Automobile Industry is one of the largest industries in global market.

Automobile manufacture in India began with the establishment of two domestic firms in India in the late 1940s: Hindustan Motors Limited and Premier Automobiles Limited. Government banned the entry of foreign auto manufacturers and brought the auto industry under a tight licensing regime. The rate of customs duty levied on automobiles was 225%, and there were also quantitative restrictions on imports. As a result, supply was limited to just two models: the Ambassador, a medium sized car from Hindustan Motors and the Padmini, a small car from Premier Automobiles, both produced under license from foreign manufacturers.

Present Scenario
Automobile sector contributes to 4% of the total GDP of India and generates over 2 lakh jobs. The

twin phenomena of low car penetration & rising incomes, when combined with Domestic Sales Volumes: Percentage share of Different Vehicle Categories in 2009-10
Two Wheelers 16% 4% 4% Passenger Vehicles 76% Commercial Vehicles Three Wheelers

increasing affordability of cars, are expected to contribute to an increase in demand.

Presently there are 1.95 Mn Passenger vehicles plying on the Indian roads which are

expected to grow to 4.90 Mn till 2015 at a CAGR of 20%. More than three-fourth of the market is in two-wheelers (See the pie chart). Global OEMs’ regard India as a sourcing hub and intellectual pool, that is why an increasing number of R&D and engineering centers are being established by them.

The agreement expired in 1971.419.126 500. API and Enfield (motorcycle) were the only two producers.309.583 1.608 356. . The Indian two wheeler industry made a modest beginning in the early 1950 when Automobile Product of India (API) started manufacturing scooter in India.829 7.608.622.223 374.889 7.876 1.660 497.743.512.838.467.997 10.006 416. Currently India is the second largest two-wheeler market in the world.087.741 6.853 9.503 11.223 1.240 275.423 556.870 566. and waiting time for getting Bajaj scooters was as high as 12 years.777.020 619. Until 1958.666 8.Automobile Production Trends (Number of Vehicles) Category Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Grand Total 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 989.083 519.853.681 8. foreign companies were not allowed to operate in India. in 1960’s it set up its facility to manufacture them in technical collaboration with piggaio of Italy.697 8. Bajaj auto began trading in imported Vespa scooter and the three – wheeler. In 1948.545.529.703 391. In the initial stages.300 1.466.445 434.243.564 8.026.275 14.830 The Two-wheeler Automobiles: Two-wheeler segment is one of the most important components of the automobile sector which has been in existence in our country since the early 1950s.093 5. it stands next to Japan and china in terms of number of two-wheelers produced and sold.040 353.982 549.351.930 11.209.049.792 10.593 2. the scooters segment was in regulated regime.172. Finally.560 1.

Major Players Hero Honda: Largest Twowheeler manufacturer in the world. Scooter/Scooty: Wheel size less than or equal to 12 inches 3. Hero Honda contributes 50% motorcycles to the market and Honda holds 46% share in scooters.Classification of Two-wheelers: 1. TVS Motor Company 19% Market Share of Two-Wheeler Automobiles Honda Motors 9% Others 3% Hero Honda Motors 42% Bajaj Auto Ltd. Also TVS makes 82% of the mopeds in the country. which shows the huge potential. wheel size more than 12 “ In India there are 7 scooters manufacturers. 9 motorcycle manufacturers and 3 mopeds manufacturers and the entry level bikes (engine <125 cc) account for around 80% of the total sales volume. Mopeds: Engine capacity less than 75 cc with fixed transmission. Motorcycle: Wheel size >12 inches 2. 80% 70% 60% 50% 40% 30% 20% 10% 0% 80% 14% 6% Growth Potential Low penetration levels & sharp increase in ` >2 lakh income group and this group is expected to reach 268 Mn count by 2015. Bajaj Auto: Second largest Two-wheeler manufacturer in India and the largest in 3 wheelers. 27% .

0 HC 8 – 12 NOx HC + NOx 3.2 1.00 1. and has recently sold its stake of 26% in its joint venture with the Hero Group.50 1.50 1.0 Deterioration Factor (DF) 1. The company has also established a manufacturing facility in Indonesia. Demand Forecasts for the current fiscal: .TVS Motor Co: Third largest Two-wheeler manufacturer in India.00 1.50 2. Suzuki: Recently entered the Indian market through its direct subsidiary Checking Pollution: Emission Standard for Two Wheelers Emission Standards in g/km Year CO 12 – 30 4.60 2. # BS III implemented in October 2010. Honda Motors: Working in Indian market through its direct subsidiary.2 1991 1996 2000 *2005 BSII # 2010 BS III *BS II implemented in April 2005.

