INTRODUCTION Faces huge competition, cost and price pressure. The zooming auto industry has driven the growth. The number of vehicles is swelling. The truck and bus market is the largest segment in terms of value.
Economic expansion and road development has made a contribution. eg. The golden quadrilateral and the NSEW Corridor project. Though the volumes have increased the profitability has gone down due to the increase in raw material cost.
Bargaining Power of Buyers OEM’s High In Replacement Market Moderate Switching Cost Low Threats of Backward Integration Low
THREAT OF POTENTIAL ENTRANTS LOW, due to HIGH ENTRY BARRIERS
ENTRY BARRIERS Highly capital intensive industry Rs4bn for radial tyre plant with a capacity of 1.5mn tyres Rs1.5-2bn for a crossply tyre plant of a capacity to manufacture 1.5mn tyres High raw material costs
Shortage of raw material Force of rivalry High risk
THREAT OF SUBSTITUTES Low, but increasing Import of tyres ISI mark made compulsory
Porter’s Model Entry High returns BarrierHigh risks High Low HighLowExit Barrier