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Auto industry-analysis by rakesh

Aug 11, 2014

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Automotive

Rakesh Rocky

Auto industry-analysis
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Page 1: Auto industry-analysis by rakesh

Automobile INDUSTRY ANALYSIS

Presented by:Presented by:

RAKESHKUMAR N K.Kohinoor business school

Page 2: Auto industry-analysis by rakesh

HistoryIndian 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.

Page 3: Auto industry-analysis by rakesh

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

2 WHEELER 3 WHEELER PASSENGER VEHICLE

COMMERCIAL VEHICLE

Page 4: Auto industry-analysis by rakesh

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

Page 5: Auto industry-analysis by rakesh

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

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

•Seller’s Market

•Long Waiting Periods

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 – Early 2000s

•Buyers market

•Increase in Indigenization

•Easy Auto finance

•Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market

Page 6: Auto industry-analysis by rakesh

Trends in Automobile sector

Page 7: Auto industry-analysis by rakesh

Continue………….

Automobile Production Trends (Number of

Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger Vehicles 723,330 989,560 1,209,876 1,309,300 1,545,223 1,762,131

Commercial Vehicles 203,697 275,040 353,703 391,083 519,982 545,176

Three Wheelers 276,719 356,223 374,445 434,423 556,126 500,592

Two Wheelers 5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,049

Grand Total 6,279,967 7,243,564 8,467,853 9,743,503 11,087,997 10,833,948

Page 8: Auto industry-analysis by rakesh

Automobile Domestic Sales Trends(Number of Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger Vehicles 707,198 902,096 1,061,572 1,143,076 1,379,979 1,547,985

Commercial Vehicles 190,682 260,114 318,430 351,041 467,765 486,817

Three Wheelers 231,529 284,078 307,862 359,920 403,910 364,703

Two Wheelers 4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,248,589

Grand Total 5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,648,094

Page 9: Auto industry-analysis by rakesh

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

Page 10: Auto industry-analysis by rakesh

BUDGET 2008-09consumption-driven growth policy on inclusive growthattempt to address farmer's woes

Page 11: Auto industry-analysis by rakesh

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

Page 12: Auto industry-analysis by rakesh

Budget Proposals Directly Impacting the Indian Automotive Industry

Page 13: Auto industry-analysis by rakesh

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

Page 14: Auto industry-analysis by rakesh

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

Page 15: Auto industry-analysis by rakesh

Compared to 2007, Print advertising of Automobiles dropped by 13% during 2008..

Volume Growth of Automobile Sector in Print during 2008

Page 16: Auto industry-analysis by rakesh

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.

Page 17: Auto industry-analysis by rakesh

State-wise share of Automobile sector in Print during 2008

Page 18: Auto industry-analysis by rakesh

Tally of Automobile Advertisers in Print during 2008

• 4% rise in number of Automobile advertisers in Print during 2008 compared to 2007

Page 19: Auto industry-analysis by rakesh

Usage of Sales Promotions ad campaigns in the Automobile sector

More than 55% of Automobile ads in Print were for Sales Promotion during 2008.

Page 20: Auto industry-analysis by rakesh

• Favorable Demographics • Improving income curve • Reducing interest rates

•Cost Pressure •High Expectations •Inadequate Infrastructure Development

KEY CHALLENGESKEY ENABLERS

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

Page 21: Auto industry-analysis by rakesh

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

Page 22: Auto industry-analysis by rakesh

SWOT OF AUTOMOBILE INDUSTRY:STRENGTHSLarge domestic market-Sustainable

labor cost advantage-Government incentives for manufacturing plants-Strong engineering skills in design-Able to achieve significant gains in productivity

WEAKNESSESLow labor productivity-High interest costs and high

overheads-Rising cost of production-Low investment in Research and Development

Page 23: Auto industry-analysis by rakesh

OPPORTUNITIESCommercial vehicles-Heavy thrust on mining

and construction activity-Increase in the income level-Cut in excise duties-Rising rural demand

THREATSRising interest rates-Cut throat competition-

Lack of technology for Indian Companies

Page 24: Auto industry-analysis by rakesh

STRATEGY EMPLOYED BY AUTOMOBILETATA MOTORSBreadth 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

Page 25: Auto industry-analysis by rakesh

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.

Page 26: Auto industry-analysis by rakesh

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.

Page 27: Auto industry-analysis by rakesh

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.

Page 28: Auto industry-analysis by rakesh

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.

Page 29: Auto industry-analysis by rakesh

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.

Page 30: Auto industry-analysis by rakesh

BMWMarket DifferentiationThey 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.

Page 31: Auto industry-analysis by rakesh

MARUTI UDYOGBreadth 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

Page 32: Auto industry-analysis by rakesh

BAJAJ AUTOANALYZERS: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

Page 33: Auto industry-analysis by rakesh

AUDI INDIA

ANALYZERSAudi 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.

Page 34: Auto industry-analysis by rakesh

MAHINDRA&MAHINDRAREACTORS: 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.

Page 35: Auto industry-analysis by rakesh

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.

Page 36: Auto industry-analysis by rakesh

Thank You !