A PROJECT REPORT ON “BUYING BEHAVIOR TOWARDS BIG CARS” Submitted to In requirement of partial fulfillment of Master of Business Administration (MBA) Submitted on Submitted by PREFACE As a part of the curriculum of the MBA Program of the _________________, the students are required to undergo project work in addition to their theoretical study so as to enable them to have the knowledge of the practical aspect of the Business Administration. As students of management it is learning experience to analyze an industry. It is the most essentials tools for us to expose our skill as a future responsible managerial post. So, I decided to take a project on automobile industry. I chose big car in automobile industry for the project. It helps us to develop our skill & confidence to do better in all respect in management fields. The knowledge of management is incomplete without knowing the practical application of the theories studied. This grand project provides golden opportunity for all students especially when the management students do not have perfect understanding of the working of unit. The report contains the detail information about comparative study of consumer behavior towards purchase of big cars. What are the factors taken into account while purchasing big car. I have tried my best to get the necessary information for project which includes secondary as well as primary data. ACKOWLEDGEMENT This report has been submitting in partial fulfillment of the requirement of the award of M.B.A. from _____________________________________ It is a universal fact that for study of a project in depth, I need the support of many people right from the stage of conceiving the idea to completion of report. It is difficult for a single person to do the job efficiently without interaction & involvement of others. I take this opportunity to thank ________________________our director ____________ and our inspiration our guides, _______________________ For giving me Valuable Guidance and providing facilities to successfully complete my Grand Project. I am grateful to other faculty members of ___________for their support whenever required. Discussions with friends also have served to provide sought after information. I am thankful to all our batch mates. Finally I am thankful to my parents and Lord Almighty without whose blessings tasks are incomplete. 4 TABLE OF CONTENT SR. No. PARTICULAR PAGENO. 1 Executive Summary 5-7 2 Introduction 8-14 3 Time line of Indian Automobile industry 15-16 4 Companies production facility in India 17 5 Market players and their products 18-29 6 Future plans of major market players 30-40 7 Consumer behavior model 41 8 Research Methodology 44-46 9 Data Analysis and interpretation 47-61 10 Findings 62 11 Recommendations 65 12 Limitations 66 13 BibliographyE 67 14 Questionnaire 68 5 EXECUTIVE SUMMARY The Indian economy is expected to grow by 6 percent in the current fiscal and slip further during the next year said the Economist Intelligence unit, a research arm of UK – based financial magazine- The Economist. With a population of over one billion and an economic growth at 9% per annum. India is the hub for business. The automobile sector is one of the core industries of the Indian economy as it contributes 4% of our GDP and 5% of total industrial output, but it is set to grow much faster than the rest of the economy. Until the mid 1990s, automobile industry in India consisted of just a handful of local companies with small capacities and obsolete technologies. Nevertheless, after the sector was thrown open to foreign direct investment in 1996, some of the global majors moved in and, by 2002 Hyundai, Honda, Toyota, General Motors, Ford and Mitsubishi set up their manufacturing base. Over the past 7-8 years, the country has seen the launch of several domestic and foreign models of passenger cars, multi-utility vehicles (MUVs) and commercial vehicles and a robust growth in the production of all kinds of vehicles. Moreover, owing to its low cost high quality manufacturing, India has also emerged as a significant outsourcing hub for auto components and auto engineering design, rivaling Thailand. 6 In India there are many automobile companies from different countries and there is a very tough competition between these companies and this is going to be more tougher as many new cars of these companies are going to be launched in coming years. For marketers it is a big investment game where they can only reduce their cost by acquiring customers and retaining them. To enable the marketers with a ready reckoner to understand the factors, which influence customers while buying a car, the study was undertaken. The project starts with the history of automobile where there were only two market players and it points out the reason which leads to the development and enormous growth of the Indian automobile industry. It also states the recession effect on the Indian automobile industry in the year 2008. The project states the major players in the Indian market, time line of Indian automobile industry, there production facilities situated at various places and their future plans. The Engle, Blackwell and Miniard model of consumer behavior is also used in the project in order to study the consumer buying process from information search to outcomes of the purchase. In order to know the buying behavior and main motivation behind the purchase of car, an exploratory research was conducted with the dealer and a questionnaire was prepared for the customer with a sample size of 120. After analyzing the data collected from respondents it was found that owners of this segment prefer to buy the car which has very good brand image, superior engineering 7 and which carries a high degree of reliability. For some it is a way to show their status and for many it is a luxury. Factors like Income, gender, age, city and type of family plays an important role in influencing customers while buying a car. As far as type of family is concerned, this study takes only nuclear family. There are two reasons for this. First is that it would be difficult to locate a joint family, as they are on the decline. The second is that it would be operationally infeasible to map the purchase behavior in a joint family because of its inherent complexity and time constraints. What is crucial to the marketer here are the number of alternatives that a customer evaluates or considers. The greater the number of additional alternative available in the market, the expected probability to switch to the other is higher. 8 INTRODUCTION For sixty years since India’s independence, the Indian car market was dominated by two localized versions of ancient European designs – the Morris Oxford, known as the Ambassador, and a old Fiat. This lack of product activity in the Indian market was mainly due to the Indian government's complex regulatory system that effectively banned foreign-owned operations. Within this system (referred to informally as the "license raj"), any Indian firm that wanted to import technology or products needed a license/permit from the government. The difficulty of getting these licenses stifled automobile and component imports, creating a low volume high cost car industry that was inefficient, unprofitable, and technologically obsolete. The two dominant products Ambassador and Fiat, although customized to the poor road conditions in India, were based on a stale design concept (with outdated features), and were also fuel inefficient. Then came the abolition of license raj. In 1993, the government followed up its liberalization measures with significant reductions in the import duty on automobile components. These measures have spurred the growth of the Indian economy in general, and the automotive industry in particular. Since 1993, the automotive industry has been experiencing growth rates of above 25%. The automobile industry in India- the tenth largest in the world with an annual production of approximately 2 million units – is expected to become one of the major global automotive industries in the coming years. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1993 9 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe. Small cars seem to be ruling the roost in the Indian automobile market with over 7.5 lakh small cars being sold in India in 2009-10. The main encouraging factors for the success story of the car market in India are the increase in the opportunity for new investments, the rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian government had been inviting foreign investors and manufacturers to participate in the car market in India. The recent trend within the new generation to get work in the software based sector has led to the rise in the income level and change in the lifestyle which has further led to the increase in the demand for different varieties of cars among them. Moreover, there are many financing companies providing easy car loans at reasonable interest rates and affordable installments. The car Market in India is crowded with all varieties of car models like the small cars, mid-size cars, luxury cars, super luxury cars, and sports utility vehicles. Initially the most popular car model dominating the Car Market in India was the Ambassador, which however today gave way to numerous new models like Maruti, Fiat, Hyundai, BMW, and many others.