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Porters Five Forces Analysis

Competitive Rivalry
In 1990s serious competition began to emerge with new vehicles, designs and
concepts entering the market.
Different companies providing different incentives to attract customers.
The Industry is a mature one and thus competition is fierce and rivalry will only
Threat of New Substitute Products increase over time.
Entrants (Low) (Low) Threat of New Entrants
Due to its High capital requirement, very few new players are able to venture in
this Industry.
Existing major multinational players benefit from economies of scale and scope
and makes it very difficult for a new entrant to offer competitive pricing.
Rivalry Substitute Products
(High) Increasing fuel prices have been pushing some urban drivers to use public
There is no realistic substitute to motor vehicles with the exception of large
scale transportation that railways provide
Bargaining power of Suppliers
Bargaining power of Bargaining power of Bargaining power of customers
Most of the auto component
Buyers have the power to walk away
Customers (high) Suppliers (Low) manufacturers are specialized in
from a purchase that they don't like
some segments and so bargaining
and take their purchase elsewhere.
power of suppliers is low
Market trends lure large shares of the
Cost of inputs-labour, parts, raw
buyer market from one auto-maker to
materials can have a significant
Strengths Weakness
1. Continuous product innovation & 1. Growth rate of Automobile industry is in
technological advancement hands of the government.
2. Increase in demand of luxury commercial 2. Automobile Industry has shifted from
vehicles demand to supply market.
3. Growth shifting to Asian markets. 3. Few controversies relating to recalling
4. Manufacturing facilities in Asian nations to vehicles on account of some technical dis-
control cost functionality.

1. Presence of large number of players in
1. Introducing fuel-efficient vehicles the Automobile industry results into
2. OEMs collaborating with suppliers and extensive competition.
experts outside the traditional auto industry. 2. Fluctuations in the fuel prices remains
3. with the increase in nuclear families there the determining factor for the growth of
has been increase in demand of two-wheelers the Industry.
& compact cars 3. ROI out of R&D is yet to be capitalized.
Growth Drivers
Indian population overall will likely move up the income curve
Growing Nearly 75 to 80 percent of the new vehicle purchases are done by using bank loans.

FDI encouragement in India has boosted the growth of this Industry (100% FDI).
Government of India is focused on establishing India is a major auto manufacturing
Support hub.

Increase in investment from both the domestic as well foreign players.

Investments Demand has been high and also the returns are very attractive.
Rising Income and Middle- Class Population driving growth in
domestic demand
GDP per capita has increased from $ 1,430.19 in 2010 to $ 1,805.57 in 2015 and is
expected to reach $ 2,128.78 by 2018.
Young population of the country is boosting the demand.
Development of roadways and greater market access has increased the demand
for commercial vehicles.
Due to the rising income and expansion of middle class, the consumer base has
Opportunities in India
Private players, such as Hyundai, Suzuki, GM, keen to set up R&D base in India.
There is a strong education base and large skilled English-speaking manpower.
Firms both National & Foreign are increasing their footprints with over 1,165 R&D centres.
Bajaj Auto, Hero Honda & M&M plan to jointly develop a technology for 2-wheelers to run on natural gas.
Mahindra & Mahindra targeting on implementing digital technology in the business.
By 2018, Hyundai is planning to enter the hybrid vehicles segment, to explore alternative fuel technology &
to avail the government incentives.
General Motors, Nissan & Toyota announced plans to make India their global hub for small cars.
Maruti Suzuki launched facelift version of Alto 800, after the success of earlier model.
Passenger vehicle market is expected to touch 10 million units by 2020.
Benefits of GST
The two taxes charged to the end consumer currently are excise and VAT, with an average combined rate of
26.50 to 44% which is higher than the expected rates of 18 and 28% under GST.
The importers/dealers would be able to claim the GST paid on goods imported/sold.
The automobiles are kept under the 28% bracket and a list of cess to be levied on a different kind of
automobile has also been declared by the Indian government.
GST will be beneficial for the people in the market for small family cars like Alto, Santro, Nano, Datsun go as
a minimum cess of 1% has been charged over and above the GST rate of 28%.
Implementation of GST would reduce the cost of manufacturing of cars due to the subsuming of different
taxes levied currently.
the taxes would be charged on consumption state rather than the origin state, which would give a boost to
the growth rate of the automobile industry.
Ashok Leyland - Introduction
Ashok Leyland is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer
of buses in the world and the 16th largest manufacturer of trucks globally.
With a turnover in excess of US $ 2.3 billion (2012-13), they are one of the most fully-integrating
manufacturing companies.
Headquartered in Chennai, India, the manufacturing footprint spreads across the globe with 8 plants.
In 2012, they introduced Indias first 37-tonne haulage truck.
For light commercial vehicles they have a joint venture partnership with Nissan Motor Company.
70 million passengers use Ashok Leylands buses everyday.
The largest fleet of logistics vehicles deployed in the Indian Army and significant partnerships with armed
forces across the globe.
Indias first hybrid electric vehicle was developed in 2002 by Ashok Leyland.
Commercial vehicle manufacturers in India

Eicher Motors
Hindustan Motors
Mahindra & Mahindra
Tata Motors
Ashok Leyland
Tatra Vectra Motors Ltd.
SML Isuzu
Bajaj Auto