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Submitted byPrashant Siwach Digvijay Singh Shubham Prakash Shobhit Shankar Sec-F AIBS
Trends
Growth of exports of 32.8 % FY 2008-09. Output of commercial vehicles has grown 2.8 times compared to the 2.2 times increase in passenger cars For every passenger car turned out, there are almost 7 two-wheelers produced
Growth Potential
1983-1993
Japanisation - GOISuzuki joint venture to form Maruti Udyog Joint ventures with companies in commercial vehicles and components Players Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra
1993-2007
Delicensing of sector in 1993 Global major OEMs start assembly in India (Toyota, GM, Ford, Honda, Hyundai) Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels Implementation of VAT
Overall Market
Over all Production increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09 Passenger vehicles increased marginally from 1.77 million to 1.83 million Two-wheelers increased from 8.02 million to 8.41 million
Domestic Market
Vehicles sold including PV,CV 2W and 3W in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08.
Exports
Sales increased from 1.23mn units in 2007-08 to 1.53 million units in 2008-09 As per the Automotive Mission Plan (AMP) 2006-2016 total turnover of the automotive industry in India would be in the order of US$ 122 billion-159 billion in 2016
Two Wheeler
Domestic - 7.25mn units . Hero Honda 42% & Bajaj 27% share Exports 819000 units (07-08) . Bajaj Auto 59% TVS 17% share
Passenger Vehicles
CAGR -14.8%
CAGR 26%
Commercial Vehicles
Domestic 487 thousand units , Tata-62% Ashok Leyland -15% Exports 59 thousand units, Tata 67% Ashok Leyland 12%
Three Wheeler
Domestic 365 thousand units , Bajaj -42% Piaggio-41% Export 141 thousand units , Bajaj -97%
5-10 Years Effective Implementation and Uniform enforcement of GST Maintain a three tier tariff structure for raw materials, intermediate goods, finished goods. Revamp WTO compatible export promotional schemes like DEPB, EOU and EPCG schemes AMP Plan 2006-16 set by govt
Economic Factors
1 year
Increased access to credit and lower interest loans
1-5 year
Investment in Infrastructure spending can boost the commercial vehicles segment.
5-10 years
Growing working population (441 million people in 2015/16) Upward migration of household income levels (600 million people have annual income of more than $10,200) Middle class expanding by 30 - 40 million every year
Economic Factors
1 year
Impact of delayed monsoon (85% of normal, subsequent impact on paddy cultivation) on rural demand.
1-5 year
Non-availability of Key raw material (like Steel) at cheap price. Possible increase of interest rates (by 2-2.5% BPLR) because of planned government borrowing.
5-10 years
Non- availability of supplier base with demanded capability (Quality and Quantity). Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day) Increase in crude oil price($ 35/barrel to $ 70/ barrel in 14 months).
Social Factors
Rapid Urbanization of semi urban regions Rising aspirational levels. Improvement in living standards of middle class Increased spending on Fashion & lifestyle comforts. Seeking Value for money- consumer behavior Increasing customer emphasis on aesthetics and comfort. A perfect marriage of rise in disposable income and demographic dividend (From US$ 556 per annum US$ 1150 by 2015)
Technological Factors
Frugal Engineering is the way forward
Upgradeable green cars : Plug and play style engines to replace old ones: the Tata Nano model Downsize the cars without losing out on interior space. Lower cost, low fuel consumption , less material usage and less pollution
Developing India as a Testing hub: National Automotive Testing and R&D Infrastructure Project
Investment of INR 17.18 Billion (about USD 380 million) in setting up, inter alia, independent automotive testing centers within the three automotive hubs in the country Setting up of comprehensive Testing and Validation facilities including Field Tracks for Agricultural Tractors, Trailers, Construction Equipments and various other off-road vehicles at Rae Bareilly in Northern India
Collaborations and Foreign Tie ups for research and technology transfer Developing engines for bio-fuels, electric or hybrid vehicles
Tata Motors :
Tata Nano became a big success gaining worldwide popularity with Tata planning to increase capacity
Toyota : Toyota Kirloskar motors planning to launch its own small car in India by 2011
Increase capacity to 600,000 cars per annum over next 1 year. Nissan : Micra, UK India
Four more models in India, involving
a total
General Motors : New Capacity to manufacture small cars at its Talegaon, Maharashtra plant with 80% local inputs. Brought in Spark small car in 2007 Nissan-Renault :
50:50 JV, to make 400,000 cars a year with an investment of over US $ 1 billion. Coming up with the $2500 car to compete with Tata Nano in 2011
Ford : Plans to unveil its small car with 1.2 ltr engine by 2010 Honda :
Investing US $ 250 million in a new plant in
Rajasthan with capacity of 60,000 car per year (First car to roll out in 2009).
VW : Investing 400 million euro in a new plant in Pune. Operations are to start in second half of 2009.
Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisition services
Alternate fuel (Bio fuel, electricity) and environment friendly green engines (Bharat emission norms)