DEEP DIVE INTO THE AUTOMOBILE

SECTOR IN INDIA
OUR TEAM

CHIRAG HITIK KANAV ABHINAV SHANKH FATHIMA ES SRINIDHI

E018 E063 E051 E054 E060 E057 E001
HISTORY
Industry has traversed various stages
Started from the rise of domestic automobile producers
Achieved self-sufficiency prior to 1983
Subsequently experienced expanded opportunities for
growth - economic reforms of 1991

Post liberalization, foreign enterprises once restricted by stringent

regulations began to venture into the Indian market
Maruti and Suzuki collaboration - initial partnership between
domestic and international entities
As of 2000, the Industry embraced a dozen major corporations,
largely stemming from global counterparts.
DOMESTIC CONTRIBUTION
Indian Automobile
Industry Indian Automobile Figures (in millions)

Worth More Than $100 Billion USD

8% of Country's Total Exports

Accounts for 7.1% of India's GDP

Aims to double its size to INR 15 Lakh

Crore by 2024
 VEHICLE CATEGORY
Multi-Purpose
4%

Utility
39.1%
Passenger
56.9%

Heavy
28.3%

Light
71.7%
 JUSTIFICATION FOR THE SECTOR
Linkages with industries that affect its supply chain like capital equipment, steel, copper, lithium,
semicondustors, warehousing, glass

Along with linkages with industries that deals in finance, credit, insurance, logistics, petroleum, repair and
maintenance, and advertising

Due to linkages with such large number of industries it makes it more justifiable to analyse the dynamics of
the automobile industry

In 2023, India became the From April '21 to March '22, India is the largest tractor , 2nd
3rd largest automobile India produced 22.93 million largest bus, and the 3rd largest
market vehicles heavy truck manufacturer
OBJECTIVE OF THE ANALYSIS
Describe the evolution of the Study the pricing policy and
industry degree of competition

Analyse the key players and

Study the market structure for
their performance in the
automobile industry in India
sector

Analyse the affect of Describe the issues,

government regulations challenges and the prospects
overtime ahead
EVOLUTION OF INDIAN AUTOMOBILE INDUSTRY
THE FIRST AUTO MOBILE IN INDIA
Cars in India were exclusively imported
1897 Journey of automobile in India began Upto
1930s from developed countries
The high cost and limited availability of these imported vehicles made them an
extravagant luxury accessible only to the wealthy elite

PHASE 1- 1943-1983
Several players emerged like Hindustan Motors, Premier, Chrysler Corporation, Mahindra and Mahindra, TATA
engineering and locomotive company (TATA motors), Ashok Leyland and Bajaj Auto dominated the two-
wheeler segment

Before No automotive component manufacturing industry to supply to indigenous player

1947

Collective efforts of government and private players, Import substitution program was launched which
1950s
restricted import of fully built-up cars.
EVOLUTION OF INDIAN AUTOMOBILE INDUSTRY
Tariff commission launched, allowing only licensed capacity of certain number of vehicles to be produce
1952 Main purpose: to exclude companies who only imported parts for assembly in India but with no India
partners. Pllayers like General Motors, Ford, Rootes group move out of India

The first Phase was identified as Government intervention through regulations which
were related to protection and indigenization of the industry

PHASE 2 - 1983 - 1990

Several players emerged like Hindustan Motors, Premier, Chrysler Corporation, Mahindra and Mahindra, TATA
engineering and locomotive company (TATA motors), Ashok Leyland and Bajaj Auto dominated the two-
wheeler segment

Little or no growth till 1980s. Government made policies to encourage the use of fuel-efficient
Early
1980s technologies and competitiveness in the car sector
Single most important policy regarding the TECHNOLOGY ACQUISITION was removed and the competitive
framework was introduced in the market when price controls were lifted

Resulted in relaxed entry requirements, allowed foreign equity partnerships, and allowed the importation of
machinery and technology
 EVOLUTION OF INDIAN AUTOMOBILE INDUSTRY
Known as the modernization programme and it altered the industry structure particularly automobile sector.
The major players during all these regulations was Hindustan motors and premier

PHASE 3 - 1991 - 2001 Liberalization of Indian economy as more restriction and laws were removed

After the liberation policy, major global players like Suzuki, Toyota, Hyundai, Maruti enter and explored the
1991 Indian market. All this changed the industry growth path
Also resulted in many foreign firms joint ventures with Indian companies.
Industry grew at 14.31% p.a. in 1991 as compared to 8.56% p.a. during 1856-1990

PHASE 4 - AFTER 2022 - 2022

Many policy changes introduced by the government to enhance the automobile exports and quality in
After
2000 India

Auto national policy (first comprehensive policy for automotive industry in India) launched.
After Main feature - approval of foreign equity investment upto 100% in manufacturing of automobile and
2002
its components, promotion
EVOLUTION OF INDIAN AUTOMOBILE INDUSTRY
The latest national auto policy suggests to adopt a long term plan to decide emission standard
2018
after BS-VI and get in line with the global benchmarks by 2028

PLI schemes introduced to promote India’s manufacturing capabilities and to develop automotive products
with a budget outlay of Rs. 25,938 crore (US$ 3.25 billion).
MEIS introduced through foreign trade policy of 2015-20, incentives provided like reduction in duties or taxes.
Under this scheme automobile manufacturers got an incentive of 2% on vehicle exports
National Automotive testing and R&D infrastructure established and since 2015 five testing and research
fascilities have been created around the nation with total cost outlay as $388.5 million

