INDIAN AUTO INDUSTRY
Facts

Second Largest two wheeler manufacturer in the world Largest tractor and three wheeler manufacturers in the world Fourth largest Commercial vehicle market in the world Eleventh largest passenger car market in the world

Trends
Growth of exports of 32.8 % FY 2008-09. Output of commercial vehicles has grown 2.8 times compared to the 2.2 times increase in passenger cars For every passenger car turned out, there are almost 7 two-wheelers produced

Growth Potential
Can become World s third largest automobile market in 2030. By 2016, Automotive sector can DOUBLE its percentage contribution to GDP from current levels of 5% (US$50 billion) to 10% ($180 billion).

Suzuki joint venture to form Maruti Udyog ‡ Joint ventures with companies in commercial vehicles and components Players ‡ Maruti Udyog ‡ Hindustan Motors ‡ Premier ‡ Telco ‡ Ashok Leyland ‡ Mahindra & Mahindra 1993-2007 Delicensing of sector in 1993 ‡ Global major OEMs start assembly in India (Toyota. alignment of duty on components and parts to ASEAN levels ‡ Implementation of VAT Era of globalisation and evolution of India as a global manufacturing hub . Hyundai) ‡ Imports allowed from April 2001. Honda.THE GROWTH JOURNEY Pre 1983 Closed market ‡ Growth of market limited by supply ‡ Outdated models Players ‡ Hindustan Motors ‡ Premier ‡ Telco ‡ Ashok Leyland ‡ Mahindra & Mahindra 1983-1993 Japanisation . Ford. GM.GOI.

For example in the US.GLOBAL SCENARIO ‡ The car industry generates large amount of employment opportunities in the economy. ‡ The global automotive car market is growing at a rate of only 2 percent per annum and is not expected to pick up in the near term. ‡ Worldwide the trend is towards ensuring that one's products are superior in terms of quality. . every sixth worker is involved in the making of an automobile.

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will cross 3 million in 2015 .INDIAN SCENARIO ‡ Automobile exports crossed $1 billion in 200405 ‡ $2.2005-06 ‡ Sustaining the growth rate becomes crucial ‡ 7 CARS PER 1000 PERSONS ‡ Passenger car market 1 million in 2003.28 billion.

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PEST ANALYSIS Political ‡Environmental regulations and protection ‡Govt. ‡Exchange rates and inflation rate Technological ‡ Industry focus on technological effort ‡ Rising costs of developments ‡ New model development is cautious . policies relating to the industry ‡International regulations and restrictions ‡Political stability Social ‡ Income distribution ‡ Population growth rate ‡ Market movement from petrol to diesel ‡ Manufacturing to a consumer dictated market Economical ‡Overcapacity ‡Shortage of capital ‡Industry at the whim of the business cycle ‡Difficulty in sustaining competitive ads.

Porter 5 Forces Analysis .

. ‡ Indian Auto Companies have achieved a High level of Productivity by embracing Japanese Concepts and Best Practices ‡ Indian Auto Companies have proven capability to supply on JIT basis out of Warehouses situated near the Customers. development. ‡ Design. and production costs in India are lower than the developed markets. ‡ The country is also building a reputation in frugal engineering.COMPARING WITH GLOBAL PLAYERS ‡ Low cost advantage primarily on account of vast availability of low cost-high skilled manpower. or building low-cost products under tight budgets.

000 of the population. ‡ 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. even twowheeler ownership is below 100 per 1. . ‡ Despite domestic sales of over 10 million units annually. India also has the opportunity to emerge as a global manufacturing base for select product segments.FUTURE OUTLOOK ‡ The size of the Indian automotive industry is expected to grow at 13 per cent per annum over the next decade to reach around US$ 130159 billion by 2016 ‡ Even after the spectacular growth in recent years. the Indian automobile market still has considerable room to grow.

‡ It is possible that the government will favour mass transport systems for the large cities. .FUTURE CHALLENGES ‡ Since the demand surge for automobiles in recent years is directly linked to overall economic growth and rising personal incomes. which may restrict the demand for personal vehicles. ‡ It is also likely that intense competition will erode the profitability of manufacturers. industry growth will slow if the economy weakens.

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