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Economics ppt
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Economics ppt

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Presentation on Automobile Sector using Managerial Economics Models.

Presentation on Automobile Sector using Managerial Economics Models.

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  1.  The design of the Cugnot Steam Trolley (1769)  History of the automobile begins as early as 1769, with the creation of steam-powered automobiles capable of human transport In 1806. The first cars powered by internal combustion engines running on fuel gas appeared, which led to the introduction in 1885 of the ubiquitous modern gasoline or petrol-fueled internal combustion engine.
  2. AUTOMOBILE 2 WHEELER 3 WHEELER L.C.V. MOTORCYCLE SCOOTERS PASSENGER VEHICLE COMMERCIAL VEHICLE M.C.V. H.C.V. SCOOTERETTES MOPEDS
  3. Globally Diesel cars are less in demand vs the demand in India. Prices of cars globally are cheaper compared to the prices in India Eg: Toyota Fortuner in Thailand 11 lakhs approx vs Toyota Fortuner in India 27 lakhs Emission norms very strict abroad compared to India Global market turning green as compared to the Indian market.
  4. In India high end cars are only imported. Indian fuel prices are regulated. Developed countries fuel prices are unregulated. Poor road condition in the country is a big challenge for the automobile industry. India is more prone to hatch back and small cars while developed countries are inclined towards spacious and luxurious cars. Safety norms in the Indian automobile industry is yet to pick up while internationally there are high safety standards and norms.
  5. • • Hindustan Motors – the first Indian Car company to start production in India founded in 1942 by Mr. B.M. Birla; Ambassador – The flagship car Establishment of other car manufacturing companies like Premier Automobiles(1944); Premier Padmini – The flagship car, now also used for cab services
  6. Growth very slow because of Low Demand and Low Economic Status of the country Government restrictions provided no motivation or incentive for firms to do technological upgradation. Supply was low and there weren’t many competitors Impact on Consumers –Consumers did not have many choices; the Demand was fairly low as Cars were still a Luxury and availability of same models
  7. • • Sanjay Gandhi owned Maruti Technical Services Limited which was liquidated After his death, Indira Gandhi government collaborated with Suzuki Motors, a Japanese firm, for collaboration – Formation of Maruti Udyog Limited and renamed later Maruti Suzuki in 2007 + =
  8. • Policy changes introduced in 2 doses: 1. Partial de-regulation in 1985 – eased licensing requirements, allowed selective capacity-expansion, partial relaxation of controls with regard to foreign collaboration, imports. However, trade and investment regulations continued, constraining growth of big business houses. 2. 1991 policy changes – Dispensed with bulk controls and regulations • Partial de-regulation allowed technology inflow into India
  9. • New Industrial Policy in July 1991 by Congress Government led by Mr. Narsimha Rao:  • It introduced Liberalization policies – Abolishment of License Raj April 1993 – Government removed motor cars from list of industries reserved for compulsory licensing
  10. • • • New firms, including foreign players, entered with modern engineering, efficient processes and modern shop-floor layouts Indian automobile industry grew at 14.31% per annum in post-1991 era compared to 8.56% per annum during 1985-91 Delicencing of sector attracted many major Global OEMs (GM, Ford, Honda, Hyundai etc.) to start assembly in India
  11. Finance Bill 2006 – reduction of excise duty on small motor vehicles, reduction in duty of raw materials from 10% to in-between 5%7.5% - Infrastructure boost Extension of 150% weighted tax deduction on R&D expenditure – increase in budgetary allocation towards R&D Allowing automatic approval for foreign equity investment upto 100%, with no minimum investment criteria
