Automotive Axles Ltd 3525a

Business Marketing

Automotive Axles Ltd.

A - Team Aparna G Anirudh Sonthalia Srinivasa Rao N M Kanhu Charan Mahapatra Vivek Jain

• AAL – An Overview • Organizational Buying Behaviour • Market Segmentation • 4Ps of Marketing • Market Potential • Sales Forecasting

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AAL – An Overview • Established in 1981 • JV between Kalyani Group and Arvin Meritor Inc., USA • Manufacturing facilities at Mysore • The largest independent manufacturer of Rear Drive Axle Assemblies •

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Product Offering • Single Drive Axle • Tandem Drive Axle • Non Drive Axle

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AAL - Clientele • Domestic OEMs

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AAL - Clientele

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Scope

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Sales & Marketing

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Market Share (Volume Wise)

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Sales Break-up

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Revenue Split Quarter

Revenue (%)

First Quarter

33%

Second Quarter

20% (Monsoon)

Third Quarter

25%

Fourth Quarter

15% – 20% (year end)

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Revenues Break-up

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Organizational Buying Behavior

The Process

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Process at AAL • Customers recognize the need- tones and power • Send their product specifications and design • Send a Request for Information (RFI) to their suppliers • Send a Request for Quotation (RFQ) • Can decide on multiple suppliers for de-risking

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Process at AAL (contd…) • Meritor carries out the prototype testing whereas beta testing is done by the clients • Production starts after the approval of prototype • AAL decides on the Bill of Materials (BOM) and the order routine • Delivery varies with the buying situation of the customer • Customer survey - performance review

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Segmentation

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Segmentation • Types of commercial vehicles – LCV : < 5 tonnes – MCV : 5 -12 tonnes – HCV : > 12 tonnes 

• Caters to 5 tonnes & above category of CVs

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Tonnage • Completely driven manufacturers

by

commercial

vehicle

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• Within the HCV and MCV segments there are vehicles with different gross combination weights and housing load based on the customer’s usage •

• Automotive Axles manufactures axles with varied load capacity and the power (BHP) 19

Different Models

SOLO AXLES

TANDEM AXLES

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Transmission to wheel • Based on the number of wheels and differentials in a HCV or MCV • Various categories – 4×2 – 6×2 – 6×4 – 8×4 – 12 x 4

× 4 Number of wheels in the vehicle

6 Number of differentials

– 12 x 6

– 21

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Product • Single Drive Axle – Ranging from 6000 kg to 14000 kg GAWR for truck, bus, tractor & construction vocations

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Product • Tandem Drive Axle – GAWR capacities from 19000 kg to 28000 kg for vehicles used in the mining & tractor applications

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Product • Non Drive Axle – used along with drive axles in order to increase the vehicle load bearing capacity

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Place • One manufacturing plant in India • No distribution channel • Production is based on the order • Some OEMs use their own logistics • Delivery via contracted logistics service providers – VRL and Friendly Logistics

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Promotion • Auto Expo • Defence Expo • Ads in leading Auto magazines • Event sponsors

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Auto Expo 2010

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Pricing • Products are highly design-oriented and customerdriven • Cost-based pricing strategy – Cost + Fixed profit percentage = Selling price

• Depends on the client specifications and the design complexity •

• Single drive axle - Rs. 35,000 to Rs. 1,50,000 • Tandem drive axle - Rs. 2.5 lakh (average) 29

Market Potential and Sales Forecasting

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Market Potential Based on s (OEMs) • Determine the expected sales of Commercial Vehicles in 2010-11 • Determine the Percentage of Medium and Heavy commercial vehicles in the CV segment (More than 5 tonnes)

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CV - Sales

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CV Segmentation

AAL caters to > 5 tonnes category, i.e., 58% 33

Calculation • Projected Sales = 8,23,662 vehicles • Segment sales share by tonnage applicable to Automotive Axles = 58% • (Commercial Vehicles over 5 tonnes) • Market Potential = 8,23,662 * 58% 

= 4,77,724 Axles for M & HCVs

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Sales Forecast

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Sales Forecast for 2010-11 Quarter

Historical Sales Trend (%)

Sales for 2010-2011 (No. of Axles)

First Quarter

30%

39,000

Second Quarter

20% ( Monsoon)

26,000

Third Quarter

25%

32,500

Fourth Quarter

25% (Year-end)

32,500

Total

100%

1,30,000

The actual sales for the quarter ending June 30, 2010 were 38,696 units 36

Sales Variance (Sales Forecast – Actual Sales) / Actual Sales





= (39,000 – 38,696) / 38,696

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= 0.0078 or < 1%

(1st Quarter)

• • Reasons – Accurate order quantities for the coming month – Axle is the second most important part in a truck after the engine. Hence, exact numbers ordered

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Sales Potential • Maximum production potential - 1,68,000 axles / year – 3 shifts a day and 7 days a week

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Conversion Efficiency For 2010-11 • Sales forecast / Sales potential 

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Conversion efficiency = 1,30,000 / 1,68,000 = 81.25%

• Production for the coming month based on the client’s confirmed orders only. • Does not manufacture extra units – Intricacy in Design – Inventory carrying cost

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