Automobile Industry India

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    Automobile Industry India

    EXECUTIVE SUMMARY

    The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about

    1.5 million every year. The dominant products of the industry are two wheelers with a marketshare of over 75% and passenger cars with a market share of about 16%. Commercial vehiclesand three wheelers share about 9% of the market between them. About 91% of the vehicles soldare used by households and only about 9% for commercial purposes. The industry has attained aturnover of more than USD 35 billion and provides direct and indirect employment to over 13million people.

    The supply chain of this industry in India is very similar to the supply chain of the automotiveindustry in Europe and America. This may present its own set of opportunities and threats. Theorders of the industry arise from the bottom of the supply chain i. e., from the consumers andgoes through the automakers and climbs up until the third tier suppliers. However the products,

    as channelled in every traditional automotive industry, flow from the top of the supply chain toreach the consumers.

    Interestingly, the level of trade exports in this sector in India has been medium and imports havebeen low. However, this is rapidly changing and both exports and imports are increasing. Thedemand determinants of the industry are factors like affordability, product innovation,infrastructure and price of fuel. Also, the basis of competition is the sector is high and increasingand the life cycle stage is growth. With a rapidly growing middle class, all the advantages of thissector in India are yet to be leveraged.

    Note that, with a high cost of developing production facilities, limited accessibility to new

    technology and soaring competition, the barriers to enter the Indian Automotive sector are highand these barriers are study. On the other hand, India has a well-developed tax structure. Thepower to levy taxes and duties is distributed among the three tiers of Government. The coststructure of the industry is fairly traditional, but the profitability of motor vehicle manufacturershas been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki havematerial cost of about 80% but are recording profits after tax of about 6% to 11%.

    The level of technology change in the Motor vehicle Industry has been high but, the rate ofchange in technology has been medium. Investment in the technology by the producers has beenhigh. System-suppliers of integrated components and sub-systems have become the order of theday. However, further investment in new technologies will help the industry be more

    competitive. Over the past few years, the industry has been volatile. Currently, Indias increasingper capita disposable income which is expected to rise by 106% by 2015 and growth in exports isplaying a major role in the rise and competitiveness of the industry.

    Tata Motors is leading the commercial vehicle segment with a market share of about 64%.Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. HyundaiMotor India and Mahindra and Mahindra are focusing expanding their footprint in the overseasmarket. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market

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    in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheelermarket.

    Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars.

    Steel is the major input used by manufacturers and the rise in price of steel is putting a costpressure on manufacturers and cost is getting transferred to the end consumer. The price of oiland petrol affect the driving habits of consumers and the type of car they buy.

    The key to success in the industry is to improve labour productivity, labour flexibility, andcapital efficiency. Having quality manpower, infrastructure improvements, and raw materialavailability also play a major role. Access to latest and most efficient technology and techniqueswill bring competitive advantage to the major players. Utilising manufacturing plants tooptimum level and understanding implications from the government policies are the essentials inthe Automotive Industry of India.

    Both, Industry and Indian Government are obligated to intervene the Indian Automotiveindustry. The Indian government should facilitate infrastructure creation, create favourable andpredictable business environment, attract investment and promote research and development.The role of Industry will primarily be in designing and manufacturing products of world-classquality establishing cost competitiveness and improving productivity in labour and in capital.With a combined effort, the Indian Automotive industry will emerge as the destination of choicein the world for design and manufacturing of automobiles.

    Table of Contents Industry Definition

    o Products and Services Key Statistics

    o Priceso Automobile Productiono Automobile Saleso Automobile Exports

    Supply Chain

    Segmentationo Product and Service Segmentationo Major Market Segmentationo Geographical Segmentationo Exports

    Market Characteristicso Market Sizeo Demand Determinants

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    o International Marketso Basis of Competitiono Life Cycle

    Industry Conditionso Barriers to Entryo

    Taxationo Industry Assistanceo Cost Structureo Capital and Labour Intensityo Technology and Systemso Industry Volatility

    Key Competitorso Major Playerso Player Performance

    Key Factorso Key Sensitivityo

    Key Success Factors Appendices

    o Appendix 1: Detailed Geographic Segmentationo Appendix 2: Detailed Central VAT (CENVAT) and Customs Tax for

    Automobileso Appendix 3: Detailed Market Share of Major Playerso Appendix 4: World Production

    References

    Industry DefinitionThis class consists of units mainly engaged in manufacturing motor vehicles or motor vehicleengines.

    Products and Services

    The primary activities of this industry are:

    Motor cars manufacturing Motor vehicle engine manufacturing

    The major products and services