The Ministry of Shipping. are governed by the Motor Vehicles Act 1988 (MVA) and the Central Motor Vehicles rules 1989 (CMVR). Road Transport & Highways (MoSRT&H) acts as a nodal agency for formulation and implementation of various provisions of the Motor Vehicle Act and CMVR. Road Transport & Highways Other Ministries ○ Ministry of Environment & Forests Standing Committee on Implementation of Emission Legislation CMVR .Technical Standing Committee ○ Ministry of Petroleum & Natural Gas ○ Ministry of NonConventional Energy Sources Automotive Industry Standards Committee . construction & maintenance of motor vehicles etc.In India the Rules and Regulations related to driving license. Bureau of Indian Standards Ministry of Shipping. registration of motor vehicles. control of traffic.

10 With reciprocating internal combustion pistons engine of a cylinder capacity not exceeding 50 cc 8711.30 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 250 cc but not exceeding 500 cc 8711. with or without side-cars.11 are as listed below: Sub Heading No 8711.90 Other 100% 100% 100% 100% 100% 100% Description of article Rate of duty . Tariff Item No.Customs Duty Norms Custom Duties for Motorcycles (including mopeds) and cycles fitted with an auxiliary motor. 87.50 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cc 8711.20 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc 8711.40 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cc but not exceeding 800 cc 8711.

Excise Duty Norms Excise Duty Norms for Motorcycles (including mopeds) and cycles fitted with an auxiliary motor. Tariff Item No. with or without side-cars. 8711 are as listed below: Tariff Item Description of goods Rate of Duty(%) 8711 10 With reciprocating internal combustion piston engine of a cylinder capacity not exceeding 50 cc: 8711 10 10 8711 10 20 8711 10 90 8711 20 Mopeds Motorised cycles Other With reciprocating internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc: Scooters 8711 20 11 8711 20 19 Of cylinder capacity not exceeding 75 cc Other Motor cycles: 8711 20 21 8711 20 29 Of cylinder capacity not exceeding 75 cc Other Mopeds 8711 20 31 8711 20 39 Of Cylinder capacity not exceeding 75 cc Other Other 8711 20 91 8711 20 99 8711 30 Of cylinder capacity not exceeding 75 cc Other With reciprocating internal combustion piston engine of a cylinder capacity exceeding 250 cc but not exceeding 500 cc: 8711 30 10 8711 30 20 8711 30 90 Scooters Motor-cycles Other 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 .

713 1.011.333 1.795 76.052 366.146 .004.644 819.537 58.544 806.940 40.729 2009-10 446.919 629.291 166.896 141.282 17.401 2008-09 335.625 45.407 513.432 29.402 175.994 42.066 173.8711 40 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cc but not exceeding 800 cc: 8711 40 10 8711 40 90 8711 50 00 Motor-cycles Other With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cc 10 10 10 8711 90 8711 90 10 Other Side-cars Other 10 8711 90 91 8711 90 99 Electrically operated Other 4 10 Exports Trends Automobile Exports Trends (No of Vehicles) Category Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Grand Total 479.238.619 265.529 1.007 2003-04 2004-05 2005-06 2006-07 129.452 2007-08 218.169 619.184 68.594 1.174 1.881 143.144 66.225 148.572 198.530.222 1.804.600 49.140.

aluminum and natural rubber has placed India amongst the low cost producing centers of two-wheelers. trade regulation. or as a means of avoiding or reducing the effect of urban congestion. political influence and some of the rules and regulation of government policies which is considered in political analysis. Mobility and safety. Since many auto finance companies lay easy installment rules with less interest rate. interest rate. India is the second largest motorcycle markets in the world next to China. those reasons are increasingly practical. Subculture. . Motor-cycle gives a great advantage to the specified areas where other vehicles cannot enter. This would encourage industry because the cost of the final product is going to be less for the customer. exchange rate and inflation rate. which will ultimately lead to more sales. motorcycles are the primary means of motorized transport. Abundant and low cost labor coupled with local availability of raw material like steel.PEST Analysis of Two-Wheeler Industry Politico-Legal Aspects – Tax policies. Socially many motor cycle manufacturers raise money for charities through organized ride and events. CARE Research anticipates buoyant growth in two-wheelers exports as well. Since there is a rule in certain states and cities in India to wear helmet while riding two-wheelers to make them safe from accidents makes two-wheeler riders to have a safe journey. Many people ride motorcycle for various reasons. In numerous cultures. Consequently. Abundance of low labor and raw material gives India an upper edge in the export. Economic Aspects – Economic factor are those which is influenced by economic growth. The corrections in Excise duty on electric vehicles will enable the manufacturers to take advantage of exemption of customs duty on Electric Vehicles. with riders opting for a powered two-wheeler as a cost-efficient alternative to infrequent and expensive public transport system. which makes more consumers to go for it. Social Aspects – Social aspects of two-wheelers industry are Popularity.

