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S.No. 1. 2. 3. 4. 2 Wheeler Industry Passenger Vehicle Industry Commercial Vehicle Industry Topic Introduction to Indian Automobile Industry
Automobile Industry
One of the major industrial sectors in India is the automobile sector. Subsequent to the liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian economy as this sector has witnessed tremendous growth. Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, delicensed in 1993. No industrial licence is required for setting up of any unit for manufacture of automobiles except in some special cases. The norms for Foreign Investment and import of technology have also been progressively liberalized over the years for manufacture of vehicles including passenger cars in order to make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. The cumulative production data for April-January 2010 shows production growth of 23.07 percent over same period last year.
On the canvas of the Indian economy, automotive industry occupies a prominent place. A sound transportation system plays a pivotal role in the country's rapid economic and industrial development. Automotive Industry comprises of automobile and auto component sectors and is one of the key drivers of the national economy as it provides large-scale employment, having a strong multiplier effect. Being one of the largest industries in India, this industry has been witnessing impressive growth during the last two decades. It has been able to restructure itself, absorb newer technology, align itself to the global developments and realize its potential. This has significantly increased automotive industry's contribution to overall industrial growth in the country.
Automotive Industry
The automotive industry is one of the most important economic sectors by revenue. The term automotive industry usually does not include industries dedicated to automobiles after delivery to the customer, such as repair shops and motor fuel filling stations.
Domestic Sales
Growth during April-January 2010 period: Passenger Vehicles: 25.21% Passenger Cars: 24.75% Utility Vehicles:21.95% Multi Purpose Vehicles: 37.05% Overall Commercial Vehicles: 30.39% Medium & Heavy Commercial Vehicles (M&HCVs): 20.58% Light Commercial Vehicles: 39.66% Two Wheelers: 23.74% Mopeds: 31.73% Scooters: 20.56% Motorcycles: 24.32%
Exports
Growth during April-January 2010 period: Overall Automobile exports: 13.24% Passenger Vehicles segment: 33.92% Two Wheelers segments: 8.84% Commercial Vehicles segment: (-)7.52 percent.
Worldwide Trends
In 2007, worldwide production reached a peak at a total of 73.3 million. In 2009, worldwide motor vehicle production dropped 13.5% to 61 million. Sales in the U.S. dropped 21.2% to 10.4 million units. China became the world's largest motor vehicles market, both by sales as well as by production. Sales in China rose 45% in 2009 to 13.6 million units.
YEAR
Passenger vehicles Commercial vehicles Three-wheelers Two-wheelers
2006-07
198,452 49,537 143,896 619,644
2007-08
218,401 58,994 141,225 819,793
2008-09
335,739 42,673 148,074 1,004,174
200000
SWOT ANALYSIS
S
Strengths
Large domestic market. Sustainable labor cost advantage. Competitive auto component vendor base. Government incentives for manufacturing plants. Strong engineering skills in design etc.
Weaknesses
Low labor productivity. High interest costs and high overheads make the production uncompetitive. Various forms of taxes push up the cost of production. Low investment in Research and Development. Infrastructure bottleneck.
Opportunities
Threats
Rising input costs. Rising interest rates. Cut throat competition
Commercial vehicles: SC ban on overloading. Heavy thrust on mining and construction activity. Increase in the income level. Cut in excise duties. Rising rural demand.
Sales 41 % 27 % 18 % 14 %
27%
Motorcycles in India
Bajaj Auto Ltd * Bajaj Avenger * Bajaj CT 100 * Bajaj Platina * Bajaj Discover DTSi * Bajaj Pulsar DTSi * Bajaj Wave * Bajaj Wind 125 * Sonic DTSi HERO HONDA * Hero Honda Achiever * Hero Honda CD Dawn * Hero Honda CD Deluxe * Hero Honda Glamour * Hero Honda Glamour-Fi * Hero Honda Karizma * Hero Honda Passion Plus * Hero Honda Pleasure * Hero Honda Super Splendor * Hero Honda Splendor NXG * Hero Honda CBZ X-Treme TVS MOTOR * TVS Apache * TVS Centra * TVS Fiero * TVS Star * TVS Victor Yamaha Motor India
Kinetic Motor Company * Kinetic Aquila * Kinetic Boss * Kinetic Challenger * Kinetic Comet * Kinetic GF * Kinetic Stryker * Kinetic Velocity
Scooters in India
The scooter and the scooterette share in the Indian two wheeler market is 13.4%. The main models available in India are: Bajaj Chetak Honda Eterno Kinetic Blaze LML NV SPL LML Select II
Scooterettes/Mopeds
TVS Motors launched India's first 50cc, 2 seater moped: TVS Moped 50. TVS also launched India's first indigenous scooterette: Scooty in 1994. This segment has about one-fourth share in the Indian two wheeler industry. The major models available in India are:
