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Group: 1
Rajesh Kumar Meena F-126 (slides 21-26)Tapan Waval F-141 (slides 9-11, 33,34)Gayathri Jayakumar F 101 (slides 7,8)Rushil Agrawal F-202 (slides 27-32)Amar Kumar Bighane F 83 (slides 2-6)Srinath S F-63 (slides 12-18)B. Queenie F-89 (slides 19,20
& compiling/editing)
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Sector overview
3.7 million automotive
vehicles were produced inIndia in 2010.
Annual vehicle sales areprojected to increase to 5
million by 2015.
Over 11 million vehicles aremanufactures of which 1.5million are exported each
year.
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Sector overviewMajor automotive firms with their headquarters
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Protectionism era Early 1980s
Slow growth due to nationalisation and the license raj Production process stagnated, cars were a major luxuryA number of foreign firms initiated joint ventures with Indian companies
Liberalization era 1990s
Increase in competitiveness and relaxedrestrictions
Entry of foreign banks with attractive autofinance schemes helped garner a hugebase of middle class population
However the market was still ruled by the
sellers
Globalization era 2000s
Increase in exports, R&Dactivities
Outsourcing of autocomponents started
Buyers started ruling the
market
Evolution
From Statics to dynamics
Source: http://india-reports.com
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Statistics
Two wheeler sector hasthe biggest share
Turnover is more thanUSD $35 billion
Provides employment toover 13 million people
Source: SIAM, Exim Bank
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Source: SIAM, Exim Bank
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Growth Drivers
0
510
15
2007
2008
2009
2010
2011
GDP Growth Rate
GDPGrowthRate
GrowthDrivers
Higher GDPGrowth
Rising FamilyIncome
Low CarPenetration
FavorableGovernment
Policies
Export Hubof The World
ImprovedInfrastructure
Source : World Bank Site
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Critical Success Factors
Source : SIAM
CriticalSuccessFactors
Fuel andCapital
Efficiency
Brand
Image
GoodAfterSales
Service
Value forMoney
Vehicles
ExportMarkets
EfficientTechnolo
gy andTechniqu
es
OptimumPlant
Utilization
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Risk factors and challenges
Deregulation of fuel prices affects Automobile sales. Petrol
prices reached as high as Rs. 75 recently
Government decisions and policy on NMZ slow moving
Safety requirements & voluntary environmental commitments
Innovation in development and manufacturing needed
Interest rates ranging from 11.25% to 17%
Metro effect = less sale and less use
Input costs like steel and availability of raw material affecting
production and driving up costs
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Ministry of Shipping,Road Transport &
Highways
Standing Committeeon Implementationof EmissionLegislation
CMVR- TechnicalStanding Committee
AutomobileIndustry Standards
Committee
REGULATORY FRAMEWORK
OTHER MINISTRIES Ministries like Ministry of
Environment & Forest Ministry of Petroleum &
Natural Gas Ministry of Non-
conventional EnergySources
CMVR - Central Motor Vehicles rules 1989
Bureau ofIndian
Standards
SafetyEmissions
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Automobiles
Passenger Vehicles
2-wheelers
Mopeds
Scooters
Motor-cycles
Electricbikes
Auto-ricksha
wsFour-wheelers
Hatch
Micro MiniCompa
ct
Sedans
Midsize
Executive
Premium
Luxury SUVs
Commercial Vehicles
LCVs MCVs HCVs
Market Segments
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76.23%
3.58%
15.86%
4.32%
Sales
Two-Wheelers
Three Wheelers
4-wheeler Passenger
Vehicles4-wheeler CommercialVehicles
Segment-wise Market Share
Source: SIAM
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Analysis
Two-wheelers
Highest Market share Heavy domestic demand Large number of players 14% yearly growth Strong replacement demand
Three-wheelers
Employment generators Heavy usage in passenger
segment Mileage of 34-36 kmpl
Decreased usage in cargosegment
Passenger Vehicles Emergence of affordable cars
like the Nano Worlds 7th largest market Greater demand due to rising
income levels Relatively lower car penetration Heavy investment from foreign
players
Commercial Vehicles Recovering market, growth>30% M&HCV segment, especially
tractors, in greater demand Increase in ownership cost Number of JVs like Eicher-Volvo
