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PREFACE

Indian automobile industry has grown leaps and bounds since 1898, a time when a car had touched the Indian streets for the first time. At present it holds a promising tenth position in the entire world with being # 1 in Two Wheelers and # 4 in commercial vehicles. Withstanding a growth rate of 18% per annum and an annual production of more than 2 million units, it may not be an exaggeration to say that this industry in the coming years will soon touch a figure of 10 million units per year. The automobile industry in India — the ninth largest in the world with an annual production of over 2.3 million units in 2011 — is expected to become one of the major global automotive industries in the coming years. In this project we have undergone a detailed analysis of India automobile industry by using Fundamental and Technical tools. In order to better understand the threat and growth opportunities of Indian automobile industry with foreign automobile industry we have made comparative analysis of automobile industry of India with China. In this report we have studied the market and discussed some cases that shows threat to Indian automobile Industry.

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TABLE OF CONTENTS
CHAPTER TITLE PAGE NO

EXCUTIVE SUMMARY

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INTRODUCTION
I 1.1 Objective of the study 1.2 Importance of the study

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LITERATURE REVIEW
2.1 Industry Overview 2.2 Industry Definition & Supply chain II 2.3 Passenger vehicle in India 2.4 Key Statistics of small car industry 2.4.1Product 2.4.2 Sales 2.4.3 Exports III 9 9 18 19 21 36

RESEARCH METHODOLOGY
3.1 Research Methodology Used 44

ANALYSIS AND INTERPRETATION
4.1 Market Analysis 4.1.1 Market Characteristics IV 4.1.2 International Market 46 46 48 57 4.2 Fundamental Analysis 4.2.1 Economy 4.2.2 GDP and Small car Industry 65 65 65

FINDINGS OF THE STUDY
5.1 Assessment of Threats & opportunities
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5.1.1Five Forces Model 5.1.2PEST Analysis 5.1.3BCG Matrix 5.1.4Industrial Life Cycle 5.1.5 SWOT Analysis 5.2 5.3

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Comparative study of Some Major Players
6.1 Introduction-TATA Motors 6.1.1 Analysis of TATA Motors VI 6.1.2 Porter’s Five forces Analysis 6.1.3 SWOT Analysis 6.1.4 BCG Matrix 6.2 Introduction-General Motors 6.2.1 Analysis of General Motors 6.2.2 Porter’s Five Forces Analysis VII
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RECOMMENDATION CONCLUSION BIBLIOGRAPHY

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VIII IX

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EXECUTIVE SUMMARY
The automobile industry today is the most lucrative industry. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 38% per annum in June 2010-11 over the corresponding period in the previous year. Further competition is heating up in the sector with a host of new players coming in and other like Porsche, Bentley, Audi, and BMW all set to venture in the Indian markets. The automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand. The Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub. A detailed analysis of Small car industry has been covered in respect of past growth and performance. Under this project to better understand the Industry we have used Fundamental and Technical tools to make it more authentic and meaningful. An approach has been followed under Fundamental Analysis which covered effect of Recession, the impact of inflation, FDI’s, Export, GDP etc. on Small car Industry. The Industry Analysis has been done with the help of five forces model, BCG Matrix, SWOT analysis, industry life cycle. For assessment of threats and growth opportunities of Indian Small car industry with reference to foreign small car industry we have discussed some cases that shows the threat & oppurtunities to Indian Market. At the end conclusion have been specified so as to make the research work more meaningful and purposeful.

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CHAPTER I INTRODUCTION

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INTRODUCTION
The car industry was born in Germany more than 100 years ago. Early development of the industry began in France in the 1900s. It was in America that the industry came of age thanks to Henry Ford, who introduced the assembly line production system. The car industry pioneered many innovative business practices. For example, the industry introduced the concept of "planned obsolescence," i.e. frequent changes in design to induce customers to switch to a new model every other year. At the same time, by virtue of its sheer size and ubiquity, the industry attracted wide public attention. In the 1960s, consumer activist Ralph Nader attacked the safety record of the 'Big Three' Detroit manufacturers, General Motor, Ford and Chrysler. In the 1970s, as oil prices quadrupled, the industry found itself under attack from environmentalists. The industry also attracted government scrutiny on account of safety concerns, antitrust worries (in the days when General Motors had 60% share of the US market) and pollution. But in view of its size and the number of jobs it created, the industry continued to receive strong government support. When small, fuel efficient and reliable Japanese cars started to eat into the market share of the Big Three, the American government resorted to protectionism. India’s automobile sector consists of the passenger cars and utility vehicles, commercial vehicle, two wheelers and tractors segment. The total market size of the auto sector in India is approximately Rs 540 billion and has been growing at around 8 percent per annum for the last few years. Since the last four to five years, the two wheelers segment has driven the overall volume growth on account of the spurt in the sales of motorcycles. India is the second largest manufacturer of two-wheelers in the world. It stands next only to Japan and China in terms of the number of two-wheelers produced and sold respectively. India is one of the very few countries manufacturing three wheelers in the world. It is the world's largest manufacturer and seller of three-wheelers. Following India's growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the 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 2011. In 2011, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result
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monthly sales of passenger cars in India exceeded 100. Several Indian automobile manufacturers such as Tata Motors.of increased competitiveness and relaxed restrictions. In February 2011. India's robust economic growth led to the further expansion of its domestic automobile market which attracted significant India-specific investment by multinational automobile manufacturers. expanded their domestic and international operations. Maruti Suzuki and Mahindra and Mahindra. 7 .000 units.

Secondary data from the internet has been used for effective analysis. which may be beneficial for many purposes like for investment purpose. 8 . The present market scenario was analyzed and future demands forecasted using research techniques.2 Importance of Study The importance of this study is to practically understand the relevance of the concepts about the industry or to do well in the business organisations and here in the realm of the automobile industry. The main objectives of the Project study are: • Detailed analysis of Small carindustry which is gearing towards international standards • Analyze the impact of qualitative factors on industry’s and company’s prospects • Comparative analysis of Some major players of small car Industry.1 Objective of the study The objective of this project is to deeply analyze our Indian Small car Industry. Also. for knowing the growth trend for better growth as well as the study of opportunities and threats from foreign industries. a comprehensive study of the major factors involved in this market was conducted so as to see how different and similar a market structure is from the theories. 1.1.

CHAPTER II LITERATURE REVIEW 9 .

but in very small numbers.In cars.000 units[23] and has since grown rapidly to a record monthly high of 182. trucks.[19] The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors. and tractors to the multi utility vehicles. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant Indiaspecific investment by multinational automobile manufacturers.[21] In the 1980s. but the growth was mainly driven by tractors. However. India has already become one of the fastest growing automobile markets in the world. In tractors. commercial vehicles and the luxury 10 .Literature Review 2. it was between a Swaraj and a Mahindra. automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.992 units in October 2009.[22] In February 2009. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. equally to policy planners. a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercialvehicles. Until the 1930s. It is a tale of exciting multiplicity. This is a tribute to leaders and managers in the industry and. automobiles came largely in twos. in 1947.[26]Congestion of Indian roads. Cars were still a major luxury. Starting from the two wheelers. In scooters.[27] SIAM is the apex industry body representing all the vehicle manufacturers.7%. In trucks. cars were imported directly. will likely be the limiting factor. the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. A number of foreign firms initiated joint ventures with Indian companies. expanded their domestic and international operations. [24] From 2003 to 2010. the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions.[20] Following the independence. the automotive industry started to grow. you had a Lambretta or a Vespa. in India. monthly sales of passenger cars in India exceeded 100. a number of Indian and multi-national car companies launched operations.all within a few years. It is standing on the doorsteps of a quantum leap. Automobile industry has written a new inspirational tale. unparalleled growth and amusing consumer experience . Since then. This situation reflected the India of yester years.In motorcycles. The Indian automobile industry is going through a technological change where each firm is engaged in changing its processes and technologies to maintain the competitive advantage and provide customers with the optimized products and services. it was either an Ashok Leyland or a Tata. Several Indian automobile manufacturers such as Tata Motors. and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example)[25] this progression is unlikely to stop in the coming decade. you had a Bullet or a Java. home-grown and international. and began assembly of Jeep CJ-3A utility vehicles under license from Willys. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars.1 Industry overview The first car ran on India's roads in 1897. commercial vehicles and scooters. Mahindra & Mahindra was established by two brothers as a trading company in 1945. Following the economic liberalisation in 1991 and the gradual weakening of the license raj. The automobile industry has the opportunity to go beyond this remarkable achievement. After 1970. you had to choose between an Ambassador and a Fiat. Maruti Suzuki and Mahindra and Mahindra. more than market demand. the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. Economic reforms and deregulation have transformed that scene. Embryonic automotive industry emerged in India in the 1940s. car sales in India have progressed at a CAGR of 13.[28] During early 60s & 70s.[21] Following economic liberalization in India in 1991.

By AT Kearney's FDI Confidence Index 2006. automobile industry has a strong multiplier effect and is capable of being the driver of economic growth.vehicles. scooters. the Indian automobile industry has achieved splendid achievement in the recent years. The automotive sector is one of the core industries of the Indian economy. whose prospect is reflective of the economic resilience of the country. "The auto industry is just a multiplier. mopeds. A sound transportation system plays an essential role in the country's rapid economic and industrial development. for investment. "The opportunity is staring in your face. It comes only once. Eye-Catching FDI Destination . The automobile sector has been contributing its share to the shining economic performance of India in the recent years. light. multi-utility vehicles such as jeeps. Due to its deep frontward and rearward linkages with several key segments of the economy. The automotive sector in India is growing at around 18 per cent per annum. tractors etc. motorcycles.INDIA! India is on the peak of the Foreign Direct Investment wave. medium and heavy commercial vehicles. The domestic auto components consumption has crossed rupees 9000 crore and an export of one half size of this figure. With the Indian middle class earning higher per capita income. a driver for employment. auto industry maintains a high-flying place. more people are ready to own private vehicles including cars and two-wheelers. If you miss it. Continuous economic liberalization over the years by the government of India has resulted in making India as one of the prime business destination for many global automotive players. Side by side with fresh vehicle sales growth. This may also happen as China attempts to cool the 11 . India is the second most attractive FDI destination after China. The well-developed Indian automotive industry skillfully fulfils this catalytic role by producing a wide variety of vehicles: passenger cars. It is commonly believed that soon India will catch up with China. pushing the US to the third position. for technology" The Indian automotive industry started its new journey from 1991 with delicensing of the sector and subsequent opening up for 100 per cent FDI through automatic route. you will not get it again" On the canvas of the Indian economy. the automotive components sector has witnessed big growth. Product movements and manned services have boosted in the sales of medium and sized commercial vehicles for passenger and goods transport. FDI flows into India trebled from $6 billion in 2007-08 to $19 billion in 2009-10 and are expected to quadruple to $25 billion in 2010-11. three wheelers.

the lead players are the US. surpassing all its competitors by a big margin. Singapore and the UK. China may be losing its edge as a low-cost manufacturing hub. India offers a potential for higher growth. Korean auto-makers think India is a better destination than China. India is up-and-coming a significant manufacturer. In a bid to drive greater investments into the sector.4 per cent respectively. The idea is to draw an innovative plan of action with full participation of the stakeholders and to implement it in mission mode to meet the challenges coming in the way of growth of industry. The manufacturing sector in the Index for Industrial Production has grown at an annual rate of over 9 per cent over the last three years. known for knowledge-based industries. the key player is Japan. Japan accounted for about 41 per cent of the total FDI in automobile. The total investment from these three countries accounted for about 40 per cent of the FDI in the services sector. automobiles and auto-parts. Though China provides a bigger market for automobiles. In automobiles. ministry of heavy industries has decided to put together a 10-year mission plan to make India a global hub for automotive industry. Clearly. especially of electrical and electronic equipment. manufacturing and service-led growth and the increasing consumerisation makes India one of the most important destinations for FDI. During 2005-2010 of the total FDI inflow. Hitherto. electrical and electronic (including computer software) and automobile accounted for 13. With rising wages and high land prices in the eastern regions. India is emerging a powerhouse of conventional manufacturing too. India's vast domestic market and the large pool of technically skilled manpower were the magnetism for the foreign investors.7 per cent and 8.economy and its protectionism measures that are eclipsing the Middle Kingdom's attractiveness. In services sectors. Automotive Mission Plan 2016 The bumper-to-bumper traffic of global automobile biggies on the passage to India has finally made government sit up and take notice. Major players in the automobile sector are:  Tata 12 . India seems to be the natural choice. Through this Automotive Mission Plan."The ten year mission plan will also set the roadmap for budgetary fiscal incentives" The Government of India is drawing up an Automotive Mission Plan 2016 that aims to make India a global automotive hub.Government also wants to provide a level playing field to the players in the sector and to lay a predictable future direction of growth to enable the manufacturers in making a more informed investment decision.

The car. rivaling Thailand. Russia.have indicated that their manufacturing facilities will be used as a global source for small cars.             Mahindra Ashok Leyland Bajaj Hero Honda Daimler Chrysler Suzuki Ford Fiat Hyundai General Motors Volvo Yamaha Mazda Foreign Companies in the Indian auto-sector Until the mid-1990s. This global car is crucial for Toyota. which is looking to improve its sales in the BRIC (Brazil. too. General Motors. some of the global majors moved in and Hyundai. high-quality manufacturing. The spurt in in-house product development skills and the 13 . Nevertheless. automobile industry in India consisted of just a handful of local companies with small capacities and obsolete technologies. Ford and Mitsubishi set up their manufacturing bases. Toyota. India has also emerged as a significant outsourcing hub for auto components and auto engineering design. India. multi-utility vehicles (MUVs). China) markets. India is expected to be the small car hub for Japanese major Toyota. commercial vehicles and two-wheelers and a robust growth in the production of all kinds of vehicles. Moreover. owing to its low-cost. Over the past four to five years. Two multi-national car majors -. Honda. a hot hatch like the Swift or Getz is likely to be exported to markets like Brazil and other Asian countries. the country has seen the launch of several domestic and foreign models of passenger cars. German auto-maker Volkswagen AG.Suzuki Motor Corporation of Japan and Hyundai Motor Company of Korea -. is looking to enter India. after the sector was thrown open to foreign direct investment in 1996.

Evidently. Meanwhile M&M's Scorpio has beaten back the challenge from Toyota's Qualis to lead the SUV segment. Toyota and GM. Tata Motor's Indigo leads the popular customer category. Indian players are still lacking in scale of operation. International automobile majors. M&M adapted available systems and off-the-shelf components from global suppliers to keep costs down and go for aggressive pricing. As the automobile industry has matured over the past decade. For instance. The domestic tooling industry bagged the order for the Toyota Kirloskar transmission plant in the face of stiff competition from multinational corporations. True. the auto components industry has also grown at a rapid pace and is fast achieving global competitiveness both in terms of cost and quality. Indian players have learnt from past mistakes and developed the skills to build cheaper automobiles using `appropriate' technologies.000 to fine-tune home-grown engines rather than $1. for instance. Similarly. a few Indian winners have emerged in the motorbike market -. Ford. such as Hyundai. While economies of scale no doubt play an important role in the auto sector. They are no longer afraid of competition from the international auto majors. a few Indian manufacturers relied on innovation rather than scale of operation for competitive advantage. which set up their bases in India in the 1990s.uniquely high concentration of small cars will influence the country's ability to become a sourcing hub for sub-compact cars. Sundram Fasteners was able to achieve the feat of directly supplying radiator caps to General Motors purely on the strength of innovation in product quality.5 million to import the entire engine. industry observers believe that while the automobile market will grow at a measured pace. The 93 cc Bike from Bajaj and 110 cc Freedom bike from LML have also emerged as winners. 14 . The cost of the entire job turned out to be only a fraction of the original estimate. today. persuaded some of their overseas component suppliers to set up manufacturing facilities in India. For instance. For it is among the handful of industries where India has a distinct competitive advantage. A heartening feature of the changing automobile scene in India over the past five years is the newfound success and confidence of domestic manufacturers. Similarly. the components industry is poised for a take-off. paid an overseas source $100.the 150 and 180 cc Pulsar from Bajaj and 110 cc Victor from the TVS stable. In fact. while its Indica is neck-to-neck with Hyundai's Santro in the race for the top-slot in the B category. TVS.

