Innovation on three wheels

Section 1: Automotive manufacturing industry in India The Indian automotive manufacturing industry

The automotive manufacturing industry in India comprises automotive manufacturing organisations that are engaged in the design, research, development, manufacture, sale and maintenance of motor vehicles. Motor vehicles refer to passenger vehicles¹ and commercial vehicles².

The automotive manufacturing industry is one of the largest in the world and accounts for 7.1 per cent of India’s gross domestic product. The automotive manufacturing industry in India is forecast to continue to grow as consumer incomes increase, untapped markets emerge and favourable government policies improve consumer confidence.

Globally, India was the fifth largest passenger vehicle market, the second largest two wheel vehicle market and the largest three wheel vehicle market in 2015.

The Indian automotive manufacturing industry has demonstrated strong sales growth with a nine per cent increase on the previous year in 2014/15. Over 19 million motor vehicles were manufactured in 2015. The industry has a strong export profile, with exports growing by a compound annual growth rate of 15 per cent in the five years from 2010 to 2015. Further, the industry has attracted direct foreign investment of over USD 14 billion since 2010.

A                  Industry segmentation

The industry manufactures two key motor vehicle segments (passenger and commercial) which are offered for sale as four product types:

Passenger Vehicles

1. Two wheel vehicles

Two wheel vehicles (known as two-wheelers) include motorcycles, mopeds, and scooters. Comprising 79 per cent of total motor vehicle sales in India, over 16 million two-wheelers were sold in 2015.

2.    Three wheel vehicles

Three wheel vehicles (known as three-wheelers) for private use have only recently been introduced to the Indian market. Grande Autos India launched their three-wheeler in 2013 and Meullier Motors India followed in 2015. These models have registered negligible domestic sales.

¹ Passenger vehicles are used for the transport of passengers for private purposes only, and have no more than eight seats in addition to the driver’s seat.

² Commercial vehicles are used for carrying goods for financial compensation or fare-paying passengers.

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3.    Four wheel vehicles

These are vehicles purchased by individuals for private use. Motor vehicles in this product types are classified by size and engine capacity (see Appendix). In 2015, 14 per cent of total motor vehicle sales in India were four wheel passenger vehicles, and of these, 70 per cent were small vehicles.

Commercial Vehicles

1. Three wheel vehicles

Depending on the model and manufacturer, three wheel vehicles (three-wheelers) can have the single wheel at the front or back. In 2015, four per cent of the total motor vehicle sales in India were three- wheelers.

Traditionally, three-wheelers have been used for commercial purposes. The growth in the three-wheeler market has been led by fare-paying passenger carriers, with almost 80 per cent of domestic sales in 2015 used for the commercial purpose of transporting people. Exports of three-wheelers grew by 20.4 per cent in the period from 2006 to 2015. However, domestic demand for three-wheelers has now slowed with businesses opting for small four wheel vehicles due to their larger capacity and better stability on the road for transporting cargo.

2.      Four (or more) wheel vehicles

Like passenger vehicles, four or more wheel commercial vehicles are classified by weight for trucks (light, medium and heavy) and use for all types. Commercial vehicles were three per cent of total motor vehicle sales in 2015. These vehicles range from utility-style vans to heavy trucks, semi-trailers and buses.

B                   Drivers of demand

Growth in the industry is influenced by a number of factors.

Affordability of the vehicles: Due to the generally low household disposable income in India, motor vehicle affordability remains a critical factor for consumers. Two-wheelers, three-wheelers and small four wheel passenger vehicles are an attractive option for households as they are cheaper to buy and run than mid-size and large passenger vehicles.

Status symbols: One key identifier of success is the type of motor vehicle driven. The bigger, more luxurious or prominent the brand, the more successful the person is considered to be.

Steady economic growth: Growing prosperity, particularly in younger and female demographics, is driving the demand for affordable motor vehicles. Economic growth is also raising the incomes of middle class households, increasing the demand for luxury passenger vehicles.

