ANALYSIS OF INDIAN

AUTOMOBILE INDUSTRY
Presented To: Presented By:
Prof. Raj Shekhar Reddy Amol Goel
Amit Gangwar
Amrita Sharma
Ruchi Nayak
Anand Kumar
Amit Dubey
Anmol Kumar
1st August, 2010 1
Indian Automobile Industry
The first automobile in India rolled in 1897 in Bombay.
Largest two-wheeler manufacturer in the world.
2nd largest tractor manufacturer in the world.
5th largest commercial vehicle manufacturer in the world.
No. 1 global motorcycle manufacturer is in India.
4th largest car market in Asia.
Within two-wheelers, motorcycles contribute 80% of the
segment size.
India is the largest three-wheeler market in the world.
Tata Motors dominates over 60% of the Indian commercial
vehicle market.
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Major Players

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Automobile Sector
The automotive sector is one of the key segments of
the economy having extensive forward and back word
linkages with other key segments of the economy.

It contributes about 4% in India’s GDP and 5% in

India’s industrial production.

This sector has generated about 4.5 Lack of direct

employment and about 1 crore of indirect
employment.
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India holds huge potential in the automobile sector
including the automobile component sector owing to
its technological, cost and manpower advantage.

India has a well developed, globally competitive Auto

Ancillary Industry and established automobile testing
and R&D centers

India enjoys natural advantage and is among the

lowest cost producers of steel in the world

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Automobile Sector Composition

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Market Share in Automobile Industry

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Production Trend
Passenger vehicles: 22.91%
Passenger cars: 24.76%
Utility vehicles: 12.69%
Multi purpose vehicles: 28.385%
Commercial vehicle: 36.12%
Medium and heavy commercial vehicles: 36.74%
Light commercial vehicles: 35.25%

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 PESTEL FRAMEWORK
FOR
INDIAN AUTOMOBILE SECTOR

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Political Factors
Various policies and taxes imposed by govt.
Foreign equity investment upto 100% for the
manufacture of auto components.
Liberalization in govt policies.

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Economic Factors
Availability of credit
Level of disposable income
Interest rate prevailing in the country
Money supply and demand factors
Country’s huge geographical spread mass transport
system
Increasing road development
Weighted tax deduction upto 150% for R&D activities.

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Socio-culture Factors
Population demographics
Average family size
People awareness
Income distribution
Preference and Perception
Social mobility
Changes in life style
Values and Beliefs

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Technological factors
Research and development of new products and
technologies
Increasing R&D hubs in the country.
Govt support in the form of R&D expenses.
National Auto motive Testing and R&D Infrastructure
Project (NATRIP)
Internet makes it easy to collect and analyze customer
feedback.

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Environmental Factors
Physical infrastructure such as roads and bridges
Physical conditions like environmental situation
Energy consumption law and Environmental
protection laws
Use of alternative fuels like CNG and LPG.
Automotive fuel policy such as Bharat Stage Norms.
Phasing out of commercial vehicles over 15 years of
age.

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Legal Factors
Product safety
Legal provisions relating to safety measures.
Government intention on harmonizing the regulatory
standards with the rest of the world
Employment laws(factory act and minimum age act)

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PORTERS FIVE FORCES
ANALYSIS

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Industry Rivalry
High concentration ratio
Huge initial cost
Highly competitive industry with little differentiation
between competitors.
Lowest possible margins
Competitors diversity
Rivalry focuses on advertisement, innovation and
other non-price dimensions.

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Threats of new Entrants

Return on capital in excess of its cost of capital.

Economies of scale (threat: low)
Product differences (threat: High)
Brand Identity (threat: High)
Govt policies (threat: Low)
Capital Requirement (threat: Low)

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Threat of Substitutes'
Cost of automobiles along with their maintenance
costs is driving customers to look for alternative
modes of commuting.
Performance and Time Measures.
Effect of New technologies.
Launch of new models at competitive prices.

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Bargaining Power of Suppliers
Service Differentiation (Power : Low)
Supplier Information (Power: Low)
Brand Identity (Power : Low)

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Bargaining Power of Buyers
Buyers have various alternate options (Power : High)
Buyers Information (power: High)
Buyers Switching Cost (Power: High)
Brand Identity (Power : Moderate)
Buyers Profit (Power: High)

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SWOT ANALYSIS

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Strength
Cost Competitiveness in terms of Labor and Raw
Material
Established Manufacturing Base
Economies of Scale
Potential to harness Global Brand Image of the
Parent Company.
Global Hub Policy for Small Car.( Hyundai ,Suzuki
etc.)

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Weakness
Perception about Quality
Infrastructure Bottlenecks
Companies are not improving after sales services.

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Opportunities
Huge Export Markets (Europe ,America ,Africa etc) for
Indian Cars
Commercial Vehicles: SC bans on overloading.
Rising income level of Consumers
Excise duty cut from 40% in 2001 to 6% in 2008.

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Threats
China , Malaysia , Thailand etc.
Other countries also have strategies for Export
Promotion
Companies not focusing on R&D are under great risk.
Lack of technology for Indian players.

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Conclusion
People prefer easier and faster mobility.
Enormous potential to facilitate this mobility.
Seamless development of industries.
Countries have to come closer and develop better
understanding.

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 Thank You !
Presented By:
Amol Goel
Amit Gangwar
Amrita Sharma
Ruchi nayak
Anand Kumar
Amit Dubey
Anmol Kumar Business Strategy Sec-J
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