Not surprisingly. According to analysts.Consequently. the auto component industry could emerge as the next success story after software.800 crore in 2003-04 from just Rs 1. the industry's exports registered a more than four-fold jump to Rs 4. thus. In the longer term. soon realised the substantial cost advantage of manufacturing components in India. Automobile majors such as Maruti Udyog.640 crore at end-2003-04 from just Rs 11. The survey said many executives believe that India's cost advantage is grinding down fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult. Indian auto businesses will only flourish if they boost investments in automation. Finding the cost lower by about 30 per cent.033 crore in 1996-97. This is the way to preserve our low cost. 15 . that followed Ford Motors in 1998.000 crore per annum. cost advantage will only be retained if Indian capital can be used to develop lowcost automation in manufacturing. they began exploring the possibility of exporting back these low-cost. and Visteon. reducing their overall costs. McKinsey's latest report has estimated that the sector has the potential of increasing its exports to $25 billion by 2015 from $1. high-quality components to their global factories and. Toyota. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate. which followed General Motors in 1995.1 billion in 2004. the value of cumulative output of the auto components industry rose rapidly to Rs 30. A survey conducted by the research. According to the Automotive Component Manufacturers Association of India (ACMA) officials. BPO and textiles. pharmaceuticals. auto component manufacturers are expected to invest about Rs 10. Threat to the Dream! India's expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. Foreign companies such as Delphi. Against this backdrop.000 crore over the next five years at the rate of Rs 2. The size of the global auto component industry is estimated at $1 trillion and is set to grow further. Hyundai have now finalised their plans to invest in some of the critical auto components.475 crore in 1996-97. KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming skeptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising.

and its life cycle stage is growth. With a high cost of developing production facilities. and increasing competition. this is rapidly changing and both exports and imports are increasing. This is not about tax rates it is just about unnecessary complexity. infrastructure and price of fuel. On the other hand. the rate of change in technology has been medium. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. India has a well-developed tax structure. The demand determinants of the industry are factors like affordability. limited accessibility to new technology. Commercial vehicles and three-wheelers share about 9% of the market between them. The level of technology change in the Motor vehicle Industry has been high but. In spite of this there are opportunities to exploit lower costs right across the board. The power to levy taxes and duties is distributed among the three tiers of Government.???The supply chain is similar to the supply chain of the automotive industry in Europe and America. the barriers to enter the Indian Automotive sector are high. the level of trade exports in this sector in India has been medium and imports have been low. Major players. but the profitability of motor vehicle manufacturers has been rising over the past five years.5 million each year. The Indian Automobile Industry manufactures over 11 million vehicles and exports about 1. The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model now. However. all the advantages of this sector in India are yet to be leveraged. India taxation remains a big disadvantage.Global auto majors are also cynical about India's low cost manufacturing base. But some companies also believe there is scope for reducing the cost of doing business. product innovation. With a rapidly growing middle class. The cost structure of the industry is fairly traditional. Low-cost base can never last long. Also. It's true that labour costs are definitely increasing but they are still five per cent of the total operational costs.Interestingly. like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. the basis of competition in the sector is high and increasing. Investment in the technology by the producers has 16 .

and capital efficiency. customer sentiment dropped. Hero MotoCorp is occupying over 41% and sharing 26% of the two-wheeler market in India with Bajaj Auto. Over the past few years. Currently. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. The first car ran on India's roads in 1897. which burned on the augmentation in demand of cars. the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. Mahindra & Mahindra was established by two brothers as a trading company in 1945. However. labour flexibility. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. and began assembly of Jeep CJ-3A 17 . Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. and raw material availability also play a major role. In 2008-09. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. cars were imported directly. India's increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry. Bajaj Auto in itself is occupying about 58% of the three-wheeler market. further investment in new technologies will help the industry be more competitive. but in very small numbers. Industry and Indian Government are obligated to intervene the Indian Automobile industry. Having quality manpower. The key to success in the industry is to improve labour productivity. infrastructure improvements. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer.Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. create favourable and predictable business environment.Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Until the 1930s. The Indian government should facilitate infrastructure creation. With a combined effort. the industry has been volatile.been high. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. attract investment and promote research and development. Both. Embryonic automotive industry emerged in India in the 1940s.Consumers are very important of the survival of the Motor Vehicle manufacturing industry. System-suppliers of integrated components and sub-systems have become the order of the day.

Several Indian automobile manufacturers such as Tata Motors. A number of foreign firms initiated joint ventures with Indian companies. in India. automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands. Cars were still a major luxury. home-grown and international. but the growth was mainly driven by tractors. Maruti Suzuki and Mahindra and Mahindra. Congestion of Indian roads. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. in 1947. Following the economic liberalisation in 1991 and the gradual weakening of the license raj. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog.utility vehicles under license from Willys. Following economic liberalization in India in 1991. 18 .7%. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers. In February 2009. Since then.000 units and has since grown rapidly to a record monthly high of 182. the automotive industry started to grow.992 units in October 2009. However.[24] From 2003 to 2010. monthly sales of passenger cars in India exceeded 100. the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. SIAM is the apex industry body representing all the vehicle manufacturers. the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. will likely be the limiting factor. more than market demand. a number of Indian and multi-national car companies launched operations. Following the independence. car sales in India have progressed at a CAGR of 13. commercial vehicles and scooters. In the 1980s. After 1970. a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example) this progression is unlikely to stop in the coming decade. expanded their domestic and international operations. The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.

Utility Vehicles & Multi Purpose Vehicles) Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles) Two Wheelers Three Wheelers. 19 .2 Industry Definition This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines.Products and Services The primary activities of this industry are: Motor cars manufacturing Motor vehicle engine manufacturing The major products and services in this industry are: Passenger motor vehicle manufacturing segment (Passenger Cars.2.

e. Some of their services may include welding. fabrication. shearing. Third Tier Suppliers: These companies provide basic products like rubber. from the consumers and go through the automakers and climbs up until the third tier suppliers. However the products. flow from the top of the supply chain to reach the consumers. 20 . as channeled in every traditional automotive industry. Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. steel. The description and the role of each of the contributors to the supply chain are discussed below. They work on designs provided by the first tier suppliers or OEMs. The orders of the industry arise from the bottom of the supply chain i. glass.3 The supply chain of automobile industry The supply chain of automobile industry in India is very similar to the supply chain of the automotive industry in Europe and America. They also provide engineering resources for detailed designs. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry.. bending etc.2. plastic and aluminum to the second tier suppliers.

First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard. Examples of these companies are Tata Motors. Innovation. Maruti Suzuki. design capability and branding are the main focus of these companies. The design process normally takes five years. seats. customers can also choose to go to independent service providers. Black-box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. 21 . Dealers: Once the vehicles are ready they are shipped to the regional branch and from there. breaks-axle-suspension. Parts and Accessory: These companies provide products like tires. Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers' wants and needs. Many dealers provide these services but. Automakers are the key to the supply chain of the automotive industry. and Honda. Toyota. The dealers then sell the vehicles to the end customers. automakers begin designing models which are tailored to consumers' demands. repairing parts. Service Providers: Some of the services to the customers include servicing of vehicles. to automakers and dealers or directly to customers. They design and innovate to provide "black-box" solutions for the requirements of their customers. windshields. or cockpit but also for the management of second-tier suppliers. to the authorised dealers of the companies. or financing of vehicles. These companies have global coverage to follow their customers to various locations around the world. and air bags etc.

332.175.86 3.220 17.25 2008 1.2.330 -4.814.783 33.641.999 10.10 2.550 13.20 2.89 2009 2.39 722.277 -9.35 2007 1.33 540.328 3.253.199 54. % Change 2010 2.250 -1.051 7.83 466.39 22 .4 Key statistics The production of automobiles has greatly increased in the last decade. Year Car Production % Change Commercial % Change Total Vehicles Prodn.846.713.479 16.584 29.536.74 486.99 2.

27 362.157 23.628.743.58 801360 -2.161.354 29.930 11.808 50.379 26.403 -0.803 31.00 1.175.044 818193 Year 20062007 20072008 20082009 20092010 20102011 Motor Vehicle Production 8. % Change 2006 1.178.969 30.52 814611 1.10 2004 533.86 1.555 32.78 332.85 283.342* 23 .53 546.55 190.054 -43.853 9.957 -2.473.467.755 9.997 10.853.149 285.22 2009 1.848 19.264.24 894796 8.968 28.74 2.Year Car Production % Change Commercial % Change Total Vehicles Prodn.25 1.000 16.019.98 253.13 2008 907.62 2005 517.503 11.511.948 7.383 33.557 26.507 32.479 Industry Million Revenue USD 24.37 160.96 2006 654.96 2007 703.755 7.087.523 22.000 7.808 19.36 2010 1.

445 434.008 3.838.979 1.777.030 Two Wheelers 6.143.076 1.853 9.530.572 1.238.209.997 10.697 Commercial Vehicles 353.467.853.333 1.126 500.529.876 1.544 806.660 Exports (Revenue) 1.718* Automobile Production Type of Vehicle 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Passenger Vehicles 1.087.626 Total.552 3.503 11.681 8.479 Automobile Sales Type of Vehicle 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Passenger Vehicles 1.126 Three Wheelers 374.223 1.006 417.880 24 .703 391. 8.882 1.309.026.697 8.175.930 11.231 2.379.061.829 7.549.982 549.545.666 8.423 556.915 2.Year 20062007 20072008 20082009 20092010 20102011 Exports (Units) 629.743.011.418.300 1.529 1.466.583 1.551.608.660 501.222 1.083 519.

910 364.529 1.225 148. commercial vehicles and three-wheelers.222 1.011.391 7.673 Three Wheelers 66.435 9. two-wheelers.629 8.896 141.437.572 198.544 806.654.920 403.452 218.537 58.881 143.713 1.174 Total 629.402 175.795 76.169 619. More 25 . with two-wheelers dominating the market.278 7.862 359.530.122 Three Wheelers 307.391 Automobile Exports Type of Vehicle 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Passenger Vehicles 166.765 490.494 384.407 513.430 351.401 335.600 49.074 Two Wheelers 366.670 Total 7.123.988 9.333 1.765 7.428 10.660 Product and service segmentation The automotive industry of India is categorised into passenger cars.897.041 467.249.994 42.238.334 7.004.739 Commercial Vehicles 29.940 40.052.906.719 Two Wheelers 6.723.781 349.209.Type of Vehicle 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Commercial Vehicles 318.644 819.872.

98 Total Passenger Vehicles (%) 13.65 12.79 Passenger Carriers (%) 0.39 Multi Purpose Vehicles (MPVs) (%) 0.19 2.15 2. Commercial vehicles are categorised into heavy. Segment 200607 200708 200809 200910 201011 Passenger Car (%) 10.25 13. hatchback. station wagon and sports cars fall under passenger cars.75 0. They account for about 5% of the market. The passenger vehicles manufacturing account for about 15% of the market in India.23 2.87 0. and are designed for maximum interior room. Mopeds occupy a small portion in the twowheeler market however.83 13.22 10.82 0. hatchback or a station wagon.than 75% of the vehicles sold are two-wheelers.18 2.01 2.01 2.a leading automaker of India. Utility vehicles are designed for specific tasks. electric two-wheelers are yet to penetrate. manufactured by Tata Motors .32 0. Three-wheelers are categorised into passenger carriers and goods carriers. Multi-purpose vehicles or people-carriers are similar in shape to a van and are taller than a sedan. Three-wheelers account for about 4% of the market in India.42 Utility Vehicles (UVs) (%) 2. Tata Nano. The passenger vehicles are further categorised into passenger cars.82 0.43 Goods Carriers (%) 2.44 2.28 0.39 9.44 12.18 2. All sedan. Nearly 59% of these two-wheelers sold were motorcycles and about 12% were scooters. medium and light.32 0.10 26 .65 15. utility vehicles and multipurpose vehicles.91 10.36 0. is the world's cheapest passenger car.

57 Motorcycles/Step-Throughs (%) 61.67 1.24 64.36 1.52 1.52 4.74 3.03 3.28 0.63 Passenger Carriers (%) 2.47 Electric Two Wheelers (%) - - - 0.65 1.19 27 .25 0.56 2.73 1.82 4.35 Mopeds (%) 4.07 0.61 1.Segment 200607 200708 200809 200910 201011 Total Medium & Heavy Commercial Vehicles[18] (%) 2.39 2.83 59.01 11.17 1.45 1.34 2.90 4.65 1.73 2.77 Total Light Commercial Vehicles (%) 1.51 Total Three Wheelers[18] (%) 4.00 4.27 1.17 3.63 4.53 Passenger Carriers (%) 0.86 65.01 Scoters/Scooterettee (%) 13.32 Goods Carriers (%) 1.37 2.61 1.51 Goods Carriers (%) 1.52 4.24 0.90 2.33 2.51 2.21 9.31 11.25 0.04 4.10 Total Commercial Vehicles[18] (%) 3.08 3.24 62.94 4.17 2.68 10.

57 Grand Total (%) 100.Segment 200607 200708 200809 200910 201011 Total Two Wheelers (%) 78.599 721 3.00 100.00 100.73 75. Tata Motors with the launch of Tata Nano is trying to attract some of these two-wheeler buyers to buy a small. Jeeps and Taxis '000) (in All Year Vehicles (in '000) Two Wheelers (in '000) Buses (in '000) Goods Vehicles (in '000) Other Vehicles (in '000) 2004 54.00 100. about 14% and over 14 million are cars.00 100.63 79. Total Number of Vehicle Registrations in India from 2004 to 2011 Cars.676 28 . This is a growth of about 100% in the past 9 years.613 635 2.991 38.519 8. jeeps and taxis.00 Vehicle Registration India had over 100 million vehicles registered on its roads in the year 2008.007 47. Over 5 million and over 1 million vehicles registered are goods vehicles and buses respectively.948 5.76 78.18 77. cheap and affordable passenger car. Two-wheelers account a significant market share.556 7.058 634 2.974 6.581 7.492 6.924 41. Over 77% and about 77 million of these vehicles are twowheelers.121 2006 67.795 2005 58.

018 9.810 936 4.451 768 3.922 9. the central government unveiled the standards titled 'India 2000' in 2000 with later upgraded guidelines as 'Bharat Stage'.487 11. Delhi(NCR).All Year Vehicles (in '000) Two Wheelers (in '000) Cars.591 77. Mumbai.464 2011 106.891 2010 96.718 51. and Agra are the 13 cities where Bharat Stage IV has been imposed while the rest of the nation is still under Bharat Stage III. Bangalore. Solapur.588 14. Ahmedabad.345 7.571 879 4. Chennai.003 5.808 70. Geographic Segmentation 29 .053 7. Kolkata.749 6.222 1.068 63. These standards are quite similar to the more stringent European standards and have been traditionally implemented in a phased manner.065 Emission norms In tune with international standards to reduce vehicular pollution. Pune.337 2009 88. Jeeps and Taxis '000) (in Buses (in '000) Goods Vehicles (in '000) Other Vehicles (in '000) 2007 72. Hyderabad.141 12. Kanpur. in the rest of the nation.828 2008 80.652 8. with the latest upgrade getting implemented in 13 cities and later.045 57. Lucknow. Surat.417 10.460 822 4.

