Automobile Industry in India Final

8/13/2019 Automobile Industry in India Final

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Automobile Industry in India

Submitted byAmit Mitra

Biswadeep Sarkar

Priyankar Chakrabarty

Subhra Dutta

Ujwal Prasad

Zeno Zozzimos


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The automotive industry in India is one of the larger markets in the worldand had previously been one of the fastest growing globally

India's passenger car and commercial vehicle manufacturing industry is

the sixth largest in the world

In 2010,India beat Thailand to become Asia's third largest exporter of

passenger cars In the same year India became the second fastest growing automobile

market in the world after China

2/3rd of auto component production is consumed directly by OEMs.

India is the largest three-wheeler market in the world and the largest two-

wheeler manufacturer in the world

India is the fifth largest commercial vehicle manufacturer in the world.

Introduction


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The Growth Journey

Pre 1983

Closed market Growth of market limited by supply Outdated models Players Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1983-1993

Mahindra Japanisation - GOI- Suzuki joint venture to form Maruti Udyog Jointventures with companies in commercial vehicles and components Players MarutiUdyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1993-2013

Deli censing of sector in 1993 Global major OEMs start assembly in India (Toyota,GM, Ford, Honda, Hyundai) Imports allowed from April 2001; alignment of duty oncomponents and parts to ASEAN levels Implementation of VAT

Era of globalization and evolution of India as a global manufacturing hub


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Size of the Industry The breakup of the automobile industry in India is given below

Unlike the USA, the Indian passenger vehicle market is dominated by cars

(79%)

India is the largest three-wheeler market in the world and the largest two-

wheeler manufacturer in the world

15%5%

3%

77%

Domestic Market Share for 2011-12

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers


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Size of the Industry contd.

With a turnover of almost $59 Million US Dollars in 2012,this industry providesemployment to 13 million people in the Indian

The gross turnover for the last 5years are as follows


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Size of the Industry contd.

The size of the two major segments of automobile industry

The two-wheeler market in India is the biggest contributor to the automobile

industry with a size of Rs.100,000 million

The cumulative sales of two wheelers in India stood at 3,519,555 units.

The Indian passenger vehicle market size estimated at 2.5 million units which is

relatively small compared to other emerging auto markets like China, South Korea

and Brazil

The amount of cumulative FDI inflow into the Indian automobile industry during

April 2000 to April 2013 was worth US$ 8.32 million, amounting to 4 per cent of

the total FDI inflows


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Structure of the Industry


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Key Players-Two Wheeler Segment

The two wheeler industry is divided into three segments

Motorcycle Segment- Dominates 83% of this industry

Scooter Segment-Dominates 15% of this industry

Moped Segment-Dominates 2% of this industry

Major Indian Companies Major Multi-national companies


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Market Share- Two Wheeler Segment

The analysis of the market share gives us the following dataHero Moto Corp is the market leader with nearly 45% of the market share

Bajaj Auto and Honda have nearly the same market share but Honda has seen an

increase in sales this year

Industry is dominated by domestic companies


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Key Players-Passenger Vehicle Segment

The passenger vehicle industry is divided into three segments

Car Segment

Utility/SUV Segment

Van Segment



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Market Share- Passenger Vehicle Segment

The analysis of the market share gives us the following data

Maruti Suzuki , the biggest passenger vehicle OEM in India holds 44.24% market share inpassenger vehicle segment

Mahindra claims its dominance in the Utility/SUV Segment and thus stands at second place

in the overall industry with nearly 11% market share

Hyundai remains at the second place with 15.7% in the car segment while overall it has

13.88% market share


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Key Players and Market Share

In terms of production the market share of the various companies in India

Maruti leads the market with a 29% units produced by it in this industry


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Key Players-Three Wheeler Segment

The three wheeler industry is divided into two segments

Passenger segment-Dominates 80% of this segment

Goods segment-Dominates 20% of this segment



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Market Share- Three Wheeler Segment

The analysis of the market share gives us the following dataBajaj auto is the market leader in the passenger segment and holds a market

share of 52.46%

Though Piaggio is the market leader in the goods segment with 52.59%in the

goods segment it has a overall market share of 31.07%

Passenger segment is thus dominated by a domestic and the goods market byinternational brand Piaggio


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Key Growth Drivers


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Key Growth Drivers contd.

Indian pockets growing deeper.


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Key Growth Drivers contd.

Indian Car Buyer getting Younger


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Future Projections

Segment wise vehicle production in India & Future projections for 2015 & 2020


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Growth forecasts - Indian auto industry

The Passenger Vehicle market of India will even cross Japan by selling about

5 million Vehicles by 2017-18.

The Indian auto exports is expected to grow to $17.64 billion in 2015-16.

Indias passenger vehicle production projections :

In 20102.6 million VehiclesBy 20155.1 million Vehicles

By 20209.7 million Vehicles


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Segment Analysis

Market segmentationis a marketing strategy that involves dividing a broad target

market into subsets of consumers who have common need and then designing and

implementing strategies to target their need and desires using media channels and

other sources that best allow to reach them.

Segment analysis is studying a particular segment, the behavior of its consumers

which would include buying pattern, their needs etc and then using the information to

market its products.


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Different Segments

Each segment is again further divided into various other segments.

o Passenger vehicle:

- Cars

- Buses

o Commercial vehicle:

-Light commercial vehicles (Goods carrier)

-Multi Utility Vehicles, Sports Utility and mini vans

-Heavy commercial vehicles (Trucks, Tempo, Tractor and Tipper/Dumper )


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Different Segmentso

Three vehicle:-Rickshaw, Trolleys, Delivery Vans and Tipper

o Two wheeler:

-Scooters and motorcycles


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Shares of different Segments

Segments Share

Passenger Vehicle 15.07

Commercial vehicle 4.66Three wheeler 2.95

Two wheeler 77.32


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Shares of different segments

15% 5%

3%

77%

Shares of different segments

1

2

3

4

1- Passenger Vehicle2- Commercial Vehicle

3- Three wheeler

4- Two wheeler

I di A i OEM P


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Suranjan Das 26

Indian Automotive OEM Presence

Hyundai

Ford Motors

Hindustan Motors

Toyota

SkodaTata Motors

Fiat

Mahindra

GM

Maruti

Honda

DaimlerChrysler

Daihatsu and Toyota plan

for small car plant

North

West

South

Nissan
http://images.google.co.in/imgres?imgurl=http://www.cartype.com/images/page/Nissan_logo6.jpg&imgrefurl=http://www.cartype.com/page.cfm?id=1320&alph=all&dec=all&h=462&w=530&sz=29&hl=en&start=1&tbnid=9v8f9QK0iQFjvM:&tbnh=115&tbnw=132&prev=/images?q=nissan+logo&gbv=2&svnum=10&hl=en&sa=Ghttp://images.google.co.in/imgres?imgurl=http://www.cartype.com/images/page/Nissan_logo6.jpg&imgrefurl=http://www.cartype.com/page.cfm?id=1320&alph=all&dec=all&h=462&w=530&sz=29&hl=en&start=1&tbnid=9v8f9QK0iQFjvM:&tbnh=115&tbnw=132&prev=/images?q=nissan+logo&gbv=2&svnum=10&hl=en&sa=Ghttp://www.lysator.liu.se/~/teochfil/wei/weichangconnie/logo-volvo.jpghttp://www.tatamotors.com/home.php


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27

Automotive (Passenger Car)

Growth In India

1949776

1552703

1549882

1379979

0 1000000 2000000 3000000

2010

2009

2008

2007

446146

335729

218401

198452

0 100000 200000 300000 400000 500000

2010

2009

2008

2007

2351240

1838593

1777583

1545223

0 500000 1000000 1500000 2000000 2500000

2010

2009

2008

2007

ProductionDomestic Sales

Export Sales

Source: Society of Indian Automotive Manufacturer

27.8%

33%

25.5%


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OEM Growth Rate, Volume and

Market Share

28

-2%

0%

2%

4%

6%

8%

10%

-10 -5 0 5 10 15 20 25 30 35 40

Hundreds

x 10000

BMW India Pvt Ltd Fiat India Automobiles Pvt Ltd Force Motors Ltd

Ford India Pvt Ltd General Motors India Pvt Ltd Hindustan Motors Ltd

Honda Siel Cars India Ltd Hyundai Motor India Ltd International Cars & Motors Ltd

