Managing the Automobile Industry

Imran Hassen, Managing Director, SkodaAuto India

Renowned management writer Peter Drucker called the automobile industry as "the industry of industries". The statement in itself is exhaustive, particularly considering the sector's vast areas of concern. Therefore, the management practices of such a vast and inter-meshed sector attain prime substance.

To understand the growing pulse of the Indian Automobile market, one has to look at its historical developments. Till the early 80's, the Indian Automobile Market was controlled by the government policies influenced by socialism, central planning and bureaucracy. All production capacities were licenced and import duties were maintained high to protect the domestic industry from foreign invasion. It was a sellers market dominated by a handful of manufacturers.

The Indian government has switched over its role from a controller to an enabler as they continue to focus on better infrastructure, growth oriented economic policies and creating the right environment to attract investments in the country and sectors.

Over the last few years, the production and management systems have revolutionised in the automobile industry. We have witnessed a sea change from Henry Ford's traditional moving assembly line to the present day lean-manufacturing techniques. But the challenges in the globalised environment are far more severe, necessitating an apt eye on the best practices to eliminate non-value added activities and streamlining the value-added activities with a consumer-oriented approach.

Imran Hassen

Imran Hassen is the Managing Director, SkodaAuto India, a part of SkodaAuto a.s./Volkswagen Group. Hassen joined Volkswagen Group in the year 1993 and was given the charge to set up the then newly acquired export department at SkodaAuto a.s. in the Czech Republic.

When SkodaAuto a.s. was introduced in over 60 countries, Hassen was assigned the responsibility to determine the challenges and obstacles which might come in the way of Volkswagen Group's entry into India, with the trade mark of SkodaAuto a.s.

Born in Lahore, Pakistan, Hassen moved to Germany as a youngster. He studied at the Christian-Albrecht-University, Kiel, capital of the North German state of Schleswig-Holstein. He began his career as a trainee with a major European car manufacturing company. He later worked with Sales and Marketing section and then moved on to work with the Export Department.

Since 2001, Hassen has been successfully managing the SkodaAuto India, and has been responsible for company's growth and activities in the country.

Today, the automobile sector is the epitome of mass production, mass marketing and mass consumption, with some of the strongest brands in the world. Therefore, companies are in an obligation to respond rapidly to customers, deliver what customers need and provide increasingly diverse products.

The fast changing business environment makes urgent necessity of product innovation and strategic management awareness. Firms can no longer produce and market huge amounts of standard products with a relatively stable market and technological climate. Instead, they have to grapple with unstable, rapidly changing markets and technologies in order to run their organisations and be able to sell their brands.

Both 'Value Conscious' and 'Price Conscious' customer segments co-exist in the Indian market today. The latter is losing its share rapidly. Any potential entrant could consider launching the products targeted at the Value Conscious segment in the country. However, an in-depth analysis of the value perception of the target segment needs to be conducted. The 'feature - price' package should ensure an attractive value proposition appealing to the increasingly knowledgeable Indian Customer.

A successful brand is widely recognised by the customer; however, building the brand successfully is complex, expensive and time taking. It includes core issues like:

▪	Matching brand image with consumer expectations
▪	Developing a future "brand oriented" product strategy
▪	Developing "Piggyback" products which can create revenue, building on the image of the core product range
▪	Selecting and managing the right distribution channels
▪	Selecting marketing media and advertising
▪	Continuously "understanding the customer" and managing feedback.

 
Thus, strategies that determine the direction of product innovation and cost management have become more crucial to corporate management today than ever before. To satisfy the customers and to remain competitive, a firm needs to maximise its efficiency throughout its entire value chain. If efficiency is not maximised throughout the entire value chain, costs can rise above those of rivals, thereby losing the battle even before it is actually fought.

As the average disposable income continues to grow amongst the Indian consumers and they grow to become more lifestyle and brand conscious, it has lead to the completion of the Automobile evolution from Products to Brands. The intangible offerings have gained as much importance as the tangible product features itself. Any new entrant therefore needs to have a specialised focus on Brand Building in the market.

With the recent strides in communication technologies, there has been effortless flow of information enabling consumers to compare quality, durability and prices of products. The consumers today are a highly informed mass and therefore, the marketing war presently revolves round the brands and the image as perceived by the potential customer.

Products don't sell themselves but if producers can understand market demand and consumer needs, through market research, it would be better to plan how to make the products get to them.

It is also helpful to look out for lessons that can be learnt from other brands inside and outside the automotive industry. Such benchmarks, however, should be well selected and meaningful to understand a complete turn around or a distinct positioning.

Pursuing perfection is the only mantra to success in the highly competitive market of the present times, particularly because the competition is only bound to increase. This entails strengthening the company's most valuable resource - its people.

The best businesses develop their employees, making them feel valued and encouraging them to contribute to the business. They promote new ideas and ways of working, and realise that future success depends on constant improvement and innovation. They know their customers and are always looking to learn from their customers and trying to anticipate and respond to their changing demands. They try to exceed their customer's expectations and place great emphasis on continually improving the quality of the products and services they provide.

The changing automobile industry in India has also given rise to a new business opportunity where dealerships are not just selling cars but providing Mobility Solutions. The idea has evolved to reduce the burden on the customer by making the right investments in infrastructure and HR, to ensure that the dealership becomes a landmark which the customers will reckon with. The ones who do not make the investment are likely to lose out in this race.

In this fast paced and competitive economy, it is the responsibility of the dealer principals to merge with the brand they represent, as a dealership, today, has become a visiting card of the manufacturer they are associated with.

Today, there are various parameters on which a dealership is adjudged like convenience of location, hours of operation, appearance of the facility, the neighborhood, comfort of transactions, ease of viewing and selecting vehicles, availability of information, inviting & friendly layout. Product ownership experience will not be restricted to purchase alone but would span the complete ownership cycle of the car. It would begin from enquiry management to vehicle selection. Also, work like vehicle documentation & processing and delivery would be important components of customer satisfaction. This would also spill over to after-sales service and spare parts support. This clearly proves that with the evolution of the Auto Industry in India, the auto dealership has also evolved.

An emerging trend is also seen towards the significant development of the pre-owned car market in India. Customers today admire the convenience and transparency offered by automobile manufacturers and dealers themselves, unlike the opportunistic attitude of the unorganised players who controlled the market. This strategic business unit is almost running complementary to the main business today.

The government has announced certain key initiatives like the Golden Quadrilateral Project and rationalisation of excise duty to improve demands, etc. All these initiatives pave the path towards a better future for the Indian Automobile Sector.

The business and economic environment is favourable. The market is dynamic and is becoming more and more customer centric. The customer is open to novel products, services and concepts and has the money and the knowledge to rightly invest in products and service they desire.

Management expert Sandra Day O'Connor, once rightly said: "We don't accomplish anything in this world alone ... and whatever happens is the result of the whole tapestry of one's life and all the weavings of individual threads from one to another that creates something". Our achievements will always be the outcome of a dedication - dedication towards the people and to want to serve them better!