  12. Key Segment Of The Economy It Contributes About 4% In India's GDP And 5% In India's Industrial Production. Generates About 4.5 Lakh Of Direct Employment And About One Crore Of Indirect Employment. Developed Globally Competitive Auto Ancillary Industry And Established Automobile Testing And R&D Centers. The Lowest Cost Producers Of Steel In The World.
  13. Intense competition amongst various players 30th December 1998 - Indica launched by Telco for `2,59,000 (petrol) and `2,85,000 (Diesel) 31st December 1998 – Maruti slashes prices by 5-12%; Maruti 800 price slashed to `1,85,000 from `2,09,000 Ratan Tata – “Even for those who do not own or buy an Indica, good news, we’ve triggered price drops in Maruti and made the car market a friendlier place”
  14. • Tata has come up with ` 1 Lakh car – Tata Nano • This again has created price war • Nissan-Renault to develop a $3000 car using India’s “frugal engineering expertise” • Bajaj to experiment with the idea of a small car
  15. In the Passenger Car category, Maruti Suzuki is still the market leader with around 50% market share
  16. • Considering huge market potential, production of passenger cars is projected to grow at CAGR of 11% between 2010-11 and 2013-14.  Comparison: • 1982 • 2009: Number of manufacturers: 3 Vehicle sales: 20000 Number of models: 3 Number of manufacturers: 15 Vehicle sales: 19,80,000 approx. Number of models: 53
  17. Passenger Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% - <1% <1% Utility Vehicles 2% 18% 1% 42% 21 % 1% 10 % 1% <1 % - 4% - <1% Multi Purpose Vehicles 100% - - - - - - - - - - - <1% 4th largest Passenger Vehicle Market in Asia
  18.  Diesel car or a Petrol car?  Important for consumers to know they're getting value for money when they buy a car.  Petrol car running cost is Rs.5/KM where as Diesel car running cost is Rs.2.5/Km.
  19.   Less KM Run people prefer Petrol cars and for more KM Run people prefer Diesel cars. Petrol car users= 1/ KM Run. Business class prefer Diesel car more than Petrol Cars, Where as Service class prefer more petrol car than diesel car
  20. 100 82 90 78 72 80 62 70 60 51 44 45 50 Petrol 39 32 Diesel Both 40 30 14 20 10 21 18 5 10 10 12 6 4 0 Better Resale Value More Fuel Consumption More Comfortable More Expensive for Maintenance More Economic More Happier
  21. Year Petrol Price Diesel Price Jun-10 51.43 39.88 Dec-10 55.87 41.98 Dec-11 65.64 45.84 May-12 70.18 46.17 Dec-12 71.02 46.25 Jul-13 77.73 58.29 Nov-13 79.49 59.46
  22. 90 80 70 60 50 Petrol Diesel 40 30 20 10 0 Jun-10 Dec-10 Dec-11 May-12 Dec-12 Jul-13 Nov-13
  23.     Customer like to go for Petrol vehicle for advantage of less maintenance cost and less Purchase price Customer like to go for Diesel vehicle for getting the advantage of extra Mileage & better features Customer buying a Diesel vehicle is not much bothered about the price of the vehicle Customer buying Petrol vehicle is not much bothered about the mileage of the vehicle
  24.  Convergence of government policies  Economy’s growth  Increase in People’s purchasing power.  Pursuit of better lifestyle  Growth in the road infrastructure
  25.  Relatively inelastic demand for Mercedes car owner compared to a Maruti Suzuki car owner who will have a relatively elastic demand when it comes to charging him for service . This is because owner of mercedes wont mind in paying higher amount.
  26. The change in price of Honda Jazz from 7,25,000 to 6,10,000 in 2012 lead to substantial increase in quantity demanded for Jazz from 316 units in 2009 to 1209 units in 2012.   This effect explains that the automobile market in India is highly price sensitive when it comes to middle level segment cars.
  27. The increase in price of Audi A6 in India from 50,25,000 to 51,90,000 in 2012 lead to very small decrease in quantity demanded for Audi A6 from 712 units in 2011 to 689 units in 2012. This shows that consumers are very less price sensitive when it comes to luxury cars.
  28.  CRISIL Reports  http://auto.indiamart.com/  http://www.wikinvest.com  http://india-reports.in  http://wheelsunplugged.in/  http://en.wikipedia.org

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