GLOBAL SCENARIO: AUTOMOBILE INDUSTRY

 Evolution of Automobile Industry over Two Centuries  From Steam Engine Petrol Engine Solar & Electric Engine  Revolutionized the future of the world  One of the most dynamic and fast growing industry

TWO WHEELER : INDIA

The Indian two wheeler market has a size of over Rs. 100,000 million.

Contribution largest among all segments in automobile industry Categorization 3 sub-segments, scooters, motorcycles and mopeds Witnessed shift towards motorcycles from scooters Rural areas prefer sturdier bikes Share motorcycle grown from 48% to 58%, scooters declined from 33% to 25%, mopeds declined from 19% to 17% (For year 2000-01.)

HISTORICAL INDUSTRY DEVELOPMENT

India is the second largest manufacturer and producer of two-wheelers in the world. Restrictive policy by the Government of India towards the passenger car industry Rising demand for personal transport Inefficiency in the public transportation system Beginning in the early 50s : Automobile Products of India (API) started manufacturing scooters, later overtaken by Bajaj Auto The only player that has lasted till today is LML Vespa in Scooters. Motorcycle segment, three manufacturers:  Enfield  Ideal Jawa  Escorts.

Law of Demand
Other things being equal, if the price of a commodity falls, the quantity demanded of it will rise and if the price of a commodity rises, its quantity demanded will decline.

Elasticity of Demand
Ep = Where;

q
q

p p

q q p p

Change in Quantity Original Quantity Change in Price Original Price

Factors affecting

Elasticity of Demand
Necessaries and luxuries The availability of substitute Level of income Proportion of income spent Extent of use Time element Durability Habits and conventions

Law of Supply
Other things remaining constant the quantity of a good produced and offered for sale will increase as the price of the good rises and decreases as the price falls.

Elasticity of Supply
Ep = Where;

q
q

p p

q q p p

Change in Quantity Supplied Quantity Supplied Change in Price Original Price

Factors affecting

Elasticity of supply
Nature of the commodity Time factor Technique of production Future expectations

Sales
Category
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Two 50,76,221 56,22,741 65,29,829 76,08,697 84,66,666 80,26,681 84,18,626 Wheelers

PERCENTAGE SHARE OF TWO WHEELERS IN INDIA

Scooters 2004 2005 2006 2007 2008 2009 15.76% 13.31% 11.52% 13.18% 13.70% 13.76% Motorcycles 78.76% 81.64% 83.62% 81.35% 80.79% 80.64% Mopeds 5.48% 5.05% 4.59% 5.20% 5.24% 5.55%

TWO-WHEELER SALES AT A GLANCE

Details
Scooter Motorcycles Mopeds Electric 2wheelers Total

Apr 2009-May2010
209,031 1,282,316 83,658 1,332 1,576,337

Apr 2008-May2009
182,293 1,172,775 69,570 2,390 1,427,028

TWO WHEELER PRODUCTION TRENDS

TRENDS IN THE PLAYER ANALYSIS

TWO-WHEELER

INDUSTRY

1. Hero Honda Largest two-wheeler manufacturer in the world 2. Bajaj Auto 2nd largest two-wheeler manufacturer in the world 3. TVS Motors 3rd largest manufacturer with facilities in India & Indonesia 4. Honda Motors Recently entered Indian market 5. Suzuki Recently entered the Indian market

Oligopoly Competition
Few sellers Importance of advertising and selling costs Group behavior Market leader Interdependence Rigid prices Possibility of cartel Kinked demand curve

Kinked Demand Curve

References
Managerial Economics By:- Dominick Salvatore http://www.scribd.com/doc/21293501/marketin g-strategies-of-two-wheeler-dealers Honda showroom, Wakadewadi TVS showroom, Wakadewadi www.google.com

THANK YOU