Fuel costs: High fuel costs for motor vehicles can shift demand to smaller vehicles, as the price of fuel impacts the affordability of using the vehicle. Increases in fuel prices have driven demand for vehicles that have better fuel economy, such as two-wheelers, three-wheelers and small four wheel passenger vehicles.

Infrastructure: The Indian government is improving road infrastructure in rural communities, making it more practical to use motor vehicles in these areas. Over the last 10 years, demand in rural areas for small vehicles, for both passenger and commercial use, has doubled from six per cent of total motor vehicle sales in 2006 to 12 per cent in 2015. The growth has been particularly in two and three wheel vehicles, primarily due to “last-mile connectivity”, which involves transporting commuters between the closest public transport and their home.

C                   Key industry success factors

The automotive manufacturing industry in India has four key success factors.

Strong supply chain relationships including an extensive distribution network

Investment in more dealerships will increase the integration of organisations in the automotive manufacturing industry in new geographic markets and consequently increase access to more customers. Local sourcing of inputs for the manufacture of the motor vehicles will improve profit margins through reducing costs and also create a more flexible production process, enabling manufacturers to respond more quickly to changes in demand.

Adoption of new technology

Innovation in product design and adopting new features enables motor vehicle manufacturers to further differentiate their product and respond to consumer preferences. New technology also assists manufacturers to comply with government standards on emissions.

Positive brand image

Improved customer experience, through positive brand interaction, product quality, better access to dealers and after-sales service is imperative as consumers become more demanding. A strong positive brand, with perceptions of reliability and, in some cases, prestige, encourages people to purchase a motor vehicle. Having a strong point of difference enables consumers to align themselves with a brand.

Environmentally friendly vehicles

Those manufacturers that have been able to offer motor vehicles with better fuel economy are more attractive to both individuals and businesses, due to reduced vehicle running costs. Automotive manufacturers need to invest in their design, inputs and distribution networks to ensure they develop products that comply with safety and emission regulations imposed by the government.

D                  Major customer market trends

Individuals, for private use

The type of motor vehicle purchased by individuals for private use is based on many factors, with affordability being the most common determinant.

Two-wheelers: As the price of two-wheelers is significantly lower than other passenger vehicles, this mode of transport appeals primarily to working class to lower-middle class individuals, or families who require convenience and cost-effective transport. Safety is a concern for this customer market due to the lack of passenger protection offered by this class of vehicle. Increasing incidence of accidents involving two wheeled vehicles has the potential to impact sales to this group.

Three-wheelers: The market for these vehicles has yet to gain momentum for private use in India.

Four wheels: India has a rapidly growing middle class. Four wheel passenger vehicles with different price points appeal to different demographics. Small vehicles are still preferred due to their convenience in dense urban areas. As middle class consumers are becoming more affluent, they are able to purchase more expensive passenger vehicles and are therefore seeking expanded offerings in small luxury vehicles.

Businesses

Commercial vehicles are used for carrying goods for financial compensation or fare-paying passengers, and are used by both businesses and sole traders. Purchases of commercial vehicles are based on affordability and use. Three-wheelers are mainly used by businesses for transporting cargo and fare- paying passengers. The drivers of three wheel vehicles are generally from lower socio-economic groups and earn their living as drivers.

E                    Major competitors

Discussed below are the industry’s major competitors; this does not represent the entire industry. Small competitors also exist, but do not individually have a market share that would justify being included.

Access to technological advances and innovation, keeping costs low and capitalising on growth markets are how the major automotive manufacturers in each product type have maintained their competitive positon.

Wind Motor Group

As the largest manufacturer of motorcycles, in India and globally, Wind Motor Group’s growth has been attributed to offering relevant products and reaching new geographical markets, including rural areas of India, with its 6000 dealers. The company’s flagship model became known for its fuel efficiency, which helped the company grow at a double-digit pace since its beginning in 1983. As one of India’s largest exporters, Wind Motor Group had a profit of USD 472 million in 2015. Its market share of passenger two- wheelers was 43 per cent in 2015.