aluminum and rubber. because there are many industries in India for manufacturing those standardized product the production is going smooth.Technical Aspects in Two-wheeler industry include technology. Honda motorcycle & scooter India. Different types of two-wheelers have different dynamics and these play a vital role in their performance.Technical Aspects .seller relations: Bargaining power Competitive pressures from seller – buyer relations: Bargaining power Rivalry: The key players in two-wheeler industries are Hero Honda motor ltd. (HHML). Passenger and commercial vehicles. Invention of Electric motorcycle gives an added advantage since the two-wheeler users can avoid using petrol. Majestic auto ltd. electric motorcycles. fuel economy. dynamics and accessories. Two-wheelers domestic market for 2009-10 is 76. Sales of two- . These vehicles also have no noise and smooth drive. Nowadays two-wheelers have been designed to give more than 80km mileage per liter with low maintenance cost. Bajaj Auto ltd and TVS motor Company ltd. Motorcycle is the best fuel economy mode of transport. Since sufficient bike accessories are easily available in almost every region. Yamaha. LML. Royal Enfield ltd. telescopic forks and disc brakes. two-wheeler riders have a privilege to change the used or damaged parts very easily.49% which is very high when compared to that of three wheelers. Porter’s Five Force Analysis Porter’s five forces Model of Competition are as follows:      Rivalry among competing sellers Potential new entrants Substitute products Competitive pressures from supplier . The other players are Kinetic. manufacturing process. Manufacturing of two-wheelers includes steel. The standardized product used in manufacturing of two-wheelers is steel. aluminum frame.

Buses are available from normal buses to hi-tech AC buses which is threat to two-wheeler industry. these are available in abundant. because of this there is more learning and experience in this field. so there are chances that the . Seller – Buyer Relations: Buyer has added advantage than seller because there are five to six popular brands of two-wheelers available in India. Because of low cost production. Sometimes low-end car is a substitute product for the people using high-end motor cycles. passenger and commercial vehicles. Since high technology and raw material resources are abundant to produce the production cost is less in producing two-wheelers. but people using two-wheelers can only use the service of buses and auto as a substitute product. Since only two people can travel in a bike so most of them use auto-rickshaws when they go out with their family and if they are affordable to buy car will use car instead of auto. this industry enjoys good growth rate and profitability. Since bus service has increased when compared to five years back people who are aged above 45 years use buses because of their health condition. This makes them to drive a smooth production of their finished products. Each company in industry not only makes differentiation in their product strategy but also makes differentiation in the promotional strategy to create ‘brand preference and loyalty’. so they can cultivate good relationship with the suppliers. tyres and tubes. Substitute Product: Substitute products for two-wheeler industries are bus transportation. suppliers are very high. Potential New Entrants: Capital investment is very huge in two-wheeler industries since large plant and large machineries needed with skilled labors and good R&D team needed for producing two-wheelers.wheelers are very high when compared to that of three wheelers. Supplier – Seller Relations: Since the selling units are very high in two-wheeler industry and because of many competitors. aluminum. Auto-Rickshaws and even low-end cars. Since each company in industry change the models based on the on-going requirements to show differentiation among their competitors. Some of the components in two-wheeler industry are very common for all the two-wheeler industries like steel. As they change their models frequently. Indian Auto policy 2002 gives added advantage to two-wheeler manufacturers to enter even other countries outside India.

its distance from the customers place and quality of service are given considerable importance by them. because it attracts most of the middle-income groups. Since full information is available to the buyers about the product details and their prices. These factors help in making good relationship with the customers. . Buyers are very conscious in spending their money to purchase two-wheelers. The location of the service center also plays an important role in the decision-making process. Nowadays people go to unique brand because of the good service they provide after purchase. buyers are fully aware of seller costs and products. so the sellers cannot price their product very high.costumers can switch brand from one another.

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