Bajaj Wave Bajaj Kristal DTSi Bajaj Blade DTSi Hero Honda Pleasure Kinetic Kine Kinetic 4S Kinetic Nova Kinetic Zoom Kinetic V2 Range Kinetic King 100 Kinetic Luna Super Kinetic Luna TFR Yo Smart Honda Dio Honda Activa TVS Scooty TVS XL
Factor which influence the growth of two-wheeler industries are as follows: Lower interest rates Easing liquidity situation Modernization of young generation A well-equipped middle- class transport Fuel-Efficient
P O R T E R S 5 F O R C E S A N A L Y S I S
P O R T E R S 5 F O R C E S A N A L Y S I S
Maruti Suzuki
Maruti Suzuki
Founded in 1981 as Maruti Udyog Limited (MUL) Suzuki Motor Corporation of Japan holds a majority stake (54.2%) in the company. On 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. It is the largest automobile manufacturer in South Asia. It was the first company in India to mass-produce and sell more than a million cars. Revenues of $4.8 billion in 2009-10
Company History
1983 : Maruti 800, a hatchback, Indias first affordable car, is released in the market. 1984 : Installed capacity of the plant in Gurgaon, reaches 40,000 units 1987 : The company's first export, when a lot of 500 cars were sent to Hungary. 1989 : Maruti 1000, Indias first contemporary sedan is released into the market 1994 : Esteem LX released in market, Maruti's second sedan model 1996 : 5 new models launched 2000 : New Alto model released 2003 : Enters into partnership with State Bank of India 2005 : The fiftieth lakh (5 millionth) car rolls out in April
SWOT ANALYSIS
S
Strengths
Brand Image Experience in Indian market Established distribution & after sales service network Understanding of Indian Market Ability to design products with differentiating features Experience and knowhow in technology
Weaknesses
Not diversified Lack of experience with the foreign market Inexperience with foreign workforce Comparatively new to diesel car segment People resistant to upper segment models
Opportunities
Mergers & Acquisitions Innovation Product and services expansion Increased purchasing power of Indian middle class category Government subsidies Prospective buyers from the two-wheeler segments Foreign collaboration
Threats
Competition Cheaper technology External changes (government, politics, taxes, etc.) Lower cost competitors or imports Price wars Competition from second hand cars and Tata Nano
P O R T E R S 5 F O R C E S A N A L Y S I S
Low - Moderate
Threat of New Entrants
Its not easy to enter H&MCV market. New entrants can enter LCV market.
TATA MOTORS
TATA MOTORS
TATA MOTORS
India's largest automobile company, with revenues of Rs. 92,519 crores in 2009-10. Indias largest Commercial vehicle manufacturer. Third largest passenger vehicle manufacturer in India. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer.
COMPANY HISTORY
Established in 1945 as TELCO. Its first vehicle rolled out in 1954 in collaboration with Daimler Benz.
1969 : Tatas first truck rolled out after ending collaboration with Daimler Benz.
1986 : Production of first light commercial vehicle, Tata 407. 1991 : Launch of the 1st passenger car Tata Sierra. 1994 : Launch of Tata Sumo - the multi utility vehicle. 1994 : Joint venture agreement signed with M/s Daimler - Benz for manufacture of Mercedes Benz passenger cars in India. 1995 : Mercedes Benz car E220 launched.
1998 : Tata Safari - India's first sports utility vehicle launched. 1998 : Indica, India's first fully indigenous passenger car launched. 2002 : Introduced its sedan Tata Indigo. 2003 : Tata Engineering formally changes to Tata Motors. First company from India's engineering sector to be listed in NYSE(September 2004).
2004 : Tata Motors acquires Daewoo Commercial Vehicle, South Korea. 2004 : Tata Motors starts its globalization drive and launches Tata Indica in South Africa. 2008 : Launch of Tata Nano, a Peoples Car (Rs. 1 Lakh only)
SWOT ANALYSIS
S
Strengths
Wide variety of offerings from low end cars to SUVs for the Indian market. Strong brand recognition amongst truckers and transportation firms This also implies a wide network of support facilities, making them cheaper to run and maintain than many. The company has had a successful alliance with Italian mass producer Fiat since 2006.
Weaknesses
The company's passenger car products are based upon 3rd and 4th generation platforms. Tata has not got a foothold in the luxury car segment in its domestic, Indian market. Customers perceive TATA as commercial vehicle manufacturers.
Opportunities
Nano is the cheapest car in the World retailing at little more than a motorbike. The new Land Rover and Jaguar models will help gaining share in luxury segment. The new global track platform is about to be launched from its Korean (previously Daewoo) plant. The range of Super Milo fuel efficient buses are powered by superefficient, eco-friendly engines.
Threats
Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Sustainability and environmentalism could mean extra costs for this low-cost producer. Other players developing luxury cars targeted at the Indian market include Ford, Honda, Toyota and Volks Wagon. Rising diesel prices in Global Market.
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