Mahindra & Mahindra Ltd Mahindra Renault Pvt Ltd Maruti Suzuki India Ltd

HyundaiTata Motors

Maruti Suzuki

Undoubtedly the market leader

Will have to defend the market shareGrowth

overlastyear

Size of the bubble shows the market share

Ford IndiaHave shown great promise with Figo

Grown faster than the rest over last year

Target would be grow in number

VW IndiaNew entrant

Need to increase market share

Also improve volume


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OEM Growth Rate, Volume and M-Share

W/O India Big3: Suzuki / Tata / Hyundai

29

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

-1 0 1 2 3 4 5 6

Hundreds

x 10000

BMW India Pvt Ltd Fiat India Automobiles Pvt Ltd Force Motors LtdFord India Pvt Ltd General Motors India Pvt Ltd Hindustan Motors LtdHonda Siel Cars India Ltd International Cars & Motors Ltd Mahindra & Mahindra LtdMahindra Renault Pvt Ltd Mercedes-Benz India Pvt Ltd SkodaAuto India Pvt Ltd

Hyundai

Growthoverlastyear

Ford

Mahindra

Toyota

GM

Honda

Size of the bubble shows the market share

Fiat


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Indian Auto Segment Analysis

30

-20.00%

30.00%

80.00%

130.00%

180.00%

-1 0 1 2 3 4 5 6

x 100000

Size of the bubble shows the Segment Size

A2: Compact (3401-4000mm)

Alto, Wagon R, Zen-Estilo, Swift, Ritz, A Star

Palio, Fiat 500, Grande Punto

FigoSpark, U-VA, Beat

Jazz

Santro, Getz, i 10, i20

Micra

Fabia

Indica

Polo

A1: (Upto3400)

Maruti 800, Nano

A3: Mid-size

(4001-4500mm)

A5: Premium

(4701-5000 mm)

A4: Executive

(4501-4700mm)

A6: Luxury (5001mm & above)

Growthover2009-10F

YApril-Julydata

Sales Volume FY 2010-11; April-July data


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-80.00%

-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

-0.5 0 0.5 1 1.5 2 2.5 3

x 100000

A2: Compact Car Segment Analysis

31

GMI

Spark, U-VA, Beat

Suzuki

Alto, Wagon R, Zen-Estilo,

Swift, Ritz, A Star

Honda

Jazz

Hyundai

Santro, Getz, i10, i20

Fiat

Palio, Fiat 500,

Grande Punto

SkodaAuto

Fabia

TataMotors

Indica


Other New Entrants this year are

Nissan: Micra sold 928 units

VW: Polo sold 5920 units

Ford: Figp sold 25332 units


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A3: Mid-Size Segment Analysis

32

-90.00%

-40.00%

10.00%

60.00%

110.00%

160.00%

-0.1 0 0.1 0.2 0.3 0.4 0.5

x 100000

Tata Motors

Indigo

Suzuki

Sx4

Ford

Ikon, Fiesta

Hyundai

Verna, Accent

HM

Cedia, Lancer

GM

Aveo

Honda

City


MRL


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Auto Component Industry Export &

Import

33

N.America23%

Africa

8%Asia

24%

Australia

1%

S.America

4%

Europe

40%

Profile of exportOEM / Tier-1: 80%

Aftermarket: 20%

Export0

1

2

3

4

5

6

7

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

1.21.7

2.5 2.7

3.53.8

3.2

1.41.9

2.5

3.6

5.2

6.8

5.9Export

Import


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34

Auto Component Industry Size &

Product Range

6.7

8.7

12.0

15.0

18.0 18.419.2

0.0

5.0

10.0

15.0

20.0

25.0

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

(US$ Billion)

Engine Parts

31%

Drive

Transmission &

Steering Parts

19%

Body & Chassis

12%

Suspension &

Braking Parts

12%Equipments

10%Electrical Parts

9%

Others

7%


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Segmental Analysis-Two Wheelers

The Indian two wheeler industry is divided into three segments:

The market share of the top competitors is as follows

Motorcycles

Hero Motocorp- 56%

Bajaj Motors- 25%

TVS- 6%

Scooters

TVS- 19%

Hero Motocorp- 16%

Mopeds

TVS- 49%

Bajaj Motors- 32%


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Segmental Analysis-Two WheelersSALES:

The overall sales of automobiles including exports stood at 6,735,988 units in

April-July period of FY 2013-13 as against 6,892,768 units during same period of FY

2012-13.

Domestic Sales for the April-July period of financial year 2013-14 stood at

57,90,184 units as against 59,13,993 units during same period for financial year

2012-13


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Segmental Analysis-Two Wheelers The two wheeler contribution has increased to 80% for the period April-July FY

2013-14 from 79% during April-July FY 2012-13

The sales of two wheelers for April-July period of FY 2013-14 stood at 46,22,669

units as against 46,52,251 units during April-July FY 2012-13, representing a

decrease of 0.64%.


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EXPORTS:

Two Wheeler Exports decline at 9.88% for April-July FY 2013-14 at 603,917 units as

against 681,189 units in April-July FY 2012-13


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PRODUCTION:

For two wheelers the production in April-July FY 2013-14 decrease by 3.26% at

5,239,763 units as against 5,416,260 units during April-July FY 2012-13.


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Segmental Analysis-Three Wheelers

The three wheeler industry is divided into two segments Passenger Segment

Goods Segment

The total sales of passenger three wheeler stood at 35,078 units as against 36,475

units in July 2012


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Three Wheeler segment analysis

The market share of the top competitors in this segment is given below

We can clearly see that Bajaj Auto is the market leader with 51% market share

The segment is dominated by two domestic players BAJAJ AUTO and MAHINDRA

& MAHINDRA

Piaggio is the market leader in the goods segment of this industry

Bajaj Piaggio M&M Atul Auto TVS

Fy 2011-12 48% 31% 12% 3% 3%

Fy 2012-13 51% 30% 10% 4% 4%

0%10%20%30%40%50%60%

Market Share (Passenger)


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Segmental Analysis-Three wheelers

SALES: Bajaj Auto got their work cut out as only 2 units were sold in July 2013.

Piaggio witness their sales decline by 15.22% for July 2013 at 3,544 units as against

4180 units in July 2012.

M&M sold 1210 units in July 2013 as against 1330 units in July 2012 registering 9%

decrease.


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The overall export in passenger segment has taken a considerable downfall with

major player Bajaj Auto suffering a de-growth.

Goods carrier segment also saw a decline in the export segment


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Past and future segmental changes

In recent years, the contribution of the automotive industry to GDP has risen

noticeably

- from 2.77 percent in 1992-93 to 4 percent in 2003-2004.

o

In the 1990s there was an upsurge in the volumes of vehicles producedo There was a flux of entry of global auto manufacturers into India along

with their parts suppliers

o The 4-wheeler segment (including tractors), for the first time, crossed the

million marks in 1996-97, registering a growth of about 12.2 percent in the

1990-97 period.


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o The 2- and 3- wheeler segments also showed good performance during

the same period with a growth rate of nearly 9 percent .

o In 2000, the production in the non-tractor segments of the auto industry

recorded a growth rate of 15 percent

o In 2002 the total production of vehicles has gone up to as high as 6.5million

o During the year 2002-03 the export of automobile industry had registered

a growth rate of 65.35 percent.

.


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Future Changes

Two wheeler segment

Since the petrol prices are rising in India a whole new segment of Hybrid bikesare being planned to be launched in India by companies like Honda and Suzuki

The demand for high end bikes are rising in India we may also see moreinternational brands entering into India by 2015.

