Automobiles

INDUSTRY ANALYSISOF

AUTOMOBILES INDUSTRY

Presented By :•Jinia Biswas•Pooja Agarwal•Shruti Jain•Smarajit Kundu•Sriparna Chakrabarty•Vibhav Kaushal

OVERVIEW

BRIEF HISTORY

• Creation of steam engine automobiles for human transport in 1769

• In 1807, the first cars powered by an internal combustion engine running on fuel gas appeared

• Gasoline- or petrol-fuelled internal combustion engine introduced in 1885

• Cars powered by electric power briefly appeared at the turn of the 20th century but largely disappeared from use until the turn of the 21st century.

HISTORY IN INDIA• The first car ran on India's roads in 1897. Until the 1930s,

cars were imported directly, but in very small numbers• Hindustan was launched in 1942, longtime competitor

Premier in 1944. They built GM and Fiat products respectively.

• Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry.

• By the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited number. During the eighties, a few competitors began to arrive on the scene.

FACTORS AFFECTING GROWTH

• Indian Government’s impetus to the industry by allowing continuous economic liberalization since 1991

• Convergence of Government policies• Economy’s growth• People’s purchasing power• Rise in the industrial and agricultural output

indirectly helps Indian Auto industry leading to higher GDP , more purchasing power and hence more sales of vehicles for domestic and commercial consumption

• Growth in the road infrastructure increases demand for vehiclesIndian highways and roads have improved a lot in quality and connectivity in the last 20 years.

• Projects like the Golden Quadrilateral aim to make even remote areas accessible by road

GOVERNMENT REGULATIONS

Import regulations

Conformity of production

Regulatory Compliance

Audit/Surveillance checks

3rd party certifications

EMISSION NORMS

• In tune with international standards to reduce vehicular pollution, the central government unveiled the standards titled 'India 2000' in 2000 with later upgraded guidelines as 'Bharat Stage'. These standards are quite similar to the more stringent European standards and have been traditionally implemented in a phased manner, with the latest upgrade getting implemented in 13 cities and later, in the rest of the nation. Delhi(NCR), Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra are the 13 cities where Bharat Stage IV has been imposed while the rest of the nation is still under Bharat Stage III.

COMPETITORS

SIZE OF THE INDUSTRY

• India's passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9 million units in 2011.

• According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil), grew 16 to 18 per cent to sell around three million units in the course of 2011-12

• As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing automobile market in the world in that year

• According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected.[

RECENT TREND IN SALES • As per data released by the Society of Indian Automobile

Manufacturers ( SIAM), car sales were down by around 7.5 per cent in July, though major players like MarutiSuzuki,Honda and Hyundai showed some improvement in August.

• A total of 13.4 m two-wheelers were sold in India in FY12, a growth of a strong 14% over the previous year. Motorcycles accounted for 89% of the total two wheelers sold. The growth came in despite firm interest rates and rise in fuel prices especially petrol. The scooters (geared & ungeared) improved their sales considerably, largely due to improved performance of the ungeared scooter segment. The 3-wheeler segment was, however, at the receiving end as volumes dipped by 2%.

SALES GROWTH

DOMESTIC SALES TREND

Year Year Year Year Year (No. of vehicles)

CATEGORY 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Passenger vehicles

1,549,882 1,552,703 1,951,333 2,501,542 2,618,072 2,686,429

Commercial vehicles

490,494 384,194 532,721 684,905 809,532 793,150

3 wheelers 364,781 349,727 440,392 526,024 513,251 538,291

2 wheelers 7,249,278 7,437,619 9,370,951 11,768,910 13,435,769 13,797,7

Grand Total

9,654,435 9,724,243 12,295,397 15,481,381 17,376,624 17,815,618

OPERATIONAL TRENDS

• Increasing urbanization and evolving customer needs to have greater influence on OEM strategies and buying behaviour than reactive regulatory policies.

• Increasing risks across value chain position OEMs to deploy range of mitigation strategies.

• domestic OEMs are strengthening their technological capabilities through organic and inorganic investments.