Hoffsta Auto

Hoffsta Auto was established in India in 1944, making it one of the oldest automotive manufacturers and most recognised brands in India. Specialising in two-wheelers and commercial three-wheelers, Hoffsta Auto made a profit of USD 660 million in 2015. Hoffsta Auto was awarded ‘Bike of the Year’ in 2014 for its advances in technology and environmentally friendly features. With 3400 dealers selling their vehicles, Hoffsta Auto hold 25 per cent market share of the passenger two-wheeler segment and 59 per cent market share of the commercial three-wheeler segment. They have just started producing mini and micro passenger vehicles.

Meullier Motors India

As a market leader with 50 per cent market share in two-wheelers in Europe, Meullier Motors Corporation opened a wholly owned subsidiary in India in 1998. Launching a prestigious two-wheeler in India in 2015 that supported their prestigious luxury European scooter brand, Meullier Motors has had slow sales growth. With only 10 dealerships, Meullier Motors India reached a profit of USD 0.25 million in 2015. Meullier Motors India introduced a three-wheel vehicle for private use to the Indian market in 2015, positioning it as more comfortable ride than a two-wheeler and more affordable than a four wheel passenger vehicle. Meullier Motors India have yet to sell this through their dealers.

Sundar Speed Corporation (Sundar Speed)

Established in India in 1980. Parent company is Japanese-owned Speedy Corporation. Success has been attributed to constantly upgrading models with new technology, keeping costs low through economies of scale and lower input costs, and penetrating new markets in India by opening dealerships. In 2015, Sundar Speed Corporation had a market share of 48 per cent in four wheel passenger vehicles and made a profit of USD 580 million. They manufacture all types of passenger vehicles, including hybrid models, and four wheel commercial vehicles, and produce the number-one selling passenger vehicle, with nearly every second passenger vehicle in India being made by Sundar Speed. The organisation has aggressively expanded the number of dealerships to 1800, however these have been concentrated in densely-populated cities and towns rather than geographically spread out across the country.

Alvido Motor Corp

Established in 1945, Alvido Motor Corp is one of India’s oldest automotive manufacturers. Prior to the market being opened to foreign automotive manufacturers, Alvido Motor Corp had the largest market share in both four wheel passenger and commercial vehicles. In 2015, Alvido Motor Corp had a 7.5 per cent share in passenger vehicle market and an 11 per cent market share of commercial vehicles including three-wheelers, making Alvido Motor Corp the third largest in both product segments, and generating strong profits of USD 48 million. In order to start increasing their market share, Alvido Motor Corp is working on a pilot customer service project in three cities. Alvido Motor Corp has the largest geographical dealership network, reaching 70 per cent of all Indian districts, with 1300 dealerships reinforcing its reputation as an Indian icon in automotive manufacturing. They offer all types of four wheel passenger vehicles and all types of commercial vehicles and their longevity in the industry has created solid supplier relationships.

Keun Motor India Limited (Keun Motor India)

With a Korean parent company, Keun Motor India is the second largest manufacturer of passenger vehicles in India, with a 17 per cent market share and profit of USD 192 million in 2015. They established in India in 1980 and have 1050 dealers, with 315 in rural India. They are known for their product development, launching two new vehicles per year for the last four years, including a new hybrid model in 2014. In 2014, Keun Motor India won the prestigious ‘Indian Car of the Year’. Keun Motor India is the largest passenger vehicle exporter in India.

Besuto Motors India

Besuto Motors India is a wholly owned subsidiary of Besuto Motors Global Corporation, the largest automotive manufacturer globally by market share, and is renowned for high quality, advanced technologies and innovative design. After making a loss for the years between 2011/12 to 2013/14, Besuto Motors India made a profit in 2014/15 of USD 84 million. Their product range is limited to four wheel passenger vehicles, including two hybrid models. Established in India in 1999, Besuto Motors India has 500 dealerships, predominately located in cities and major towns. Besuto Motors India is the fourth largest passenger vehicle manufacturer with a market share of 5.4 per cent in 2015.

