Auto industry-analysis

1. Automobile INDUSTRY ANALYSIS
Presented by:
RAKESHKUMAR N K.
Kohinoor business school

2. History
Indian market before independence was seen as a market for imported
vehicles while assembling of cars manufactured by General Motors and
other brands was the order of the day.
Indian automobile industry mainly focused on servicing, dealership,
financing and maintenance of vehicles. Later only after a decade from
independence manufacturing started.
India's Transportation requirements were met by Indian Railways
playing an important role till the 1950's.
Since independence the Indian automobile industry faced several
challenges and road blocks like manufacturing capability was restricted
by the rule of license and could not be increased but still it lead to
growth and success it has achieved today.

3. Automobile industry
 Tenth largest in the world with an annual production of
approximately 2 million units
 Expected to become one of the major global automotive industries in
the coming years
AUTOMOBILE
PASSENGER COMMERCIAL
2 WHEELER 3 WHEELER
VEHICLE VEHICLE

4. India is….
• Largest three wheeler market in the world
• 2nd largest two wheeler market in the world
• 4th largest passenger vehicle market in Asia
• 4th largest tractor market in the world
• 5th largest commercial vehicle market in the world

5. Evolution of Automobile Industry
Early to mid 90s
Initial Years •Seller’s market and long Mid 90s – Early 2000s
Manufacturing was licensed waiting periods
•High Customs duty on import •Buyers market
•Steep excise duties & •Delicensing in 1993
•sales tax •Increase in
•2 Major players: •Removal of capacity Indigenization
Premier Automobiles Ltd restrictions
& Hindustan Motors •Easy Auto finance
•Decrease in customs &
1980s excise •Manufactures
•Entry of MUL, better product, diversifying into related
with government support •Auto finance boom- activities: finance lease,
more players (foreign fleet management,
•Seller’s Market banks & non banking insurance and used car
companies, better market
•Long Waiting Periods schemes.

6. Trends in Automobile sector

7. Continue………….
Automobile Production Trends (Number
of
Vehicles)
Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Passenger
723,330 989,560 1,209,876 1,309,300 1,545,223 1,762,131
Vehicles
Commerci
203,697 275,040 353,703 391,083 519,982 545,176
al Vehicles
Three
276,719 356,223 374,445 434,423 556,126 500,592
Wheelers
Two
5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,049
Wheelers
Grand
6,279,967 7,243,564 8,467,853 9,743,503 11,087,997 10,833,948
Total

8. Automobile Domestic Sales Trends
(Number
of Vehicles)
Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Passenger
707,198 902,096 1,061,572 1,143,076 1,379,979 1,547,985
Vehicles
Commercia
190,682 260,114 318,430 351,041 467,765 486,817
l Vehicles
Three
231,529 284,078 307,862 359,920 403,910 364,703
Wheelers
Two
4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,248,589
Wheelers
Grand
5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,648,094
Total

9. Automotive industry crisis
• global financial crisis in the auto industry that began
during the latter half of 2008
• weakened by the substantially more expensive
automobile fuels linked to the 2003-2008 oil crisis
• the global financial crisis and the related credit
crunch placed pressure on the prices of raw materials
• In 2009, the vehicle companies of the world are being
hit hard by the economic slowdown across national
boundaries

10. BUDGET 2008-09
consumption-driven growth
policy on inclusive growth
attempt to address farmer's woes

11. Pre-budget Demands of the
Automotive Industry
• The adoption of a uniform excise structure of 16
percent across all passenger cars and utility vehicles
• The reduction of excise duty on two-wheelers and
three-wheelers from 16 percent to 8 percent to offset
declining sales
• The provision of benefits for the development of
hybrid technology
• The offer of liberal credit to the agricultural sector to
encourage the purchase of tractors

12. Budget Proposals Directly Impacting
the Indian Automotive Industry

13. Analysis of current scenario
 High interest rates, high domestic oil prices and
inadequate vehicle financing have continued to affect
the overall automobiles sector
 The current slowdown in economic growth and
automobiles industry has further deteriorated due to the
global financial market crisis which has created
volatility in stock markets and exchange rates and
aggravated lack of liquidity

14. Continued…....
 Automobile companies are reducing production by
shutting plants for a few days to avoid inventory
build-up and in anticipation of seeing further
downside

15. Volume Growth of Automobile Sector in Print during 2008
Compared to 2007, Print advertising of Automobiles
dropped by 13% during 2008..