• OEMs leverage digital marketing for urban consumers and non-traditional distribution channels for rural markets

• New entrants using creative business models for mobility, in-vehicle services and after-sales support

• Suppliers to enhance local product development capabilities, supply chain competency, and flexibility to meet diverse OEM expectations

• Dealers to focus on managing their capital agenda, skill development and shifting revenue contribution of high-margin allied services

MARKET STRATEGIES• Commercial vehicle-maker Ashok Leyland announced a

voluntary retirement scheme (VRS) for its executive cadre as the market continued to show a downslide. In a statement issued here, the company said the VRS was conceived as a response to the continuing slowdown in the market. The scheme aimed to reduce manpower costs and align fixed costs to reduced activity levels.

• Hyundai Motor India today launched automatic version of its compact car Grand i10 in the country, with price starting at Rs 5.64 lakh . The Grand automatic transmission further improves THE value proposition offering smooth and effortless driving for customers

• Hero MotoCorp, the two-wheeler maker, on Thursday announced two high-profile appointments in key positions, a move that closely follows a back-to-back management rejig the company made in recent times.As part of its endeavour to beef-up its in-house research & development (R&D) team, Hero roped in Markus Feichtner, an expert on engines technology, to head the newly-set up division called "Engine Design & Development".

• Harley Davidson's recent unveiling of two Dark Custom motorcycles starting at an estimated 4.5 lakh in the 250-300 cc

segment with competition intensifying in premium vehicles. The iconic motorcycle maker wants to make and sell these smaller-engine bikes with extensive local involvement to bring prices down, said two persons close to the development.

• Mahindra & Mahindra today announced the launch of the entry level 'W4' model of its popular SUV, the XUV500 at a price of Rs 10.83 lakh . As a customer centric organisation, it has incorporated customer feedback at every step.

• Country's largest car maker Maruti Suzuki India has topped customer satisfaction with dealer service for a 14th consecutive year, rated by market research firm JD Power Asia Pacific on various factors like service quality, vehicle pick-up, service adviser, service facility and service initiation.

SEASONALITY• After months of gloom, the Indian automobile

industry saw some hope as the sector saw an 8.7 per cent growth in September 2013. But the market continues its apprehensive outlook ahead of the Indian festive season.

• During the festive season, from October to January, there is an average increase of 15-20 per cent demand for automobiles due to discounts on interest rates as well as the product and upgrades.

• Most companies come up with discounts around December to offload older models and then jack up prices in January. This is a seasonal phenomena.

• Interest rates may not boost sales during the festive season despite cut in auto interest loan by public sector banks because the overall cost of ownership is high and continues to rise steadily due to the frequent rise in fuel prices.

• The monsoons will have a positive impact on agriculture. The sales of tractors and commercial vehicles are witnessing an increase due to this.

SENSITIVITY TO ECONOMIC FLUCTUATIONS

• The auto industry, which contributed 7 percent to India’s gross domestic product and attracted 6.7 percent of the foreign direct investments in the 2012-13 financial year, has been hit by sluggish domestic demand as economic growth slows, and costs of imported auto components rise with the rupee’s depreciation.

• Bigger manufacturers like Tata Motors have also been affected because they have foreign currency-denominated debts.

• Car sales in India have fallen for nine months straight, from November last year to July, the first time the industry has seen a decline since the global financial crisis.

• Many auto makers are exploring the option of raising prices to cope with the stress on their margins. But a price increase, coupled with rising fuel prices and possibly higher interest rates, does not bode well for companies or consumers in the upcoming festive season, when sales usually pick up.

• While the faltering economy is not good news for Indians, a weak rupee is not all bad news, even for the automobile industry, because it makes cars and auto parts produced in India cheaper when sold in overseas markets.

• Industry sentiment is at an all-time low, with underutilized capacity, production cuts, a slowing down of expansion plans and [more recently] layoffs.

• India has one of the lowest automobile-penetration in the world according to the organization, and a huge potential domestic market and rising disposable incomes may save the sector.