PHASE 5 - AFTER 2022

Government promoting faster adoption of electric vehicles in India

Vehicle scrappage policy introduced. All vehicles older than 15 years to pass a “fitness and emissions
April
test” to keep their registration
2002 State and Central government-owned vehicles including buses owned by transport corporations and
public sector undertakings that have been on the road for over 15 years to be scrapped
EVOLUTION OF INDIAN AUTOMOBILE INDUSTRY
FAME scheme I and II, electric vehicle subsidy is provided for electric two- wheelers, three wheelers, 4
wheelers along with electric buses and the scheme is extended till march 24, 2024

Government approved new PLI scheme of 25,938 cr. To boost manufacturing of electric and fuel cell
vehicles. The Indian government has also provided tax exemptions and subsidies to EV
manufacturers and consumers to promote the domestic electric vehicle industry

The Indian government has set a target to achieve 30 percent electrification of the country's
vehicle fleet by 2030
ANALYSIS OF MARKET STRUCTURE
Elastic price elasticity of demand due to
oligopolistic presence of large number of substitutes

High barriers to entry

NON collusive
oligopoly
The four firm concentration ratio is 78% ,
showing dominance by few large firms thereby
showcasing a oligopolistic market structure.

Industry'S Herfindahl-Hirschman Index (HHI)

IS 2150. Which shows that the Industry is mildly
concentrated
MARKET SHARE
Market leader: Maruti Suzuki, 40% Others
market share 6.9%

KIA CORPORATION
Second largest: Hyundai Motor
6.6%
Company, 15% market share MARUTI SUZUK
40.7%
MAHINDRA AND MAHINDRA
Third largest: Tata Motors, subsidiary of
11%
Tata Group, 13.11% market share

Fourth Largest: Mahindra and Mahindra,

10.68% market share, evolved into TATA MOTORS
largest SUV manufacturer in the country 13.5%
Bottom 20%: comprises new players like HYUNDAI MOTOR COMPANY
KIA and MG and some of old players like 15.5%
Honda, skoda, Toyota.
YOY CHANGE IN REVENUE OF KEY PLAYERS
Showcasing normal goods
and high income elasticity of
demand

Negative growth rate

registered in 2020 and 2021
due to Covid-19 pandemic

Revival of the sector after

2021 indicates the direct
relationship between
income and demand
PRODUCTS OFFERED AND PRICE RANGE
Tata Motors Maruti Suzuki

Hatchback: 6-8.2L SUV: 15-24L Hatchback: 3.9-9.88L SUV: 6.5-12.29L

Sedan: 7-10L EV: 8.6-12.04L Sedan: 6.5-12.29L EV: 12-14L

PRODUCTS OFFERED AND PRICE RANGE
Mahindra & Mahindra Hyundaii

Hatchback: 6-8L SUV: 9-26L Hatchback: 5.5-12.2L SUV: 7-35L

Sedan: 5-11L EV: 15-19L Sedan: 6-17L EV: 15-24L

PRICING POLICY & DEGREE OF COMPETITION
Due to high degree of competition and differentiated products, the
players are not merely price takers and follow their own pricing and
output policy

The firms are interdependent on each other For example: A price

change by Maruti Suzuki, Hyundai or Tata Motors will affect the decision
making of others

Company regularly needs to differentiate their goods by launching

new models to maintain their competitive position. for example: A lot
of EV models are being scheduled to be launched within coming year
ISSUES AND CHALLENGES FOR THE SECTOR

Global shortage of Supply chain Increase in rates by

semiconductors disruption the RBi

High cost of of
Delays in production batteries like Lithium Less Liquidity in the
Ion and Nickel- metal market
hydride

Less revenue earned

Will hamper
as % increase in price
Influencing price production and R&D
will be less than %
dynamics of the Evs in the sector
increase in demand
 FUTURE PROSPECTS
Government Steps Effects on players Idustry Targets

Automotive Mission Plan 2016- TATA plans to increase Passenger car market to
26 targets a four-fold growth contribution of EV sales from reach a value of US$ 54.84
12% to 50% by 2030 billion by 2027

Increased the budget Post COVID-19 pandemic, the

allocation of FAME II by 78% Suzuki to launch six EVs in
sector expects strong growth
India by 2030
in FY23

Panned US$ 3.5 billion in

incentives to encourage clean M&M partners with Jio-bp to EV market estimated to reach
technology vehicles set up EV charging network Rs. 50,000 crore by 2025
APPENDIX
https://www.jiobp.com/news/Jiobp-and-Mahindra-and-Mahindra-
strengthen-EV-partnership
https://www.ibef.org/industry/india-automobiles
https://www.mckinsey.com/industries/automotive-and-assembly/our-
insights/the-indian-automotive-industry-from-resilience-to-resurgence
https://www.siam.in/statistics.aspx?mpgid=8&pgidtrail=14
https://www.indiabudget.gov.in/economicsurvey/
https://www.tecnovaglobal.com/blog/prominent-challenges-in-the-indian-
automotive-sector-2022/
https://www.screener.in/company/TATAMOTORS/consolidated/
https://www.thehindu.com/sci-tech/technology/indias-electric-vehicle-
market-grew-223-in-2022/article66516424.ece