Commercial Bikes and Scooters are being planned to be launch in India as it hasgained prominence in other major countries. Since the Indian roads will be wellequipped to run those in future.

Four wheeler segment

As the demand for luxury segment cars in India is increasing by 8% we will see

more influx of new variants of international brandsToyota is already planning to launch a hybrid car in India by 2015 other majorplayers are also planning for the same

Car with even better mileage are being planned to launch in India

More passenger vehicles four wheelers are expected to be seen in near future inIndia as reported by cartrade.com.(one of the biggest side for insights on

automobile industry)


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Projections for future-Segment Wise


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Key Performance Parameters

Amount of recyclable materials in fleet as a percentage of vehicle weight.

Percentage of fleet that scores 80% or more on the Consumer Reports reliability

ratings.

Average fuel economy by type of vehicle.

Average carbon dioxide emissions by type of vehicle.

Count of visits to service centers for repair i.e. issues.


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Amount of technical developments coming through per quarter.

Production and performance management provides essential functions to control

and monitor production. Using Zenon HMI/SCADA software, it is possible to

optimize production processes in the automobile industry.


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Increased output, increased flexibility, increased safetyThe right SCADAsoftware ensures that throughput time and inventory stocks are reduced and the

supply speed is increased.

The result is optimum utilization of production capacities.

Costs are reduced noticeably when an effective production and performance

management solution is used; productivity increases and thus competitiveness

too.


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Key Performance Parameters - Dealers

- Sold hours versus available hours on the floor (depending on brand there are

clear targets)

- Sold parts workshop and sold parts OTC

- Share warranty hours and -parts sold

- Number of vehicles serviced in the workshop

- Repeat repairsif it is happening often

These few numbers will then give us a first indication if we need to service more

cars, sell more hours/parts per units, increase the speed/qualification of staff or

improve processes.

K P f P t


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Key Performance Parameters -

Dealers

Productivity (tech efficiency vs. labor utilization).

Repeated repairs (VERY IMPORTANT and most of the organizations to not measure

it) and of course the

Recovery Rate.

Retention Rate. the customer type and operations/vehicles mix are very important

to see where you are, to where do you want to go and what is the

best/easiest/cheaper way to achieve your goals.

K P f P t


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Dealers The customer type (Internal vs External Customers; warranty cases are

considered for this purpose Internal, although is an external customer dothe DLR) mix is very important, mainly the amount of the CPUS (CustomerPay Units Serviced). These are the customers that put "real money" insideyour organization and that allows the organization to pay the bills.

Retention Rate one can measure by Unique CPUS (VIN) divided by UIO's(units in operation) in DLR area, or national wide area. If one dont haveunique CPUS, one can always multiply the UIO by Customer Visit Rate, toarrive at the figure.

Ke Performance Parameters


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Dealers

Another interesting KPI is the Absorption Ratio, percentage of fixed

expenses of the DLR covered with PROFIT Contribution from After Sales

Business (only).

Parts side you have Stock turn, Stock wide and so on, but the importantones are the Stock Fill Rate (does the stock responds to Customers

Needs), Repair Order Fill Rate (does the DLR have all the parts to repair

orders at that day) and OIL (optimum inventory level)

Gives you the amount of units by part number that you should have.


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Evolution of the Competition

Early competitionCost Leadership approach Competition based on variety and choiceSloans

portfolio strategy

Competition based on diversification through leadership

in design, technology or manufacturing excellence

Competition based on mass customization-present day

scenario


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Early competitionCost Leadership approach

Emergence of craft producers

Employed skilled workforce

Customized outputhand craft single vehicles

Made for the elite class

Fords T-model

Interchangeability of parts

Moving assembly linemaximizing production


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Fords T-model

Mass production

Standardization of parts and job functions

Reduction in cost per unit

Age of T-model1914-1926 ; cost leadership approach


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Competition based on variety and choiceSloans portfoliostrategy

More choices offered

Constant innovation

Age of Flexible mass production

Cosmetic updates to each vehicle every year

Production in large batches to meet efficiency in economies of

scale


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Competition based on diversification through leadership in

design, technology or manufacturing excellence

Tightly synchronized process

Short changeovers for small batch production

Social system designed for workforce empowerment

Continuous improvement


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Competition based on mass customizationpresent dayscenario

Factors affecting competition

Product quality and features

Innovation and development time

Pricing

Reliability and safety

Fuel economy

Customer service and financing terms


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The Present: Shifts in the Competitive Landscape

Regionalization - As demand in the established regions has

been stagnating, we have seen several major waves of

investment in emerging markets

Fragmentation of markets - the implosion of traditional

vehicle segments, in favor of cross-over and niche vehicles ;

SUVs, MPVs, UAVs


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Saturation and over capacity - a result of the failure to adjust

capacity to demand

Structural Changes in the Supply Chain - main changes hereare a general reduction of supplier numbers per vehicle

assembly plant, the re-distribution (i.e. outsourcing) of value-

added activities, and the increase in globally sourced

components and materials.


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Critical success factors

o Distribution network

A more practical critical success factor for any automotive company is a strong

network for distribution because of the following reasons:-

Cars and trucks are not sold directly to customers, auto manufacturers rely on

franchised dealerships to provide local showrooms.

The dealers must be knowledgeable and reputable to sell cars, which is essential

for the automaker.

Like auto corporations, dealers are reliant on a positive image that may be

influenced by, or influence in turn, the image of the automaker.


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o Cash flow

A healthy cash flow is another practical critical success factor because:-

When an automaker provides incentives or lowers prices, it almost always sells

more cars, but the profit margin may not be a healthy one.

An automaker needs to keep costs under control, including line items that are

prone to fluctuation such as the price of raw materials and outsourcedcomponents.

Achieving a sustainable cash flow is central to the frequent discussions between

automakers and employee unions.


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o Compliance

Automakers must also ensure that the vehicles they sell are in compliance with

various federal and local regulations. These include emissions standards, fuel

efficiency and safety standards.

While it may cost less to produce vehicles that perform marginally in these areas,

the cost of a safety recall or government-mandated repairs are often much higherand difficult to anticipate.

o Ability to enhance and vary product mix

A diverse and broad product mix enables a manufacturer to serve a wide variety of

transportation solutions across different load levels. It also helps in building strong brand loyalty among customers. In addition the

presence in business such as auto spares, buses, exports and defense helps

companies to weather the cyclicity in passenger car sales.


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o Flexibility

An elusive critical success factor for the automotive industry is the ability to be

flexible.

People buying automobiles may change their buying habits quickly in response to

factors like the state of the economy, the price of fuel and new automotive

technologies. It is essential that automakers remain attentive to these trends and keep in place a

system that can adapt quickly to create new products that meet the current and

near-future needs of customers.


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o Positive image

One critical factor that often defines an automotive company is its public image.

Because buyers entrust their safety, along with a sizable portion of their income, to

an automobile company, the perception of the company figures greatly in the

buying decision.

Factors influencing an automotive company's image include advertising, word ofmouth and expert reviews and opinions.

o Access to new technologies

In addition to matching competitors new products and upgraded machinery,

technology is also going to be critical with emission norms are going to bestricter going forward.

The requirement of updated technologies has driven domestic players into

acquisition/collaborations/JVs with global majors.

Regulations that affect the Industry


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The Indian Automobile Industry plays a major role in the economic scenario of the

country.

The automobile sector in India, record sales of more than one million passenger

cars per year.

The percentage of automobile exports has risen significantly during the last few

years. The government policies on Indian automobile industry have been framed in order

to aid in the expansion of the automobiles sector in India.

A number of reforms were initiated in 1991. Liberal policies affected during this

period, proved to be beneficial to the automobile industry.




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Liberal policies affected during this period, proved to be beneficial to the

automobile industry.

The fiscal measures, tax reliefs and reforms in equity regulations and foreign

exchange led to significant growth in the automobile sector.

A reduction in the percentage of tariffs imposed on exports and a change in thebanking policies was instrumental in the expansion and growth of the auto sector.