Grande Autos India

With over USD 300 million in accumulated losses over last two years, Italian parent company Grande Auto is using India as manufacturing hub to look to reduce their manufacturing costs. Grande Autos India has a 4.5 per cent market share in passenger vehicles, and is the sixth largest manufacturer in India. Reaching a profit of USD 2.4 million in the previous financial year, Grande Autos India is looking to new markets to increase profits. Grande Autos India launched Ecco, a three wheel model for private use, in 2013. However, the organisation has stated that they are testing the market, and the model is only available as an import from Europe.

Suno Motors

Suno Motors is the largest automotive manufacturer in commercial vehicles in India, with a market share of 62 per cent in 2015. Considered a pioneer in Indian automotive manufacturing, Suno Motors was the first company in India to manufacture and market the micro passenger vehicle, the sports utility vehicle and light commercial truck. Suno Motors is also an iconic Indian brand, having been established in India in 1946. They have 550 dealerships. Suno Motors manufactures four wheel passenger vehicles with a market share of five per cent. Suno Motors is losing market share across all their product types to more vibrant brands and more relevant product offerings from competitors. Suno Motors’ profit in 2015 was USD 180 million.

Tariq Motors

Founded in 1947, Tariq Motors is India’s second largest commercial vehicle manufacturer. In 2015, Tariq Motors made a USD 55 million profit from a 19 per cent market share. Tariq Motors is India’s largest bus manufacturer and produces the entire commercial vehicle range, including three-wheelers and vans, with a focus on medium to heavy trucks. Tariq Motors has 300 dealers. Due to a strong demand for medium to heavy trucks, Tariq Motors has seen strong sales growth of 40 per cent in the last financial year to 2015.

F                    Challenges facing the industry

The industry has experienced considerable growth over the last five years, with consumer confidence improving following a change in government. The challenges facing the industry are customer expectations, increasing in input costs and changing government policy.

Social challenges for automotive manufacturers include rising customer expectations and demands for more value from vehicle purchases, meaning that manufacturers need to be aware of, and responsive to, customer needs. As disposable income increases due to the expanding middle class, customers expect better value. As the number of competitors has increased in the Indian industry range and choice of products offered for sale has also increased, consumers have become more discerning in their purchases.

As part of new product development, manufacturers need to recognise the regulatory changes from the Indian government in regard to emissions, in particular, government regulations for two- and three- wheelers. These regulations have been tightened over the last ten years to reduce the amount each vehicle emits. Manufacturers have had to incorporate substantial product amendments in order to comply with government policy.

Increases in commodity input prices for materials such as iron ore, crude oil and rubber in India, resulting from growth in demand, as well as ongoing running costs such as the price of fuel, are impacting production costs. Industry profitability is being squeezed as a result, with increased costs absorbed by manufacturers, given the price-consciousness of customers. Automotive manufacturers are concentrating on increasing the proportion of local production of their motor vehicles, to keep costs low.

Section 2: Besuto Motors India A         Background

Besuto Motor Corporation India (Besuto Motors India) is a wholly-owned subsidiary of Japan-based Besuto Global Motor Corporation, which is the largest automotive manufacturer globally, by market share, with the sole distribution right for Besuto branded vehicles.

Besuto Motors India’s market share has decreased from 6.16 per cent in 2013/14 to 5.4 per cent in 2014/15. Despite the decrease in market share, Besuto Motors India had a marginal two per cent gain in sales in 2014/15. However, the company is still underperforming compared with the rest of the industry and has only recently returned to profit after incurring losses from 2011/12 to 2013/14.

Industry analysts have suggested that Besuto Motors India has struggled because their relatively high- priced four wheel passenger vehicles are too costly for the price-conscious end of the Indian market. Highly specialised components used in manufacture have resulted in higher price points than competitors. Further, Besuto Global Motors Corporation are known globally for producing large four wheel passenger vehicles, with big profit margins. Critics say that it is this lack of knowledge of the Indian market that has meant Besuto Motors India hasn’t reached its target of 10 per cent market share by 2015.