086 Bihar 949 1. Maharashtra had over 13 million.389 5. Geographical Segmentation: State-wise motor vehicles registration in India from 2004 – 2011.042 8.446 7.591.232 8. 2004 States\Year (in '000) 2006 (in '000) 2008 (in '000) 2010 (in '000) 2011 (in '000) 2005(in '000) 2007(in '000) 2009(in '000) Andhra Pradesh 1111 4. Tamil Nadu had about 16 million new vehicles registered.The total number of new vehicles registered in the 28 states and 7 union territories of India in the year 2008 were about 106.024 1.989 Arunachal Pradesh 21 21 21 21 21 21 21 21 Assam 542 596 657 727 798 883 973 1.002 5.121 751 726 694 647 593 Chhattisgarh 857 948 1. or a car. Details of category wise new vehicle registrations in the various states and union territories are displayed. About 16 states and 1 union territory had over a million new vehicles registered.536 1. The diagram above displays the registration of new vehicles in various states and union territories.076 1.726 1.216 1. About 91% of these vehicles are non-commercial vehicles purchased by households looking for a twowheeler.720 6. The number of new vehicles registrations has grown by about 66% in the past five years. and Gujarat had over 10 million.939 30 . Only about 9% of new vehicles registered are used for commercial purposes.367 1.

338 4.552 2.633 10.689 4.785 9.036 5.112 2.087 7.281 12.792 3.630 1.122 2.479 1.315 2.804 4.760 7.180 3.968 Maharashtra 6.817 31 .564 Madhya Pradesh 3.710 4.008 6.341 1.977 4.164 Himachal Pradesh 217 244 269 289 329 375 421 480 Jammu Kashmir & 330 364 399 439 493 556 628 719 Jharkhand 909 984 1.477 13.267 3.576 6.537 3.414 8.2004 States\Year (in '000) 2005(in '000) 2006 (in '000) 2007(in '000) 2008 (in '000) 2009(in '000) 2010 (in '000) 2011 (in '000) Goa 341 366 397 436 483 537 585 638 Gujarat 5.442 4.738 3.119 4.636 3.101 1.949 2.548 2.892 8.217 1.360 Kerala 2.508 7.796 Karnataka 3.612 4.969 10.543 Haryana 1.279 2.055 11.717 5.883 3.459 3.034 4.095 3.173 3.134 8.

943 3.159 2.207 Tripura 50 57 66 76 85 95 105 117 Uttarakhand 364 406 457 516 580 651 732 822 Uttar Pradesh 4.197 3.2004 States\Year (in '000) 2005(in '000) 2006 (in '000) 2007(in '000) 2008 (in '000) 2009(in '000) 2010 (in '000) 2011 (in '000) Manipur 77 90 97 106 114 123 134 145 Meghalaya 62 67 73 73 78 84 89 95 Mizoram 31 34 37 42 48 54 61 70 Nagaland 160 177 162 172 186 201 215 230 Orissa 1.525 1.571 4.575 10.921 5.529 3.359 1.171 5.791 5.936 2.860 16.281 5.910 3.225 4.970 9.815 Sikkim 12 13 15 17 19 21 23 25 Tamil Nadu 5.096 1.285 4.308 3.928 6.717 1.658 8.215 1.901 13.487 3.992 Rajasthan 2.144 8.162 5.417 Punjab 2.085 11.005 8.103 3.460 7.919 32 .271 8.834 4.859 4.

971 4.816 3.2004 States\Year (in '000) 2005(in '000) 2006 (in '000) 2007(in '000) 2008 (in '000) 2009(in '000) 2010 (in '000) 2011 (in '000) West Bengal 1.690 1.464 3.366 2.690 2.237 4.699 3.138 3.166 5.635 3.833 Andaman Nicobar Islands & 25 28 28 28 31 34 38 42 Chandigarh 386 386 562 586 629 677 732 799 Dadra & Nagar Haveli 13 13 31 35 43 54 67 86 Daman & Diu 37 41 44 48 55 63 71 79 Delhi 3.868 5.548 2.544 4.469 Lakshadweep 4 5 5 5 6 7 7 8 Pondicherry 252 270 293 313 359 418 495 552 33 .

896 75.74 416.588 Light Motor Vehicles (goods) - 7.893 408 4.665.283 (passenger) Total Commercial 3.829 75.439 5.712 - 1.046 Two Wheelers 21.421 Light Vehicles Motor 784 500 890 20.978 235.459 1.881 30.601 6.438 34 .198 11.239 154 361 36.487 1.542 7.831 Taxis 436 1.190 1.923 Buses 459 1.019 233.519 1.947 270 2.917 17.173 108 43 24. 750 3.21 2 678 17.351 2.671 5.Geographical Segmentation: Category-wise registration in Union Territories of India Andaman Type of Vehicle & Nicobar Chandigarh Islands Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry Multiaxled/Artic ulated Vehicles/Trucks & Lorries 1.059 - 1.

693 295.192.582 Others 461 - - 30 9.258 574.278 1.541 Total commercial non- 25.612 9.281 4.642 Jeeps 1.851 44 318 Trailers 67 - 46 124 99 - 1.545 Tractors 261 36 44 165 4.270 12.565 27.705 503 4.28 3 85 3.904 35 .693 157.386 5 2. 389 78 47.003.838 Omni Buses - - 6 38 8.000 43. 463 4.033 - 429 295 122.Andaman Type of Vehicle & Nicobar Chandigarh Islands Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry Cars 1.

Similarly. Fiat Motors also announced that it would source more than US$1 billion worth auto components from India. fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Nissan. Toyota. The cars will be manufactured both for the Indian market and for export. Nissan Motors plans to export 250. with United Kingdom being India's largest export market followed byItaly.5 billion in 2009. PSA's intention to utilise this production facility for export purposes however remains unclear as of December 2010.000 cars for US$500 million. The company said that the plant was a part of its plan to make India the hub for its global production business. General Motors announced its plans to export about 50.000 cars manufactured in India by 2011.Exports Mahindra Scorpio Jeep in service with the Italy's CNSAS.000 vehicles manufactured in its India plant by 2011. The Economic Times reported that PSA Peugeot Citroën was planning to reenter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100. In July 2010. According to New York Times. Netherlands and South Africa. Volkswagen and Suzuki. Hyundai Motors alone exported 240. In 2008. investing EUR 700M in the operation.000 vehicles. Germany. In September 2009. India's strong engineering base and expertise in the manufacturing of low-cost. India's automobile exports have grown consistently and reached $4.000 cars made in India. Ford Motors announced its plans to set up a plant in India with an annual capacity of 250. India's automobile exports are expected to cross $12 billion by 2014. 36 .

Korea (1. now ships more than 250. In 2009 India (0. Maruti Suzuki also manufactures small cars for Nissan. and is in preparation to launch electric vehicles in Europe in 2010.Poland. Apart from shipments to its parent Suzuki. In recent years. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U. The firm is also planning to launch an electric version of its low-cost car Nano in Europeand the U.16m) as Asia's fourth largest exporter of cars after Japan (1. the biggest exporter from the country. there are challenges that could thwart future growth of the Indian automobile industry. Tata Motors exports its passenger vehicles to Asian and African markets. Hyundai.12m) and Thailand (0. Top 20 Export destinations in 2010-2011 and growth from previous year 2009-2010 (in USD Millions) 2010-2011 (in USD Millions) Percentage Growth Rank Country 37 .23m) surpassed China (0. Nissan will also export small cars from its new Indian assembly line. market. industry growth will slow if the economy weakens.S. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. which will market the product worldwide. India has emerged as a leading center for the manufacture of small cars. which sells them in Europe.S.A Tata Safari on display in Poznan.000 cars annually from India. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes.77m). While the possibilities are impressive.26m) by allowing foreign carmakers 100% ownership of factories in India. which China does not allow.

74 17.86 20.24 -11.54 5.79 5 United Kingdom 165.14 216.8 11 Colombia 118.44 192.26 4 South Africa 224.99 10 Germany 133.Rank Country 2009-2010 (in USD Millions) 2010-2011 (in USD Millions) Percentage Growth 1 United States of America 593.11 -13.11 9 Egypt 134.68 8.32 48.34 265.21 7 Algeria 147.63 80.77 6 United Emirates Arab 164.71 1.63 206.64 525.52 2 Italy 332.57 246.57 -15.88 120.35 359.54 38 .52 409.22 3 Sri Lanka 249.93 188.26 164.28 8 Bangladesh 137.43 143.

63 15 Spain 81.19 163.05 20 Ghana 59.03 18 Greece 65.32 14 Turkey 83.74 125.10 0.66 151.91 38.75 127.33 98.01 148.01 56.86 13 Mexico 93.07 39 .80 94.82 -11.63 94.96 -29.30 -36.77 134.1 19 Netherland 65.69 16 France 76.53 73.83 17 Nigeria 66.21 74.13 -11.Rank Country 2009-2010 (in USD Millions) 2010-2011 (in USD Millions) Percentage Growth 12 Nepal 111.

Saab. SSC. Roadster 1. Aria Foreign automotive companies in India Vehicles manufactured or assembled in India Manufactured only in Chennai. Kia. India. Bolero. Hammer.Pagani. Jeepster. SsangYong. Scorpio. Grande. Safari.Mazda. Vista. Venture. Indica. Indigo.2. car-makers such as Alfa Romeo. Xenon.Citroën. RiO San Motors: Storm TataMotors:Nano. Lexus. Genio. Sailster Hindustan Motors: Ambassador ICML: Rhino Rx Mahindra: Major. Jeep.Caterham. McLaren. thei10 is one of Hyundai's best selling globally exported cars. Rockster. Peugeot. Spyker. GAZ and Proton are in varying stages of official introduction to the Indian automobile market. Cadillac. Xylo.5 Passenger vehicles in India This list is of cars that are officially available and serviced in India.SEAT Smart. Sumo.8S. Ariel. Daihatsu. Chrysler. 40 . Thar. Indian automotive companies        Chinkara Motors: Beachster. XUV500. Premier Automobiles Limited: Sigma. Manza.Acura. Verito. Lotus. Indigo CS. Infi niti. While other cars can be imported to the country at a steep 105% import duty. Zenvo.

General Motors India Chevrolet: Spark. A-star. Tavera. Maruti Suzuki. Innova. Fortuner. Opel only provides spare parts and vehicle servicing to existing Opel vehicle owners. Toyota Kirloskar: Etios Liva. Pajero. Sonata. S-Class. Jazz. WagonR. Koleos. Duster. X3. Nissan Motor India: Micra. Vento. i10. Accent. Aveo. Laura. Gypsy. Hyundai Motor India: Eon. a subsidiary of Japan's Suzuki Motor. Endeavour. (in collaboration with Hindustan Motors):[85] Lancer. Swift. Optra. Volkswagen India: Polo. Omni. Volkswagen Group Sales India: Audi India: A4. Alto. i20. Land Rover: Freelander 2 Maruti Suzuki: 800. City. E-Class. Ford India: Figo. Renault India: Pulse. Aveo U-VA. Beat. Estilo. A6. Fluence. Swift DZire. Škoda Auto India: Fabia. Etios. Civic. Accord. Mercedes-Benz India: C-Class. X1. Rapid. Cruze. Sunny. 41 . Ritz. Eeco. Honda Siel: Brio. Jetta. Linea. Verna. M-Class. As of 2011. Fiesta Classic. Passat. is the largest automobile manufacturer in India.                   BMW India: 3 Series. Evalia. Fiat India (in collaboration with Tata Motors): Grande Punto. Mitsubishi Cedia. Q5. 5 Series. Santro. Lancer Opel was present in India until 2006. Fiesta. Corolla Altis. SX4.Maruti Swift.

Maybach: 57 and 62. Hyundai: Santa Fe. Q7. M5. GL-Class. Carrera GT. Phantom Coupé. DBS. Maserati: Quattroporte. Rolls Royce: Ghost. 370Z. X6 GT. GranCabrio. Ferrari: California. Virage. TT. SLK-Class. DB9. Nissan: Teana. Continental Flying Spur. FF. Hummer H3. 599 GTB Fiorano. X5. Land Rover: Discovery 4. Chevrolet: Captiva. G-Class. Mulsanne. Mercedes-Benz: CL-Class. M3. A8. BMW: 5 Series GT. Porsche: 997. S8. 7 Series. Azure. CLS-Class. Kizashi. Jaguar: XF. Brooklands. XK. Gumpert: Apollo. Convertible. R-Class. MINI: Cooper.Vehicles brought into India as CBUs                           Aston Martin: Vantage. 42 . GT-R. GranTurismo. Mitsubishi: Montero. Bentley: Arnage. S4. Suzuki: Grand Vitara. R8. X6. SLClass. One-77. Boxster. Škoda: Yeti. Cayenne. Evo X. Continental M. RS5. Phantom Drophead Coupé. M6 and Z4. Aventador. Range Rover. X-Trail. XJ. Cooper S. Honda: Civic Hybrid. Phantom. Viano. Bravo. Rapide. Koenigsegg: CCX. CR-V. Fiat: 500. 458 Italia. CCXR. SLS. S6. Superb. Countryman. Agera. Range Rover Sport. Bugatti: Veyron. General Motors: Hummer H2. Audi: A7. Cayman. Panamera. 6 Series. Lamborghini: Gallardo. Outlander. Range Rover Evoque.

Tiguan. XC90. Volkswagen: Beetle.VE Commercial Vehicles limited . Volvo: S60. Daimler AG .5% owned by Sumitomo Group Kamaz Vectra . Land Cruiser Prado. Phaeton. S80.originally a JV between Ashok Motors and Leyland Motors. Camry.  Rosenbauer 43 .   Toyota: Prius. Commercial vehicles manufacturer in India Indian brands       Joint Venture Brands      VE Commercial Vehicles Limited .manufactures luxury coaches in India. which Daimler AG owns. Touareg. now 53. Ashok Leyland .manufactures BharatBenz. XC60.A JV between Volvo Groups & Eicher Motors Limited. a brand of trucks based on the Fuso and the Mercedes Benz truck platforms. now 51% owned by Hinduja Group Mahindra Navistar a 51:49 JV between Mahindra Force Hindustan Motors Premier Tata AMW Eicher Motors Group and Navistar International Swaraj Mazda originally a JV between Punjab Tractors and Mazda.A JV between Russia's KaMAZ and the Vectra Group Foreign brands      Volvo Tatra MAN Mercedes-Benz . Land Cruiser.

       Scania Iveco Hino DAF Isuzu Piaggio Caterpillar Inc. A discussion between the various stakeholders including Government. Toyota Kirloskar) are also involved in this task. The final contours of the policy will be formed after this set of discussions. Road Transport and Power are involved in developing a broad framework for the sector. Mahindra & Mahindra) and Mr Vikram Kirloskar (Vice-Chairman. Finance. Government has also proposed to set up a Rs 740 crore R&D fund for the sector in the 12th five year plan during 2012-17. Along with these ministries big auto industry names such as Mr Anand Mahindra ( Vice Chairman and Managing Director. The idea is to reduce the high cost of key imported components such as the battery and electric motor and develop such capabilities locally 44 . Electric car manufacturers in India       Ajanta Group Mahindra Hero Electric REVA Tara International Tata Electric vehicle and Hybrid Vehicle During April 2012 Indian Government has planned to unveil the roadmap for the development of the domestic electric and hybrid vehicles (xEV) in the country. industry and the academia is expected to take place during February 23-24]. Ministries such as Petroleum.