The automobile market in India was however, opened up to foreign investors in

1996.

The auto emission rules issued by the government in recent years ensured that the

vehicles manufactured in India, catered to international standards.


The Regulators


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The Regulators

The automotive regulations in India are governed by the Ministry of Shipping, Road

Transport & Highways (MoSRT&H) which is the nodal ministry for regulation of the

automotive sector in India.

Ministries such as Ministry of Environment & Forests and Ministry of Petroleum &

Natural Gas also have a vital role in the formulation of automotive regulations andstandards in India.

The principal instrument governing the automotive sector in India is the Motor

Vehicles Act, 1988 (MVA) along with the Central Motor Vehicles Rules 1989 (CMVR).


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Ministry of Shipping, Road Transport

and Highway

Bureau of

Indian

Standards

CMVR- Technical Standing

Committee

Standing committee on

implementation of

Emission Legislation

Automotive Industry

Standards Committee

Other Ministries

Ministry of

environmentMinistry of natural

Gas

Ministry of non

conventional

energyEmission Safety

Political-Legal Factors


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Political Legal FactorsBoosted Economic Growth

1 year

6% cut in CENVAT, abolition of surcharge on

income tax. Abolition of FBT, Reduction of excise duty on

big cars.

Encourage Urban Fleet Modernization

1-5 Years

- Providing Special Auto-component Parks

(SAP) and Special Economic Zones (SEZ) as in

IT . Negative list of items and rules of origin inFTAs / RTAs. (ASEAN Free Trade Agreement)

- SIAM recommended the government on extendingexcise and sales tax benefits to customers whoopt for scrap page of their old vehicles

5-10 Years

Effective Implementation and Uniformenforcement of GST

Maintain a three tier tariff structure for rawmaterials, intermediate goods, finished goods.

Revamp WTO compatible export promotionalschemes like DEPB, EOU and EPCG schemes

AMP Plan 2006-16 set by govt

Stunted Economic Growth

1 year

Differential excise duty for small and bigcars.

Customs duty for imported cars includinghybrid cars.

Excise duty cut only for petrol driventrucks

1-5 Years

Existing Complex labor laws( 45 Central

acts and 16 associated rules) Not implementing country wide VAT

Ambiguous policy in land acquisition forgreen field projects

5-10 Years

Poor execution of Infrastructureinvestments. (Construction of Highways of

16km per day against the target of 32 kmper day)

Absence of National Auto fuel Policy(NAFP)

CMVR- Technical Standing Committee


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To provide technical clarification and interpretation of the Central Motor VehiclesRules having technical bearing, to MoRT&H, as and when so desired.

To recommend to the Government the International/ foreign standards which can

be used in lieu of standard notified under the CMVR permit use of

components/parts/assemblies complying with such standards.

To make recommendations on any other technical issues which have directrelevance in implementation of the Central Motor Vehicles Rules.

To make recommendations on the new safety standards of various components for

notification and implementation under Central Motor Vehicles Rules.

To make recommendations on lead time for implementation of such safety

standards.

To recommend amendment of Central Motor Vehicles Rules having technical

bearing keeping in view of Changes in automobile technologies.

Functions

Standing Committee on Implementation of Emission


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Standing Committee on Implementation of Emission

Legislation (SCOE)

Functions:

To discuss the future emission norms

To recommend norms for in-use vehicles to MoSRT&H

To finalize the test procedures and the implementation strategy for emissionnorms

Advise MoSRT&H on any issue relating to implementation of emission regulations.

d l


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Import guidelines

The import of vehicles shall be subject to the following guidelines of theGovernment of India:

1. (I) A new imported vehicle shall mean a vehicle that: -

(a) has not been manufactured/assembled in India; and

(b) has not been sold, leased or loaned prior to importation into India; or(c) has not been registered for use in any country according to the laws of

that country, prior to importation into India.

.

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Import guidelines

II) The import of new vehicles shall be subject to the followingconditions:

(a) The new vehicle shall-

(i) have a speedometer indicating the speed in km / h;(ii) have right hand steering, and controls (applicable on vehicles other

than two and three wheelers);(iii) have photometry of the headlamps to suit "keep-left" traffic; and(iv) be imported from the country of manufacture.

(b) In addition, the new vehicle shall conform to the provisions of theMotor Vehicles Act, 1988 and the rules made thereunder, as applicable, onthe date of import.

(c) The import of new vehicles shall be permitted only through theCustoms port at Nhava Sheva (Mumbai), Calcutta and Chennai

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Import guidelines2. (I) A second hand or used vehicle shall mean a vehicle that :-

(a) has been sold, leased or loaned prior to importation into India; or

(b) has been registered for use in any country according to the laws of that

country, prior to importation into India;

(II). The import of second had or used vehicles shall be subject to thefollowing conditions:-

(a) The second hand or used vehicle shall not be older than three years

from the date of manufacture;

(b) The second hand or used vehicle shall:

(i) have right hand steering, and controls (applicable on vehicles other

than two and three wheelers);

(ii) have a speedometer indicating the speed km / h; and

(iii) have photometry of the headlamps to suit "keep left" traffic.

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Import guidelines

c) In addition, the second hand or used vehicle shall conform to the provisionsof the Motor Vehicle Act, 1988 and the rules made there under, as applicable,

on the date of import.

(d) Import of second hand vehicles shall be allowed only through the customs

port at Mumbai.

(e) The second hand or used vehicles imported into India should have a

minimum roadworthiness for a period of 5 years from the date of importation

into India with assurance for providing service facilities within the country

during the five year period.

Automobile Exports Trend


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p

Automobile exports volumes increased at a CAGR of 22.4 percent over FY05-FY12.

Over this period the fastest growth was in the two wheeler segment (25.8%)

followed by three wheeler (21.9%)

Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Passenger Vehicles 175,572 198,452 218,401 335,729 446,145 444,326 507,318

Commercial Vehicles 40,600 49,537 58,994 42,625 45,009 74,043 92,663

Three Wheelers 76,881 143,896 141,225 148,066 173,214 269,968 362,876

Two Wheelers 513,169 619,644 819,713 1,004,174 1,140,058 1,531,619 1,947,198

Grand Total 806,222 1,011,529 1,238,333 1,530,594 1,804,426 2,319,956 2,910,055

Automobile Exports Trends(Number of vehicles)

E t f th l t f


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Export performance over the last few years

During April-September 2011, overall automobile exports registered a

growth rate of 32.31 percent.

Passenger Vehicles registered growth at 21.01 percent in this period.

Two Wheelers, recorded growth of 32.34 percent in this period

Commercial Vehicles and Three Wheelers segments recorded growth35.91 percent and 49.55 percent respectively during April-September

2011. I

In September 2011 compared to September 2010, overall automobile

exports registered a growth of 39.62 percent.

There is an 8.62% decline in cumulative exports of vehicles from India inApril to May 2013, as against the same period last year.



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Two Wheeler segment has lost 6% segment share due to weak demands in South

East Asia, Latin America and Africa.

Passenger vehicles has gained a few number from 16% during April-May 2012 to

stay at 19% in the April-May period of current fiscal.

Three wheeler segments good demand has gained them 13% segment share in the

April-May against 9% during the same period previous year.

E t G th P S t


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Export Growth Per SegmentSegment 2007-08 2008-09 2009-10 2010-11 5-year

CAGR

Passenger Vehicles 218,401 (10.0%) 335,729

(53.7%)

446,145

(32.9%)

453,479 (1.6%) 20.90%

Commercial Vehicles 58,994 (19.1%) 42,625 (-27.7%) 45,007 (5.6%) 76,297 (69.5%) 13.40%

Two Wheelers 819,713 (32.3%) 1,004,174

(22.5%)

1,140,058

(13.5%)

1,539,590

(35.0%)

24.60%

Three Wheelers 141,225 (- 1.9%) 148,066(4.8%)

173,214(17.0%)

269,967 (55.9%) 28.60%

Grand Total 1,238,333

(22.4%)

1,530,594

(23.6%)

1,804,426

(17.9%)

2,339,333

(29.6%)

23.70%

R t t


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Recent events

New products

Volkswagen launches the Cross Polo in India at 7.75 lakh-

The Volkswagen Cross Polo comes with a 75PS 1.2Tdi engine from the

diesel Polo. It is mated to a 5-speed manual transmission. Expect a 0-

100kmph time of 16.16 seconds with a top speed around 180kmph, same

as the regular diesel Polo. Sales for the Cross Polo start from August 23,2013.