Change at the top

Anita Khan was brought in to lead the Indian subsidiary in 2012 as Operations Director, having previously worked in the head office in Japan. At the time, Besuto Motors India was in the middle of a strike by factory employees, and her skills in negotiation and human resource management were sought to negotiate an agreement. The strike continued for another 21 days following her appointment, as employees refused to agree to the proposed pay conditions offered by Besuto Motors India. Productivity of Besuto Motors India decreased by almost 50 per cent overnight. Considered a direct communicator, Khan worked with the union to come to an agreement and employees returned to work under revised conditions.

One year later, in 2013, Khan was promoted to Managing Director and became one of the youngest managing directors and the only female managing director in the Besuto Global Motors Corporation worldwide. Khan was also the first Indian to run Besuto Motors India.

2015 to 2020 Strategic Plan

At the end of 2013, six months after her appointment as Managing Director of Besuto Motors India, Khan met with her senior executive team to build a strategic plan for the organisation. The team included the newly-promoted Operations Director, a Manufacturing Director, a Marketing Director and a Supply Director.

Together, the senior executive team decided that within the next five years the strategic plan would be to: respond to customer needs; improve their product offering to be more on trend than was currently the case; increase the local content of production, and grow Besuto Motors India’s presence in the Indian market by increasing the number of dealerships they sold through. This included increasing the number of dealerships and promoting the brand more heavily in rural areas, where Besuto Motors India’s sales for passenger vehicles had doubled from seven per cent in 2006 to 15 per cent in 2015. The team decided Besuto Motors India needed to offer customers both high-quality and fuel-efficient small vehicles, as well as better access to dealers.

In line with the strategy to increase their market share in the Indian market across all their models, Besuto Motors India acquired a subsidiary, Beiber Auto India, in 2014. Beiber Auto India was known for specialising in manufacturing small, lower cost motor vehicles with good fuel economy. Beiber Auto India also had manufacturing facilities in India and an established dealership network. This acquisition meant that Besuto Motors India had a broader product offering in the Indian market, and vehicles more suited to customer needs.

Branding, marketing and customers

Research undertaken by the marketing team found that brand image and reputation had become increasingly important to Indian automotive consumers over the last five years. Further, the Marketing Director found that as a Japanese brand, Besuto Motors India was perceived to be more contemporary, with better technology and engineering than Indian brands by these consumers. In 2013/14, the most respected brand in the Indian automotive manufacturing industry was Sundar Speed Corporation followed by Korean brand, Keun Motors India, with Besuto Motors India ranking third.

In 2015, Besuto Motors India ranked the highest in the ‘Annual India New Motor Vehicle Sales Satisfaction Survey’ and the highest in the ‘Annual India Dealer Satisfaction Survey’, with Sundar Speed Corporation coming second.

Besuto Global Motors Corporation, including Besuto Motors India, is one of the biggest spenders globally on advertising among motor vehicle manufacturers. Besuto Motors India invests in digital marketing and also advertises extensively on television, radio, press and outdoor advertising. Besuto Motors India also has retail promotions to encourage purchases at key times. Khan also invested in a new customer relationship management system to track potential and existing customers, to improve customer experience, collect information on purchasing behaviour and to respond to any after-sales concerns.

Besuto Motors India has identified a target market of affluent, middle-class Indians who want safety, quality, and the convenience of a personal vehicle in urban areas. This demographic also demands eco- friendly and technologically advanced motor vehicles with good reliability and low running costs, in addition to prestige. Another untapped market is people in rural areas looking to private transport for

“last mile connectivity”.

Products and manufacturing

Only manufacturing four-wheel passenger vehicles to date, Besuto Motors India offers ten models to the Indian market, including two hybrid models; one multi-purpose vehicle, and three sports utility vehicles. In 2015 Besuto Motors India won four awards: a sustainability award for their hybrid vehicles, an award for their mid-size sedan (four wheel passenger vehicle) and a ‘Promising Brand’ award. Besuto Motors India only offer their own technology in their own passenger vehicles.

