PESTLE ANALYSIS ON

AUTOMOBILE INDUSTRY IN
INDIA
BY-MANISH BADHIYE
 Introduction
AUTOMOBILE SECTOR
Mainly engaged in manufacturing motor vehicles or motor
vehicle engines.
Primary activities are:
Motor cars manufacturing
Motor vehicle engine manufacturing
Major products and services are:
Passenger motor vehicle (Passenger Cars, Utility Vehicles & Multi
Purpose Vehicles)
Commercial Vehicles (Medium & Heavy and Light )
Two Wheelers and Three Wheelers
Landmark of Indian automobile
industry
1897 First person to own a car in IndiaMr. Foster of
Crompton Greaves Company, Mumbai
1901 First Indian to own a car in India - Jamsetji Tata
1905 First Woman to drive a car in India
-Mrs.Suzanne RD Tata
1945 Tata Motors
1947 Mahindra & Mahindra Limited
1948 Ashok Motors
1981 Maruti Suzuki
1994 Mercedes-Benz
1995 Ford Motor Company
1996 Hyundai Motor Company
2005 BMW
2007 Audi
2009 Land Rover and Jaguar
TOP 10 AUTOMOBILE COMPANIES IN INDIA
 PESTLE
ANALYSIS
POLITICAL
In 2002, the Indian government formulated an auto policy that
aimed at promoting integrated, phased, and self-sustained growth of
the Indian automotive industry.
Allows automatic approval for foreign equity investment up to
100% in the automotive sector and does not lay down any minimum
investment criteria
Govt. has granted concessions, such as reduced interest rates for
export financing.
Formulation of an appropriate auto fuel policy to ensure availability
of adequate amount of appropriate fuel to meet emission norms
Establish an international hub for manufacturing small, affordable
passenger cars well as tractor and two wheelers
 Ensure a balanced transition to open trade at
minimal risk to the Indian economy and local
industry
Assist development of vehicle propelled by alternate
energy source.
Lying emphasis on R&D activities carried out by
companies in India by giving a weighted tax
deduction of up to 150% for in house research and
R&D activities.
Plan to have a terminal life policy for CVs along
with incentives for replacement for such vehicles
Economic

Economic pressures on the industry are causing

automobile companies to reorganize the traditional
sales process.
Weighted tax deduction of up to 150% for in-house
research and R & D activities
More than 90% of the CV purchase is on credit.
Finance availability to CV buyers has grown in scope
during the last few years.
The increased enforcement of overloading restrictions
has also contributed to an increase in the no. of CVs
plying on Indian roads.
Several Indian firms have partnered with global
players. While some have formed joint ventures with
equity participation, other also has entered into
technology tie-ups.
Exports have decreased in FY 2012-13 , But domestic
sales have increased
The Indian economy has grown at 8.5% per annum.
The manufacturing sector has grown at 8-10 % per
annum in the last few years
Contributes about 4 per cent in India's Gross
Domestic Product (GDP).
5 percent in India's industrial production.
Generated about 4.5 lakh of direct employment
Social
Since changed lifestyle of people, leads to increased
purchase of automobiles, so automobile sector have a
large customer base to serve.
The average family size is 4, which makes it favorable
to buy a four wheeler.
Growth in urbanization, 4th largest economy by ppp
index.
Upward migration of household income levels.
85% of cars are financed in India.
Car priced below USD 12000 accounts for nearly
80% of the market.
Vehicles priced between USD 7000-12000 form the
largest segment in the passenger car market.
Indian customers are highly discerning, educated and
well informed. They are price sensitive and put a lot
of emphasis on value for money.
Preference for small and compact cars.
Preference for fuel efficient cars with low running
costs
 Technology

More and more emphasis is being laid on R & D activities carried

out by companies in India
Technological solutions helps in integrating the supply chain,
hence reduce losses and increase profitability.
The Government of India is promoting National Automotive
Testing and R&D Infrastructure Project
(NATRIP) to support the growth of the auto industry in India
With the entry of global companies into the Indian
market, advanced technologies, both in product and
production process have developed
With the development or evolution of alternate fuels,
hybrid cars have made entry into the market
Internet makes it easy to collect and analyze customer
feedback
Few global companies have setup R &D centers in
India.
Major global players like audi, BMW, Hyundai etc
have setup their manufacturing units in India.
Environmental

Physical infrastructure such as roads and bridges

affect the use of automobiles.

Physical conditions like environmental situation affect

the use of automobiles.
Increasing number of vehicles on road is also
increasing the pollution.
Option could be electric vehicles (?)
Best option is Biofuel
LEGAL
The automotive regulations in India are governed by
the Ministry of Shipping, Road Transport & Highways
The principal instrument governing the automotive
sector in India is the Motor Vehicles Act, 1988 (MVA)
along with the Central Motor Vehicles Rules 1989
(CMVR)
The Act governs emission norms and safety standards
in India
For preparing safety standards, consideration is on
various aspects. The Indian standards and norms are at
par with international standards
CONCLUSION
The growing mobility needs of the people in India
augur well for two and four wheeler industry.
The cost advantage that India offers with respect to
product development is fast establishing the country
as an R&D hub.
In addition, the credibility that India has gained as a
cost effective manufacturing base for both small cars
and two-wheelers is fuelling creation of capacities by
all major manufacturers in the country.