Review of Automobile

Sector In
India

Presented by:
Ofer Ashtamkar
Kishor Choudhary
Ajay Jaiswal
Kunal Mane
Santosh Saud
Sagar Vijan

03
12
25
31
46
61

Introduction
The automobile industry is one of Indias most vibrant and growing

industries. This industry accounts for 22 per cent of the country's

manufacturing gross domestic product (GDP).
The auto sector is one of the biggest job creators, both directly and
indirectly.
India's domestic market and its growth potential have been a big
attraction for many global automakers. India is presently the world's
third largest exporter of two-wheelers after China and Japan.
The next few years are projected to show solid but cautious growth
due to improved affordability, rising incomes and untapped markets.

History
Indian market before independence - imported vehicles while
assembling of cars manufactured by General Motors (GM) and
other brands
Indian automobile industry mainly focused on servicing, dealership,
financing and maintenance of vehicles. Later only after a decade from
independence manufacturing started.
After independence - manufacturing capability was restricted by the
rule of license and could not be increased.
In 1953 an import substitution program was launched,
and the import of fully built-up cars began to be
impeded.

The production was confined to three main

manufacturers Hindustan Motors, Premier Automobiles
and Standard Motors.
Hindustan motors was launched in 1942, long time
competitor Premier in 1944. They built GM and Fiat products
respectively.
Mahindra & Mahindra was established by two brothers in 1945, and
began assembly of Jeep CJ-3A utility vehicles.
Tata entered the commercial vehicle sector in 1945 after
forming a joint venture withDaimler-Benzof Germany.
To promote the auto industry the government started the Delhi Auto
Expo which had its debut showcasing in 1986.
There was no expertise or research & development

Evolution of Automobile Industry

Initial Years

Early to mid 90s

Manufacturing was licensed

High Customs duty on import
Steep excise duties &
sales tax
2 Major players:
Premier Automobiles Ltd
& Hindustan Motors

Sellers market and long

waiting periods

1980s

Decrease in customs &

excise

Entry of MUL, better product,

with government support
Sellers Market
Long Waiting Periods

De-licensing in 1993
Removal of capacity
restrictions

Auto finance boom- more

players (foreign banks & non
banking companies, better
schemes.

Mid 90s Early 2000s

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

After 2000 - Era of globalization and evolution of India as a global

manufacturing hub

Top & Major Manufacturers in

Automobile Industry
Maruti suzuki Ltd.
General Motors India
Ford India Ltd.
Eicher Motors
Bajaj Auto
Hero Motors
Hindustan Motors
Hyundai Motor India Ltd.
Royal Enfield Motors
TVS Motors
Swaraj Mazda Ltd
Toyota
Nissan
Chevrolet
Tata motors

India is.
Is one of the largest automotive markets in the world
Largest TRACTOR manufacturer
2nd Largest TWO WHEELER manufacturer
2nd Largest BUS manufacturer
5th Largest HEAVY TRUCK manufacturer
6th Largest CAR manufacturer
8th Largest COMMERCIAL VEHICLE manufacturer

Market Share

Automobile Domestic Sales

(Number
Trends
of
Category
Passenger
Vehicles
Commercial
Vehicles
Three
Wheelers
Two
Wheelers
Grand
Total

2008-09

2009-10 2010-11

2011-12

Vehicles)
2012-13 2013-14

15,52,7 19,51,333 25,01,542 26,29,839 26,65,015 25,03,685

03
3,84,194

5,32,721 6,84,905

8,09,499

7,93,211 6,32,738

3,49,727

4,40,392 5,26,024

5,13,281

5,38,290 4,79,634

74,37,61 93,70,951 1,17,68,9 1,34,09,1 1,37,97,18 1,48,05,4

9
10
50
5
81
97,24,2 1,22,95,3 1,54,81,3 1,73,61,7 1,77,93,7 1,84,21,5
43
97
81
69
01
38

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

Analysis of current scenario

A total of 16.9 m two-wheelers were sold in FY14, a growth of a
tepid 7% over the previous year.
Passenger vehicles (PV) also did badly as volumes declined by 6%.
Slowdown in the economy, firm interest rates and fuel prices had an
adverse impact on demand.
It was a second consecutive challenging year for the medium and
heavy commercial vehicles (M/HCVs) segment as volumes plunged
by 25%. LCVs were at the receiving end as well as volumes dropped
by 17.6% YoY
Both Tata Motors and Ashok Leyland faced heavy
challenges during the year given that both of them corner a
significant chunk of the CV pie.