Besuto Motors India located a new supplier that was able to produce generic components, enabling Besuto Motors India to implement a new manufacturing method, introducing an expected 50 per cent commonality across engines, in addition to 60 per cent common parts across their vehicles, improving economies of scale in production and supporting the introduction of new products at a quicker rate.

One of the concerns facing Khan was that Besuto Motors India’s motor vehicles had only 30 – 50 per cent of their components sourced from within India, with remaining components being imported. The industry average was 70 – 90 per cent domestically-sourced components. Unfavourable exchange rates had kept costs high and impacted profitability. Besuto Motors India increased the proportion of locally- made inputs for their engines to 85 per cent by the end of 2015 by improving relationships, sourcing new suppliers and renegotiating inputs from existing suppliers.

Besuto Global Motor Corporation operates a just-in-time production process, the only automotive manufacturing company in India to do so. This is dependent on fast delivery of components so local supply, to achieve timely supply, is critical for success.

The Besuto Road – the importance of employees

To repair the unease that arose out of the factory employees’ strike in 2012, Khan implemented an employee engagement program called the ‘The Besuto Road’. It involved communicating, both internally and publically, that employees were the main assets of Besuto Motors India and the “source of inspiration and growth of the organisation”. The employee engagement included an ‘Employee of the Quarter’ program, which identified employees demonstrating outstanding leadership and team work.

Khan reinforced to her senior executive team the need to seek continuous improvement through encouraging staff to set targets, take initiative and problem-solve, and so empower their staff by giving them increased responsibility.

Khan also implemented an employee suggestion scheme. Ideas from this scheme were used to improve the working environment and identify how to improve the customer experience. Improvements to working conditions included a fully-equipped canteen, lockers, and healthcare centres staffed round- the-clock. Khan used the number of employee suggestions as a measure of morale and engagement. Employee suggestions reached more than 1000 in the first year of her leadership. Those employees who requested a response from their suggestion were sent a personal note of thanks by Khan.

Khan developed an intranet and improved access to the staff newsletter to ensure company updates and performance were accessible to all employees. She initiated all-staff meetings every quarter; in the first one, she publically assured the nearly 5000 employees that they would receive opportunities to grow and excel. Training programs were implemented to improve teamwork, communication, innovation and productivity. Leadership programs were developed organisation-wide to enable employees to gain skills, making them eligible for internal promotion. Khan also set up an ‘exchange scheme’ so that employees from India could work in other parts of the organisation, both in Asia and around the world.

A report commissioned by Khan on staff sick leave indicated that the new strategies were working. It showed a reduction in the number of days off over the 2014/15 period compared to the previous year. Even better, there was a 15 per cent increase in the number of internal promotions over the same period.

Dealership relationships

From 2014, Khan expanded the Besuto Motors India dealer network from 320 to 500 dealers with 25 of the new dealerships located in rural areas to capitalise on the growth in this market. In conjunction with the marketing team, Khan re-branded the Beiber Auto India dealerships to the Besuto Motors India brand. In August 2015, Besuto Motors India undertook a dealer roadshow through the larger districts of India, with a message of product quality and service. A rural sales division was added to the marketing team to concentrate on expanding into new regions, train dealers in new customer service methods and gain customer feedback.

B                   Future opportunity

In 2014 Besuto Global Motors Corporation developed its first three wheel electric vehicle that combined the benefits of a two-wheeler vehicle – compact, nimble in traffic and convenient – with the benefits of a passenger vehicle – less exposed to the weather, protection around the driver and a more comfortable ride over longer distances. The new vehicle, known as myRide, was trialled in the Japanese market and gained traction with young professionals and women who required affordable private transport in dense urban areas. It retailed for USD 8000 to reflect a high price/high quality perception. In India, a new micro vehicle is priced between USD 2000 and USD 9000, and two-wheelers sell from USD 500 upwards.

myRide was very different to previous three-wheelers: electrically powered with futuristic styling, one wheel at the back and two at the front with a fully-enclosed cabin. Driving myRide did not require a helmet and was comfortable in all weather conditions. The product was the first to the Indian market with sophisticated engineering that enabled the left and right front wheels to move up and down independently in response to the driver’s steering. The vehicle automatically selected the optimal lean angle when going around a corner, consequently driving more like a passenger vehicle than other three- wheelers. This meant the vehicle maintained stability, even on slopes and uneven surfaces.

myRide could travel around 50 kilometres before the battery needed charging, taking three hours to fully charge using a standard electrical outlet. As a fully electric vehicle, myRide had zero emissions, and its one headlight and two taillights were all energy-efficient. myRide was just under one metre wide, providing agile and manoeuvrable driving in dense traffic and taking up less than a whole lane on crowded urban roads. Its small size was also favourable for parking.

