New Delhi: As use of social media spreads like wild fire, automobile companies are cashing in on the opportunity to tap younger customers and are more than doubling their spending to market products through sites like Facebook and Twitter.

Maruti Suzuki India, Hyundai Motor India Ltd and Tata Motors, the top three volumes player in the Indian automobile market, are leaving no stones unturned to tap the potential of social media which they consider very important for future.

“Earlier, source of information for buying a car used to be friends and family but now increasingly more people are doing it themselves through the social media. Moreover, it is inexpensive and you can get a lot of feedback from customers through it,” Maruti Suzuki India (MSI) Chief General Manager (Marketing) Shashank Srivastava told PTI.

Social media can no longer be ignored as it is becoming a part and parcel of smart phones and with increasing internet penetration across India. Therefore, for any marketer it is important to be a part of social media, he added.

“The importance of social media is that increasingly the average age of users is decreasing. In 2005-06 it was 39 years and now it is 34,” Srivastava added.

Expressing similar sentiments, Hyundai Motor India Ltd (HMIL) Director Marketing and Sales Arvind Saxena said: “We are getting a lot of young customers, who are active on the social media, these days. They are constantly on Facebook or Twitter exchanging information. If you want to tap them, you need to be on social media.”

Tata Motors believes that communication through social networking sites is the immediate barometer of effectiveness in the communication strategy.

“We engage with customers through social media marketing, answer their queries on social networking sites like Facebook, Twitter and so on. Besides the metros, we also received good response from small towns,” a Tata Motors spokesperson said.

Market observers also feel that the auto companies are heading towards the right direction with the use of the social media as a marketing tool.

“Last year we saw a big chunk of first time car buyers look for information on the Internet and social media pages before making a purchase decision. It is in this context that we are saying auto makers using e-marketing for example email news letters to better engage this community,” Octane Marketing COO and Co-Founder Samarth Saxena said.

As per a recent report ‘e-Marketing Outlook in India for 2012′ by Octane Marketing, there would be 18 per cent increase this year in the number of Indian marketers, who see the importance of integrating e-mail and social media campaigns.

Social media (68.8 per cent) and e-mail marketing (53.1 per cent) emerged as the top two online marketing initiatives that will see an increase in marketing investments in 2012, as compared to 2011, the report said.

Considering the importance of the medium, it is not surprising that these companies are increasing their spendings for campaigns on the overall digital media.

“In fact our spending on digital media, including social media has been doubling over the past few years. This year it will be Rs 16 crore as against Rs 8 crore last year,” Srivastava said.

He further said, “The amount may be still small compared to our overall marketing expense but one has to keep note that we have been doubling it.”

Similarly, HMIL has also been doing the same. “Two years back our spending on digital media was very less. It was about two per cent of our total marketing expenditure. Today it is has increased to about eight per cent,” Saxena said without sharing the overall marketing expense of the company.

Already, the companies are seeing the returns on these investments.

“Our model Ritz has the highest following on Facebook with 5.5 lakh followers. The Alto has 4 lakh followers,” Srivastava said, adding MSI even used feedback from customers while coming up with new products.

“Lots of changes that we had incorporated in the interiors of the new Swift was based on feedback from people through the social media,” he said.

Tata Motors has also reaped the benefits of logging on to the online medium and sell its Nano, besides using the conventional methods.

“Tata Nano is also very active on Facebook and Twitter. Nano Facebook page has a fan base of over 1.56 lakh,” the company spokesperson said.

Lastly, but not the least, Srivastava said having a presence in social media has its brand rub off as well and “any company which is inactive on it is considered outdated” by today’s young customers.

“The usage of social media by companies will only increase. I am sure there will come a time when car launches will happen only on social media. Although it may take time in India but the direction is very clear,” he said.

Mumbai: With just 80 exclusive Nano dealership outlets operational at present, Tata Motors needs to do a lot to achieve its target of 300 by March 2012.

When sales are falling below expectations, the company is banking on dealership expansion into virgin geographies across India. In a bid to
take Nano to tier III and tier IV towns (with less than 200,000 population), where Tata Motors has no presence so far, it is intensely scanning the interior India. Finding good dealer partners in these locations also pose huge challenge for the company.

“We have recently commenced operations in cities like Balurghat (West Bengal), Naihati, (West Bengal), Bhadrak (Orissa), Gajraula (Uttar Pradesh), Rajpura (Punjab), Barshi (Maharashtra), Vita (Maharashtra), Patanjali (Andhra Pradesh), Suryapet (Andhra Pradesh), Dehgam (Gujarat) and more such tier-III and tier-IV small towns, where we did not have presence,” said the company spokesperson.

“Nano is being sold from about 704 outlets at present. This will increase further,” he added.

However, Nano sales are yet to show substantial improvement although the sales in November was 12-fold high (6,401 units) when compared to the particularly low number of 509 units in the same month a year ago.

Cumulative sales of Nano this fiscal so far is lower by 3% at 39,646 units against 40,976 units for the year-ago period.

In small town India, Tata Motors will have to battle it out with Maruti Suzuki which currently has the largest dealership network of 980 plus and is expanding.

Hyundai, which recently launched its Rs 2.7 lakh small car Eon, is putting together a blueprint to establish its dealer presence in similar geographies.