Maruti WagonR Stingray launched in India at Rs 4.09 lakh-

The Stingray will be available in three variants [Lxi, Vxi and Vxi (O)].

Differentiating the Stingray from the regular Wagon R,are a tightly packed

chrome grille, projector head lamps and the wide air dam. There are funky

alloys on offer as well.

R t t
http://ibnlive.in.com/newstopics/wagon-r.htmlhttp://ibnlive.in.com/newstopics/wagon-r.html


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Recent events

2013 Nissan Terrano unveiled in India, launch in October-Terrano, the Duster equivalent for Nissan has officially been unveiled on 21

August 2013. Born out of the Renault-Nissan alliance, the Terrano bucks

the trend of badge engineered cars from the joint venture.

Audi launches the Q3 S in India at Rs 24.99 lakh-

Audi has launched its most affordable offering for the Indian market, the

Q3 S at Rs 24.99 lakh ex- Delhi. The Q3 S is a trimmed down version of the

popular Q3 SUV. The Q3 currently operates in a segment which has the

BMW X1, Mercedes' A-Class, B-Class, Volvo V40, Mini Countryman and the

upcoming GLA.


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E t h ld


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Events held

Automotive Testing Expo IndiaAutomotive Testing Expo was going held from 06-MAR-12 to 08-MAR-12 in

Chennai Trade and Convention Centre. The major participants are Ashok

Leyland, Daimler India, Ford India and Hyundai Motor Engineering.

Indian Machine Tool and Automation Expo

Indian Machine Tool and Automation Expo was held from 16-MAR-12 to

18-MAR-12 in Talkatora Stadium, New Delhi. The special attractions are

thematic lectures on CNC machines & Tools and Automation.

Automotive Engineering Show

The Automotive Engineering Show took place from April 26-28, 2012. The

venue was Auto Cluster Exhibition Center in Pune. Topic of discussion -

The event had highlighted the main and upcoming trends in automotive

engineering.

E t h ld


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Events held

Automobile World ShowThe Automobile World Show was held from July 05, 2012 to July 08, 2012.

The venue for this prestigious event was Mahatma Mandir, Gandhinagar,

Gujarat, India.

India Auto Expo

India Auto Expo took place from July 12, 2012 to July 15, 2012. The venue

for this famous event was Chennai Trade Centre, Chennai, Tamil Nadu,

India. Topic of discussion- The event attempted to highlight the developing

vehicle manufacturing market in South India and growing opportunities

for the automobile market in South India. Carmakers will get a cost-

efficient platform to display their products in this event.

List of Top Automobile Companies in


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India 2011

Rank Company Turnover PAT MCRP CR Assets

7 Tata Motors Ltd 123222.91 9273.62 56499.77 52209.48

21 Mahindra & Mahindra Ltd 37026.37 3079.73 49945.17 36926.19

19 Maruti Suzuki India Ltd 38140.69 2382.37 31475.63 14762.9

41 Hero MotoCorp Ltd 19669.29 1927.9 40398.63 4447.22

46 Bajaj Auto Ltd. 17008.05 3454.89 46885.69 5154.9667 Ashok Leyland Ltd. 11133.04 631.3 6653.15 6621.16

101 Sundaram Clayton Ltd 7419.41 64.63 529.23 2428.87

110 TVS Motor Company Ltd. 6569.99 127.94 2985 1745.06

List of Top Automobile Companies in India 2011 (Figures in Crores Rs)

2011 ET 500

Analysis of cost and profitability


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Major costThe auto manufacturing industry is considered to be highly capital and

labor intensive. The major costs for producing and selling automobiles

include:

-Labor - While machines and robots are playing a greater role in

manufacturing vehicles, there are still substantial labor costs in designingand engineering automobiles.

-Materials -Everything from steel, aluminum, dashboards, seats, tires, etc.

are purchased from suppliers.

-Advertising- Each year automakers spend billions on print and broadcast

advertising; furthermore, they spent large amounts of money on marketresearch to anticipate consumer trends and preferences.



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y p y Margins

Indian automobile sector has shown tremendous growth and flexibility in

last couple of years. Mahindra, Tata, Maruti, and many others includingforeign players such as Hyundai, Ford, GM, and Skoda have made India

their home for production of small cars

Company GPM% OPM% NPM%

TATA MOTORS

LIMITED 17.49 9.81 3.78

BAJAJ AUTO LIMITED 23.36 19.78 20.3

MAHINDRA&MAHINDR

A 22.08 14.65 11.34

HERO MOTOR CORP. 20.54 13.43 9.97

MARUTI SUZUKI INDIA

LTD 13.17 9.5 6.25

ASHOK LEYLAND 16.43 10.67 5.53

EICHER MOTORS 21.35 10.17 17.06

HMT LTD -12.32 -25.29 -39.43

TVS MOTOR CO. LTD 15 4.92 3.14

ESCORTS LTD 14.5 5.01 3.7



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From the previous data we can see that:-

Bajaj auto and Eicher Motors has the best margin among all the

automobile players while TVS motors, Tata motors, and Escorts Ltd have

the lowest. M&M has maintained very good gross margin but their net margin is

lower than Bajaj and Eicher.

Maruti Suzuki Market Size


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It has a market cap of Rs(CR) 39,129.94

As of November 2012, it had a market share of 38.3% of the Indian passenger

car market

Maruti is a market leader in mid-size segment of cars and has a market share of

around 42% in mid-size segment cars.

The company exports more than 50,000 cars annually and has domestic sales

of 730,000 cars annually.

Maruti has manufacturing plant in Manesar and Gurgaon and they are coming up withplant in Gujarat to make India a hub for mid-size cars.



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Its manufacturing facilities are located at two facilities Gurgaon and Manesar in Haryana,

south of Delhi. Maruti Suzukis Gurgaon facility has an installed capacity of 900,000 units per

annum.

The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a

capacity of 550,000 units per year and a Diesel Engine plant with an annual capacity of

100,000 engines and transmissions

Manesar and Gurgaon facilities have a combined capability to produce over 14,50,000 units

annually.


Market Share of MSIL


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Market Share of MSIL

Year Market Share

2009 46.5 %

2010 44.6 %

2011 45.3 %

2012 38.3 %

2013 39.1 %

MARUTI SUZUKI GROWTH ANALYSIS


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Maruti Suzuki India Limited logged 9.2 percent increase in sales for July 2012 at

82,234 units as against 75,300 units in the same month last year.

Its domestic sales during July stood at 71,024 units, compared to 66,504 units in

July last year, up 6.8 percent.

The sales were driven mostly by its compact sedan Dzire, which clocked 11,413

units.



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Sales of small cars, including the M800, Alto, A-Star and Wagon R, however, declined by

23.7 percent to 28,998 units.

The company's other best-selling model Swift along with Estillo and Ritz together

clocked 15,759 units in July this year, up 73.2 percent from last year.

MSIL's sales of its mid-sized sedan SX4 plunged by 70.5 percent to 679 units

Exports during the month stood at 11,210 as compared to 8,796 in July last year, up

27.4 percent.


