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Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
Competitiveness of Indian Automobile companies
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Competitiveness of Indian Automobile companies

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  • 1. Why and How are Indian automobile companies capitalizing on Indian advantages for expanding internationallyGroup 6Alok|Anirban|Gautam|Sanjay|Shifaz|Sudeep|Suruchi
  • 2. SM II - Group Project, Group 6, Section C
  • 3. Export Orientation of the Indian Automobile Sector CAGR growth of 31% between 2001-02 and 2007-08 05% 11% 66% 18%SM II - Group Project, Group 6, Section C
  • 4. Production, Domestic Sales and Export of CV’s in India Production, Domestic Sales and Export of PV’s in IndiaSM II - Group Project, Group 6, Section C
  • 5. Exploit Indian competitiveness as a Global Automotive production hub Attractive domestic Political & Business market & proximity to environment other markets Automotive hub Low production cost & Technological capabilities efficient supply chain in a particular class of management vehiclesSM II - Group Project, Group 6, Section C
  • 6. Growing demand Growing demand Inviting Increasing Policy Support Resulting in investments Rising Goal of establishing Rising investments incomes, young India as an Auto- from domestic and population manufacturing hub foreign players Greater availability R&D Focus; GOI has Greater innovation of credit and set up technology in products; market financing options modernization fund segmentation Strong growth in Policy sops, FDI Strong projected exports as well encouragement demand making returns attractiveSM II - Group Project, Group 6, Section C
  • 7. Favourable government policies Auto Policy 2002 o Automatic approval for foreign equity investment up to 100 per cent; no minimum investment criteria o Encourages R&D by offering rebates on the R&D expenditure spent by the companies Automotive Mission Plan 2006–2016 o Setting up of a technology modernization fund focused on SMEs o Automotives training institutes Dept of Heavy Industries & Public o Worked towards reduction of excise duty on small cars and the increase of budgetary allocation for R&D o Weighted increase in R&D expenditure to: 200 per cent from 150 per cent (in- house); 175 per cent from 125 per cent (outsourced)SM II - Group Project, Group 6, Section C
  • 8. NATRiPs o Set up at total cost of USD 388.5 million to enable the industry to implement global standards o R&D centers of excellence with focus on low-cost manufacturing and product development solutions Union Budget FY11 o Surcharge on domestic companies reduced to 5 per cent from 7.5 per cent o Reduce excise duty on development & manufacturing of hybrid vehicle kits to 5 per cent from the existing 10 per centSM II - Group Project, Group 6, Section C
  • 9. Competitive advantage of India over its peersSM II - Group Project, Group 6, Section C
  • 10. Global demand shifting to smaller cars General Motors, Nissan, Toyota have announced plans to make India has built up the scale and significant India their hub for new global competencies and cost advantages in the small car platforms production of small cars. Light vehicle sales in India are It benefits from lower development and labour estimated to cross the 3 million costs, and improving auto component mark by 2012 manufacturing base. Strong export potential in ultra low cost cars segment (to With most global players targeting the most developing and emerging competitive, small car segment, increasing markets) localization remains critical for OEMs to establish profitable business given the competitive intensity in the small car segment .SM II - Group Project, Group 6, Section C
  • 11. Emergence of large automotive clusters Gurgaon, Manesar, Utt arkhand, Faridabad Pune, Nasik, Sana nd, Satara, Ahmed Jamshedpur, Hooghly nagar Hosur, Mysore Pithampur, NagpurSM II - Group Project, Group 6, Section C
  • 12. 42% of the sales came from the European markets. Witnessed a considerable drop in exports of 6.3% in FY11 because of the European market remaining challenging on account of withdrawal of scrappage incentivesSM II - Group Project, Group 6, Section C
  • 13. Reasons for expansion: o Intensifying domestic expansion o Decrease dependency on the static domestic market It then started exploring alternate markets such as : Thailand, Hungary, Malaysia, Laos, Lebanon, Algeria, Chile, Netherlands, Indonesia and Sri Lanka. • Exported entry-level models across the globe to over 120 countries. • The A-Star (sold in Europe as the ‘Alto’, in some as ‘Celerio’) has been the star performer abroad and has been named as the 5th World Strategic model by Suzuki. Other successful exported cars are the Alto K10 (fuel efficient), Estillo, Ritz and Zen. The company also entered into an agreement with Nissan, under which the latter sells the same car in Europe as the ‘Pixo. • To handle the higher volumes, the company tied up with the Adani group for a dedicated car terminal at Mundra port, Gujarat where they invested Rs 100 crores. • Invested heavily in R & D activities in Japan to come up with technological innovations like K-Series of engines and i-GPI technology.SM II - Group Project, Group 6, Section C
  • 14. Exports accounted for 28.5% of the company’s total net salesDistribution network covers 50 countriesSM II - Group Project, Group 6, Section C
  • 15. Presence abroad: Bajaj Auto International Holdings BV (BAIH BV) - a 100% Netherlands based subsidiary of Bajaj Auto - formed to focus on international ventures, including possible acquisitions PT Bajaj Indonesia (PT BAI) - Majority owned subsidiary of BAL - focuses on network development, sales and after sales services and brand building The company is currently on the look out for sites for assembly plants as it cuts the import duties (Import duty is higher on a CBU compared to a SKD and CKD. AIM to export 2 million units in the coming 2 to 3 yearsSM II - Group Project, Group 6, Section C
  • 16. EXPORTS VOLUME 4000 3500 3000 2500 2000 EXPORTS VOLUME 1500 1000 500 0 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 March 2011 March 2010 YTD March F10 YTD March F11 DOMESTIC TOTAL 35488 29944 286713 358021 M&M EXPORTS 2034 1754 10567 17138 Logan Exports 1000 1904 SECTOR TOTAL 37522 31698 298280 377063SM II - Group Project, Group 6, Section C
