIAM). Hindustan Motors rolled out Mitsubishi Lancer in . 1999 : Wagon R introduced by . 1999 - 2000 : Hyvmdai Motors Ltd., has created a record in the history of automobile industry by crossing 1 lakhs car production mark. MUL - introduced Baleno, a luxury Sedan from Suzuki

14 Maruti introduced 7 distinct product offering / catering to every segment in the Indian Automobile market. Piaggio launched APE 3 wheelers in India, Joint venture between Piaggio and Greaves as its world class plant at Baramati, Pune. Ltd. India's leading manufacturer of commercial vehicles has entered heavy commercial vehicle segment 2000 : World class tractors from L&T - John Deere Ltd. rolled out at Sanaswadi near Pune produced most modem tractors with the latest technology and manufacturing facilities. Honda Motor Cycle and Scooter India Pvt. Ltd. (HMSI) launched ACTIVA in India HONDA ACTIVA - high fiiel efficiency 4 stroke engine. TVS Victor launched. Hero Honda 5 millionth rolls vehicle. 2001 : launched. SKODA Octavia hit Indian roads (Volkswagen group) - a luxury segment car. VOLVO launched B7R luxury bus. BAJAJ AUTO Pulsar (bike segment - motorcycle). 2002 : TATA EX launched (commercial vehicle). Indigo car - TATA's first mid size Sedan suited for long family drives and week ends. Hindustan Motors Ltd. - New car Pajero - Chennai. 2003: Karizma - from Hero Honda - a sports motocycle - market leader in the Indian motorcycle industry - Exceptional performance with uiunatchable style and utmost comfort. Deming pri-ze (International standard) for TVS Motor Company for applying TQM. First two wheeler company in the world to achieve this recognition. 2003: Bajaj Tempo Ltd., in Collaboration agreement with MAN (Maschinenfabrik Augsburg Numbug) to enter in the medium and heavy commercial vehicle segment. (MAN technology partner). - acquisition of DAEWOO'S Commercial Vehicle division. 2004: TATA MOTORS rolled out first batch of City Rover cars in the highly competitive UK and European market.

15 The Farm equipment sector Mahindra & Mahindra Ltd., has received the prestigious Deming application prize for 2003 for establishing TQM.

1.3.1 Comparative study between different types of vehicles on the basis of yearly Growth in percentage - Production, Domestic Sales and Export

Yearlv growth of Production in Total - Expressed in percentage - Table-1

Type of vehicles 2002-03 2003-04 2004-05 2005-06 2006-07 Passenger cars 11.41 40.39 22.74 8.92 18.34 Utility Vehicles 8.34 27.82 24.39 7.96 13.03 Total Passenger Vehicles 8 36.81 22.26 8.22 17.99 Medium & Heavy Commercial Vehicles 24.55 37.86 29.31 2.09 34.19 Light Commercial Vehicles 26.52 30.92 27.52 23.68 37.4 Total Commercial Vehicles 25.35 35.02 28.6 10.57 32.96 Three wheelers Passenger carrier 23.79 16.45 -3.13 20.88 34.31 Goods carrier 55.06 67.72 23.3 7.59 15.77 Total 3 wheelers 30.07 28.73 5.12 16.02 28.01 Two wheelers Scooters/Scooterette -9.5 10.24 5.58 3.39 -7.55 Motorcycles 33.37 12.36 19.26 19.52 14.57 Mopeds -17.75 -5.49 4.86 9.06 0 Total 2 wheelers 18.84 10.77 16.13 16.52 10.98 Multi Purpose Vehicles -19.31 17.95 11.04 -1.05 27.06

16 Yearly growth of Domestic Sales in Total - Expressed in Percentage - Table-2

Type of vehicles 2002-03 2003-04 2004-05 2005-06 2006-07 Passenger cars 6.36 28.56 17.82 7.56 22.01 Utility Vehicles 8.98 28.84 20.47 10.29 13.21 Total Passenger Vehicles 4.75 27.56 17.68 7.68 20.7 Medium & Heavy Commercial Vehicles 28.57 39.48 22.99 4.52 32.84 Light Commercial Vehicles 32.29 31.68 21.48 19.72 33.93 Total Commercial Vehicles 30.01 36.41 22.42 10.24 33.28 Three wheelers Passenger carrier 6.11 3.91 -1.83 24.09 11.33 Goods carrier 51.5 72.44 24.65 7.89 13.52 Total 3 wheelers 15.6 22.7 8.37 16.91 12.22 Two wheelers Scooters/Scooterette -9.1 7.35 4.08 -1.45 3.48 Motorcycles 26.33 14.34 19.05 17.04 12.79 Electric 2 wheelers 0 0 0 0 0 Mopeds -16.97 -9.29 4.9 3.15 6.95 Total 2 wheelers 14.47 11.47 15.76 13.57 11.42 Mnlti Purpose Vehicles -15.68 14.34 9.2 2.05 25.2