and Mahindra-Navistar Industrial upturn and improved
financing environment
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Top Players and market shares
59%24.00%
6.00%
7.00% 4.00% Hero Moto
CorpBajaj Auto
HondaMotorcyclesTVS Motors
Others
2 Wheelers
*as of Nov.2011
41%
40.00%
10.00%
3.31% 5.69%
Piaggio
Bajaj Auto
Mahindra
Scooters India
Others
3 Wheelers
Source: SIAM
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Players
45%
16.00%
15.00%
7.00%17.00%
Maruti
Hyundai
Tata Motors
Mahindra
Others
Passenger
59%
30.00%
4.00%4.00% 3.00%
Tata Motors
Mahindra
Force Motors
Piaggio
Others
LCVs
Source: SIAM
63%
23.00%
7.00%7.00%
Tata Motors
Mahindra
Force Motors
Others
HCVs and MCVs
*as of Nov.2011
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Analysis of Top Players
Maruti Suzuki 55% market share in the Indian car Market
Diverse product portfolio across segments
True Value replacement and servicing; Insurance
Aggressive Pricing strategies Lowest cost of ownership
Technological Advantages
Established distribution networks
Tata Motors Continuous innovation; product diversity Acquisition of Jaguar Landrover
Strong presence across segments
Unique understanding of customer needs
Exceptional skill base; R & D
People strength; over 22000 employees
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Analysis of Top Players
Hero MotoCorp Excellent technological expertise, courtesy Honda
Presence across geographical barriers-from cities to villages
Excellent after-sales service across the country
High volumes, pervasive sales and distribution network Strong brand, built steadily over 25 years
Bajaj Auto Heavy R & D investment; Pioneer in DTS engines
Excellent product development capability
Strong presence across segments
Strong branding and mind share through advertisements; Hamara Bajaj,Definitely Male and Hoodibaabaa
Shift from scooter to motorcycle segment
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Sector Analysis
Potential Entrants
Average
(Foreign makers finding it lucrativeto manufacture)
Buyers
High
(highly competitive, lots of optionsto choose)
SuppliersLow
(Location factor - suppliers close tofactories are preferred, too many
suppliers)
SubstitutesAverage
(public transportation like metrohas potential to trouble the
automakers
Desire to own a car is high)
Industrycompetitors
High(Most competitive auto
market in the world,presence of most majorplayers in each category
with competitive pricingschemes)
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Future TrendsFuture trends
Passenger carproduction: over3mn in 2014-15
Turnover of theIndian autocomponent
industry to surpassUS$ 50 Billion in2014-15
2W sales growth tobe slower (10%CAGR) over FY12-16E
Decline in growthto 10% in FY13E
M&HCV Volumegrowth willremain muted
CV sales growth toslow to 10%
Compulsory emission norms for companies to invest in fuel-efficient technologies by 2015
An umbrella organization National Automotive Board (NAB)being constituted by Govt. of India
India would become the third largest auto industry by
volumes by 2015 (source Rothschild)
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HARMFULTo achieving the
objectives
HELPFULTo achieving the
objectives
INTERNAL
FACTORS
EXTERNAL
FACT
ORS
MSIL has the largest share inpassenger car segmentMSIL has the largest network ofdealers and after sales service centresin IndiaMSIL is the first automobile company
to start a second hand vehicle salesthrough its True-value entityBrand strength and loyal customerbase
Low interior quality as compared toother playersThe management and the companyslabour unions are not in good termsMSIL has not been able to penetrate
SUV and Luxury segment
Economic slowdown Rising fuel cost Depreciating value of
rupeeRising input costHyundais Eon and Tata MotorsNano are making a dent on Alto sshare
With the launch of Ertiga MSIL
can stake claim in the MUV segmentExport Hatchbacks to Europeanmarkets
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
MARUTI
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Maruti offers a low cost hatchback topremium sedanIt offers its products in Petrol, Diesel,
CNG and recently in LPG variant as wellMaruti 800Alto K10Wagon RSwift and Swift DzireSX4Ertiga
Kizashi
Pricing is one the major forte of MarutiPrice is lower than its competitorsRs3,20,000-Rs16,00,000
As of now it is mainly inM Metropolitan, urban and
semi urban areasMSIL has the largest network of dealers
and after sales service centres in India.
