INTRODUCTION
The Automotive Industry in India is one of the larger markets in the
world and had previously been one of the fastest growing
globally, but is now seeing flat growth rates.
However production of passenger vehicles in India was recorded at
3.23 million in 2012-13 and is expected to grow at a compound
annual growth rate (CAGR) of 13 per cent during 2012-2021
AUTOMOBILE
2 WHEELERS 3 WHEELERSPASSENGER
VEHICLES
COMMERCIA
L VEHICLES
The growth journey
Initial YearsManufacturing was licensed•High Customs duty on import•Steep excise duties &sales tax
•2 Major players:Premier Automobiles Ltd.& Hindustan Motors
1980s•Entry of Maruti Udyog Ltd.•Better product,with government support.•Seller’s Market.•Long Waiting Periods.
Early to mid 90s
•Seller’s market and longwaiting periods.
•Delicensing in 1993.
•Decrease in customs &excise duty.
•Auto finance boom- moreplayers (foreign banks &non banking companies,better schemes).
Mid 90s – Early 2000s
•Buyers market.
•Easy Auto finance.
•Manufactures diversifying into related activities: finance lease, insurance and used car market.
Market shares
Passenger Vehicles
Market Share
Commercial Vehicles
Market Share
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
Sales
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
exports
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
What is Oligopoly market?
• Market structure is featured by a few firms.
• Strategic Interaction - Reaction to competitor’s pricing and
marketing strategies.
• Product can be homogenous or differentiated.
• Considerable barrier to entry for new firms.
• Possibility of Collusion, leading to
illegal price setting.
• On the other hand, if no collusion,
possibility of fierce competition
among the few firms.
What is Monopolistic market?
• Market structure characterized by many
firms.
• Product differentiation allows a Range
of prices.
• Monopoly over a small range of price.
• Barriers to entry and exit very minor.
• Branding, advertising and personal
selling to differentiate the product.
The Causes of Transformation – The First Big Step
• Sanjay Gandhi owned Maruti Technical Services Limited
which was liquidated.
• After his death, Indira Gandhi government collaborated with
Suzuki Motors, a Japanese firm, for collaboration –
Formation of Maruti Udyog Limited and renamed later
Maruti Suzuki in 2007.
+ =
The Causes of Transformation
• Policy changes introduced in 2 doses:
1. Partial de-regulation in 1985 – Eased licensing
requirements, allowed selective capacity-expansion, partial
relaxation of controls with regard to foreign collaboration, imports.
However, trade and investment regulations continued,
constraining growth of big business houses.
2. 1991 policy changes – Dispensed with bulk controls and
regulations
• Partial de-regulation allowed technology inflow into India.
• New Industrial Policy in July 1991 by Congress Government led by
Mr. Narsimha Rao:
It introduced Liberalization policies .
• April 1993 – Government removed motor cars from list of industries
reserved for compulsory licensing.
Effects of the Transformation
• New firms, including foreign players, entered with modern
engineering, efficient processes and modern shop-floor layouts.
• Indian automobile industry grew at 14.31% per annum in post-1991
era compared to 8.56% per annum during 1985-91.
• Delicencing of sector attracted many major Global OEMs
(GM, Ford, Honda, Hyundai etc.) to start assembly in India.
• Demand for small and compact cars by highly educated, well-
informed Indian customers.
• Easy Auto Finances attracted the buyers leading to sharp rise in the
demand.
Current Trends in the Current
Monopolistic Automobile Market
• Considering huge market potential, production of passenger cars is
projected to grow at CAGR of 11% between 2010-11 and 2013-14.
Comparison:
• 1982
Number of manufacturers: 3
Vehicle sales: 20000
Number of models: 3
• 2011:
Number of manufacturers: 20
Vehicle sales: 23,80,000 approx.
Number of models: 78
Sources of data
www.wikipedia.org
www.automobileindia.com
www.investropedia.com
For automobile sales and export data: Society of Indian Automobile
Manufacturers (SIAM) and for auto component revenue and export
data: The Automotive Component Manufacturers Association of
India (ACMA)
Economic Times
http://www.imaginmor.com/automobileindustryindia.html
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