Indian Auto Industry

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  • Topic: Automobile industry in India, Tata Nano, Maruti Suzuki
  • Pages : 9 (1821 words )
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  • Published : September 14, 2010
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Indian Auto Industry Current Scenario & Future Trends

Index
 Evolution of Indian Auto Industry Market Segmentation PEST Analysis Porter’s 5 forces Analysis  Obstacles, advantages and opportunities Analysis of Current trends Impact of Union Budget Impact of Tata Nano Impact of Tata Ace Future Trends in auto market

Evolution of Automobile Industry
Initial Years Manufacturing was licensed •High Customs duty on import •Steep excise duties & •sales tax •2 Major players: Premier Automobiles Ltd & Hindustan Motors Early to mid 90s

•Seller’s market and long waiting periods
•Delicensing in 1993 •Removal of capacity restrictions •Decrease in customs & excise •Auto finance boom- more players (foreign banks & non banking companies, better schemes.

Mid 90s – Till now •Buyers market

•Increase in Indigenization
•Easy Auto finance •Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market

1980s
•Entry of MUL, better product, with government support

•Seller’s Market
•Long Waiting Periods

Market Segmentation
• Two Wheeler • Three Wheeler • Passenger Vehicle(PV) • Commercial Vehicle(CV)* Category wise market share in 08-09
2 wheelers 3 Wheelers Passenger Vehicles Commercial Vehicles

4% 16% 4%

76%

* This also includes Tractor volumes

Market Growth Rate
Total Industry Vs. Passenger Car Segment Growth Rate
Passenger Cars 37% 22% 15% 17% 8% 15% Total Industry 35%

Total Industry Vs. Commercial vehicle Segment Growth Rate
Commercial vehicle 29% 17% 11%15% 33% Total Industry

18% 14%

15% 15% 3% 3%

14%

6%
-2% 2007-08 3%

2003-04

2004-05

2005-06

2006-07

2008-09
-24%

2003-04

2004-05

2005-06

2006-07

-2% 2007-08 2008-09

Total Industry Vs. Three Wheeler Segment Growth Rate
Three Wheelers 29% 28% 15% Total Industry

Total Industry Vs. Two Wheelers Segment Growth Rate
Two Wheelers 16% 17% 17% 15% 11%14% 5% Total Industry

15% 11% 14%

17%
5%

16% 15%

0%
2005-06 2006-07

2003-04

2004-05

-2% 2007-08 2008-09 -10%

3% 2003-04 2004-05 2005-06 2006-07 -2% 2007-08 -5%

3% 2008-09

PEST Analysis
Political
    

Economic (-)#
     

Legislation (M*)

Home economy situation and trends (H) Overseas economies and trends(H) General/specific taxation issues (H) Market and trade cycles (H) Interest and exchange rates (M)

(+/-) (+/-) (+/-) (+/-) (+/-)

Regulatory bodies and processes(M) (+/-) Government policies(H) Trading policies (H) Wars and conflict (M) (+/-) (+/-) (-)

International trade/monetary issues (H)

(+/-)

Social
    

Technological (+/-) (+/-)
    

Lifestyle trends (L) Consumer attitudes and opinions(H)

Competing technology development (H) Maturity of technology(M) Manufacturing maturity and capacity (H) Information and communications(M) Technology legislation (M)

(+) (-) (-) (+) (+/-)

Brand, company, technology image(H) (+/-) Major events and influences (M) Advertising and publicity (H) (+) (+)



Innovation potential(M)

(+)

*H/M/L = Level of Impact (High/Med/Low)

#(+/-) Kind of impact (Pos/Neg)

Porter’s 5 force Analysis
Rivalry among competing Sellers: (Strong) • Since a major chunk of the market is shared by two to three major players in all the segments, rivalry among them is pretty high. • Companies are becoming more globalized, ramping up production and putting pressure on others to keep costs low. • The trend of consolidation of firms to keep up with larger companies exists.

Threat of substitutes: (Weak) • Substitute for two wheelers is less. Recently launched Tata Nano can act as a substitute. • For new passenger cars the substitute is used cars. But the used car business has not gained momentum. • For commercial vehicles the substitute is Railways and Air cargo. But currently both the sectors target different segments of the market. • Threat of the substitutes with newer...
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