New Delhi: With rising petrol and diesel prices making it tough to tame inflation, the Government is now planning a serious policy push towards developing alternate automotive technologies.

A fund of about Rs 740 crore for research and development in electric vehicles (EVs) and hybrids is likely to find its way in to the 12th Five-Year Plan, officials connected with the development told Business Line.

“This fund will be used in projects for developing new technology in EVs and hybrids along with the industry, foreign technical collaborators and other domestic institutions, such as the IITs.

The industry is also expected to contribute, as the Government will only fund research and not manufacturing,” the official said.

To be formally announced next month, this allocation is part of a Rs 2,541 crore budgetary spend on the auto sector across the Plan period. It also follows the Government’s Budget 2010-11 announcement of forming a ‘National Mission for Hybrid and Electric Vehicles’ with the industry and academia.

“Many foreign players such as Toyota are interested in investing in EVs, but are waiting for the policy. They are looking to make and develop components domestically if feasible,” the official said.

Under this programme, research facilities for such technologies will be set up at Automotive Research Association of India, Pune and the other six Government-run auto homologation and testing centres under National Automotive Testing and R&D Infrastructure Project (NATRiP).

Investment pattern
The investment figure of Rs 740 crore was arrived after consultations with industry body Society of Indian Automobile Manufacturers and Booz and Co, a consultant hired to draft a report on potential of the EV sector. Booz, in fact, had suggested a Rs 1,000 crore fund, which had later been scaled down by the Ministry of Heavy Industries.

Apart from the EV R&D fund, Rs 991 crore from the Rs 2,541 crore allocation is for completion of the NATRiP (total spend Rs 2,288 crore) and Rs 7-8 crore for a National Automotive Board that is scheduled to be set up.

Mumbai: The Rs 3/litre petrol price hike is going to fuel diesel demand even further and put huge pressure on carmakers and the public sector oil refiners.

On an average, petrol will be dearer than diesel by at least Rs 25/litre (Rs 71 to Rs 46) effective Friday. “The craze for diesel cars will only increase and it will be tough for companies to cope with this lopsided demand,” an auto sector executive told Business Line.

It remains to be seen what impact the hike will have on petrol-driven compact cars. For instance, when prices were hiked by Rs 5/litre in May this year, it hit sales of some top-selling Maruti models like the Alto and Wagon R by nearly three per cent in the short-term.
Big setback.

Carmakers like Honda have constantly maintained that this fuel price differential has been a big setback since it does not have a diesel engine in its portfolio. Over the last few months, the company has attempted to offset this disadvantage by reducing prices of the City and Jazz models but the recent price hike could only make things more difficult.

Honda is now getting ready to launch the Brio at a competitive price and it is a moot point if the absence of a diesel option will make a difference to its fortunes. Almost every other carmaker, right from Maruti and Ford to Toyota and General Motors, has a diesel option in its compact car kitty. Despite this, they could still find the going tough in terms of meeting the surging demand.

“It’s not as if all of us are gloating about getting more orders for diesel cars. We are still very uncomfortable about the subsidy and are not sure when the Government will decide to withdraw it,” a car company official said.
Inflation fear

The truth is that this may not happen in a hurry because any move to deregulate diesel prices will stoke inflation which is already inching towards the 10 per cent mark. For the moment, nobody has a clue on working out a differential pricing model for diesel in cars and trucks. “As a result, expensive cars and sport-utility vehicles will continue to make the most of subsidised diesel even though it is an obnoxious practice,” the official added.

From the oil companies’ point of view, leaving diesel prices untouched will hardly help their cause. The losses at Rs 6/litre should be seen in the context that diesel accounts for nearly 60 per cent of the total fuel losses with kerosene and cooking gas taking up the balance 40 per cent. With states like Tamil Nadu reeling under a severe power shortage, use of diesel will only increase in generator sets and deflate the profits of the refiners.

New Delhi :Finance minister Pranab Mukherjee on Friday said interest-sensitive sectors like automobiles and real estate are likely to get affected more compared to other segments by rise in borrowing cost.

“Cost of borrowing has gone up, as a consequence …. Sectors sensitive to interest rates are likely to be affected relatively more than others,” Mukherjee said in a written reply to a question in Lok Sabha.

To tame inflationary pressure, the Reserve Bank has hiked key policy rates 11 times since March 2010 by a cumulative 325 basis points. This led to a rise in borrowing cost which in turn played a role in decelerating growth in industrial production.

During the first quarter (April-June) this fiscal, the industrial output, as measured by the Index of Industrial Production (IIP), stood at 6.8% as against 9.6% in the corresponding three-month period last year.

“The observed deceleration in growth in automobile and real estate sector also owes to higher prices arising from the market conditions,” he added.

Mukherjee said since July 2010 the banks have raised their base rates (the minimum lending rate) in the range of 75-325 basis points.

“The rise in interest rates was a concomitant of the series of policy rate hikes by the RBI to control inflation and to rein in inflationary expectations in the economy,” he said.

Mukherjee said the government has been giving interest subvention to certain sectors of the economy to cordon off the impact of continuous rate hike.

In another question he said the funds collected under New Pension System (NPS) from the government sector employees and from private investors is Rs 9,465 crore.