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 by commercial vehicle

manufacturers
•

• 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)

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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
– 6×4 × 4
– 8×4 Number of Number of
– 12 x 4 wheels in the differentials
vehicle
– 12 x 6

–
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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 customer-

driven
• 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)

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Market Potential and Sales Forecasting

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Market Potential Based on Users (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%

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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

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Sales Variance

(Sales Forecast – Actual Sales) / Actual Sales



 = (39,000 – 38,696) / 38,696

 = 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

 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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