India is a Booming Automobile Industry

7/31/2019 India is a Booming Automobile Industry

1/16

India is a Booming AutomobileIndustry

Presented by :

Raman Kumar Jha

Taxila Business School Jaipur


2/16

Indian automobile industry

The automobile industry in India is the ninth largest in the world with an

annual production of over 2.3 million units in 2008. In 2009, India

emerged as Asia's fourth largest exporter of automobiles, behind Japan,

South Korea and Thailand

India has emerged as one of the world's largest manufacturers of small

cars. According to New York Times, India's strong engineering base and

expertise in the manufacturing of low-cost, fuel-efficient cars has

resulted in the expansion of manufacturing facilities of several

automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen

and Suzuki

In 2008, Hyundai Motors alone exported 240,000 cars made in India.

Nissan Motors plans to export 250,000 vehicles manufactured in its India

plant by 2011.Similarly, General Motors announced its plans to export

about 50,000 cars manufactured in India by 2011.


3/16

Success story of Indian automobile

August 2000 M&M exported Scorpio to Russia

And Indonesia

February 2008 Maruti Suzuki became the first Indian

car company to export half million car

January 2010 Ashok Leyland forms JV with Nissan to

manufacture LCV

February 2011 Bajaj export touch magical millionmark


4/16


5/16

What it takes to become a global

automotive production hub?

Attractive domestic market & proximity to othermarkets.

Political & Business Environment.

Low production cost & efficient supply chain. Technological capabilities in a particular class of

vehicles.

A big chunk of pie of Indian population became a

middle income group. India is second largest growing economy in the

world.


6/16

Indian 3-Wheeler Market

Sub-segments and Competitive Scenario

68% 24% 2% 1% 3% 3%

23% 40% 12% 13% 7% 6%

India is the largest three-

wheeler market in the world

Passenger

Goods

Scooters

India

60%

40%

Sub Segments


7/16

The Indian 3-Wheeler Industry

Product unique to emerging markets in South / South-East Asia & partsof Africa

Product design & execution focus on technological simplicity and ease

of use.

Lesser competitive intensity as compared to other segments.

Dis-similarity with Global Industry

None.Similarity with Global Industry

CharacteristicsIndian 3-wheeler Industry


8/16

Indian Passenger Vehicle Market Competitive Scenario

Passenger

Cars52% 17% 19% - 1% 5% 2% 2% 2% 1% -


9/16

The Indian Passenger vehicle Industry

Market dominated by Mini Cars & Hatchbacks (>80%)

High incidence of taxes in Car Prices.

(24% Excise Duty, 12.5% VAT, Local Taxes as applicable)

Customer preference driven by value for money and cost of ownership

considerations rather than image, performance and power.

(80% of cars sold are priced below USD 12000)

Large proportion of chauffer driven cars. Rear Passenger comfort is a criticalinfluence in purchasing decisions.

Emergence of strong domestic players (TATA, Mahindra).

Strong demand pull for Utility vehicles from Private Taxi segment.

Dis-similarity with Global Industry

Multiple segmentation across & within major segments

Cars (A, B, C, D & E segments) (Hatchbacks, Sedans,

Notchbacks, Station Wagons & Saloons)

Utility Vehicles (Multi- & Sports Utility)

Large variety of products & choice for the customer

Similarity with Global Industry

CharacteristicsIndian Passenger Vehicle Industry


10/16

Indian Commercial Vehicle Market Competitive Scenario

Medium &Heavy CV -Trucks

64% 24% - 8% - 3% -


11/16

The Indian CV Industry

Secular long term growth trend

Lower Power to Weight Ratios

Early stage of road development

Less degree of product sophistication.

Strong price entry barriers created by

domestic players

Dis-similar to Global CVIndustry

CyclicalSimilar with Global CVIndustry

CharacteristicsIndian CV Industry

0

50

100

150

200

250

70-71

72-73

74-75

76-77

78-79

80-81

82-83

84-85

86-87

88-89

90-91

92-93

94-95

96-97

1998-9

9

00-01

02-03

Nosin

'000

Indian CV Industry

CAGR: 5%


12/16

Market Share of Indian Automobile

Industry


13/16

Top players in different Auto

segments


14/16

The table below shows segment-wise distribution of the

auto component Industry.

Organized Component Manufacturers

Strengths

1.Higher production capacities 2. Captive OE market

3. Access to technology through tie ups 4. Quality standards

5. Potential to export 6. Improving quality consciousness of

end users

Weaknesses

1. High Investment in plant and machinery 2. Higher overheads

3. Higher rates of taxes and

differential regional tax patterns 4. Limited domestic OE volumes


15/16

Unorganized Component Manufacturers

Strength

1. Low capital investment

2. Minimal overheads3. Taxes and levies

exemption (violation)

4. Poor regulation on sale

of spurious parts

5. Price sensitivity of Market

Weakness

1.Sub normal quality

2.Obsolete technology

3. Low capital availability

4. Restricted growth

potential


16/16

Documents

India is a Booming Automobile Industry