CHAPTER III RESEARCH METHODOLOGY 45 .

in the use of statistics questionnaire and controlled experimentation and in recording evidences sorting it out and interrupting it knowledge of research methodology plays a key role in project work.Primary Data or sources are original works of research or raw data which interpretation or pronouncements that represent an official opinion or position.Secondary Data are interpretation of primary data. This includes Encyclopedias. Secondary Data . There are many definitions of research design. Nearly all the reference material fall into this category.1 RESEARCH METHODOLOGY USED:- Types of Data Collected:There are two types of data collected. but no single definition imparts full range of important aspects. Primary sources are always the most authoritative because information has not been filtered or interpreted by a second party. 46 . magazine. They are Primary Data. apart from some guidance and overview about the industry from my friends and faculty. textbooks. Secondary Data: . encyclopedia and Car magazines and Internet.Not Much Primary data is given in this report. handbooks. The study of research methodology gives necessary training to the students in gathering information and necessary material related to their project and understanding the importance of the field work when necessary and training techniques for the collection of the appropriate to particular problem. news paper and articles and most news casts are considered secondary information sources.RESEARCH METHODOLOGY Research Methodology is a way of systematically solves the research problem. We have used the trend projection and exponential forecasting technique to predict the sales. It may be understood as a science of studying how research is done. . Primary Data: . It consists of series of action or necessary step to effectively carry out research and desired sequence of the step. We can say that research methodology has many dimensions to constitute a part of research methodology.Secondary data used in the project generally consist of internet. 3.

CHAPTER IV MARKET ANALYSIS 47 .

and product innovation. income. which is more than double the current contribution.75 trillion by 2020.9 billion. This translates into a contribution of 10% to 11% towards India's GDP by 2016. (INR 165. 48 . Also. Demand determinants Determinants of demand for this industry include vehicle prices (which are determined largely by wage. The projected size in 2016 of the Indian automotive industry varies between $122 billion and $159 billion including USD 35 billion in exports. The industry has attained a turnover of USD $35. The industry has provided direct and indirect employment to 13. Product Innovation is an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars.000 crores) and an investment of USD 10. scrapping rates. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars.4 trillion and is expected to grow to $3. making better vehicles available at affordable prices.MARKET ANALYSIS 4. the running cost of a vehicle (mainly determined by the price of petrol). increase in people with lesser dependency on traditional single family income structure is likely to add value to vehicle demand. material and equipment costs) and exchange rates. Allowing unrestricted Foreign Direct Investment (FDI) led to increase in competition in the domestic market hence.1 Market analysis of Industry 4.1 Market characteristics Market size The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. India's current GDP is about $1.1. Affordability: Movement in income determine the affordability of new motor vehicles. preferences. Demographics: It is evident that high population of India has been one of the major reasons for large size of automobile industry in India. Automobile industry is currently contributing about 5% of the total GDP of India.1 million people. interest rates.8 billion. Exchange Rate: Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption.

power. 49 . India's banking giant State Bank of India and Australia's Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. have experienced encouraging growth. when overall passenger car sales have run into problems. which are significantly more expensive in India than abroad due to high import taxes. roads. more fuel-efficient vehicles led to the launch of Tata Motor's Nano – one of the world's smallest and cheapest cars. demand for large cars declined in favour of smaller. The Indian unit of BMW had to raise capacity at its factory four times during 2011.Infrastructure: Longer-term determinants of demand include development in Indian's infrastructure. more fuel-efficient vehicles. and power units. the sales of luxury cars and SUVs. (Source: Silicon India) Price of Petrol: Movement in oil prices also have an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and the first half of 2008. and telecom industries. These investments have been made with an aim to generate long-term cash flow from automobile. The changing patterns in customer preferences for smaller. while sales of the high-end Jaguar Land Rover model owned by Tata Motors rose impr essively during a period when more affordable passenger car sales were experiencing a downturn. Surprisingly. India needs about $500 billion to repair its infrastructure such as ports.

3% of global automotive trade. Even with this rapid growth. Since then almost all global majors have set up their facilities in Indian taking the level of production from 2 million in 1991 to over 10 million in recent years. India's automotive exports constitute only about 0.53 million passenger and commercial vehicles. This is evident from the fact that even thought passenger and commercial vehicles have crossed the production figures of 2. The concept of attaining competitiveness on the basis of low cost and abundant labour. the Indian automotive industry's contribution in global terms is very low.28% of world production of 70.3 million in the year 2008. Research and development investment is needed for innovations which is the lifeline for achieving and retaining competitiveness in the industry. low interest rates and concessional duty structure is becoming 50 . Automotive industry is a volume-driven industry. The most important indices of competitiveness are productivity of both labour and capital. and certain critical mass is a pre-requisite for attracting the much-needed investment in research and development and new product design and development. yet India's share is about 3. Competition in this industry is increasing.1.4. The exports in automotive sector have grown on an average compound annual growth rate of 30% per year for the last seven years. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. Basis of Competition Competition in this industry is high. The export earnings from this sector are over USD 6 billion.2 International Markets International Markets Exports The level of trade export is medium The level of trade export is increasing International Markets Imports The level of trade import is low The level of trade import is increasing International Markets Analysis The Indian automotive industry embarked a new journey in 1991 with de-licensing of the sector and subsequent opening up for 100% foreign direct investment (FDI). favourable exchange rates.

A similar initiative is required for creating specialised institutions in automotive sector for education. As per Automotive Mission Plan 2006–2016 (2008). along with the rise in GDP. fairly well developed credit and financing facilities and local availability of almost all the raw materials at a competitive cost. promote domestic competition and stimulate innovation. not sustainable. Life Cycle Analysis General improvement in availability of trained manpower and good infrastructure is required for sustainable growth of the industry. availability of trained manpower at competitive cost. has emerged as one of the favourite investment destinations for the automotive manufacturers. communication and export infrastructure facilities. The government aims that with its policies its encourage growth. The auto industry has grown in the clusters of interconnected companies which are linked by commonalities and complementarities. The products manufactured by this industry are profitable. the Indian Government has launched a unique initiative of National Automotive Testing and R&D Infrastructure Project (NATRIP) to provide specialised facilities for Testing. Certification and Homologation to the industry. Keeping this in view. A greater emphasis is required on the development of the factors like innovation which can ensure competitiveness on a long-term basis. market oriented stable economy. India. training and development.inadequate and therefore. Life Cycle The life cycle stage is growth Life Cycle Reasons The market for manufacturing motor vehicles is consistently increasing. The Government is planning to create a National Level Specialises Education and Training Institute for Automotive Sector and to enhance the transportation. The Indian Government wants to create a policy environment to help companies gain competitive advantage. Companies have been consistently opening new plats and employing over the past five years. These advantages need to be leveraged in a manner to attain the twin objective of ensuring availability of best quality product at lower cost to the consumers on the one hand and developing and assimilating the latest technology in the industry on the other hand. Pune in West. Japanese and European manufacturers of motor vehicles have entered the market. Industry value added has been rising. Chennai in South. Jamshedpur-Kolkata in East and Indore in Central India. The major clusters are in and around Manesar in North. 51 . the Indian Government recognises its role as a catalyst and facilitator to encourage the companies to move to higher level of competitive performance. with a rapidly growing middle class .

that have considerable claims to new technology. Passenger Vehicles 16. it acquired the Daewoo Commercial Vehicles Company. South Korea's second largest truck maker. In 2005. through major spotlight on export of small cars. a reputed 52 . South Korea. Tata Motors acquired a 21% stake in Hispano Carrocera. Key Competitors Tata Motors Market Share: Commercial Vehicles 63. Some of the barriers that need to be overcome by a new entrant include: the cost of developing high volume production facilities to benefit from economies of scale. The relative large size of domestic market. has also emerged as an international automobile company.The contribution of automotive sector in the GDP of India is expected to double by 2016.and Three-wheelers. has already seen significant rationalisation of this industry. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market. with consolidated revenues of USD 14 billion in 2008-09. and the ability to gain access to technology of major operators. a business comprising the two British brands which was acquired in 2008.94%. together with high competition. Since first rolled out in 1954. Multi-Utility Vehicles. Tata Motors has winning products in the compact. and an excessive number of participants. The company is the world's fourth largest truck manufacturer. In 2004. Barriers to entry into automobile manufacturing activity are formidable. Thailand and Spain. and the world's second largest bus manufacturer with over 24. Tata Motors as has produced and sold over 4 million vehicles in India. Industry Conditions The automobile manufacturing sector is characterised by a high cyclical growth patterns. while also exporting these products to several international markets.000 employees. Tata Motors is the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004). Two.45% Tata Motors Limited is India's largest automobile company. Through subsidiaries and associate companies. midsize car and utility vehicle segments. high fixed cost and break-even point levels. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. Among them is Jaguar Land Rover. as the present incumbents include some of the largest multinationals. Tata Motors has operations in the United Kingdom. It is the leader in commercial vehicles and among the top three in passenger vehicles.

SX4 and Sports Utility vehicle Grand Vitara. to stylish hatchback Ritz. with the Xenon having been launched in Thailand in 2008. Maruti Suzuki India Market Share: Passenger Vehicles 46. is India's largest passenger car company. and in South Korea.000 engineers and scientists. the company's Engineering Research Centre. The standard version has been priced at USD 2. a global leader in bodybuilding for buses and coaches to manufacture fully built buses and coaches for India and select international markets. With over 3. Tata Motors created a new segment by launching the Tata Ace.100. In 2006. the Tata Nano. Hispano's presence is being expanded in other markets. a development which signifies a first for the global automobile industry. Tata Indica became India's largest selling car in its segment. In 2006. India's first indigenously developed mini-truck. Senegal and South Africa. India's first Sports Utility Vehicle and. Wagon-R. The company offers a complete range of cars from entry level Maruti-800 and Alto. Spain. In 2005. in 1998. Swift. Maruti Suzuki India has produced and sold over 10 million vehicles in India and exported over 500. Tata Motors unveiled its People's Car. A star. Tata Motors formed a joint venture with the Brazil-based Marcopolo. Russia.000 units to Europe and other countries. In January 2008. accounting for over 45% of the domestic car market. the Tata Indica. It was Tata Motors. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck. Dharwad in India. Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company's pickup vehicles in Thailand. which developed the first indigenously developed Light Commercial Vehicle. Within two years of launch. India's first fully indigenous passenger car. Nano brings the comfort and safety of a car within the reach of thousands of families.07% Maruti Suzuki India Limited. The company's 53 . and the UK. The company today has R&D centres in Pune. a subsidiary of Suzuki Motor Corporation of Japan. established in 1966.200 or Rs. Lucknow. Estillo and sedans DZire. Jamshedpur.Spanish bus and coach manufacturer.000 (excluding VAT and transportation cost). Tata Motors is also expanding its international footprint by franchises and joint ventures assembly operations in Kenya. Bangladesh. and subsequently the remaining stake in 2009. Since inception in 1983. Ukraine. has enabled pioneering technologies and products.

continuing its tradition of being the fastest growing passenger car manufacturer. The company competes in the Light Commercial Vehicle segment through its joint venture subsidiary Mahindra Navistar Automotives Limited and in the passenger car segment through another joint venture subsidiary Mahindra Renault.revenue for the fiscal 2010-2011 stood over Rs 375. the premium hatchback i20 in the B+ segment. the Sonata Transform in the E segment.4% over 2008. Three Wheelers 1. In the year 2009. In 2011 Hyundai plans to add 10 new markets with Australia being the latest entrant to the list. Hyundai Motor India Market Share: Passenger Vehicles 14.224 million and Profits After Tax at over Rs. an increase of 14.15% Hyundai Motor India Limited is a wholly owned subsidiary of world's fifth largest automobile company.1% as compared to 2008 with 289. In a little over a decade since Hyundai has been present in India. These includes the Santro in the B segment.01%. Hyundai Motor. the Accent and the Verna in the C segment. South Korea.886 million. Mahindra & Mahindra Market Share: Commercial Vehicles 10. Passenger Vehicles 6. it has become the leading exporter of passenger cars with a market share of 66% of the total exports of passenger cars from India. and is the largest passenger car exporter. 22. the i10.213 vehicles 54 . while overseas sales grew by 10. Middle East.000 per annum. The first shipment to Australia is of 500 units of the i20 and the total i20 exports to Australia are expected to be in the region of 15. In 2010. Hyundai Motor currently exports cars to more than 110 countries across European Union. Hyundai Motor India's exports grew by 10. on the domestic sales front. Africa. in spite of a global slowdown. Hyundai Motor Company.7%. Latin America and Asia.017 units. registered total sales of 559.31% Mahindra & Mahindra is mainly engaged in the Multi Utility Vehicle and Three Wheeler segments directly. making it a significant contributor to the Indian automobile industry. In the domestic market it clocked a growth of 18. It has been the number one exporter of passenger car of the country for the sixth year in a row. Hyundai Motor presently markets 49 variants of passenger cars across segments.7%.50%.880 vehicles in the year 2009. the Company along with its subsidiaries sold a total of 220.863 units. with export of 270.

to focus on the Australian Market.603 Light Commercial Vehicles through Mahindra Navistar Automotives and 13.7% and 46.5% over the previous year. This represents a decrease of approximately 6.069 M&HCV trucks respectively.(including 44. the Company's market share grew marginally and Ashok Leyland retained its number one position in this segment.6% over the previous year. This includes 16. the Middle East) witnessed a reduction of about 25% over the previous year. The company lost 1. as against a decline of 7. Mahindra & Mahindra is expanding its footprint in the overseas market. mainly due to loss of sales in the truck segment.5% less than in the previous year. was relatively stable. To combat the impact of decline in CV sales.7%. While total industry volume of the medium and heavy duty buses declined by about 8. Hence. recording a growth of 0.049 M&HCV buses and 31.423 cars through Mahindra Renault). Ashok Leyland registered sales of 47.4% for industry Multi Utility Vehicle sales. increasing its market share to 57. where the Company's presence had been historically weak. 37. This was because the Eastern Region. 8.3%. Total industry volume related to overseas markets to which the Company exports (such as Sri Lanka.2% over the previous year's market share of 51. The Xylo was launched in South Africa. Mahindra & Mahindra further strengthened its domination of the domestic Multi Utility Vehicle sub-segment during the year.761 MUVs in the previous year. A record number of 153. during 2010-11. whilst the market declined sharply in other regions.533 three-wheelers. the Company focused on non-cyclical businesses in the portfolio.3%. 55 .118 medium and heavy commercial vehicles (M&HCV). The company formed a new joint venture Mahindra Automotive Australia Pty.3% less than in the previous year. The company's domestic Multi Utility Vehicle sales volumes increased by 3. Ashok Leyland Market Share: Commercial Vehicles 22% Against the backdrop of the sharp slump in demand for commercial vehicles. Limited.8% market share in the Indian medium and heavy commercial vehicle market during the financial year 2010-11. The Company sold 6.653 Multi Utility Vehicles were sold in the domestic market in 2011 compared to 148.812 vehicles in the overseas markets during 2010-11. 8.

the growing purchasing power of the middle class continues to attract new entrants to the Indian passenger car market. The growth of component suppliers also enabled select domestic automobile firms. instead of being overwhelmed. 56 . More significantly. after industrial licensing was abandoned in the 1990s. with no prior experience in car manufacturing. to add passenger vehicles to their product range. the domestic manufacturers have emerged as market leaders. Though several foreign manufacturers have struggled to expand their foothold. However. adapting well through alliances with foreign firms for technology.The Company produced in all 54. Maruti Suzuki introduced more efficient manufacturing practices and developed a number of local component suppliers.049 vehicles during the year. The trigger for change has typically been the introduction of foreign technology and competition. These segments too have evolved from duopolistic inertia to vigorous competition. buyers now have a surfeit of vehicle models to choose from. This industrial eco-system with vastly improved capabilities eased the entry of several foreign car manufacturers. This story essentially repeated itself in other segments of the Indian automobile market. In place of outdated products. the Company worked only about 50% of the working days in all its manufacturing units during the second half of the year. To contain costs and conserve cash. including commercial vehicles and motorcycles.

