The analysis of the possibility of
Hybrid car and new-type Light vehicle in India
Market possibility and strategy

P265 Doing business in India research paper

Question
How to best introduce innovative products into Indian market through foreign investment: opportunities and concerns (choose any two products as example for similarity and contrasts)
Product I; Hybrid car (Specific example, Prius (Toyota))
Product Ⅱ; Light vehicle (Specific example, Hustler (Suzuki))

Overview

1. Introduction

2. Market overall
(1) Macroeconomics
(2) Automobile market size and growth rate
(3) Market segmentation
(4) Market Player
(5) Sales channel
(6) Supplier
(7) Indian government policy
(8) Reported difficulties
(9) Possible external variable

3. Opportunity and challenge

4. Strategy

1. Introduction
India is one of the most promising automotive markets; market expansion is expected in accordance with economic development. For example, JD Power predicts that the total automobile market size will triple to 9.3 million units by 20201. Wall Street Journal reports another forecast; sales in India are projected to rise at 6.73 million in 20202. Both forecasts suggests India will be world third largest market in 2020, following China and the U.S. Success in Indian market is one of the important issue for world’s big car companies.

In this paper, I will analyze the strategy for introduction of two products; Product I ; Hybrid car (Specific example, Prius (Toyota)), Product Ⅱ; Light vehicle (Specific example, Hustler (Suzuki)).These are two important innovative products produced by two different automobile companied of Japan. Prius is the first commercial hybrid car by Toyota. Toyota already launched to sell Prius in India in 2010; however, the magazine of Japanese Automotive Manufacturing Association (JAMA) reported that Prius in India is over 5 million Japanese Yen (about 50,000 US dollars (hereafter USD))3. Actually, ZigWheels, Indian car selling site, suggests that Prius is about 30 lakh Indian Rupee4 (about 50,000 USD). It is far more expensive in Japan and the U.S (In Japan it sells in 2.17 million Japanese Yen (about 21,700 USD5)6, in U.S. it sells in 24,200 USD7). One of the causes of such high price is high tariff rate; Indian effective tariff rate on manufactured automobile is estimated to 60%8. To solve the tariff problem, Toyota can launch foreign direct investment (hereafter FDI) in India (Assume that Toyota can sell Prius in almost same price as in Japan if it chooses FDI). However, is it good strategy? If so, why and for which reasons? They are the problems which I analyze this paper.

Hustler is one of the high-expected new light vehicles by Suzuki. Characteristics of this car are stylish design and safety technology9. The price is about 1 million Japanese Yen (about 10,000 USD)10. Suzuki, correctly speaking its subsidiary Maruti Suzuki (hereafter Maruti), already has wide range of light vehicle product lineup11 but does not have this type of car in terms of the sophisticated design, safety technology and relatively high price . Does the extension of brand lineup help Suzuki or not (assume that Maruti sell Hustler in almost the same price as in Japan)? If it helps, what is the best strategy to increase market penetration? These are issues which I analyze for the second product in this paper.

I want to tackle these problems starting with market overall which is common external environment for Toyota and Suzuki. Then, I want to draw opportunities and challenges for them. Finally, I conclude specific strategy for Toyota and Suzuki. In this paper, I look at the strategy in terms of a assume target year of 2020.

2. Markets overall
(1) Macroeconomics
In 2012, Indian Nominal GDP is 1839.3 billion US dollars which means about 1500 USD per capita (The Economist Intelligence Unit (EIU) suggests in 3861 USD12 in Purchasing power parity). EIU predicts real economic growth from 2013 to 2020