17

7. '* Type of vehicles 2002-03 2003-04 2004-05 2005-06 2006-07 Passenger cars 42.6 78.36 28.21 5.8 13.38 Utility Vehicles -61.75 159.05 47.75 -0.36 -1.92 Total Passenger Vehicles 35.44 79.56 29.7 5.51 13.05 Medium & Heavy Commercial Vehicles 151.82 27.5 27.99 18.06 70.85 Light Commercial Vehicles -6.09 39.7 78.13 61.07 16.61 Total Commercial Vehicles 3.24 42.24 71.75 35.5 22.58 Three wheelers Passenger carrier 194.72 56.98 -2.49 15.52 88.89 Goods carrier -39.43 68.95 33.33 -6.23 -20.93 Total 3 wheelers 180.47 57.14 -1.98 15.1 87.17 Two wheelers Scooters/Scooterette 14.94 64.86 13.06 38.28 -57.48 Motorcycles 117.52 51.37 47.97 39.31 41.4 Electric 2 wheelers 0 0 0 0 0 Mopeds 23.3 2.94 18.72 51.06 -13 Total 2 wheelers 72.47 47.51 38.24 40.05 20.65 Multi Purpose Vehicles -30.67 63.19 33.08 -10.92 21.68

The above tables of production, domestic and export sales reveal the following: 1. Passenger cars yearly growth shows less in the year 2004-05 and 2005-06 but again it has gained moments during the year 2006-07 due to technological changes, customer preferences, environmental friendly, change in life style etc. 2. Utility vehicles yearly growth shows very less in the year 2005-06 and 2006-07. 3. Medium & Heavy Commercial Vehicles yearly growth shows less in 2005-06. 4. Light Commercial Vehicles yearly growth of production and sales shows less in 2005-06, whereas its export shows less in 2002-03 and 2006-07 as compared to other years. 5. Multi Purpose Vehicles shows growth in 2006-07 - as it is preferred by customers due to multipurpose use coupled with value for money.

18 6. Three wheeler passenger carriers yearly growth suffered in 2004-05 but again it started rising due to increased demand for the vehicles, changes in design, reasonable pricing, which are affordable for the Indian population. 7. Three wheelers (Goods carriers), yearly growth is not satisfactory during the years 2005-06 and 2006-07 - it started declining because of the introduction of other types of commercial vehicles, entering in the market. 8. Domestic sales for scooters declined but exports shows satisfactory till 2005-06. However it declined in 2006-07 hence production also decreased due to low demand. 9. In case of motorcycles yearly growth in export shows satisfactory results where as domestic sales yearly growth was there but not at an increasing trend. Hence the production was adjusted according to the demand. 10. Mopeds export is satisfactory till 2005-06 but again it declined due to changes in customer tastes and preferences for the new models which attracted them. 11. Electric two wheelers have entered the market with limited success.

1.4 Future trends in the Automobile Industry In future, the electric cars will hit the road soon. The electric vehicles are zero polluting, easy to handle, have low running and maintenance cost. The Indian commercial vehicle manufacturers have maintained their market leadership. The giant companies are plaiming for expansion as the covering of all the evolving marketing segments are still possible and has a very long way to go before it attains any degree of maturity. The competition brought improvements in terms of technology and passenger safety.

Volvo, MAN, International Trucks and Engine Corporations, Scannia etc. have entered the Medium & Heavy Commercial Vehicles segment either through Joint venture or on their own. The competition from local players like Asia Motors Works in addition to Commercial vehicle manufacturers like Tata Motors Ltd., Ltd., Eicher Ltd., Swaraj Mazda etc. are also increasing day by day.

19 There is tremendous growth potential for car sector in hidia including Luxury car market. The sophisticated design and advanced technology are preferred by today's Indian customers. India is fast growing powerful market for small car segments as well as luxury segments. Now auto makers are working on diesel hybrids, bio diesel and many alternatives. The electric motor replaces the conventional systems which operate as a generator which offers significant improvements in the design, safety, enviroimiental fiiendly and also speed of the car. Indian companies will focus on the investment link opportunities in other countries. The technical support received from Multi National Companies not only help in reducing the emission but also to achieve low cost.