16. Share of categories of Automobile sector in Print during 2008
'Passenger Vehicles' were the front runners in Print advertising with
64% share followed by ‘Motorcycle’ and ‘Commercial Vehicles’ with
17% and 7% share respectively during 2008.

17. State-wise share of Automobile sector in Print during 2008

18. Tally of Automobile Advertisers in Print during 2008
• 4% rise in number of Automobile advertisers in Print during 2008 compared to 2007

19. Usage of Sales Promotions ad campaigns in the Automobile sector
More than 55% of Automobile ads in Print were for Sales Promotion
during 2008.

20. KEY ENABLERS KEY CHALLENGES
• Favorable Demographics •Cost Pressure
• Improving income curve •High Expectations
• Reducing interest rates •Inadequate Infrastructure Development
Key Focus Areas
• Product development( includes collaboration, new products developed)
• Vendor base (quality of vendors, skill levels , size etc.)
• Manufacturing capability( quality levels, productivity & skill levels, technology )
• Service levels
• Supply chain
• Labor law
• Leverage IT
Key Features of Future Auto Policy
• Foreign Direct Investment
• Import tariff
• Incentives for Research and Development (R&D)
• Environmental Aspects
• Other measures

21. Top & Major Manufacturers in Automobile Industry
 Maruti Udyog Ltd.
 General Motors India
 Ford India Ltd.
 Eicher Motors
 Bajaj Auto
 Daewoo Motors India
 Hero Motors
 Hindustan Motors
 Hyundai Motor India Ltd.
 Royal Enfield Motors
 Telco
 TVS Motors
 DC Designs
 Swaraj Mazda Ltd

22. SWOT OF AUTOMOBILE INDUSTRY:
STRENGTHS
Large domestic market-Sustainable labor cost advantage-
Government incentives for manufacturing plants-Strong
engineering skills in design-Able to achieve significant
gains in productivity
WEAKNESSES
Low labor productivity-High interest costs and high
overheads-Rising cost of production-Low investment in
Research and Development

23. OPPORTUNITIES
Commercial vehicles-Heavy thrust on mining and
construction activity-Increase in the income level-Cut
in excise duties-Rising rural demand
THREATS
Rising interest rates-Cut throat competition-Lack of
technology for Indian Companies

24. STRATEGY EMPLOYED BY AUTOMOBILE
 TATA MOTORS
Breadth Strategy:
 It has employed breadth strategy in terms of producing different range of
products inautomobile sector.
For example
 Commercial vehicles
 Truck manufacturer
 Bus manufacturer
 Passenger car
 Military vehicles
 Tata two stretcher ambulance

25. Innovators:
Tata came with the concept of innovation of smallest 4-
Wheleer vehicle in world withTATA NANO.
Also Tata would be launching lithium battery car called
Tata Indica by 2010.
Market Differentiation:
TATA ACE was first mini truck.-It was specifically marketed
for transporters and single truck owners for city and ruralowners
It has become the first choice of transporters and is still rated as
number one utilityvehicle in low weighted transport vehicles.-It is
such a huge success that its electric version is also launched.

26. Cost Control Strategy:
Tata Nano is the biggest example of cost cutting
strategy with first ever car for Rs 1 lakh. It’s the
cheapest ever new car manufactured, popularly
known ascommon man’s car.

27. MAHINDRA AND MAHINDRA
Breadth Strategy (Globally):
It has widely developed breadth strategy in terms of global expansion.
 Mahindra group has a global presence.-Its global subsidiaries include:
 Mahindra Europe based in Italy
 Mahindra USA Inc.
 Mahindra South Africa
 Mahindra China Tractor Co. Ltd
 It also manufactures jeeps and SUV as per the needs of people considering
theGeographical aspects also.
 Certain models of jeep used for tracking and other adventurer purpose which
arelaunched in other countries and not even released in Indian markets.