Analysis of current scenario

Tractors did very well during the year as

monsoons in 2013 were quite healthy and M&M,

which is a market leader in the tractors space,
benefitted from this as its auto division faced
rough weather.
As volumes took a beating, few of the companies
did manage to report an improvement in
operating margins largely on account of various
cost rationalization measures undertaken.

Porter five forces analysis

Porter five forces analysis is a framework to analyze

level of competition within an industry and

business strategy development.

BCG MATRIX OF TATA MOTORS

???

HIGH
Safari Dicor , Indica
Vista , Star bus ,
Manza , Winger,
Magic

BUSINESS
GROWTH
RATE

Nano, versa &

other new
inventions

Safari, Sumo, Indigo Indigo Sedan,

CS
Sierra, Estate
LOW
HIGH

LOW

Marketing Strategies adopted by Automobile industry in India

Advertisements
Digital medium
Print medium
Celebrity endorsements and testimonial advertisements

Segmentation
1. Based on the price of the car:Economy Segment
Mid- Size Segment
Luxury car segment
Super luxury car segment

2. Based on the length of the car:A segment - Cars that are less than 3.5 meters long (800, Omni)
B segment- Cars between 3.5 meters to 4 meters long (Zen and Santro)
C Segment- Cars between 4 meters to 4.5 meters long (Honda city)
D segment- Cars that are more than 4.5 meters long (Mercedes,

Sonata, Accord, Skoda)

3. Based on the user segment

Individual Buyers
Taxi operators
Government /non-government institutions

PEST
analysis

Political
The Government of India allows 100 % FDI under the

automatic route.
The government had lowered excise duty on small cars,
motorcycles, scooters & commercial vehicles to 8 % from 12
%, on sports utility vehicles to 24 % from 30 %, on midsegment cars to 20 % from 24 % and on large-segment cars to
24 % from 27 %.
The Government of India-appointed Society of Indian
Automobile Manufacturers (SIAM) and Automotive
Components Manufacturers Association (ACMA) are
responsible in working for the development of the Indian
automobile industry

Economical
The level of inflation, Employment, level of per capita .
Economic pressures on the industry are causing

automobile companies to reorganize the traditional sales

process.
Weighted tax deduction of up to 150% for in-house
research and R & D activities.
Govt. has granted concessions, such as reduced interest
rates for export

Social
Growth in urbanization, 4th largest economy by PPP

index.
Upward migration of household income levels.
85% of cars are financed in India.
Car priced below 720000 accounts for nearly 80% of the
market.
Vehicles priced between 420000-720000 form the largest
segment in the passenger car market.
Indian customers are highly discerning, educated and well
informed

Technological
Technological solutions helps in integrating the supply

chain, hence reduce losses and increase profitability.

Customized solutions (designer cars, etc) can be provided
with the proliferation of technology
Internet makes it easy to collect and analyse customer
feedback
With the entry of global companies into the Indian
market, advanced technologies, both in product and
production process have developed.
With the development or evolution of alternate fuels,
hybrid cars have made entry into the market.

Various Challenges
In Indian Automotive Market, there are some challenges by virtue of
which automobile industry faces lot of problems. These challenges
should be overcome and the challenges are listed below:

Growth in input costs

Fuel price volatility
Slowdown in demand
Production cuts
Growing competition
Changing consumer preferences
Environmental issues
Low R&D orientation

The Future of the Automotive

Industry
Development of the domestic electric and hybrid

vehicles in the country.

Industry gearing up for GREENVEHICLE
manufacturing.
Development of smaller engines to be high on
agenda.
Penetration of telematics: In-vehicle infotainment
and embedded software to rise
Cost optimization: The survival tool.
Used cars market set for rapid expansion.

Conclusion
India has the potential to develop into a significant market for

automobile manufacturers.
Indian automotive industry holds significant scope for

expansion, both,
In the domestic market ,Where the vehicle penetration level is

on the lower side as compared to world average, and in the

international market, where India could position itself as a
manufacturing hub.

References:
Automotive Component Manufacturers Association of India

(ACMA)
Society of Indian Automobile Manufacturers (SIAM)
Union Budget 2014-15
Department of Industrial Policy and Promotion (DIPP)
Press Releases
Media Reports

Thank You !

Budget Proposals Directly Impacting the Indian

Automotive Industry