The major markets have focused on hybrids, diesel technology and fuel cells in the fiiture to develop cars which can give solutions to global warming. This irmovation differentiates the organisation from competition with high performance. Car owner spends more time inside the cars. Therefore, the automakers are diverting their attentions from exterior styling to interior designings and comforts. Automakers give importance for JIT (Just In Time) deliveries as the trend is towards greater online customization of cars i.e. manufacturer make vehicles for specific customer orders example - Citroen's, Bratislava plaint in Slovakia has onsite storage.

Worldwide trade is becoming cheaper and affordable. Hence, there is improvement in logistics (supply chain management). For example, Toyota has a production system - the model of lean manufacturing. The increase in the supply chain meets the demand in time. As a result, there is complete solution for distribution process.

The hybrid energy systems provide cleaner vehicles with enhanced performance but they can be viable in markets only if the relevant raw materials are available. It also reduces the fuel consumption. The experts have predicted that the wind

20 which has no fuel cost will be employed in the technology and can measure the efficiency in terms of KWh of electricity out divided by capital cost. The fuel cell is the prime mover where battery is only a storage device. Hence fuel cell is like an engine which is not required to charge but to fill up the fuel tank. In UK, hydrogen fueling infrastructure is developing fast. By diversifying the energy supply, all nations are able to produce fuel from local sources.

The companies are trying to produce vehicles not only environment friendly but also economical. There is overwhelming response for such models from the prospective customers as they welcome novel products which give maximum benefit to them. There is continuous innovation and novel ideas generated by automobile industry manufacturers as the likes and preferences of consimiers are continuously changing due to lifestyle, standard of living and purchasing power.

1.5 Significance of the study Benchmarking finds new ways of implementing Best Practices learned from the same industry or even from other industries in different areas to optimise / maximise quality, save manpower time and cost. This study can reveal whether industries are able to produce exceptional results by implementing Best Practices. The current and future performance gap should be analysed to narrow down the negative performance gap. It is possible to reduce it by conscious effort of employees and continuous evaluation / review by management. l.S.l Contribution to Knowledge and relevancy of the topic with reference to today's problems.

There is tough competition at the Global level. If any organization wants to survive in such an environment, the benchmarking process should be adopted because it helps the firms to improve continuously in all areas of operations. Benchmarking indicates to a company that there may be people elsewhere who do

21 things better than they do. It enables to set goals objectively based on external information rather than internal.

1.5.2 Advantages likely to be obtained after implementing suggestion. 1. The firms in the Automobile Industry can improve their performance 2. The customer loyalty can be achieved. 3. All segments of the population can enjoy the road transportation services at minimum cost. 4. The increase in road transportation services can generate employment and thereby improves the economic growth. 5. Competitive benchmarking helps to compare the performance of the company not only at the local level but also at the global level.

1.6 Objectives of the study The objectives of the study are: 1. To know how benchmarking is implemented; 2. What are the key performance indicators critical to success? 3. What kind of Benchmarking models have been followed? If followed, what are the steps and how their model is different fi-om others? 4. To know the reason why benchmarking has been adopted and how does it help in optimisation of cost, manpower and quality. 5. To find out whether a model in benchmarking be evolved to help other units and industries in optimisation. 6. To findou t whether it leads to superior performance. 7. To know, how Best Practice Benchmarking is implemented and how Critical Success Factors are contributing for improving performance of the organisation. 8. To know the impact of Benchmarking

22 The above objectives of the study are related to Quality, Productivity and Practices adopted by the Management against competition or those recognised as Industry Leaders.

1.7 Scope of the study and Extension of Research on this topic in other areas

Benchmarking can be done in many areas. In this research work, the selected units in and around Pune, represent the automobile industry. Best practice benchmarking has been adopted in many firms to compare themselves with the best in the industry, to become better than the best. The research work is related to the sales in the marketing areas in the selected units, of the automobile industry. This research can be further extended to other areas of the functions of marketing and sales and also in the areas of business administration like production, finance, personnel etc.

Today there is a tremendous change in the style of management and business practices focusing more attention on business results by using modem methods like Flat Organization structure. Zero defect management, Total Quality Management, Total Productivity Maintenance, Six Sigma, Kaizen, Just-In-Time, Benchmarking etc. rather than using conventional methods for achieving business results. The technological changes are so rapid hence it is necessary to compare with the Best-in-Class to survive in this global competitive environment.