DEVELOPMENT

NEWS

INNOVATIONS

FUTURE TECHNOLOGICAL DEMAND

Fuel Efficiency

Emission Reduction

Safety &

Durability

Cost Effectiveness

Innovative Features

FUEL EFFICIENCY & EMISSION CONTROL

HYBRIDS

FUEL CELL

EVLPG,CNG, ETHANOL

INNOVATIVE FEATURES

Key Less Entry

Composites

Soft Steel Interiors

Long Life Components

Enhanced Driving Comfort

ElectricallyControlledmechanism

COST EFFECTIVENESS

Bi Fuel ECUs Aluminum Wiring Harness

In mould DecorationFoam Injected

Platic Parts

SAFETY & DURABILITY

GOVERNMENT REGULATION

AUTOMOBILE INDUSTRY REGULATIONS IN INDIA

• The Indian automobile industry is the tenth largest in the world.

• It has an annual production of approximately 2 million units.

• There has been a sustained growth in the automotive sector of India following the economic reforms of 1991 which opened up 100 percent Foreign Direct Investment in this sector. The competitiveness in the automotive sector has been increasing since then

• The industry has been growing annually at 20 per cent. • India is set to be a key player in the automotive sector.

• The automotive regulations in India are governed by the Ministry of Shipping, Road Transport & Highways (MoSRT&H) which is the nodal ministry for regulation of the automotive sector in India.

• Along with MoSRT&H, ministries such as Ministry of Environment & Forests and Ministry of Petroleum & Natural Gas also have a vital role in the formulation of automotive regulations and standards in India.

•The principal instrument governing the automotive sector in India is the Motor Vehicles Act, 1988 (MVA) along with the Central Motor Vehicles Rules 1989 (CMVR).

•The Act governs emission norms and safety standards in India and consolidates the law pertaining to motor vehicles. The CMVR provide the rules that explain the MVA in detail.

• MoSRT&H has constituted two committees to recommend and advise the ministry on issues relating to Safety and Emission Regulations.

• These committees are - Central Motor Vehicles Rules-Technical Standing Committee (CMVR-TSC) and Standing Committee on Implementation of Emission Legislation (SCOE).

• Central Motor Vehicles Rules-Technical Standing Committee (CMVR-TSC) was formulated to receive draft recommendations from other committees, such as Automotive Industry Standards Committee and Bureau of Indian Standards, and to finalise and approve safety recommendations made by such committees.

• The joint secretary of MoSRT&H is the Chairman of CMVR-TSC. CMVR-TSC comprises of representatives from Ministry of Heavy Industries and Public Enterprises, Bureau of Indian Standard (BIS), Automotive Component Manufacturers Association of India (ACMA), Select State Governments, Testing agencies, SIAM and other invitees.

• The purpose of CMVR-TSC is to finalise and approve the draft standards and norms submitted by various committees.

• The CMVR-TSC is assisted by the Automotive Industry Standards Committee (AISC) and Bureau of Indian Standards (BIS).

• AISC is a committee set up by MoSRT&H. The purpose of establishing this committee was to review the safety standards with regard to motor vehicles in India on a periodic basis and to give recommendations.

• The Chairman of this committee is the Director of Automotive Research Association of India (ARAI) which is one of the testing agencies constituted under CMVR-TSC.

• The AISC safety standards are formulated and prepared by separate Panel comprising of representatives of various stakeholder associations such as Department of Heavy Industries, Department of IPP, Department of RT&H, BIS, Vehicle Research and Development Establishment (VRDE), SIAM, ACMA and ARAI.

• The representative of ARAI is the member secretary of this committee.

ROLES OF ARAI

• Government approved test agency to carry out mandatory/ certification testing

• Research Association and service provider to carry out sponsored R&D work and development testing

Also engaged in • –preparation & harmonization of standards • –Deliberation of policy matters affecting auto R&D • –Creation of facilities and building up competence by

undertaking forward looking research & technology demonstration projects

National institution to disseminate information and create forum for knowledge sharing in association with industry / academia

FEATURES & TYPES OF APPROVAL SYSTEM

• 3rd Party Type Approval (TA) system is similar to UN-ECE • Implemented in year 1991 • TA administration Agencies • Notifying agencies: MoRTH, MoEF, etc. • Standards and other requirements are notified under CMVR • Testing & Approving agencies: ARAI and others • TA & CoP certificates are mandatory TA standards • Bureau of Indian Standards (BIS) prepares IS standards • AISC Technical committee prepares AIS standards as an interim step • Standing Committee on Emission (SCOE) prepares Emission Standards (TAP