000 miles of highways apart from building more than 10. to the National Highway System in the U.S. more than 20. with the government absorbing part of the costs for segments where toll collections are unlikely to make the project commercially viable. though smaller in scale.000 miles of highways have been upgraded or are currently being developed under the program. The National Highway Development Program launched in 2000 is similar in concept. Kolkata. and Mumbai with a four-lane highway. Over the next decade.000 miles of expressways. 57 . dubbed the Golden Quadrilateral. Considering the poor state of Indian roads even in the 1990s. The first leg of the project linked the four big Indian cities of Delhi. the government is planning to upgrade another 20. The subsequent phases of the program developed the North-South and East-West highway corridors and access roads to major seaports. withdrawing restrictive industrial licensing and allowing the entry of foreign firms would not have ensured sustained growth for the Indian automobile industry.Yet. this was an arduous task that required large capital investments. For demand growth to endure. Most of these projects are being implemented through private sector participation. the government would also have to enable the development of the country’s road network and reduce traffic congestion in its cities. Since its launch. Chennai.

Widening of inner-city roads and construction of elevated roads over busy intersections and level crossings have helped the cities to absorb the significant increase in vehicle population over the last decade. As the number of car owners started rising. 58 .Most Indian cities have grown without even basic planning of the road network and other infrastructure. roads in most cities became clogged and pollution levels increased. under programs like the National Urban Renewal Mission. The federal government provides a large part of the financing for such projects.

remains the market leader in India with a share of over 45%. Korean firm Hyundai and domestic major Tata Motors have been in a tight race for the second and third places for a while now. Most major global manufacturers are already present in the country. Despite increased competition. while some of the domestic manufacturers are entering overseas markets. much of the excitement in India is in the passenger vehicle segment. Maruti Suzuki also has the largest dealer network and its annual manufacturing capacity is now over 1 million vehicles. which form the bulk of the Indian car market. Robust growth in middle class income levels and easier credit availability have sustained demand growth for passenger cars. Small hatchbacks dominate Hyundai’s model lineup and the firm has built up a strong brand reputation over the last several years.1. Maruti Suzuki. Tata Motors has a wider product range. Hyundai is now marginally ahead with a market share of 14% as compared to over 12% for Tata Motors. from SUV’s to the world’s cheapest car. Tata products are positioned as value-for-money and run predominantly on diesel. Its strength lies in its wide range of small car models.4. The firm also jointly owns an assembly line with European carmaker Fiat and markets Fiat cars in India. which is nearly a third less expensive than gasoline in India because of government subsidies. 59 . the Nano. which is now majority owned by Suzuki Motor Corp.3 Market Segments Passenger Vehicles: Middleclass dreams fuel sales growth Like most other markets.

General Motors has seen a revival over the last year. besides passenger cars. In a bid to expand their market share. while Toyota sells the most minivans. another large local manufacturer. The company has gained make share recently after the launch of a competitively priced small hatchback from its assembly line and engine plant near Chennai.Mahindra & Mahindra. derives the bulk of its sales from the SUV segment where it is the market leader. which has not performed well. Honda is a clear leader in the midsized sedan category. 60 . Ford has been more successful in the small sedan segment in India. Japanese manufacturers Toyota and Honda enjoy leadership in their segments. in south India. The firm sold half of its Indian operations to Chinese automaker SAIC Group last year. though they have been present in the market for more than a decade. both firms are expected to launch small hatchbacks and sedans shortly. Several global manufacturers have struggled in India. Though their product offerings in the Indian market are limited. but volumes remain very low. GM also sells small sedans and SUV’s. and the joint venture is planning to introduce utility vehicles. The firm recently bought out European manufacturer Renault in a passenger car joint venture. after the firm launched low-priced hatchbacks under the Chevrolet brand.

9 Mumbai for 8. the Czech subsidiary of Volkswagen.7 Mumbai.6 Mumbai. 2010 Among European manufacturers. Luxury passenger cars have seen excellent demand growth.Leading Indian Automobile Firms Market Firm Products Foreign Partner Value (in $ Stock Listing Billions) Tata Motors Passenger and Fiat Renault-Nissan for small car Suzuki Motor and Navistar Commercial Vehicles Honda Motor 7.Wheelers Market value data based on full capitalization as on September 20. Farm Equipment.2 11. has built a relatively good position in the mid-sized sedan market. with Nissan focusing more on the small car segment. Two-wheelers Hero Honda Two .8 planned 9. especially in recent years. London 8. London Firm) Mumbai (Holding Commercial Vehicles Two and Three - Bajaj Auto Wheelers Maruti Suzuki Passenger Vehicles Passenger Mahindra Mahindra & Commercial Vehicles. Volkswagen itself has been a recent entrant in the Indian market and has expanded its product range by launching a small hatchback and a mid-sized sedan. jointly owned by its Japanese associate Nissan. Skoda Auto. Mercedes Benz and BMW have almost identical market shares while Audi has made rapid gains over the last year. the luxury segment now accounts for only about a percent of the total passenger vehicle market. The Renault-Nissan alliance is expected to launch several models in the near future. While its venture with Mahindra has not been successful. Fiat’s record in India has been patchy and it now relies on the Tata Motors dealer network to sell its products. French automaker Renault has opened a large assembly line. New York Mumbai. All three manufacturers assemble cars in India from 61 . However.

62 . are gradually expanding their dealerships in the country. as the country emerged as the second fastest growing economy in the world. the new highways can easily accommodate large multi-axle tractor-trailers. now owned by Tata Motors. the bus transit systems have been improved and upgraded across the country. and other commercial vehicles. Jaguar and Land Rover. buses. As the smaller towns and villages get connected to the highway system and more migrants move out of the villages. and hence product prices are higher than other markets. Unlike in the past when only single axle trucks were suitable for narrow Indian roads.imported kits. Though India has one of the most extensive railway networks in the world. The rebuilding of the country’s main highways under the National Highway Development Program has made road transport easier and more efficient. the bulk of the commercial goods movement is by road. When the country has a high population density and personal car ownership is low. demand for passenger transport will also rise faster when the economic growth accelerates. Another factor that pushed up demand for trucks is the substantial increase in construction of buildings and infrastructure. which attract high import taxes. Commercial Vehicles: Rapid economic growth boosts demand The volume of goods to be moved across the country and the demand for commercial vehicles to transport the goods are directly related to the pace of overall economic growth. The federal government continues to finance the introduction of modern buses. comfortable enough to encourage commuters to switch from personal vehicles in cities. India has seen a substantial increase in demand for trucks. In recent years. Increased migration of workers to the cities and industrial zones has also pushed up demand for long distance bus services. demand for commercial transport services will only increase in the future. To ease traffic congestion in cities.

The company has recently tied up with Nissan for manufacturing light commercial vehicles and engines In the 1990s. Volvo has gained market share in the large truck and bus segment and acquired half of a domestic manufacturer of small trucks. Tata Motors is the majority partner in a venture with Brazilian firm Marcopolo to build buses in India. American manufacturer Navistar has a joint venture with Mahindra & Mahindra and has recently launched large trucks in India. Ashok Leyland is a market leader in buses and a leading vehicle supplier to the Indian armed forces. several Japanese manufacturers entered the Indian market with light commercial vehicles but had limited success. The firm’s large trucks and buses are popular. the firm has joined hands with a local company to assemble and market pickup trucks. including small goods carriers.For decades. but it has had limited success in smaller capacity truck models.Ashok Leyland is a distant second in the segment with a nearly 13% market share of all commercial vehicle sales. 63 . The firm currently has a truck manufacturing facility in South Korea and owns a major portion of a bus and coach manufacturer in Spain. mostly through acquisitions and joint ventures. Among more recent entrants. Tata Motors has dominated the commercial vehicles segment and currently controls two-thirds of the market. Tata Motors has also expanded its overseas presence over the last decade. German manufacturer MAN owns half of a joint venture with local firm Force Motors. The firm has the broadest dealer network and the widest product range of all manufacturers. In Thailand. which manufactures a range of commercial vehicles. from small goods carriers to large tractor-trailers.

with a dominant position in higher priced motorcycles. such as motorcycles and motor scooters. These factors have made India the second largest two-wheeler market in the world with annual sales of over 10 million units. Harley Davidson is a recent entrant in the premium motorcycle market where volumes are very low. Automobile Components: Attractive source for global auto firms The Indian automobile component industry and allied businesses are among the select success stories in the country’s manufacturing sector. and manufacturing competencies over the last couple of decades. The increasing income levels in semi-urban and rural areas of the country offers further growth potential for two-wheeler manufacturers. They are also cheaper to run and easier than cars to maneuver and park on narrow roads. TVS Motor is the third major player in the two-wheeler market. Since the average road speeds in India are low. The firm once had a near monopolistic control of the motor scooter market. Bajaj Auto is also the market leader in three-wheelers. Honda Motor also has a wholly owned subsidiary in India. Two-wheelers are more affordable than low cost cars and even used cars. two-wheelers. but gradually withdrew from the segment as consumers switched to motorcycles.Two-wheelers: Rural markets offer further growth opportunity Like most developing markets. The leading Indian component manufacturers have gradually built their design. but their achievements are not yet widely acknowledged. Bajaj Auto is the second largest Indian two-wheeler manufacturer. engineering. The impressive growth of the domestic automobile market has allowed them to scale up their operations. Honda is followed by fellow Japanese manufacturers Suzuki and Yamaha in the motorcycle segment. which are popular as taxis in India. It is the market leader in motor scooters and the fourth largest in motorcycles. Honda Motor of Japan holds a 26% stake in the firm and provides product technology. the lower passenger safety of two-wheelers when compared to cars does not inhibit buyers. Several of them now export to major global car manufacturers and the leading firms are establishing manufacturing operations in overseas mark 64 . with a market share of more than 40%. The firm is particularly strong in the entry-level motorcycle category and its products are positioned as the most fuel-efficient. are the most popular mode of personal transport in India. Hero Honda is the undisputed market leader in the Indian two-wheeler market. for manufacturing motorcycles and motor scooters.

Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets.Though major carmakers bring along their key suppliers when they enter new markets. As the carmakers become more confident in the capabilities of the local parts suppliers. Leading global manufacturers including Volkswagen and Fiat have announced their plans to increase component sourcing from India. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U. they begin sourcing components from local suppliers even for their global operations. local component manufacturers are enlisted as suppliers of smaller parts. these factors are making an attractive automobile manufacturing location for the global markets. and production costs in India are lower than the developed markets. 65 . Apart from shipments to its parent Suzuki.S. Together with the growing maturity of domestic auto component suppliers. India has emerged as a leading center for the manufacture of small cars. India also has the opportunity to emerge as a global manufacturing base for select product segments.000 of the population. Design. Several global automobile makers have been present in India for several years now and they have been sourcing parts from the network of local suppliers for other markets.S. development. The country is also building a reputation in frugal engineering. Maruti Suzuki also manufactures small cars for Nissan. Outlook: Export potential adds to domestic demand flourish Even after the spectacular growth in recent years. now ships more than 250. with sufficient economies of scale. the Indian automobile market still has considerable room to grow. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U. which sells them in Europe. even two-wheeler ownership is below 100 per 1. the biggest exporter from the country. Hyundai. market. In recent years.000 cars annually from India. Passenger car ownership in India is still very low even when compared to other emerging markets. Despite domestic sales of over 10 million units annually. Bajaj Auto is designing a low-cost car for the Nissan-Renault alliance. The big domestic market potential will allow carmakers to build large assembly lines. and is planning to launch electric vehicles in Europe this year. Besides the domestic prospects. It is likely that the continued rise in average income levels will sustain demand for personal vehicles while overall economic growth will support the demand for commercial vehicles. or building low-cost products under tight budgets.

the automobile industry historically has been one of the sectors leading the economic growth and development. Also. 66 . Available indicators suggest that it will be no different in India. any delay in the further development of the highway network could slow down domestic demand growth. While the potential is impressive. especially in the passenger vehicles segment. Since the demand surge for automobiles in recent years is directly linked to overall economic growth and rising personal incomes.which will market the product globally. which may restrict the demand for personal vehicles. Most Indian cities will have a combination of metro rail networks and dedicated road corridors for buses and it is possible that a good number of commuters will opt for public transport. there are challenges that could pull down future growth of the Indian automobile industry. Nissan-Renault may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. It is also likely that intense competition will erode the profitability of manufacturers. which is likely to remain one of the fastest growing economies in the world. In most countries. It is possible that the government will favor mass transport systems for the large cities. the long-term outlook for the automobile industry in India remains bright. industry growth will slow if the economy weakens. Despite these challenges.

India is 16th in the world in termsof nominal factory output. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher.2 GDP and Automobile Industry In absolute terms. 67 . Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. This is the pie.000 reflecting improvement in the living standards of an average Indian.2 FUNDAMENTAL ANALYSIS 4. Montek Singh (PlanningCommission of India).1 ECONOMY Economic analysis is the analysis of forces operating the overall economy a country. Following is the graph showing a trend of Indian GDP trend in past 3 years.Today. The service sector isgrowing rapidly in the past few years.The per capita Income is near about Rs38. Economic analysis is important in order to understand exact condition of an economy.5 per cent for FY 2010-11 Mr.2.chartshowing contributions of different sectors in Indian economy.2. automobile sector in India is one of the key sectors of the economy in terms of the employment. the GDP growth has downgraded it to 7.4. As the world economy slips into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector. 4.1 percent for 2009-10 and predicted it to be 6.

overall production fell by 22 % over the same month last year. Inflation Despite of negative inflation these days (-. while revising its inflation forecast for the FY through March to around 5% from 4%. and Contribution in Indian GDP is near about 5% and will be double by 2016. However. overall production (passenger vehicles. But at the end of the year industry had to face the hard truth and witnessed the fall in sales compared to last year. the Reserve Bank of India said few week back.The market value of Automobile Industry is more than US$8 bl. the effect of inflation has affected 68 .72 million as compared to 9. Passenger Vehicles segment registered negative growth. A moderate amount of inflation is important for the proper growth of an economy like India because it attracts more private investment. In December 2011. commercial vehicles.7%. Global recession has hit the Indian auto industry.77 million to 1.65 million in 2009-10.41 million.02 million to 8. However. One of its supporting facts is that the sales in December 2011 for passenger vehicles fell by 13.43 percent fall in December 2011 over the same month last year.85 million vehicles in 2009-10 to 11.17 million vehicles in 2010-11.86% over December 2010 Two Wheelers registered minor growth of 1. The fall in wholesale prices from a year earlier is mainly due to a statistical base effect and doesn’t suggest contraction in demand. Two Wheelers sales recorded 15. The automotive industry in India grew at a computed annual growth rate (CAGR) of 11.85 % during April – December 2011. Passenger vehicles increased marginally from 1. higher interest rates. Although the sector was hit by economic slowdown.7% with passenger car sales shows 1. In last FY despite of skyrocketing oil prices (crude oil price has already up to $130 compared to $20 per barrel five years back). two-wheelers and three-wheelers in 2010-11 was 9. two wheelers and three wheelers) increased from 10.oil price hike. Total number of vehicles sold including passenger vehicles. India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined.21% on 22-Aug-11) we saw an increasing trend of sales in auto sector.31% growth while Commercial Vehicles segment slumped 21.83 million while two-wheelers increased from 8. but growth rate in last FY2008-09 was only0.5 percent over the past five years. Indian automobile Industry was not as much affected and experts think that Indian automobile industry will continue to grow this year despite all obstacles. commercial vehicles. Recession All the major auto companies enjoyed the high growth ride till the mid 2008.

