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India is a Booming AutomobileIndustry
Presented by :
Raman Kumar Jha
Taxila Business School Jaipur
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Indian automobile industry
The automobile industry in India is the ninth largest in the world with an
annual production of over 2.3 million units in 2008. In 2009, India
emerged as Asia's fourth largest exporter of automobiles, behind Japan,
South Korea and Thailand
India has emerged as one of the world's largest manufacturers of small
cars. According to New York Times, India's strong engineering base and
expertise in the manufacturing of low-cost, fuel-efficient cars has
resulted in the expansion of manufacturing facilities of several
automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen
and Suzuki
In 2008, Hyundai Motors alone exported 240,000 cars made in India.
Nissan Motors plans to export 250,000 vehicles manufactured in its India
plant by 2011.Similarly, General Motors announced its plans to export
about 50,000 cars manufactured in India by 2011.
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Success story of Indian automobile
August 2000 M&M exported Scorpio to Russia
And Indonesia
February 2008 Maruti Suzuki became the first Indian
car company to export half million car
January 2010 Ashok Leyland forms JV with Nissan to
manufacture LCV
February 2011 Bajaj export touch magical millionmark
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What it takes to become a global
automotive production hub?
Attractive domestic market & proximity to othermarkets.
Political & Business Environment.
Low production cost & efficient supply chain. Technological capabilities in a particular class of
vehicles.
A big chunk of pie of Indian population became a
middle income group. India is second largest growing economy in the
world.
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Indian 3-Wheeler Market
Sub-segments and Competitive Scenario
68% 24% 2% 1% 3% 3%
23% 40% 12% 13% 7% 6%
India is the largest three-
wheeler market in the world
Passenger
Goods
Scooters
India
60%
40%
Sub Segments
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The Indian 3-Wheeler Industry
Product unique to emerging markets in South / South-East Asia & partsof Africa
Product design & execution focus on technological simplicity and ease
of use.
Lesser competitive intensity as compared to other segments.
Dis-similarity with Global Industry
None.Similarity with Global Industry
CharacteristicsIndian 3-wheeler Industry
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Indian Passenger Vehicle Market Competitive Scenario
Passenger
Cars52% 17% 19% - 1% 5% 2% 2% 2% 1% -
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The Indian Passenger vehicle Industry
Market dominated by Mini Cars & Hatchbacks (>80%)
High incidence of taxes in Car Prices.
(24% Excise Duty, 12.5% VAT, Local Taxes as applicable)
Customer preference driven by value for money and cost of ownership
considerations rather than image, performance and power.
(80% of cars sold are priced below USD 12000)
Large proportion of chauffer driven cars. Rear Passenger comfort is a criticalinfluence in purchasing decisions.
Emergence of strong domestic players (TATA, Mahindra).
Strong demand pull for Utility vehicles from Private Taxi segment.
Dis-similarity with Global Industry
Multiple segmentation across & within major segments
Cars (A, B, C, D & E segments) (Hatchbacks, Sedans,
Notchbacks, Station Wagons & Saloons)
Utility Vehicles (Multi- & Sports Utility)
Large variety of products & choice for the customer
Similarity with Global Industry
CharacteristicsIndian Passenger Vehicle Industry
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Indian Commercial Vehicle Market Competitive Scenario
Medium &Heavy CV -Trucks
64% 24% - 8% - 3% -
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The Indian CV Industry
Secular long term growth trend
Lower Power to Weight Ratios
Early stage of road development
Less degree of product sophistication.
Strong price entry barriers created by
domestic players
Dis-similar to Global CVIndustry
CyclicalSimilar with Global CVIndustry
CharacteristicsIndian CV Industry
0
50
100
150
200
250
70-71
72-73
74-75
76-77
78-79
80-81
82-83
84-85
86-87
88-89
90-91
92-93
94-95
96-97
1998-9
9
00-01
02-03
Nosin
'000
Indian CV Industry
CAGR: 5%
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Market Share of Indian Automobile
Industry
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Top players in different Auto
segments
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The table below shows segment-wise distribution of the
auto component Industry.
Organized Component Manufacturers
Strengths
1.Higher production capacities 2. Captive OE market
3. Access to technology through tie ups 4. Quality standards
5. Potential to export 6. Improving quality consciousness of
end users
Weaknesses
1. High Investment in plant and machinery 2. Higher overheads
3. Higher rates of taxes and
differential regional tax patterns 4. Limited domestic OE volumes
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Unorganized Component Manufacturers
Strength
1. Low capital investment
2. Minimal overheads3. Taxes and levies
exemption (violation)
4. Poor regulation on sale
of spurious parts
5. Price sensitivity of Market
Weakness
1.Sub normal quality
2.Obsolete technology
3. Low capital availability
4. Restricted growth
potential
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