It is the need of the hour to benchmark and find the current performance gap and it is also necessary to take steps to bridge the gap because the new performance gap is created as the best in class go ahead and continue to improve themselves to become better and better. This creates new performance gap. By improving the overall performance of the organisation (i.e. by improving in all functional areas like production, marketing, logistics, fmance and personnel) the weak areas will be strengthened.

23 There is a wide scope to do research work in this topic. The research work can be carried out in other industries also. The benchmarking can be done at strategic level, internal level, performance, function-wise, process-wise, etc. The developed coimtries have proved to be better, by showing good results, after implementing best practice benchmarking because they welcome transparency, openness, ready for free discussion and at the same time following the code of conduct by keeping the information confidential. Examples: - Ford Benchmarking team began its analysis of two Ford plants in May 1984 and the data collected were presented to Mazda Programme Managers in exchange for similar information from then* Hofii operation. They identified the reasons why did the Japanese have an advantage in salaried labour? That is centralization, good management, elimination of duplication, simplification, training etc. - Infinity benchmarked Mercedes Benz. determined to make its Infinity model to Mercedes quality specifications. Benchmarking team was established in Infinity University and launched training programme at a regular intervals. Three years later Nissan launched its luxury car Infinity, was ranked No.l along with Toyota's Lexus. (In the 1991, JD Power & Associates customer satisfaction study). - Xerox pioneered in North America the late 1970s by benchmarking its manufacturing costs against those of domestic and Japanese competitors. - Rank Xerox had achieved benchmarked levels in several areas, especially that of customer satisfaction.

1.7.1 Period of Study The period of the study is between 2002-03 to 2006-07. This 5 year analysis has been done for all types of vehicles such as two wheelers, three wheelers, passenger cars/passenger vehicles, multi purpose vehicles, utility vehicles and commercial vehicles.

24 1.8 Sample size, Limitations of the study and Hypothesis Sample size The Automobile manufacturers are playing in a highly competitive environment in India. In this research, 6 companies have been studied in and around Pune, and other companies have been chosen for comparative purpose. The comparative study is done by analysing the Primary data and secondary data with the help of statistical methods of trend analysis. Limitations of the study 1. This research study focuses on Competitive Benchmarking 2. The companies selected for the study are located in and around Pime. 3. The information about other firms are compared with the firms selected for the study in the automobile industry. 4. This research work is based on the information obtained through the interviews with the concerned Officers / Middle Level Managers and also Top Level Managers. But the interviews with the customers are not included in the study because the main focus of this research is in the area of sales improvement. 5. The comparative study analysis is on the basis of Key Success Factors revealed how the firms in the automobile industry could achieve sales. 6. The model-wise comparison of sale has not been considered, as the data is available for total sales only. 7. Daimler Chrysler India Pvt. Ltd., was not included in the Ratio Analysis comparative study as the sufficient data was not available.

Hypothesis Industry Best Practice Benchmarking helps the firms in the automobile industry to improve sales. The competitive benchmarking reduces the performance gap i.e. to reduce the weaknesses and improves the strengths of the firms in the automobile industry, by learning fi-om its competitors.

25 1.9 Units selected for the study In this research 6 companies have been studied in and around Pune. They are: 1. Tata Motors Ltd., 2. Force Motors Ltd., 3. Kinetic Engineering Ltd., 4. Daimler Chrysler India Ltd., 5. Bajaj Auto Ltd., 6. Premier Automobiles Ltd.

1.10 Problems investigated 1. The type of benchmarking adopted. 2. The approaches and areas to benchmark. 3. What factors have been considered to ensure success. 4. Pitfalls of Benchmarking. References / Sources of information 1. Indian Automobile Industry - Statistical Profile 2007-08 - Published by Society of Indian Automobile Manufacturers : p.p 5 to 40,46 to 77, 80 to 113,116 to 132 2. Motor India Vol. 51 No.5 - December, 2006 (Journal of the Automobile Industry and Trade) - History of Indian Auto Industry 1956-2006 : p.p 18 to 290 3. Motor India Vol. 51 No. 11 - June 2007 : p.p 8 to 93 4. Motor India - Jime 2007 - Journal of the automobile industry and trade - Vol. 51 No. 11) 5. Global Benchmarking for Competitive Benchmarking published by Universities Press India Ltd - The Economist Intelligence Unit: p.p 48 to 52 6. Internet

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