7% in last February and Commercial Vehicles reported 69 . under this segment the market leader Hero Honda registered growth of 12% in its domestic sales where as Bajaj Auto disappointed as sales plunging by 23%. which has led to a turnover of USD 12 billion in the Indian auto industry and USD 3 billion in the auto parts industry.6% growth rate. Two wheeler segment sales grew up by 12.25% compare to 2009-10. FDI’s In India FDI up to 100 percent. Taking these factors into account. The effect of inflation has taken the rise in the price rate of the cars by 3-4% which in turn suffices the need to meet the rise in price of the raw materials to build a car. while in April-May 2011 it was around Rs. Current Scenario of Automobile Industry in Economy With the latest available data Indian Automobile Industry is expected to grow at 9%-10% in near future. the share of external sector in the economy and the size of risk-adjusted capital flows. India enjoys a cost advantage with respect to casting and forging as manufacturing costs in India are 25 to 30 per cent lower than their western counterparts the Investment Commission has set a target of attracting foreign investment worth US$ 5 billion for the next seven years to increase India's share in the global auto components market from the existing 0.every sector which is related to car manufacturing and production. The overall approach to the management of India's foreign exchange reserves in recent years reflects the changing composition of the balance of payments and the 'liquidity risks' associated with different types of flows and other requirements.was Rs. Foreign Exchange India holds the third largest stock of reserves among the emerging market economies after China and Russia. Following is the table shows the trend of foreign reserves held by central bank in last FY. Reserves came down cause of recession all over the world however India still able to maintain its reserves hence a minor fall was seen compare to all other country which shows great strength in long-term for Indian Economy. on the other hand car sales has been grew up by a healthy 22.212 Cr an increase of 47.497 Cr. The car market and the car industry witnessed a fall of 8-9%.8% with the modest 2. has been permitted under automatic route to this sector. FDI inflows in Automobile Industry 20082009.5. India's foreign exchange reserves continued to be at a comfortable level and consistent with the rate of growth.5 per cent by 2015.9 per cent to 2. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India.

. Nissan & Ford plan new cars to cash in on fastest-growing compact car section of car market in India. .75 million units by 2014. .  To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10% of the GDP and providing additional employment to 25 million people by 2016.3 million 70 . vehicle sales in the country will grow at a CAGR of 12 per cent to touch 3.Skoda Auto 33%. TATA by 11%. Hero Honda 33%.slower sales. Toyota. Volkswagen. Source: Economic Times Sales of different Auto Companies speed up even before festive season Maruti by 29%. It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016.       manufacturer in the world. India ranks 1st in the global two-wheeler market.8% by 2014 at 11. Yamaha 63% etc. It is assumed that in coming festive season to meet demand. Mahindra 42%.3lac/month with help of 5000 new hands. Projected Growth rate in Automobile Industry   units. carmakers going to produce 70000units/month more over the average 1. -wheeler sales will grow at a CAGR of 8. Indian Automobile Industry at Global level.

CHAPTER V ASSESMENT OF THREATS AN GROWTH OPPURTUNITIES OF INDIAN AUTOMOBILE INDUSTRY 71 .

Five Forces Model 2. Numerous other forms of transportation are available.1 Five Forces Model Michael Porter identifies five forces that influence an industry. Threat of Substitutes The threat of substitutes to the automotive industry is fairly mild. rivalry in the Indian auto sector is intense due to the entry of foreign companies in the market. Barriers to entry The barriers to enter automotive industry are substantial. may be high in terms of personal time. but none offer the utility. convenience and utility. the startup capital required to establish manufacturing capacity to achieve minimum efficient scale is prohibitive. SWOT Analysis 5. The industry rivalry is extremely high with any being product being matched in a few months by the competitors. The switching cost associated with using a different mode of transportation. convenience. Industrial Life Cycle 4. These forces are Degree of Rivalry Despite the high concentration ratio seen in the automotive sector. independence and value offered by automobiles. This instinct of the industry is primarily driven by technical capabilities acquired over years of gestation under the technical collaboration with international players. Industry Specific Index 5. For a new company.ASSESMENT OF THREATS AN GROWTH OPPURTUNITIES OF INDIAN AUTOMOBILE INDUSTRY Assessment of the industry can be done based on the following headings: 1.1. BCG Matrix 3. 72 .

Supplier’s power In the relationship between the industry and its suppliers. there are a number of major industries and they all occupy different positions in the BCG matrix according to their growth and contribution towards the economy.1. Business strategies are developing. has the potential to compete its home market against the global firms who are not well established there.1. different industries are present and different industries have different growth rate as compared to the growth of the economy. the power axis is tipped in the consumers’ favor. In an economy. a domestic company.Although the barriers to new companies are substantial. the product market has been established and there is at least some historical guide to ground demand estimates. 5. However. steel. The 73 .2 BCG Matrix In an economy. pharmacology and retail sectors and these can be placed in the different positions in the matrix. successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. In the pioneer phase. automobiles. telecom. The industry is comprised of powerful buyers who are generally able to dictate their terms to the suppliers. 5. growth. establishing companies are entering the new markets through strategic partnerships or through buying out or merging with other companies. Industry life cycle classification generally groups industries into one of four stages: pioneer. maturity and decline. In the Indian economy. the power axis is tipped in industry’s favor. and there is high risk of failure. Buyers’ Power In the relationship between the automotive industry and its ultimate consumers. This is due to the fairly standardized nature and the low switching costs associated with selecting from among competing brands.3 Industrial Life Cycle The industrial life cycle is a term used for classifying industry vitality over time. with local knowledge and expertise. In the growth phase. the product has not been widely accepted or adopted. some of the major sectors are FMCG. However. software. banking and insurance.

Utility Vehicles by 10. Passenger Cars grew by 11. As the product matures. growth slows as penetration reaches practical limits. 74 .79 percent.39 percent in this period.63% respect. The Commercial Vehicles segment grew marginally at 4.March 2008 compared to the last year. Light Commercial Vehicles recorded a growth of 12.64% and 16.17 percent.57 percent and Multi Purpose Vehicles by 21.13 percent during April.92 % during this period.90 percent and 44. However. often at an accelerating rate of sales and earnings growth. with motorcycles and electric two wheelers segments declining by 11. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy. The cumulative growth of the Passenger Vehicles segment during April 2010 – March 2011 was 12.71 percent with sales of Goods Carriers declining drastically by 20.66 percent. so the automobile sector can be very well be said to be in the growth phase. While Medium & Heavy Commercial Vehicles declined by 1.29 percent.49 percent and Passenger Carriers declined by 2.93% respect. Scooters and Mopeds segment grew by 11.07 percent. Three Wheelers sales fell by 9.industry is growing rapidly. Indian Automotive Industry is booming with a growth rate of around 15 % annually. Industry demand tends to follow the overall economy. Companies began to focus on market share rather than growth. Two Wheelers registered a negative growth rate of 7. but the scope of growth of the automobile sector is very much possible in India due to the increasing income of the middle class and their income as well as standard of living.

5. SWOT analysis of the Indian automobile sector gives the following points: Strengths      Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc Weaknesses      Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck Opportunities      Commercial vehicles: SC ban on overloading Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties Rising rural demand Threats    Rising input costs Rising interest rates Cut throat competition 75 . Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W).4 SWOT Analysis A scan of the internal and external environment is an important part of the strategic planning process.1. and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

But in the beginning of 2010 right from 1st quarter auto industry again start regaining and we saw a tremondous growth in auto industry which never seen before not in india but all over the world. Also no further launches were made in mid or late 2009 and postponed to next year. Hence an index like the BSE auto index is made of auto stocks. etc. which represent a specific industry sector.1. The demand of 2 and 4 Wheelers start increasing rapidly which also force auto industry to employ more workers to meet demand and with in the 2nd quarter of FY2010-11 Auto index reaches to its highest ever crossed mark of 6000. Maruti Suzuki. production came down because of less demand in the economy.5. Sectoral Indices are very useful in tracking the movement and performance of particular sector. Above is the Indian Auto Industry Index(BSE) shows the up’s and down’s over the period of 5 years. Indian auto industry start picking up growth slowly in the first end of 1st quarter index reaches to its highest in his history. We have also saw a fall in FDI’s in automobile Industry. And this growth of industry will be carry further as festive season still to come.5 Industry Specific Index Industry specific index also called as sectoral index are those indices. so there is a lot of scope to growth in this industry. All stocks in a sectoral index belong to that sector only. 76 . Than we saw a steady fall in the index and in the mid 2006 reaches to years lowest point it again start booming and than year on year we saw a up and down movement in the index as lots of new players came in Indian market with foreign colaboration but when 2008 came with global slowdown it brings the demand of automobile so low that index reaches to its lowest in past 5year . Most of the company even shut down their manufacturing units for more than a week. Intially in 2003 when major giants got listed on stock exchange TATA Motors.

the real long-term threat to Indian autos comes from the Japanese. Dumping or sidelining the Hero group is only a matter of time. First and foremost. The Japanese grind their competitors into the dust using TPM. unless we are talking tractors. One is that they compete relentlessly on cost and quality. TQM and lean manufacturing techniques. They cannot expect to hold their own against global competition by simply following the strategies of the past. It is close to doing the same in scooters. Suzuki wants only a minimal presence for Maruti in its new diesel and car plants. strategic thinking. Though no one can rule the US and European carmakers out. Honda defeated Bajaj in two-wheelers with just one basic fuel-efficient bike. they must learn to identify the main enemy and dissect his long-term game plan before working out a counter-offensive.2 THREATS TO INDIAN AUTOMOBILE INDUSTRY FROM FOREIGN AUTMOBILE INDUSTRY The big threat to Indian autos……… Can an improved Indica be sold for less than the Maruti 800? Can Bajaj create a service network that's miles ahead of the competition? Should TVS and Bajaj be developing nextgeneration two-wheeler engines together? If Indian-owned automobile companies are not asking themselves these kinds of questions today they will be marginalised tomorrow. 77 . Three in particular are of relevance to the Indian context. the Indian auto sector is growing like gangbusters. The Firodias and the LMLs do not have it in them to make it to world class. The Mahindras never will be No 1 anywhere. If Japan Inc is the real enemy of Indian-owned auto companies.5. it is now in a position to completely dominate the all-important segments in two-wheelers. but their current dominance may be transient. True. But apparent success should not cloud our vision on long-term trends. Yamaha and Suzuki decided to go it alone when they realised that their Indian partners (the Nandas and TVS) would be a drag on their ambitions. The Tatas are No 1 in the C segment. What Indian entrepreneurs have not displayed so far is sharp. their strategies are worth studying. Consider: Indian companies have already ceded market dominance in both mobikes and scooters. In four-wheelers. By launching a pincer attack with a 100 per cent subsidiary.

for example. forcing resources to be shifted there. you have to destroy your rivals' profit centres so that their ability to compete is steadily reduced. Once the profitability of Bajaj is down to sub-normal levels. customer servicing. the Tatas will face the battle of their lives. The third Japanese war technique is the feint -. The second way the Japanese compete is by targeting their rivals' profitable honey pots.not to speak of Hyundai And cost cutting has to spread across the supply chain -. engine development. the real attack will come shortly in low and middle end cars. 10 years from now India's hitherto successful auto players will find that they are losing the war. But as the Mahindras celebrate the short-term success of the Scorpio or the Sumo. And when that comes.a mock attack that sends the opponent looking in the wrong direction for a counter-attack. this means it can sell the Corolla at the price of an Indigo in real terms) 10 years from now. If Toyota cuts costs annually by 5–7 per cent.the Qualis Everyone knows that Toyota is world champ in cars but it chose to enter the MUV segment first. This also explains why the next target for Honda is the Pulsar -. It did this to make its competitors invest more in this segment. and Honda -.Bajaj's best-selling bike. If Tata Motors wants to stay in the competitive game. To win the war. In two-wheelers. Consider Toyota's first offering -. The Tatas and Mahindras could carve out segments of dominance in MUVs so that they can specialise and improve quality and reduce costs faster. it will have to cut costs and improve quality at a faster rate than Toyota. Why did Honda get into scooters when everyone was saying the market was not growing as fast as mobikes? Answer: that's where Bajaj's margins were fattest. this could mean players like TVS and Bajaj working out an alliance in supply chain improvements. and various other areas. They have to work out strategic alliances in such a way that they can concentrate their resources in areas where they want to be No 1 and help their partners in the other ways.and not just in the Tata or Bajaj factories. So what should Indian auto-entrepreneurs do? One thing is to realise that they cannot take on their Japanese rivals in all segments. 78 . The first key to global success is superior supply chain competitiveness. Without such strategic thinking. Suzuki. It also explains why Suzuki wants a diesel engine plant: it has to neutralise Tata Motors' advantage. defeating Bajaj will be easy for the Japanese.Toyota is already No 2 worldwide and it has achieved this by cutting costs (and/or improving quality) at a rate that is faster than its competitors.

Hyundai's most ambitious launch to date comes at a time Maruti has temporarily stopped Alto's production because of a longstanding labour issues. Eon. Hyundai aims to sell 1. meanwhile.5 lakh units of the Eon in a year. with 3. has already filled its dealers with stocks of the new Eon. industry experts say this time could be different and are expecting a high-pitch battle in the small car segment completely dominated by Maruti. firing a warning shot across the bow of its bleeding arch rival which has been wounded by a strike at one of its plants. and which has left the country's biggest carmaker dependent on a slender inventory to drive sales during the bumper festive period. accounted for around 16% of all cars sold in India and is the top selling car model on the planet. Hyundai's first car developed from scratch for India and is aimed at the bulging middle of the country's car market. treads on Alto territory:Hyundai has launched its new car directly pitted against Maruti Suzuki's global top seller Alto. which is a fourth of the total Indian market and ushers in the greatest potential for growth in the world's second fastest market. it had started producing the cars from mid-September to develop a buffer to meet high festive demand. now running into its third month. hoping to capitalise on the vacuum in the segment.7 lakh. The Alto. having edged Volkswagen's Gol & Golf and Fiat's Punto. Although past challengers have barely managed to make a dent on Alto's sales. making it the first serious threat to the Alto's seven-year-old dominance of the country's car market. Although it launched the new car only on Thursday." said Arvind Saxena. Hyundai. has a starting price of Rs 2. 79 .Here we are discussing some case that shows that Indian market is really overshadowed from foreign market: Hyundai Eon launched. an ambitious target in a tepid car market and also given that the Alto took almost four years after launch to reach this level of unit sales. Hyundai's director for sales. "We are looking at the sub-compact segment.47 lakh cars sold last fiscal year.