The interior offered unique features including a very large windshield for increased visibility, room for a passenger and luggage, digital music facilities and air vents to replace air conditioning, which is expensive to maintain. Options such as a satellite navigation system and upgraded seats with back support could be added to the base model at extra cost.

Existing competitors selling passenger three-wheelers in India

Meullier Motors India is a wholly-owned subsidiary of the French motor vehicle manufacturer, Meullier Motors Global. Meullier Motors Global offers a three-wheeler for private use in the European market at a price point of USD 6000: this is a hybrid vehicle using both fuel and an electric motor. The model does not provide any cover for the rider, making it more like a two-wheeler with a third wheel. This creates more stability than a motorbike or scooter, but users are exposed to the elements and enjoy a less comfortable ride. Meullier Motors India introduced their three-wheeler to the Indian market in Mumbai, at the Annual Indian Auto Expo in 2015, positioning it as more comfortable ride than a two-wheeler and more affordable than a four wheel passenger vehicle. Consumers can import it from Europe as it is not yet available through Meullier Motors India dealerships. Industry reports have suggested Meullier Motors India is planning to sell their three-wheelers domestically through their Indian dealers in 2017.

Italian automotive manufacturer Grande Autos introduced their three-wheeler, Ecco, to the Indian individual market in 2013. Ecco is a niche product, and not considered a major industry competitor overall, but is important in relation to this opportunity. Designed for private use, Ecco is the closest competitor to Besuto Motors India’s myRide in that it has a stylish body that encloses the driver and has room for a passenger. It is a hybrid vehicle and cheaper than myRide at USD 7000, has less technology and comes with fewer ‘comfort’ features: doors are optional and there are no air vents. Additionally, consumers need to lease the battery from Grande Autos India at USD 50 per month. Ecco is imported into India. Grande Autos India has indicated that they are using the model for research and development in the Indian market. The organisation hasn’t said when they will make the Ecco domestically available through their dealerships.

Strategic direction

Marketing research undertaken by Besuto Motors India highlighted the gap in the passenger three- wheeler segment and possible expansion of Besuto Motors India into this product. Khan thinks that the full potential of the market is not being exploited, as current suppliers offering three wheel vehicles for private use are only importing on demand.

Social trends indicate consumers want a smaller motor vehicle, however brand and prestige form part of the decision making. Further, Besuto Motors India had acquired Beiber Auto India which had manufacturing facilities for smaller vehicles. With Besuto Motors Global Corporation owning the intellectual property of myRide, Khan thought it was worthy of consideration by Besuto Motors India.

C                   Conclusion

Through implementation of their strategic plan, Khan recognises that Besuto Motors India needs to respond to customer needs, improve their product offering to be more on trend than is currently the case, increase the local content of production and increase the number of dealerships they sell through.

The relatively small market share of Besuto Motors India doesn’t represent the large global presence of their owner, Besuto Motors Global Corporation. With sales of Besuto Motors India not growing as fast as the rest of the industry, Khan is keenly aware that the organisation needs to consider their strategic opportunities.

Khan is considering whether providing a three-wheeler for private use to an untapped and untested Indian market will lead the organisation to an improvement in sales growth and market share for Besuto Motors India.

D Appendix

Table 1: Classifications of four wheel passenger vehicles in India, 2016

Table 2: Classifications of commercial vehicles in India, 2016

Note: Only commercial vehicles which fall under the classification of Truck are required by legislation to have the Gross Vehicle Weight noted.