Maruti Suzuki Net Sales & YOY Growth


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Maruti Suzuki Net Sales & YOY Growth

Year Net Sales (MN)

2009 203,583

2010 289,585

2011 358,490

2012 347,059

2013 426,126

Year on Year Growth Rate is 22.7%

Segmental Presence of MSIL


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Segmental Presence of MSIL

Maruti Suzuki is present across a wide variety of segments as follows:

Passenger Cars

Vans

Utility Vehicles

Petrol Variants

Diesel Variants

Compressed Natural Gas Variant

PASSENGER VEHICLE INDUSTRY


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GROWTH (%)

Year Growth %

2010 25.7

2011 28.2

2012 5.1

2013 2.2

The passenger vehicle industry was growing at 2.2%, Maruti grew by 4.4 %

MSIL PETROL VEHICLE SALES


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MSIL PETROL VEHICLE SALESYear Units

2011

2012

893,000

701,000

2013 598,000

Petrol price deregulation and depreciating rupee against dollar increased petrol

prices leading to an impact on petrol vehicle sales

DIESEL VEHICLE SALES (in units)


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DIESEL VEHICLE SALES (in units)Year Units

2010 163,000

2011 199,000

2012 243,000

2013 393,000

CNG CAR SALES


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CNG CAR SALESYear Units

2011 1,300

2012 3,200

2013 4,200

The high prices of petrol and diesel have resulted in emergence as a viable and

preferred fuel option.

Mahindra & Mahindra Market Size


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Mahindra & Mahindra Market Size

It is the leader in the diesel-powered passenger utility vehicle segment, with a market

share of 53% in fiscal 2012.

It is ranked #21 in the list of top companies of India in Fortune India 500 in 2011.

It has a market capitalisation of Rs (Cr) 50,161.36

The company's acquisition of a majority stake in one of its competitors, Punjab

Tractors Limited, increased Mahindra's already dominant domestic market share from

30% in fiscal 2008 to more than 37% in fiscal 2009.

Segmental presence of M & M


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Segmental presence of M & M

M & M is present across a wide variety of segments as follows:

Passenger Cars

Utility Vehicles

MPV (Vans)

Passenger Vehicles

MHCV- Passenger, goods.

LCV- Passenger, goods

3 wheeler- Passenger, goods

2 wheeler

Total domestic sales of M & M


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Total domestic sales of M & MSegment 2010 2011 2012

Passenger Cars 1528337 1972845 2016115

Utility Vehicles 272740 315123 367012

MPV (Vans) 150256 213574 234945

Passenger

Vehicles

1951333 2501542 2618072

MHCV 244944 323059 348701

LCV 287777 361846 460831

2 wheeler 9370951 11768910 13435769

M & M Market Share


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M & M Market ShareSegment 2012 % 2011 %

UV Total 55.1 53.7

MPV Total 10.9 0.5

Verito 9.5 7.1

LCV < 2 21.5 22.8

LCV > 3.5 T 10.4 11.5

MHCV Load 1.2 0.3

MNAL Total 3.5 3.0

M &M AS Segmental Growth


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M &M AS Segmental GrowthSegment Financial year 2012 Growth %

UV Total 202217 19.5

MPV Total 25644 NM

Verito 17839 78.2

LCV < 2 53895 23.3

LCV > 3.5 T 10328 0.9%

MHCV Load 3490 NM

MNAL Total 13818 24.7

Mahindra & Mahindra


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A growth of 19.5 % has been achieved in the domestic utility vehicle and its market share

rose to 55.1 % from 53.7 % in the previous year.

It is the 7thhighest selling passenger vehicle in India

Its the market leader in the 2-3.5 tonne LCV segment with a market share of 66.5%

It retained its leadership for the 29thconsecutive year in the domestic market with a

market share of 41.4%

Financials-Maruti Suzuki


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a c a s a ut Su u

Revenue turnover -

2012-13 - Rs. 49,090.00 crores

2011-12 - Rs. 39,495.30 crores

2010-11 - Rs. 40,865.50 crores

Profit

2012-13 - Rs. 2392.10 crores

2011-12 - Rs. 1635.20 crores

2010-11 - Rs. 2288.60 crores

Mahindra and Mahindra


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Revenue turnover -

2012-13 - Rs. 43,412.65crores

2011-12 - Rs. 34,353.63crores

2010-11 - Rs. 25,569.55crores

Profit

2012-13 - Rs. 3352.82crores

2011-12 - Rs. 2878.89crores

2010-11 - Rs. 2662.10crores

Hyundai Motor Co. Ltd.


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y

Revenue turnover -

2012-13 - 84,469,721 million KRW

2011-12 - 77,797,895 million KRW

2010-11 - 66,985,271 million KRW

Profit

2012-13 - 14,555,747 million KRW

2011-12 - 13,293,485 million KRW

2010-11 - 10,215,187 million KRW

Maruti Suzuki


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Maruti Suzuki

Market CapRs. 389517.13 million

Dividend yield0.62 %

EPSRs. 86.07

P/E Ratio14.98


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118/176


Market Cap50333.18 billion KRW

Dividend yield0.83 %

EPSRs. 15757.50 KRW

P/E Ratio7.61

Maruti Suzuki


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Maruti Suzuki

Operational and Financial ratios :

Earnings per share

2012-13Rs. 79.21

2011-12 - Rs. 56.58

2010-11 - Rs. 79.19

Earnings per share serves as an indicator of a company's profitability. This

shows EPS is high for Maruti in the last 3 years



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Earnings per share

2012-13Rs. 56.80

2011-12 - Rs. 48.87

2010-11 - Rs. 45.33

Earnings per share serves as an indicator of a company's profitability. EPS is

on the higher side for Mahindra in the last 3 years



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Earnings per share

2012-1315757.50 KRW

2011-12 - 14100.00 KRW

2010-11 - 10258.00 KRW

Earnings per share serves as an indicator of a company's profitability. EPS is

on the higher side for Mahindra in the last 3 years

Maruti Suzuki


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Maruti Suzuki

Cash earnings per share2012-13Rs. 140.84

2011-12 - Rs. 95.97

2010-11 - Rs. 114.26

A measure of financial performance that looks at the cash flow generated by

a company on a per share basis. The higher a company's cash EPS, the better

it is considered to have performed over the period



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Cash earnings per share2012-13Rs. 68.84

2011-12 - Rs. 58.66

2010-11 - Rs. 52.38

A measure of financial performance that looks at the cash flow generated by

a company on a per share basis. The higher a company's cash EPS, the better

it is considered to have performed over the period

Maruti Suzuki


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Dividend per share2012-13 - Rs. 8

2011-12 - Rs. 7.50

2010-11- Rs. 7.50

The sum of declared dividends for every ordinary share issued in an year. Its

consistent over the years which indicates good overall performance



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Dividend per share2012-13 - Rs. 13

2011-12 - Rs. 12.50

2010-11- Rs. 11.50

The sum of declared dividends for every ordinary share issued in an year. Its

consistent over the years which indicates good overall performance

Maruti Suzuki


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Book NAV/Share2012-13Rs. 615.20

2011-12 - Rs. 525.52

2010-11 - Rs. 479.84

An expression for net asset value that represents a fund's (mutual, exchange-

traded, and closed-end) or a company's value per share. It is generally less

than the market price per share



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Book NAV/Share2012-13Rs. 245.91

2011-12 - Rs. 203.43

2010-11 - Rs. 174.86

An expression for net asset value that represents a fund's (mutual, exchange-

traded, and closed-end) or a company's value per share. It is generally less

than the market price per share



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y

Quick ratio2012-131.4

Acid-test or quick ratio or liquid ratio measures the ability of a company to

use its near cash or quick assets to extinguish or retire its current liabilities

immediately. Quick assets include those current assets that presumably can

be quickly converted to cash at close to their book values

Maruti Suzuki


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EBITDA margin2012-138.53 %

2011-12 - 6.25 %

2010-11 - 8.84 %

The higher the EBITDA margin, the less operating expenses eat into a

company's bottom line, leading to a more profitable operation. Here it is on

the higher side for Maruti



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EBITDA margin2012-1310.81 %

2011-12 - 10.91 %

2010-11 - 13.42 %


company's bottom line, leading to a more profitable operation. It is really

good for Mahindra



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y

EBITDA margin2012-13 11.71%


company's bottom line, leading to a more profitable operation. It is really

good for Mahindra

Maruti Suzuki


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Total debt to equity ratio2012-130.07