" he adds. This (drop in July) is just a temporary blip. deputy managing director. There is a huge opportunity and we have to move fast with our expansion plans. will give them a winner in India's price-sensitive small car market. with its fluidic styling and contemporary engineering. managing director of IHS Automotive India.1 kilometres per litre of petrol compared with Alto's 19. will directly hit the dated Alto and affect Maruti's fortunes. Toyota. has sold some 16. Maruti sells 32. Hyundai managed to sell 34. which generates a quarter of its India sales from the Alto.000 units of the Alto every month on average. Sales of the model. Ford.286 units of its smallest car Santro in the first five months of this year. Renault. That in a line sums up the name of the game for the auto majors: ramp up capacities at the entry levels with affordable and snazzier models. intends to boost its share of emerging markets from 40% in 2010 to 50% in two to three years on the back of growing sales of fuel-efficient small vehicles." says Hiroshi 80 . but Maruti is the brand to reckon with in compact cars. was unfazed by the prospect of a new challenger on its turf. Nissan challenging Maruti." said Deepesh Rathore. which accounts for three out of four sold in the country. All our cars have low cost of ownership and higher resale value that defines the segment norms across brands. "If inflation is tamed. But Hyundai executives hoping that the Eon. which sports a 814 cc engine and has a fuel efficiency of 21. In contrast. launched in September 2000. "The Indian market is much bigger for us now than in the past. Volkswagen. Toyota." But Maruti Suzuki. performance.73. Tata Motors: "The growth story is intact. grew 46% in last fiscal year to 3. Added one Delhi-based CEO of an automotive company: "It's an ideal buy for first time car buyers who account for 25% of the 2-million new cars sold in India."Eon. Toyota Kirloskar Motor. available in two engine configurations of 800cc and 998cc. The Alto. company sources said. The world's largest carmaker by sales. The company is working on an answer to Eon and will unveil a all new small car with a new-age 800cc engine. the joint venture in which the Japanese giant holds 89%.7 lakh units till date. interest rates will come down.47 lakh units. All car manufacturers need to expand operations. "Eon will set a new benchmark in India with best styling." said Maruti's marketing boss Shashank Srivastava. Hyundai." said Hyundai Motor India president and CEO H W Park. "The new Eon does bring in new competition in small car segment. safety and convenience in its segment." says Sandeep Singh.

one of the newer entrants into India.54%. Ford bounced back smartly to more than double its share to 3. Emboldened. VW is now thinking big. it's not only VW that can be spotted in their rear view mirrors. if not all three. Volkswagen India: "We want to be amongst the top three in India by 2018. VW. More variants of the Figo are in the works even as the Detroit major recently launched the premium sedan Fiesta." Chacko acknowledges that it's going to be a "long journey. Perhaps no longer. There is demand but we are all constrained by capacity. What's more. Chrysler and Proton are all itching to get foot to pedal. A week ago the US auto giant announced that it would invest close to $1 billion in a second factory in Sanand in Gujarat to assemble vehicles and make engines. very big. For. If Ford has decided to bite the bullet after 13 years in the country. the right products and achieve high localisation levels" if he has to get into the top three. Ford India. The likes of Peugeot-Citroen. it will launch eight new such products in 12-18 months. it may have something to do with some new-found success." and that he needs to get "a whole range of products. and finalising their India blueprints. will have to face up to a significant erosion in share. I am sure with a market share of 11% in India we can be amongst the top three.5% market share till a year ago. Kia.Nakagawa. it will also mean that one of the leaders. Volkswagen Group's chief representative and president and MD. it began operations in 2007. Says John Chacko. Struggling with just a 1. which accounts for three fourths of all cars Ford sold in July. The renewed focus on the mass market. managing director. Nissan (ranked No 6 in the world) and Renault have joined the race." says Michael Boneham. Globally we rank third with a market share of 11%. and the Polo premium hatchback is VW's cheapest car in India. But Ford is clear that that compacts is where the action is. It has done so by launching competitively-priced models -the Vento that was priced lower than the hitherto bestselling Honda City in the midsize segment. managing director of Toyota Kirloskar Motor. has achieved what many of its global counterparts could not do in more than a decade: a market share of 3% in four years. 81 . promises to change the name of the game. more than half of the cars sold in India are compacts and hatchbacks. Detroit giants GM and Ford are also threatening to get their act together. The success ingredient: The small car Figo. If VW does climb five places.

ROOM FOR ALL "Maruti has the scale, new products and is currently the most efficient manufacturer in India," says Hormazd Sorabjee, editor of Autocar India. "At least for the next 8-10 years, Maruti will continue to be the dominant player as India is a lead market for Suzuki, much more important than Japan," he adds. Indeed, Suzuki's ability to transfer R&D quickly will go a long way in helping Maruti stay on top. "Our ability to put models in the market that reflect customer needs in shorter periods at a low cost of ownership will make the difference," says RC Bhargava, chairman, Maruti Suzuki. "We may lose market share over a 10-year period but our volumes will grow," he adds. Over the past decade, Maruti's share has slipped by 14 percentage points from 55% in 2000. Another masterstroke from Maruti could well prove to be a plan to re-introduce its one-time breadand-butter entry-level brand, the Maruti 800. Analysts point out that the new-look 800 will comply with the new emission norms, and will be priced lower than the Alto, taking it closer into the territory of the world's cheapest car, the Tata Nano. Hyundai too is planning to launch a car below its current base model, the Santro. Tata Motors may well be the most vulnerable of the top three, what with the Nano not yet delivering huge volumes. Sales in July fell to 3,250 from a peak of 10,000 a few months ago. Overall, Tata's share in passenger cars has dropped from 18% in fiscal 2007 to 12.66% in the April-June 2011 quarter. "Of the top three, Tata Motors seems to be on the weakest wicket. The Nano has not given them the required market share," says Maruti's Bhargava. "The passenger vehicle segment of Tata Motors is under pressure as the lead time for product development is too long," adds Autocar's Sorabjee. Tata Motors officials were unavailable for comment. The biggest beneficiaries are the new kids on the block. In the first six months of 2011, points out VW's Garg, the top three have grown volumes by 14%, 21% and 9% respectively, but their market shares have dropped cumulatively by 3.8%. In the same period Toyota, VW and Ford have collectively gained 4.4%, adds Garg. "This has to happen in any emerging market where a market leader starts losing share as the number of players increase," he explains. VW for its part has more than doubled its market share from 1.6% a year ago. As a group, VW is present with entire range of brands: there's Audi at the luxury end; and Skoda, which extends from the mass segment (with the Fabia) to the luxury (the Superb). Between January and June, the three brands grew by 500% with sales of nearly 38,000 units, says Chacko.
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Toyota has been present in India since 1999 when it launched utility vehicle Qualis. Over the years, it captured consumer mind space with bestselling brands like the Corolla, Innova, Camry and Fortuner. Yet these brands addressed only 12% of the Indian car bazaar. The more recent launches of the mid-size sedan Etios and small car Liva have changed the name of the game-now Toyota can pull in close to half of the country's potential car buyers. That's a significant shift for Toyota, from the higher end to the mass market. We have entered a new segment with new customers and aspirations," acknowledges Toyota Kirloskar's Singh. "Etios will now be our flagship product as it was developed and adapted for India. And for the next two years our focus will be on the compact segment (where the Liva is positioned)," adds Singh. Toyota intends to increase dealerships from 159 to 175 by the end of 2011, 40-45 % of them in tier-II markets.

SMALL PACKAGES The advantage for brands like VW and Toyota is that they are distinctly more aspirational than a Maruti. The flip side, however, is that nobody knows, and straddles, the small car segment as well as Maruti does. And that's the segment that every car maker with mass market ambitions is attempting to crack. GM is there with the Beat, which is now in diesel too, and Ford with Figo (petrol and diesel). And Honda Siel, a distant No 10, is banking on the Brio compact to score some gains. So where does that leave a Johnnie-come-lately like a Renault? The French auto major dissolved a joint venture with the Mahindras last April, and started independent operations this May. The market share game is not priority for Renault at this point in time; establishing the brand over the next 12 months is. To that end Renault recently launched the Fluence sedan in the Rs 15 lakh price bracket. "Brand Renault is not well established in India. With the launch of the Fluence we are showing Renault's capabilities in design, styling, innovation, technology and value-formoney products," says Marc Nassif, MD, Renault India. Renault plans to follow up with the launch of the SUV Koleos this year; in 2012, it will launch mass market cars, including a hatchback, the affordable SUV Duster and another yet unnamed car. "In two years, we will launch mass market products and have 100 dealership outlets in 70 cities, so 2013 will be the first fully functional year and we expect to sell 100,000 cars by 2014," explains Nassif. That's when he says Renault will reach a critical mass in the Indian market. "Phase two of our operations will take us to a goal of reaching a 5% market share," adds Nassif. In South America and Brazil, the company got a 5% share in
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8-10 years. Renault may be a late entrant but its advantage may well be that it won't have to traverse as long learning curve as the likes of the Detroit majors, Honda and Toyota had to. Meantime, other global majors like Peugeot-Citroen are looking to kickstart their India operations. "New entrants have outlined an aggressive strategy with several new launches lined up in the next three to four years. Cost and product differentiation will hold the key," says PwC's Majeed. It's going to be a no-holds-barred skirmish for share in one of the world's fastest growing markets. Who ends up on the victorious side is a matter of conjecture as of now, but there's little doubt about one big winner in this battle: the spoilt-for-choice Indian consumer.

Fiat Signs Deal to Supply Diesel Engines to Maruti
Italian carmaker Fiat and Japans Suzuki Motor Corporation have inked an agreement to supply 1 lakh diesel engines to Maruti Suzuki India,which will help the countrys largest carmaker to manufacture more engines,and thereby prune the rapidly growing waiting list.The two auto giants agreed to supply Fiats 1.3 litre-multijet engine licensed by Fiat India Automobile,which is a joint venture between Fiat and Tata Motors to Suzukis Indian arm,Maruti Suzuki India.The JV company will supply up to 100,000 engines annually to Maruti beginning January this year for a period of three years.

Stepping on the gas:
To grab a bigger share of the Indian automobile market, late entrant Nissan Motor is following a strategy somewhat different from its Japanese counterparts: Two years ago, when Nissan Motor India, a 100 per cent subsidiary of Nissan Motor Ltd Japan, was celebrating the start of production of its made-in-India compact car, Nissan Micra, from its manufacturing plant at Oragadam, near Chennai, Toshiyuki Shiga, chief operating officer, Nissan Motor Company, had said, ―The start of commercial production of Nissan Micra is the beginning of a new chapter for us in India.‖ One message came through loud and clear from his statement. That the Asia’s No 2 car manufacturer (with a share of 7.5 per cent in the region) may be a late entrant in one of the top 10 automobile producing markets in the world (No 7 in 2010 with an annual turnover of $35 billion against No 15 in 2000) but it was no push-over. Mind you, in its home market, Nissan is already the second largest car manufacturer, surpassing Honda in 2011 with Toyota still very much the dominant first.
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the year seems to have begun on a positive note for most automobile brands. The other models in the company’s line-up in India. First. that of No 2 Hyundai Motor India and Tata Motors grew 11 per cent in the same month over January 2011. that there is a growing acceptance of Japanese technology and quality in India than ever before. Nissan Motor India hasn't looked back since then.022 units in the domestic market till January this year. Toyota and to an extent Suzuki.371 units.3 million vehicles units Indian car market. the thing to remember is that the company has a small base in India. even a small growth percentage can mean much higher sales volume than Nissan. while Ford India and General Motors skidded with –8 per cent and –22 per cent respectively. for companies like Maruti Suzuki and Hyundai that have a significantly larger base.Indeed. registering an over two-fold jump over February 2011. managing director. Also. From the looks of it.‖ While Nissan has a little over 1 per cent of the 2. In turn. The company has gone on to sell 22. are following in the country. 85 . such as Honda Motor. it is evident that the Nissan Sunny. In the same month last year. the company had sold a total of 2. the tales of rising inflation. the entry-level sedan that was launched in the country in September 2012. its overall strategy shows how it is following a path somewhat different from what its Japanese counterparts in India. Sales of market leader Maruti Suzuki grew 2 per cent in January 2012 compared to January 2011. unveiled two new models — the Nissan Sunny sedan in September 2011 and the Nissan Evalia. Tokuyama says its performance shows.000 units this year and touch 1 lakh in the year 2013. let’s look at some figures: Nissan Motor India reported its highest ever monthly sales in India this February with a total of 5. The Nissan Micra too showed impressive numbers in February 2012 registering total sales of 2.081 units. Of course. Says Kiminobu Tokuyama. the introduction of the diesel variant in January 2012 has given sales of the Sunny a huge leg up. Nissan Motor India. has been a big contributor to the company’s sales by logging 3. among other things. the hardening of interest rates and the increase in fuel prices are not going to dampen the spirits of the company’s brass. Toyota Kirloskar logged 246 per cent growth. ―We hope to cross sales of 30. the X-Trail and the 370Z. a multi-utility vehicle showcased at the Delhi auto expo earlier this year and slated for launch in August — and has put competition in a fix with a heady mix of killer pricing and aggressive retail expansion strategy. the Nissan Teana. From the figures available. While the sales figures tell a story of steady growth. contributed the rest.198 units. In other words.130 units in February 2012.

Says Abdul Majeed. Now compare this with. Nissan claims to offer a combination of price. PricewaterhouseCoopers India. It is only now that the company is saying India will be the small-car hub for Asia Pacific and Africa for Ford Or consider Honda.Also many global automakers have moved low-cost export operations to India recently. accounting for around 70 per cent of the sales. which was imported as a completely-built unit (CBU). with the launch of the Nissan X-Trail (T30). which contribute a big chunk of their sales in India. besides value adds like low turning radius. the company really took the decision to go all out with the launch of the compact car Micra realising that affordable small models dominate India’s car market. It remains the only carmaker in the country with an all-petrol line-up even though more than 40 per cent of the cars sold in India are now diesel-powered. Honda has faltered in recent years. Honda’s sales fell 32 per cent in the first 10 months of the current fiscal while the passenger vehicle market grew 1. Even luxury brands like BMW AG and Daimler’s Mercedes-Benz plan to bring compact cars to India. a Ford Motor Company.45 per cent. automotive practice. re86 . iKey among others. around five times Ford’s total. The company currently produces diesel engines for the Micra and the Sunny partly with imported components and partly with locally procured components but is working on higher localisation of the engine. power and safety features. In this it has followed the strategy of South Korea’s Hyundai Motor which entered the market in 1996 and immediately began targeting the small car sector where formerly state-run Maruti Suzuki had a virtual monopoly. starting R&D base here. Indeed.000 cars in 2011.Staying relevant Now look at its strategy. partner and leader. one important aspect of the Micra is that from the very beginning.74 per cent of the market share in January 2012. more than 85 per cent of its parts are procured through local vendors (96 in total) and 50 per cent of them are located within Chennai. Despite being having a presence in India for about 14 years now and after ruling India’s premium car segment for years. fuel-efficiency and eco-friendliness. For example. which entered India around the same time as Hyundai but has struggled ever since with sluggish sales of bigger and costlier vehicles. say.Nissan has been careful to cover its flanks — it offers both the Sunny and the Micra in diesel variants. ―Auto companies should also exploit the Indian location for their global strategy. Hyundai India sold 616. It held less than 0. And catering to the expectations of the small car market in India. Petrol currently costs 50 per cent more than diesel which remains subsidised. The Japanese car maker also failed to act fast on the market’s rapid shift towards diesel vehicles. While Nissan started its operations in India in 2005. The company has also been attempting higher localisation in its diesel enginepowered cars. according to reports.

Nissan plans to focus on expanding its distribution network and improving brand visibility besides launching new models. which is likely to drive up competition in the car space with Toyota also drawing up plans to get the Lexus. Africa and West Asia. By the end of March it hopes to increase the production capacity to 4 lakh units. ―Nissan wants to play it big. Going forward In the next one year. By the end of next financial year.000 Micra sub-compacts last fiscal year.‖Currently. says. Another focus area will be beefing up its portfolio of luxury cars in the country. 80 per cent of the vehicles’ production. The reason is simple: It has to compete with manufacturers like Mercedes Benz and BMW in the space.‖ While Jain seems content with the company’s growth figures. 87 . It is currently running on a production capacity of 2 lakh units at our plant in Chennai. a majority chunk of Nissan’s production has been directed towards exports with the made-inIndia Micra being sold in several markets globally. Hover Automotive India. During the April 2011-January 2012 period. In a country like India the task becomes slightly complicated as the distribution and after-sale services have to be custommade for different market segments. In the pipeline is the launch its premium car brand Infiniti. CEO. exporting components to other countries etc.In its focus on having a wide retail footprint. Tokuyama says. Nissan has followed Suzuki in India.416 units of India-built Micra cars during the period. Localisation will help keep the prices low (CBUs attract high import duty). At the launch time of Micra we had 14 operating dealers and then in the next 20 months we opened 50 dealerships across India. The company exported 60. Experts say that for a relatively late entrant like Nissan. while sales in India will remain its first priority. a key determinant of success will be how fast it is able to ramp up its distribution network. rising input costs have recently compelled Nissan to hike the prices marginally. the company is looking to export its India-made cars to some markets of Europe. we should be 100-plus. Plus India’s car assembly regulations mandate higher local content. Nissan wants to assemble the brand in India. Nissan’s sales and marketing partner in India. It took seven to 10 years for many other original equipment manufacturers to reach such numbers that we have. which have places a great onus on localisation. Depending on demand. the Oragadam plant’s total production for Nissan stood at 103. Only then a global auto company can exploit the potential of a country in a holistic way. Dinesh Jain. rather than importing the cars as CBUs. We are already catering to about 75 per cent of the market for cars in India across 20 states and Union Territories.directing component suppliers.Capacity expansion is also on the cards for Nissan.437 units and the company exported 84.