28. BAJAJ AUTO
Innovators:
 They were the first company to come with concept of gearless 2 –
wheeler vehicles thatwas BAJAJ SUNNY.-Also they came with first DTSI –
engine called BAJAJ PULSAR.
 These two 2-wheeler vehicles were a big revolution in Indian market.
Cost cutting strategy:
 Bajaj Sunny was the cheapest two wheeler gearless vehicle sold in
Indian market.
 Also Bajaj is coming with its smallest and cheapest 4 wheeler cars in terms
of competition with Tata Nano.

29. HONDA CIVIC HYBRID
Innovators:
It has come with luxury cars which run on hybrid battery.A
new revolution for energy conservation technique where
battery will getcharged while the car runs on petrol and
then will automatically get switched to battery mode. It
does save a considerable amount of fuel consumption and
themileage is also extraordinary for this high end
sedan cars.

30. BMW
Market Differentiation
They are the one who have in a true sense
differentiated the market for luxurycar. They have
made an impression that a BMW is owned only by
high society people.
Thus they manufacture luxury cars targeting only
such section of society with allhigh end luxuries
that can be provided in a car at a considerably
high price.

31. MARUTI UDYOG
Breadth Strategy:
 It employs breadth strategy in terms of huge production of vehicles..-Maruti was first
company in India to mass produce and sell a million cars
 It was highly claimed for bringing a market revolution in India and became the
marketleader in auto mobile sector.
 Geographically Maruti services and service stations are found in every part and corner
of India
Cost cutting:
 Maruti has been a leader only due to its very important strategy that it has
always provided cheapest and great quality cars affordable by Indian consumers.
 One of the major reason was also the maintenance of the Maruti cars which
iscomparatively very cheaper compared to other companies.
 No one was able to break market of Maruti Fronti for decades only due its
pricingstrategy
 MILE AND SNOW CLASSIFICATION STATEGY

32. BAJAJ AUTO
ANALYZERS:
BAJAJ AUTO is planning to launch its 2 lacs small car is
an example of analyzer.
It followed the strategy of TATA Nano and found that
there were a definite class and adefinite feasible market of
people interested in small and cheap cars.-Thus it very
tactfully copied the strategy employed by Tata Auto

33. AUDI INDIA
ANALYZERS
Audi did also launched its range of luxury cars in India
after waiting for the results andthe success of BMW in
India.
They did analyzed Indian Market and the response to the
launch of BMW and thenentered the Indian Market.

34. MAHINDRA&MAHINDRA
REACTORS:
 Mahindra group initially was just dealing with under licensing of iconic Willy’s Jeep inIndia.
 The company then branched out in manufacturing light commercial vehicles, tractors
andthen commercial vehicles.-Today it is the leading manufacturer of SUV’S in India.
PROACTORS:
 As already mentioned above following companies can be listed as proactors:
 HONDA CIVIC HYBRID
 TATA NANO
 BAJAJ AUTO
Breadth Strategy:
 The Hero Honda group has been India’s no.1 seller of Motorcycles when you areconsidering
the numbers.
 The Hero Honda has a varied range of Motorcycles in its product portfolio ranging fromhigh
mileage, sports bike, and also the medium segment. It does cater its products toevery
geographical location from rural India to urban India.
 It has proved to be the number one manufacturer of motorcycles all over India in almostall
variants that it does have from 100 cc bikes to 225 cc bikes.

35. KAWASAKI-BAJAJ INDIA
ANALYZERS:
They are the new entrants in the market with their 250 cc
sports bike recently launchedwith the name Kawasaki
Ninja 250 cc.
They did also analyze the market for quite some time and
then went on with the production of the Ninja as per the
Indian roads, taste and pricing. The bike is the best betfor
the Indian sports bike enthusiasts and the youth with the
best experience as well as thesuitability for the Indian
roads.

36. Thank You !