2011-12 - 0.08

2010 -11 - 0.02

A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. The leverage is high, which is a good sign for

Maruti



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2011-12 - 0.30

2010 -11 - 0.23


liabilities by stockholders' equity. The leverage is not that high, as there aresecured loans in the balance sheet



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liabilities by stockholders' equity. The leverage is not that high, as there are

secured loans in the balance sheet

Maruti Suzuki


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Current Ratio2012-131.29

2011-12 - 1.35

2010-11 - 1.55

A liquidity ratio that measures a company's ability to pay short-term

obligations. This is healthy sign for the company



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Current Ratio2012-131.10

2011-12 - 1.08

2010-11 - 0.91





137/176

Current Ratio

2012-131.7



Maruti Suzuki


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Interest cover2012-1316.76

2011-12 - 39.88

2010-11 - 125.35

A ratio used to determine how easily a company can pay interest on

outstanding debt. There are lesser debts in the books and so the financialleverage is high



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2011-12 - 23.16

2010-11 - 49.45


outstanding debt. Here the figures show that the company can go for moredebt funds as interest coverage is taken care of



140/176


2011-12 - 21.42

2010-11 - 14.17


outstanding debt. Here the figures show that the company can go for moredebt funds as interest coverage is taken care of

Maruti Suzuki


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Return on capital employed

2012-1317.48 %

2011-1214.39 %

2010 -1123.36 %

A ratio that indicates the efficiency and profitability of a company's capital

investments. This is also showing some good signs for the company as it is onthe higher side



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2012-1327.44 %

2011-1226.56 %

2010 -1130.69 %





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2012-13 11.28 %

2011-1211.79 %

2010 -119.35 %



SWOT Analysis for the top players in

Two Wheelers Segment


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Two Wheelers SegmentStrengths

Largest manufacturer of two wheelers in India

Many service stations

Easy availability of replacement part/spare parts

Products for all the segments

Weakness

After the demerger of Honda from Hero Honda,Hero will not be getting the technical expertise ofHonda in motor engineering

Capacity utilization is almost 100%

The word Hero Honda and Honda becamesynonymous for normal people

Hero and Honda have almost similar type of models

Opportunity

Increase in the sale of sports bike segment

Credit financing by different banks is increasing forthe 2 wheeler purchaser

Increase in disposable income

Threats

Increase in fuel price

Inflation Economic slowdown

SWOT Analysis forHero Moto Corp




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Strengths In the last few years they are the innovators in

technology (specially for the brand Pulsar)

Providing technology which can make fuelefficiency bike

Leader in 150+ cc segments

WeaknessNot full capacity utilization

Not strong in all the categories

Do not have any presence in the Moto-scootersegment

Worst asset turnover ration in the industry

Opportunity

Increase in the sale of sports bike segment

Credit financing by different banks is increasingfor the 2 wheeler purchaser

Increase in disposable income

Can re-enter the fastest growing segment

Threats

Increase in fuel price

Inflation

Economic slowdown

SWOT for BajajAuto Ltd.




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Strengths-Strong in the moped segment

-Gaining popularity in the 100 cc segment

-Capacity utilization is 100%

Weakness-Very less product portfolio in the motorcyclesegment

-Least financial leveragability in relation to industrystandard

-No expansion plans

Opportunity

-Increase in the sale of sports bike segment as thedemand is rising

-Credit financing by different banks is increasing

-Increase in disposable income

Threats

-Increase in fuel price

-Inflation

-Economic slowdown

-Migration of people from moped to motorcycle

SWOT for TVSMOTOR COMP


Four Wheelers Segment


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Four Wheelers Segment

STRENGTHS

Contemporary technology

Japanese Management practices

After sale services

Distribution

Diversification & R&D

WEAKNESS

Still depends upon SUZUKI COPORATION

10% components are manufactured outside India

Still considered as poor mans brand

Unaccustomed to international standards or keencompetition.

OPPURTUNITY

First company to roll out suitably Designed cars before2008 as per Govt.s Proposal of new ethanol(renewable)

Other companies lacks economy of scale

Rising demand

Untapped rural market

THREAT

Numbers of new Technology driven players andmanufactures are in market

Reduction in subsidies by government on petroleumproducts

Changing environmental and emission norms

Higher local taxes

SWOT forMaruti Suzuki

SWOT Analysis for the top players inFour Wheelers Segment


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g

Strengths:

(a) Trust people are having in the brand name Mahindramotors

(b) Strong relationship with dealers

(c) Number of authorize service station is in goodnumber than that of competitors

(d) Sturdy SUVs good for Indian roads and off-road

terrain(e) Most of the market is credit driven so easy financeprovided by Mahindra motors (Mahindra finance) itselfand others is an edge over competitors.

Weakness

(a) Dealers are selling vehicles at different prices in asingle city.

(b) Changing of original parts by a dealers.

(c) Type of MRF is not having a very good claimprocessing system. Claim processing is carried outonly twice a week.

(d) Maintenance cost is high

(e) Vehicle is out of the reach middle class becauseinitial of Mahindra sports utility v is above 4 lakhs

Opportunity

1. Developing hybrid cars and fuel efficient cars for thefuture2.Tapping emerging markets across the world andbuilding a global brand3.Fast growing automobile market4.Growing in the market through electric car Reva(controlling stake)

Threats1. Government policies for the automobile sectoracross the world2. Ever increasing fuel prices3. Intense competition from global automobile brands4. Substitute modes of public transport like buses,metro trains etc

SWOT for Mahindra &Mahindra Ltd.

SWOT Analysis for the top players in FourWheelers Segment


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Strength-The company employs about 75,000 persons aroundthe world.-Hyundai vehicles are sold in 193 countries throughsome 6,000 dealerships and showrooms worldwide-Hyundai sells over 1.5 million vehicles per year-Hyundai has excellent branding and advertising byhaving celebrity brand ambassadors

-Hyundai motor company has over 75,000 employeesglobally

Weakness

-Hyundai doesnt have any product match to competein Corporate orders like Tata Indica V2,Tata Indigo,Chevy Tavera, Ford Fiesta etc

-Spare parts of Hyundai vehicles are comparativelypriced higher and do not have PAN India presence

-Concentrates on both domestic and Internationalsales thus higher risks of exchange rate fluctuations

-Hyundai is still struggling to make a better impact insmall car segment in terms of cost efficiency

Opportunity

- Developing hybrid cars and fuel efficient cars for thefuture-Fast growing automobile market is India

-Hyundai has very good opportunity in entering intocommercial vehicles and Recreational vehicles as theyare already doing well outside India. Currently HMIL hasits focus only on Passenger car segment

Threat

Government policies for the automobile sectoracross the worldEver increasing fuel pricesIntense competition from global automobilebrandsSubstitute modes of public transport like buses,metro trains etc

SWOT forHyundaiMotors


Three Wheelers Segment


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Three Wheelers SegmentStrength

-The Bajaj group is one of the trusted Indian brandsand was in existence since 1926

-Bajaj auto has the highest market share in threewheeler segment in petrol segment

-It is the largest exporter in three wheeler commercialsegment in the world

-Product design and development capabilities.

-Extensive R & D focus.

Widespread distribution network

Weakness

-Bajaj has a negligible presence in commercial threewheeler diesel segment

-Not a global player in spite of huge volumes.

-Not a globally recognizable brand

-Hasn't employed the excess cash for long.

Opportunity

-Bajaj has partnered with Renault-Nissan in bringing RE60, analternative to replace 5 million three wheelers in the market

-It can expand into foreign markets like China and it already hasgood market share in Africa, South Asia and Latin America

-Increasing fuel price has made people shift to higher mileagevehicles hence they should concentrate on the good segmentvehicle market

Threat

Bajaj three wheeler passenger segment has lot of

alternatives like Tata Ace, Tata Magic, Piaggio Ape etcIncreasing price of petrol has made Auto drivers toshift to diesel autos from Piaggio

Bajaj has heavy competition for its petrolAutorikshaws from TVS King

SWOT for BajajAuto Ltd.


