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:
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Matching
brand image with consumer expectations |
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Developing
a future "brand oriented" product strategy |
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Developing
"Piggyback" products which can create revenue, building
on the image of the core product range |
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Selecting
and managing the right distribution channels |
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Selecting
marketing media and advertising |
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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! |
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