Over 1000 sales outlet as of March 2012Over 3000 sales outlet as of March 2012
Maruti has a huge customer baseFor Promotion they usually followTVC Recently they showcased their productsin Delhi Auto Expo
Their tagline is Kitna deti hai whichconnects really well with Indian mentalityMaruti also offers heavy discounts infestive season and also at the end of year
PRODUCTS PRICE
PROMOTION PLACE
MARUTI
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HARMFULTo achieving the
objectives
HELPFULTo achieving the
objectives
INTERNAL
FACTORS
EXTERNAL
FACT
ORS
HERO has the largest market sharein two wheeler market with 57 %Hero has a distribution network of700 dealersand 3,700 service centresStrong brand nameEasy availability of spare parts
After the partition from HONDA,HERO does not have fullydeveloped R&DHERO is not a prominent player inscooters segment
Economic slowdownRising fuel costDepreciating value of
rupeeRising input cost
Rural market, being under-penetrated at 22%, providesample opportunities for
two-wheeler manufacturersFocus on targeting students andwomen for light ungeared scooters
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
HERO
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HERO offers both motorcycle and
scootersPassion, Splendor, CD Dawn, CD Deluxe,Glamour, Achiever, CBZ, Karizma, Hunk,Impulse ,Ignitor(new launch)Ungeared scooter Pleasure and 110ccscooter Maestro (new launch)Diversified products
Pricing is one the major forte of HERO
There is almost no price differencebetween hero and its competitorsRs40,000-Rs1,00,000
HERO caters to all areasHero has a distribution
network of 700 dealers
HERO is the sponsor of MumbaiIndiansHERO use various mediumsSuch as TV, Radio and printHERO launched it IMPULSE at DelhiAuto Expo
PRODUCTS PRICE
PROMOTION PLACE
HERO
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HARMFULTo achieving the
objectives
HELPFULTo achieving the
objectives
INTERNAL
FACTORS
EXTERNAL
FACT
ORS
Strong distribution networkEngineering Know howBrand strengthDiversified products
Expenses incurred on postretirement plans
Economic slowdownDepreciating value ofrupee
Tough competition
Rural market, being under-penetrated at 22%, providesample opportunities for
two-wheeler manufacturersFocus on targeting students andwomen for light ungeared scooters
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
HONDA
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HMSI has covered all the
segment of motorcycle andscooter in IndiaAviator, Activa, Dio, EternoUnicornShineTwisterStunnerDream Yuga
HMSIs Pricing as compared to
other brands is on lower sideCurrently for low cc engineRs40,000-Rs1,20,000
As of now it is mainly inMetropolitan, and urbanareas
HMSI has a distribution networkof 800 dealers
For Promotion they namedAkshay Kumar as their BrandAmbassador
PRODUCTS PRICE
PROMOTION PLACE
HONDA
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$2.3 billion acquisition of the Jaguar and Land Rover brands from Ford Motor Co.
All-cash deal; biggest automobile buy out by an Indian company; completed in June
2008
Included manufacturing plants, two advanced design centers in the UK; worldwide
network of sales companies
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TATA raised $3bn from bridge loans; Banks included JP Morgan, Citigroup, State
Bank of India
Positives for TATA instant recognition across the globe, access to advance design
studios & Technology
Points of Concern Difficult market conditions for JLR, another $1bn investment
required, inexperience in luxury automobiles, R&D abilities
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M&M acquired 80% stakes KMCL for Rs. 110 Crores
Mahindra Kinetic Scooters & Motorcycles Ltd.
Not a sell off; a Joint Venture
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Mahindras entry into two wheeler segment
Struggling KMCL emerge as a debt-free company
Kinetic s Taiwan partner SYM - technical partners to the new alliance
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522.5 billion won (approx $470 million) deal
February 9-10 2011; M&M allotted 70% of the Korean company's total shareholding
Both firms will work together, will share technology and will develop sales and
services outlet
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2007: Bajaj picked up a 14.9% stake in Austria based KTM power sports AG for around
Rs300Cr
Gradually increasing, recent additional 6.3% stake in KTM, taking its stake to around
47%
Instant Foothold in Europe; jointly working on a series of platforms and engines-cost
and quality benefits
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Wayforward
IncreasedModel Variety
Growth InLow PriceMarkets
Environment& Safety
Cost reductionVirtualised
Testing
CollaborationEngineering
Quality &Reliability
Awareness
ReducedModel Cycles
ROAD AHEAD YES WE HAVE TO
BUILD IT OURSELVES
SIAMs Timeframe for Fuels
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ALL STAKEHOLDERS IN LINE = BRIGHTER
FUTURE FOR THE AUTOMOBILE SECTOR
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