Three Wheelers Segment


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Three Wheelers SegmentStrength

-Strong Brands and product line

-Great innovation capabilities, both in engine anddesign

-Economies of scale in the production of engines andpossibility to sign deals as engine global automotiveplayer

Weakness

-Poor ability to compete in other segments of thisindustry

-Distribution system not as strong as Bajaj

-Spare Parts are more expensive and availability ofthem is far less than Bajaj

-Less amount of service centers than Bajaj

Opportunities

-Poor infrastructure and high urban traffic fuel 2-

wheelers growth in India.-Introduce Hybrid technology and get the first moveradvantage over Bajaj

-Since Indian market is price conscious try to launchnew fuel efficient vehicles at lower price

Threat

-Weak Indian market recovery

-New competitions like Atul Auto focusing on priceand gaining market share

-New competitors like GM and Nissan are planning toenter this segment

-Rise of input costs

SWOT forPiaggio

PRODUCT SEGMENTATION OF MAJORPLAYERSIN TWO-WHEELERINDUSTRY


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Hero Moto Corp

Up to 100cc -CD Dawn, CD Deluxe, Splendor plus, Splendor NXG , Passion plus

100 to 135cc -Glamour , Super Splendor

More than 150cc-Achiever , CBZ extreme , Hunk and Karizma

Bajaj Auto Ltd

Upto100ccPlatina(Platinum)

100to135cc - XCD-125 DTS Si, Discover 135, Kristal DTSi

More than 150cc-Pulsar-(150 ,180, 200 , 220 DTSi )and Avenger DTSi

TVS Motor Company Up to 100cc -Scooty pep+, Star City

100to135cc -Flame, Victor GLX

More than 150cc- Apache RTR

PRODUCT SEGMENTATION OF MAJORPLAYERSIN FOUR-WHEELERINDUSTRY

Maruti Suzuki


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Maruti Suzuki

Entry level -Alto , Maruti 800

Hatchback-Ritz, A-Star, Swift , Wagon R ,Estilo

Sedans- DZire, Kizashi and SX4

Van segment- Eeco , Omni

Multi Purpose vehicle -Suzuki Ertiga ,Stringray

Sports Utility vehicle-Grand Vitara

Hyundai Motors

-Hatchback- Santro Xing , i10, Eon and the i20-Sedans- Accent ,fluidic Verna ,fluidic Elantra and Sonata Transform

-Sports Utility vehicle-Santa Fe

Mahindra & Mahindra Ltd

-Sedans- Logan ,Mahindra Verito

-Sports Utility vehicle-Mahindra Xylo , XUV 500 and Mahindra Quanto

-Multi Purpose vehicle-Scorpio and the Bolero

Porters 5 Forces-Two Wheelers


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Threat of New Entrants

Very Low because

Entry barriers are very high

Product falls under the category of high level of involvement

The biggest challenge is setting up sales service center, which is very hard for anew entrant

Well established players are already existing

Industry is consolidated Economies of scale

Threat of Buyers Bargaining Power

Very High because

So many options are available to buyers Substitutes are available

Supply-demand mismatch in the industry

Supply is greater than the demand



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Threat of Supplier's Bargaining Power

In automobile industry sellers can have bargaining power in the following area

Metal : Prices are determined in international markets, chances of Bargaining

power is less

Tires: They are 40 listed tire manufactures in India, Industry is fragmented.

Bargaining power of suppliers is low

Batteries: Industry is fragmented. Bargaining power of suppliers is low

Component Manufacturers: Industry is fragmented. Bargaining power of suppliers

is low

Intensity of Competition

Intensity of competition is high

Aggressive competent players are already present

7 players are present in commuter segment

Manufacturing capacity already exceeding demand



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Threat of Substitutes

Local trains

Cars

Electrical Vehicles

Public transport

The substitutes in one form or other have the following attributes

Relative price of substitutes is cheaper

Relative quality of substitutes is higher

Switching costs is lower



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Why people are switching to Local trains?

Safety

Affordability

Time saving

Cost

Pollution

Why people are switching to Cars?

Safety

Comfort

Status Symbol

Why people are switching to Public Transport?

Safety

Affordability Time saving

Cost

Pollution



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Why people are switching to Electrical Vehicles?

Environmental Friendly

Maintenance cost

Reasons for Electrical Vehicles not doing well ?

Electrical vehicles at present not competitive with respect to present petrol

running vehicles

No established player is offering Electrical vehicles

Porters Five Forces-4 Wheeler Industry

Bargaining Power of Suppliers:

>The industry is comprised of powerful


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AutomobileIndustry-4wheelers

Rivalry among Competitors :

>Rivalry in the Indian auto sector isintense due to the entry of foreigncompanies in the market.

>Product being matched in a few monthsby the competitors

Threat of substitutes:

>The threat of substitutes tothe automotive industry isfairly mild.

>The switching cost may be

high in terms of personaltime, convenience andutility.

>The industry is comprised of powerfulbuyers who are generally able todictate their terms to the suppliers.

Barriers to entry :

>Regulatory framework

>The startup capital requiredto establish manufacturingcapacity to achieve minimumefficient scale is prohibitive.

Buyer/Customer Power :>Buyer is having bargaining power dueto low switching costs associated withselecting from among competingbrands.

Segment-Wise Positioning


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4 wheeler segment- Top players positioning

Maruti Suzuki- The Middle class car of India- These cars again targeted the

middle income groups, but this time the positioning was not as the basic need, it

was comfort at comparatively lower price

Hyundai-'New Thinking New Possibilities- The concept of 'Modern Premium'

means to get a premium product at prices that are not necessarily suited for the

elite class

Mahindra & Mahindra Ltd- Rise; Every 2 minutes a Mahindra is born Indians are

second to none in the world-The best domestic automobile company are targetedand best suited for Indian roads



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2-wheeler segment- Top players positioning

Hero moto corp-Hum mei hai Hero; Desh ki Dhadkan (HeroHonda)-Every person

has a hero and a winner within ones self-Young boys looking for fast sporty bikes

for Indian roads

Bajaj- Hamara Bajaj; Distinctly Ahead-Two-wheelers for every Indian-The core

competency of Bajaj Auto Ltd is its technology and innovation-Middle-class people

who want a bike that is stylish and gives a good mileage

TVS Motors-Bikes which will bring a smile in the lives of customers-Bikes which will

bring a smile in the lives of customers based on its services and technology it willserve the customer with hassle free service



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3-wheeler segment- Top players positioning

Bajaj Auto--Hamara Bajaj; Distinctly Ahead but here the positioning is different than

that of the two wheeler segment- the company aims to convert three-wheeler users

to 4-wheelers by giving them a feel of a four wheeler by products like Tata Ace at

affordable prices.

Piaggio-Reliable and innovative. Best technology for goods vehicle segment. It aims to

provide with a hassle free service to the customer when they are carrying goods.

M & M-Rise; Every 2 minutes a Mahindra is born. The FES vision is to deliver FarmTech

Prosperitythrough a variety of existing and new agriinitiatives to impact the lives offarmers, enabling them to RISE above their current realm of possibility.

Strategic decision taken in the past

and their results


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Bajaj Auto Ltd.

Past strategy: Full reliance on scooter segment

Impact:

Was numero uno when scooter was a dominant segment

Lost out after the entry of motorcycles in the market

Current Strategy

Target the youth with sporty bikesTVS Motors

Past strategy

Focus on rural/semi urban population

Impact

Did poorly in urban areas

Started losing due to

Population Migration

Increase in purchasing power


and their results


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Current strategy

Maintain dominance in rural/ semi urban population

Focus on economy segment in urban population

Presence in premium segment

Hero Motocorp

Past strategy: Focus on economy segment with splendor and passion being the flagship

product

Minimal presence in the premium segment

Impact

Largest selling 2 wheeler in the world

Started losing due to market evolution


Automobile Industry in India Final

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