China has also joined the green initiative and has 88 .4 billion to boost the development of electric vehicles.Hyundai poaches another executive from Maruti Suzuki: South Korean carmaker Hyundai Motor India has poached Rakesh Srivastava. Almost 17 European Union nations including UK. 2012. Srivastava was until recently the chief general manager & commercial business head at Maruti Suzuki India. Is India ready for a green drive? Three lakh electric vehicles on the roads by 2020 would mean a reduction of over 16 lakh metric tons of pollution and savings of over Rs 3. It's the largest market for luxury cars and predominantly consumers end up buying top-end variants across all segments right from compact Alto to top-end Mercedes Benz S Class. Belgium.Maruti spokesperson did not deny the development. and placed him as the vice-president for its sales operations across India. while Hyundai comes a distant second with 15% of the pie. Italy and Spain provide specific tax rebates to promote usage of electric cars. as reflected by the increasing focus on electric vehicles." the company said in an email response. France. the marketing head for the northern region for Maruti Suzuki. Volkswagen. They compete with bigger global rivals like Toyota. Saxena is now a key member of the HMIL team and drives the entire operation for the Korean company in a leadership role . another marketing veteran from Maruti. sales and marketing in India. Honda and Ford. He was the zonal head for the entire north market. "Rakesh Srivastava has joined Hyundai Motor India as vice-president national sales with effect from April 2.Hyundai confirmed the move.Go Green’ is the motto for all leading economies of the world. General Motors. which is the largest and most crucial market for any carmaker in India. "It's the largest market with customers carrying higher propensity to spend.700 crore in foreign exchange over the same period." said a Mumbai based analyst.This is the second major placement for Hyundai after it snared Arvind Saxena. but declined to comment. Hyundai Motor India is the main rival to the market leader Maruti Suzuki India. into its fold as vice-president marketing & sales in November 2005.Analysts tracking the auto industry say the north plays a decisive role for the success of any automotive company.as director. US President Obama has envisioned a target of one million electric cars on US roads by 2015 and allocated USD 2. Maruti Suzuki still rules the Indian market with a 38% market share.

India also has the maximum market potential owing to an established auto component infrastructure. However. most manufacturers are planning to launch vehicles in other countries or have already launched electric cars globally like Nissan with Leaf and Mitsubishi with iMiEV. Since these cars can run approximately 80 km on one charge. Once the supportive government policies are formulated the market for these vehicles would become developed. high urban congestion and the presence of a large domestic market. the National Council for Electric Mobility (NCEM) which would have representation by various ministries to devise a holistic policy for promotion of electric vehicles in the country. they are recommended for short distances as charging infrastructure is not developed in the country. parking spaces in malls and offices have been equipped with charging points for electric cars. However.plans to produce one million electric vehicles annually by 2015. it is important to develop rapid charging stations which can provide quick charging in lesser time. There have been initiatives under which BSES in Delhi established charging ports in 50 locations across its sub-stations in the city. Electric vehicles are becoming popular among housewives and students who don’t have stringent commuting requirements. The Ministry of New and Renewable Energy has been the frontrunner in taking initiatives for promotion and adoption of electric vehicles. they are playing it safe in India by watching the government movements and would eventually target Indian market only if the policies formulated under National Council for Electric Mobility are favorable. infrastructure is also another concern for electric vehicles in India. In fact. However in India. Likewise in Bangalore. 89 . Also increasing crude oil prices are driving demand for these vehicles.Price positioning is the main concern for electric and hybrid vehicles. we are still testing the waters to understand the sustainability of these vehicles in the long run. The Prime Minister Dr Manmohan Singh also announced the formulation of an apex body. the ministry formulated the Alternative Fuels for Surface Transportation Programme under which it provided 20 per cent subsidy to the manufacturers. low manufacturing and R&D costs.Besides price. owing to the expensive battery costs. The main advantage of electric vehicles besides low pollution is that running cost of an electric vehicle is much lower vis-à-vis conventional vehicle. mechanical hardware availability. In November 2010. Besides. Reva is priced at a price point which is comparable to other petrol-driven Asegment cars while similarly Toyota Prius is positioned in a price category which falls in the luxury segment. The high price combined with low consumer awareness and environmental sensitivity is leading to the big question on whether India is ready for such vehicles.

if we are trying to reduce the carbon footprint by decreasing the fuel-driven vehicles. or on the contrary are we burning more coal in the thermal stations to generate the required electricity for charging these vehicles. Special purpose companies would be established for project implementation.700 crore in foreign exchange and significant health costs savings. The cars can only cover short distance of about 80 km per charge and hence the value proposition for electric vehicle as a first car is also currently non-existent as compared to the petrol vehicle. 90 . maintenance and management of smart cities. Reuse and Reduce. and scooters which could result in a reduction of over 16 lakh metric tons of pollution by 2020. India’s population in cities is expected to grow manifold to a staggering 200 million while pollution is expected to grow by five times as compared to 2010. JGC Corp and Toshiba are working along with State and Central governments to design and build these eco-friendly smart cities. smart cities are being developed which are focused on promoting electric vehicles usage.The key challenge here is that for a developing country like India where we are struggling to deal with problem of electricity shortage. Smart cities are going to be built under the main objective of 3-Rs: Recycle. a majority of the total vehicles in the US and the UK were electricity based.The whole phenomenon of electric vehicles have picked up in the recent years owing to the increasing oil prices and pressure on developed nations to reduce the carbon footprint. Toyota City and Yokohoma. cars. Japanese corporations such as Hitachi. do we have enough resources to build charging infrastructure for electric vehicles. transport contributes to 7 per cent of total greenhouse gas emissions while electricity contributes to 35 per cent. As per statistics in India. It is desired to have 3 lakh electric vehicles on the roads by 2020. Shendra.By 2020. Globally. These cities are being designed in association with Japanese firms like Hitachi. including three-wheelers. operation. Mitsubishi. It would focus on promoting energy-efficient facilities with networking function along with environmentally friendly public transportation system and personal vehicles. Changodar and Dahej to be built along the Dedicated Freight Corridor. It is interesting to note that electric vehicles were introduced in 1830s while back in 1900. Also it is difficult to assess in the long run. Thus it is certainly a case of reinventing the wheel with India still gearing up to join the green drive. Indian government is also planning four smart cities in Manesar. Mitsubishi and Toshiba and would be would be based on successful models of Japanese cities Kitakyushu.Customer perception and outlook further pose the challenge of product acceptability in India. With this tremendous growth has emerged a very critical issue of keeping air and noise pollution in urban areas under control. savings of over Rs 3. Electric vehicles are perceived to be under powered vehicles at higher cost.

Government initiatives are going to be one of the major drivers for bridging the gaps between consumers and electric cars manufacturers. charging infrastructure and rebates would boost the adoption of these vehicles in future. ―Are we ready to bring about the green wave of change?‖ 91 . Consumers are also gradually becoming conscious about the use of cleaner technologies with the key question now being. All leading manufacturers are eyeing India as a key market for the electric vehicles provided the government implements favorable policies. Various companies are also taking initiatives to promote electric vehicles as a part of their corporate social responsibility. Reduction in cost of vehicles and providing special benefits of parking.

This ensured that vehicles produced in India conformed to the standards of the developed world.000 rupees earlier. The move is aimed at helping India emerge as a hub for global manufacturing and sourcing for auto parts.000 rupees per vehicle from 20. motivate many foreign commercial vehicle manufactures to set up shops in India. FIIs including overseas corporate bodies (OCBs) and NRIs are permitted to invest up to 49 percent of the paid-up equity capital of the investee company. to set up an expert group to advise on a viable and sustainable system of pricing petroleum products. 92 .3 Government Policies Towards Indian Automobile Industry Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years.  Investments in making auto parts by a foreign vehicle maker will also be considered a part of the minimum foreign investment made by it in an auto-making subsidiary in India. Automatic approval for foreign equity investment upto 100% of manufacture of automobiles and component is permitted.   Specific component of excise duty applicable to large cars and utility vehicles will be reduced to 15. The policies adopted by Government will increase competition in domestic market. thanks to low costs and government policies it soon faces stiff competition from it multinational competitors all eyeing for a share in the ever growing Indian autosector. subject to approval of the board of directors and of the members by way of a special resolution.5. Though it has an advantage in India.  The announced reduction on the basic customs on bio-diesel is great news for all companies working on environmental saving technologies. as this will surely had an impact on the Automobile Industry. whom will make India as a production hub and export to nearest market.    Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved majority foreign equity ownership. The Proposal by the Govt.

CHAPTER VI INDIA AND CHINA: OVERVIEW OF THE INDUSTRY 93 .

Domestic car sales in China is xpected to grow at 10% each year and is expected to account for over 15% of the global growth in the car sales. which act as non-tariff barriers to Chinese imports. Thus not too many car manufacturers have reached their economies of scale so far.these countries have one of the worst cost structures for the car industry. Firstly. The low-end Indian models competing essentially on price might have to bear the marginal decrease in sales due to the imports.In addition .6. Given the capacity –intensive nature of the industry. The government has also imposed strict emission norms. the logic of Cheap-labor has not worked to be too profitable . Component Exports: The area of major competition for the Indian auto industry is in the component sector. There might have been evidences of rapid growth in the short term but the options are limited for potential entrants. The Auto Industry contributes to nearly 4% of India’s GDP whereas a higher percentage is deployed in the case of china . given the inefficient supply chains and fragmented distribution systems.2 Framework for the Analysis: 6.2. The market on the Pacific rim alone cannot support the kind of volumes expected to run sustainable operations in these countries. These countries represent a huge potential market in the long term. With the accession to WTO and the liberalization of the two economies. global sourcing of components from china brings savings of nearly 17-20% to the table(as against the 15-17% in the case of India) mainly due to tehri scale of 94 .1 Assessment of the Chinese threats & weaknesses of the Indian Players Two Wheelers: Import of two wheelers in the Indian market is unlikely to pose a serious threat to Indian players despite the low price tags mainly due to two reasons-low perceived quality levels of the Chinese vehicles and widespread availability of retail financing for twowheelers in India which makes Indian bikes easily available to all household.Both countries had long followed strict FDI norms into these sectors and high import tariffs to support domestic players. a large number of global p layers have set up plants in India and China and in the process burnt their fingers in anticipation of the large volumes. 6.as the auto majors have realized .1 India and China :overview of the auto Industry China and India account for less than 1% of the cars in use today with fewer than 10 cars per thousand people.

Indian component exporters might lose out in the price wars if they start with a higher cost base. local government concessions. lower transactional costs(30% lower for auto components manufacturers in China). Component Imports: The structure of the component industry in India shows a largely fragmented industry (implying low scale operations0with just 28 players with a turnover of greater than 30 million USD. low-technology parts).With the increasing competition for orders from global OEMs.061 kWhr/USD in china as against 0.095 kWhr/USD in India)reduced freight.lower power costs(0. Hence the Chinese dragon could eat away a diverse set of small and medium enterprises in India through low cost imports of components (primarily in lowend. 95 .economies .

CHAPTER VII RECOMMENDATIONS 96 .

It is the time for Indian manufacturing sector as a whole to hone its competitive edge. as an opportunity to learn would find it perfectly feasible to do so. Utilize existing relationships with MNC carmakers to achieve global recognition. Increase the quality consciousness of workers through training programmes (utilize the Ministry of Industry automotive cess fund for conducting training programs to boost productivity of SMEs in the component industry)     Leverage IT to drive down transaction costs and time-to-market. 97 . They would have to develop new competencies and radically overhaul existing ones if required and companies which view their international expansion. Learn from strategic alliances formed with other firms worldwide-utilize the exposure to different companies with complementary capabilities and a mutual interest in cooperation. Improve spending on R&D and employ flexible manufacturing to design and produce new products.RECOMMENDATIONS The imperatives for all the firms in the Indian auto industry as follows:   Increase scale of operation through Greenfield projects or M&As (to prevent subscale manufacturers from losing out to global majors.

CHAPTER VIII CONCLUSION 98 .

CONCLUSION Indian Automobile Industry is in the growth phase and the expected growth rate is 9-10% for FY2009-10 compare to last year growth rate which was just 0. According to Indian Statistical Organization the per capita income (Rs. The growth rate of Indian Automobile is so fast that by 2016 Indian Industry will be world 7 largest manufacturer in all sections. declining margins.38000) is increasing and national income at the rate of 14. Access to distribution network is important. increasing disadvantages of being subscale and emergence of a certain set of new oppurtunities for Indian Firms. There are certain choices that could decide the future existence of the Indian auto firms –choosing to ally or saty alone and also choice of segment of the value chain to focus on component suppliers and module suppliers. The Indian auto market is still untapped the majority of the people in country don’t own a four wheeler and all the major auto companies are trying to increase their sales by several moves.7% and the above facts and figures in our study also support this truth. The amount of investment in capacities by passenger car manufacturers in turn depends on the production Threat from the new players: Increasing Most of the major global players are present in the Indian market. Disaggreaation of the automotive value chain has led to increased competition. Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital.4% which shows potential to buy vehicle in auto industry. Like TATA has launch NANO the people’s car and now TATA motors is also planning to come out with an electric car as well as hybrid car. Critical Issues and Future Trends The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. 99 . moreover in two wheeler segment many companies like Mahindra and Mahindra. This is related to the quantum of investments made by the players in capacity creation and the selling price of the car. Lower tariffs in post WTO may expose Indian companies to threat of imports. Indian Automobile has a lot of scope for both two wheelers and four wheelers due to development in infrastructure of the country and especially the rural sector in which demand of two wheeler has increased even in recession. few more are expected to enter.

the Indian passenger car market is moving towards cars of higher capacity. (compact and mid size segments). even though the ratio of sales to capacity (an important indicator of the ability to reach break-even volumes) of the domestic car manufacturers have improved.Increased competitive intensity has limited the pricing power of manufacturers. This apart. competition is likely to intensify in the SUV segment in India following the launch of new models at competitive prices. In recent years. Although the Mini segment is expected to sustain volumes.Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities for semi knocked down kits or complete knocked down kits.Product differentiation via new features. New multinational players may enter the market.Rivalry within the industry: High There is keen competition in select segments. the growth rates are likely to vary across segments. it is still low for quite a few car manufacturers in India. Automotive players are rationalizing their vendor base to achieve consistency in quality. Thus the ability to innovate is critical. it is likely to continue losing market share. in terms of engine capacity. and automotive exports are likely to gain increasing importance over the medium term. India is also likely to increasingly serve as the sourcing base for global automotive companies. Additionally. However. 100 . growth in the medium term is expected to be led largely by the Compact and Mid-range segments. Threat from substitutes: Low to medium With consumer preferences changing. Market strength of suppliers: Low A large number of automotive components suppliers. improved performance and aftersales support is critical. inter product substitution is taking place (Mini cars are being replaced by compact or mid sized cars). Market strength of consumers: Increasing Increased awareness among consumers has increased expectations.

CHAPTER IX BIBLIOGRAPHY 101 .

EBSCO HOST(database) PROWESS(database) INDIA STATS(database) Peterson.org.in FDI statistic government of India India Central Statistical Organization Economic Times Some more….rbi.co.in www.yahoofinance.com www..moneycontrol.googlefinance.BIBLIOGRAPHY MAGZINES:  Business Today Business World News Papers:    The Economic Times The Indian Express The Business Standard The Hindustan Times WEBSITES:              www. Lewis and Jain: Managerial Economics 102 .google.com www.com www.com www.worldfact.