115/ 116) Roadmap of Regulations • Agreed by industry, test agencies and government • National Policy is to align with ECE regulations to the extent possible

AUTOMOTIVE SECTOR –TECHNICAL REGULATION

Regulatory Complaince

Import Regulations 3rd party

Certificate

Audit/ Serveillance Check Conformity

OfProduction

CENTRAL MOTOR VEHICLE RULE (CMVR)

Mandatory Requirements for Vehicle TA

General Requirements

Vehicle Level

System Level

Component Level

• Eg. Anti-Theft masses• Dimensions etc

• Mass emission ,noise etc

• Seats ,anchorage• Under run protection,

Forward vision

• Horn , Mirror• Safety glass

VEHICLES COVERED UNDER MANDATORY TYPE APPROVAL

INDIAN AUTOMOBILE INDUSTRY

CHALLENGES & FOCUS FOR FUTURE REGULATIONS

• Limiting GHG emissions

• Improving Road Safety

• Reduce transport related noise & congestion and improve traffic flow

ENVIRONMENTAL REGULATIONS

ADDRESSING THE CHALLENGES

Emission reduction requires initiatives in….

• Improving Energy efficiency

• Fuel and Emission Standards

• Inspection, Certification and Maintenance

• Retrofitment • Alternative fuels • Vehicle technology for

more eco-friendly vehicles • Infrastructure & logistics

for better traffic management

• Driver behaviour

Greater Fuel

Efficiency

More Efficient Use of Vehicles

Improved Traffic Flow

Diversified Automotive Fuel Supply

FUTURE EMISSION STANDARDS

• BS IV- Country-wide?

• Uniform Fuel Specifications?

• BS V-?

• CEVs- Next stage norms?

2010-20: UN’s DECADE OF ROAD SAFETY

Increasing Road Safety requires initiatives in ...

Road Safety

ENGINEERING-Vehicle-Road

EMERGENCY

ENFORCEMENT

EDUCATION &

AWARENESS

ARAI has submitted Action Plan on 4 “E”s of Road Safety

• Improve Road Engineering

• Road Safety Monitoring • Increasing Road User

Education and Awareness

• Controlling Behavioural changes

• Legislations and its enforcement

SAFETY STANDARDS IN FUTURE

•Electromagnetic compatibility (EMC)

•Spray suppression

•Day time running lamps?

•Vehicle Alarm system

•ABS?

•Electromagnetic compatibility (EMC)

•Driver safety

•Passenger safety

•Advanced Braking System •Head on, offset frontal and side crash •Head restraints with controlled back-set •Electromagnetic compatibility (EMC) •Child Restraint •Vehicle alarm system & protection against unauthorized use •Hybrid vehicles

SAFETY STANDARDS IN FUTURE

Bus construction •School bus •Sleeper coaches •Protection against unauthorized use •Electromagnetic compatibility (EMC) •Hybrid vehicles •Fire protection •Advanced Braking Systems •Navigation/ Fleet management

Agriculture Trailer Code

•Rear vision •Field of vision •Attendant/ passenger seat •Ballast mass •ROPS•Mechanical couplings

Truck construction •Automotive trailer code •Conspicuity markings •Protection against unauthorized use •Electromagnetic compatibility (EMC) •Close coupling and mechanical coupling devices •Advanced Braking System •Navigation/ Fleet management