  • 17. M&M is has entered several markets in developing economies such as South America, South East Asia and Africa. M&M leverages its Indian cost advantage to grow in the international market. Cheap Labor and Cost of Production allows M&M to export CKDs to international markets and sell them at much lower price tag. M&M is manufacturing world-class products at a competitive prices which allows the firm to fulfill its global ambitions and compete in overseas markets. Basically M&M is entering those markets where the requirements, both in terms of Quality and Price, are similar to those in India. M&M Ties-up with local manufacturers to leverage their capabilities in local markets. M&M has recently acquired Ssangyong Motor Company[SYMC] in Korea M&M has collaborated with Eljuri Group in Ecuador in November 2011 XUV 500 [SUV] and Genio [Pick-up trucks] were launched recently for Indian as well as International markets in September 2011 Earlier M&M had entered the Nigerian market with its 3-wheelers Alfa Passenger and Alfa LoadSM II - Group Project, Group 6, Section C
  • 18. In 2010-11, exports contributed to 6.51% of total revenue Total export 58089 vehicles, a growth of 70% CV’s 50,244, a growth of 80.2% PV’s 7,845, a growth of 25.9% Extended presence in the European market o 21% stake in Hispano Corrocera o MoU with Fiat in 2005 o Acquired a 94.3% stake in INCAT International for R&D support and IT capabilities Joint Venture with Marcopolo o 51:49 joint venture company with Brazils Marcopolo to manufacture and assemble fully-built buses and coaches in India o To be marketed not only in India but also in all Tata Motors focused marketsSM II - Group Project, Group 6, Section C
  • 19. Acquisition worth $ 2.3billion from Ford Motors in 2008 TML felt that acquiring JLR would help them acquire a global footprint It would help them enter high-end premier segment of the global automobile market Provide access to the latest technology which would also help them improve their core Indian products Expected decrease in dependence on Indian market Tata Motors and MG Rover inked this deal in December,2002 City Rovers manufactured in Tata Motors Pune plant were marketed by MG Rover in the UK and US markets Why did Tata Motors go for this deal: - to enhance the volume throughput of the Indica’s Pune plant - was seen as an endorsement by a major international company of Tata Engineering’s capabilities in general, and the world-class acceptability of the Indica in particularSM II - Group Project, Group 6, Section C
  • 20. Exports to Over 115 countries Fastest to the 1 million mark 66% of total passenger car export Santro, i10, i20 and AccentSM II - Group Project, Group 6, Section C
  • 21. Hyundai’s 50:50 ruleThe company usually relies on export markets for 50% of its sales and on thedomestic market for the balance 50%.For instance, in calendar 2008, HMILs total sales was 4.89 lakh units. Of this, 2.43lakh units were exported. In 2009 calendar year, the company targeted a sale of 5.52lakh vehicles, of which 2.75 lakh units are for export markets. "We are in the process of changing this 50:50 business mix. In 2010, we plan to sell 55% of our total vehicles in the domestic market and export the balance.” - Arvind Saxena, director (marketing and sales), HMILEurope accounts for nearly 60-70 % of HMILs total exports.Most recent destination to be added: Australia with offering of i20SM II - Group Project, Group 6, Section C
  • 22. Pursue aggressive volume growth to beamong the top 10 global players in trucksand top 5 in busesThe CIS countries and particularly, Ukrainevalue highly the hallmarks of AshokLeyland vehicles, reliability andruggedness.The Asian, African and LatAm countrieshave grown at the rate of 8% even as theglobal economy grew at only 5%. Last years’ results boosted by a buoyant Sri Lankan economy and improved performance in SAARC countriesSM II - Group Project, Group 6, Section C
  • 23. Participants in the Bus Rapid Transport(BRT) system in Laos, Nigeria Has set up manufacturing facilities in Letnany Czech Republic for producing its Avia Line of trucks with the latest technology and compliant with stringent emission norms Has a 28% equity stake in the Lanka Ashok Leyland company, a venture with the Sri Lankan Govt. to supply CBU and CKD units Acquired a 26% stake in Optare Plc., UK , a reputed bus manufacturer with experience in Hybrid and Electric Vehicles State of the art bus manufacturing facility at UAE, a JV between Ras Al Khaimah Investent Authority and Ashok LeylandSM II - Group Project, Group 6, Section C
  • 24. Initiatives by Indian CV manufacturers to increase exports Tata Motors in June 2011 exported its new range of Prima World Trucks to South Africa and Middle East on a trial basis. The company expects to increase its export sales in the segment in the current fiscal. M&M is likely to launched the electric version of its mini truck Maxximo in October 2011. The two-cylinder diesel mini truck Maxximo has a payload capacity of 850 kilograms, although its electric variant has lesser capacity of around 600 kilograms. M&M is looking to export its Maxximo electric to Europe and the US. Ashok Leyland has formed a JV with Nissan to manufacture LCVs and plans to start production from the second half of 2011. The JV will launch a LCV which has a payload capacity of 1.5 tonne and a gross vehicle weight of 3 tonnes. The JV plans to export around 30 per cent of its production to Asian markets. M&M in its joint venture with Navistar plans to exports busses (7.5-25 GVW) which will built at the companys Chakan plant and trucks to right-hand drive markets such as South Africa.SM II - Group Project, Group 6, Section C
  • 25. Challenges to India’s export competitiveness Growth in input costs Slowdown in external demand in Europe and USA Production cuts in lieu of slowdown Growing competition from Chinese manufacturers Changing consumer preferences Infrastructure constraints Human resource challengesSM II - Group Project, Group 6, Section C

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