Email ID – pankaj.aswal@greatlakes.edu.inMobile No : +91 – 9962015344Institute – Great Lakes

Price Elasticity

Price War ProductDifferentiation

Interest Rate Risk

Competition

Link to emission norms

2 Wheeler High High High Low High Low

4 Wheeler High High High Medium High medium

Commercial vehicles Low Absent Low High Low High

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009

MHCV

LCV

Total CV

CV Units Sold in 1000s

Bargaining Power of Suppliers

• Weak because there are many suppliers but only few CV OEM buyers

Bargaining Power of Buyers

• Weak as there are few sellers but plenty of customers

• No price wars

Threat of Substitutes

• Low as railway freight rates are very high

Threat of new Entrants

• Low as it is capital intensive industry

Company

• Less competition & low product differentiation

Joint Venture with Local Player like Ashok Leyland or Swaraj Mazda

Collaboration

Joint Venture

Subsidiary

Educated Labor

Consistent Industrial Policy

Access to port

Financial Incentives by Government

Approximately 7000-8000 INR savings per car only through tax relaxations

Select Partner looking to leverage

technology advantage

Decide objective, structure

& form of joint venture

Select cash cow product such as

trucks

Alternate production technology

Estimate Cost of Equipments

Estimate price of portfolio selected

CostingMarket &

competition analysis

Sales projections & distribution model

Technology transfer cost

Foreign exchange projection

Resource Planning & financial projections

Most Important, define EXIT STRATEGY

CV market sensitive to interest rate fluctuation

Cost of raw material like steel may increase manifolds

Long term trend reflects cyclic pattern

Financing rates may increase in future

Capacity expansion may be required

Cultural differences may lead to conflicts with partner

1) Anand Rathi Automobile Report2) SSKI India Research3) http://en.wikipedia.org/wiki/Joint_venture4) http://india-autonews.blogspot.com/2010/03/indian-commercial-vehicle-

market.html5) Fitch Ratings CV Report6) Cygnus Quarterly Performance Analysis