ITS APPLICATION : BEYOND 2013

Advanced Traffic Management

Advanced Traveler Information

Advanced Public Transportation

Advanced Traffic Information

Electronic Toll Collection

Incidence Management

Weighing in motion

ITS Applications

REGULATION IN PIPELINEFitment of RIMD for Toll

collection

CUSTOMER PREFERENCE- AUTOMOBILE INDUSTRY

CUSTOMER PREFERENCE – PASSENGER VEHICLE

CUSTOMER PREFERENCE – COMMERCIAL VEHICLE

CUSTOMER PREFERENCE – TWO WHEELER

CUSTOMER PREFERENCE – THREE WHEELER

COMPETITOR INFORMATION

SPLIT INTO FOUR SEGMENTS

COMPETITORS – TWO WHEELERS

COMPETITORS – PASSENGER VEHICLES

COMPETITORS – COMMERCIAL VEHICLES

COMPETITORS – THREE WHEELERS

LOCATION OF COMPETITORS

HOW LONG HAVE THEY BEEN IN BUSINESS

PASSENGER VEHICLES-

MARUTI SUZUKI- SINCE 1981HYUNDAI- SINCE 1967TATA MOTORS- SINCE 1945

COMMERCIAL VEHICLES-

TATA MOTORS- SINCE 1945ASHOK LEYLAND- SINCE 1948EICHER MOTORS- SINCE 1948

TWO WHEELERS-

HERO- SINCE 1984BAJAJ- SINCE 1960s (FIRST MODEL)TVS- SINCE 1978HONDA- SINCE 1948

THREE WHEELERS-

BAJAJ- SINCE 1960sPIAGGIO- SINCE 1884MAHINDRA - SINCE 1945TVS- since 1978

CURRENT MARKET SHARE

MARKETING STRATEGIES• Advertisements on the Audio visual medium are a rage as it gives the car makers an opportunity to flaunt their cars. Flashy cars can be demonstrated on television but when it comes to the finer prints of the cars, print and online media comes to the rescue.

• The digital medium offers a greater flexibility to the car companies since they come with a lot of interactive features like demonstrating the interiors of the car with its salient features.

• The print medium on the other hand provides an opportunity to the car makers to explain the function of a car in detail.

• Celebrity endorsements and testimonial advertisements have come a long way and they are also doing their bit to sell the cars. Super star Shahrukh Khan has been associated with Hyundai Motor Company for a long time and he comes regularly on television to promote the Santro car. Similarly Ford has roped in Abhieshek Bachan for the promotion of the latest offering from the company Ford Fiesta.

OPERATIONAL STRATEGIES

MARUTI

Adopted JIT to achieve high operational effeciencies and reduce inventory carrying cost.

Recycling groundwater : Uses techniques like soak pits, recharging shafts and rainwater harvesting that help in recharging groundwater from rainfall.

Adoption of e-nagare system – release of schedules on hourly basis that helps in maintaining less than two hours inventory of components within the country.

Kaizens(shop floor improvements) have drastically reduced the consumption of water and power and the waste

Annual dealer interactions and reviews which help the dealers in cost savings and customer convenience.

MAHINDRA

Concept of reverse engineering implementedPartnering with local universities for new technology

develpoment.

TATA MOTORS

Jaguar Land Rover has re-hauled its supply chain to secure cost savings as well as a sustainability equation that gives the company a green edge.

A redesigning of process equipment at Tata Chemicals’ Haldia plant that cut process downtime by 40%

Use of fewer and smarter resources to begin requiring lesser

cleanup at the final disposal.

UNIQUE SELLING PROPOSITIONS

• FOR MARUTI SUZUKI :

Maruti has car models in every segment with a wide price range to choose from, apart from being the most reliable name in Indian automobile market.

Largest distribution network of dealers and after sales service centres.

Maruti is the largest passenger car company in India, accounting for around 45% market share 

Good advertising, product portfolio, self-competing brands Complete automobile segment including sedans & SUV’s India’s No.1 automobile brand with strong legacy

• FOR HERO MOTORCORPS :

Tag line – Hum Mein Hain Hero

Huge brand equity and one of the biggest players in the two wheelers Indian market

Excellent distribution, over 3000 dealerships and service centers 

Good advertising and excellent rebranding from Hero Honda to Hero Moto Corp

Positioning - Every person has a hero and a winner within one’s self

• FOR TATA MOTORS :

One of the oldest and trusted brand with extensive distribution and strong market penetration

Slogan – Inspired By People- indicating a connect with customers.

Good market penetration in the taxi & rental segment Highly diversified product portfolio  Many associations like Jaguar Land Rover, Hispanso,

Macropolo etc which increases international presence Wide & extensive distribution and service network

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