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Facts
Second Largest two wheeler manufacturer in the world
Largest tractor and three wheeler manufacturers in the world
Fourth largest Commercial vehicle market in the world
Eleventh largest passenger car market in the world
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 PotentialCan become Worlds third largest automobile
market in 2030.
By 2016, Automotive sector can DOUBLE itspercentage contribution to GDP from currentlevels of 5% (US$50 billion) to 10% ($180billion).
INDIAN AUTO INDUSTRY
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THE GROWTH JOURNEY
Pre 1983 1983-1993 1993-2007
Era of globalisation
and
evolution of India
as a global
manufacturing hub
Closed market
Growth ofmarket
limited by supply
Outdated models
Players
Hindustan Motors
Premier
Telco Ashok Leyland
Mahindra & Mahindra
Japanisation - GOI- Suzuki
joint venture toform Maruti
Udyog Joint ventureswith
companiesincommercial
vehicles and components
Players
Maruti Udyog
Hindustan Motors
Premier
Telco
Ashok Leyland
Mahindra & Mahindra
Delicensingofsectorin
1993
Global major OEMsstart assembly in India
(Toyota, GM, Ford,
Honda, Hyundai)
Imports allowed from
April 2001; alignment of
duty oncomponents
and parts to ASEANlevels
Implementationof
VAT
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GLOBAL SCENARIO
The car industry generates large amount of
employment opportunities in the economy. For
example in the US, every sixth worker is involved
in the making of an automobile.
The global automotive car market is growing at a
rate of only 2 percent per annum and is not
expected to pick up in the near term. Worldwide the trend is towards ensuring that
one's products are superior in terms of quality.
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INDIAN SCENARIO
Automobile exports crossed $1 billion in 2004-
05
$2.28 billion- 2005-06 Sustaining the growth rate becomes crucial
7 CARS PER 1000 PERSONS
Passenger car market 1 million in 2003; willcross 3 million in 2015
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PEST ANALYSIS
Political
Environmental regulations andprotection
Govt. policies relating to theindustry
International regulations andrestrictions
Political stability
Social
Income distribution Population growth rate
Market movement from petrolto diesel
Manufacturing to a consumerdictated market
Economical
Overcapacity
Shortage of capital
Industry at the whim of thebusiness cycle
Difficulty in sustainingcompetitive ads.
Exchange rates and inflation rate
Technological
Industry focus ontechnological effort
Rising costs of developments
New model development is
cautious
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Porter 5 Forces Analysis
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COMPARING WITH GLOBAL PLAYERS
Low cost advantage primarily on account of vast availabilityof low cost-high skilled manpower.
Design, development, and production costs in India arelower than the developed markets.
The country is also building a reputation in frugalengineering, or building low-cost products under tightbudgets.
Indian Auto Companies have achieved a High level ofProductivity by embracing Japanese Concepts and Best
Practices Indian Auto Companies have proven capability to supply on
JIT basis out of Warehouses situated near the Customers.
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FUTURE OUTLOOK
The size of the Indian automotive industry is expected to grow at 13
per cent per annum over the next decade to reach around US$ 130-
159 billion by 2016
Even after the spectacular growth in recent years, the Indian
automobile market still has considerable room to grow.
Despite domestic sales of over 10 million units annually, even two-
wheeler ownership is below 100 per 1,000 of the population.
It is likely that the continued rise in average income levels will
sustain demand for personal vehicles while overall economic growth will support the demand for
commercial vehicles.
Besides the domestic prospects, India also has the opportunity to
emerge as a global manufacturing base for select product
segments.
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FUTURE CHALLENGES
Since the demand surge for automobiles in recent
years is directly linked to overall economic growth
and rising personal incomes, industry growth will
slow if the economy weakens.
It is possible that the government will favour
mass transport systems for the large cities, which
may restrict the demand for personal vehicles. It is also likely that intense competition will erode
the profitability of manufacturers.
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