Indian Automobile Sector (Oligopoly to monopolistic transformation)
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Indian Automobile Sector (Oligopoly to monopolistic transformation)

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Indian Automobile sector

Indian Automobile sector
tells how it transformed from oligopoly to monopolistic competition over the years

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  • Hello. Could you share the content you had from the imaginmor link? I am unable to get redirected to anything from any of the hyperlinks below the article on the page, even References :/ Help would be greatly appreciated. And nice work, by the way :D (Y)
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Indian Automobile Sector (Oligopoly to monopolistic transformation) Indian Automobile Sector (Oligopoly to monopolistic transformation) Presentation Transcript

  • PRESENTED BY: Shashank Kapoor Nidhi Aggarwal Amandeep Badwal Narayan
  • INTRODUCTION The Automotive Industry in India is one of the larger markets in the world and had previously been one of the fastest growing globally, but is now seeing flat growth rates. However production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021 AUTOMOBILE 2 WHEELERS 3 WHEELERS PASSENGER VEHICLES COMMERCIA L VEHICLES
  • The growth journey Early to mid 90s Initial Years Manufacturing was licensed •Seller’s market and long •High Customs duty on import waiting periods. •Steep excise duties & sales tax •Delicensing in 1993. •2 Major players: Premier Automobiles Ltd. & Hindustan Motors •Decrease in customs & excise duty. 1980s •Entry of Maruti Udyog Ltd. •Auto finance boom- more •Better product, players (foreign banks & with government support. non banking companies, •Seller’s Market. better schemes). •Long Waiting Periods. Mid 90s – Early 2000s •Buyers market. •Easy Auto finance. •Manufactures diversifying into related activities: finance lease, insurance and used car market.
  • Automotive Companies in India Major Indian Companies Major Multi-National Companies
  • Key Growth Drivers
  • Market shares Passenger Vehicles Market Share Commercial Vehicles Market Share Sources: For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
  • Sales Sources: For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
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  • exports Sources: For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)
  • Transformation from Oligopoly to Monopolistic Market
  • What is Oligopoly market? • Market structure is featured by a few firms. • Strategic Interaction - Reaction to competitor’s pricing and marketing strategies. • Product can be homogenous or differentiated. • Considerable barrier to entry for new firms. • Possibility of Collusion, leading to illegal price setting. • On the other hand, if no collusion, possibility of fierce competition among the few firms.
  • What is Monopolistic market? • Market structure characterized by many firms. • Product differentiation allows a Range of prices. • Monopoly over a small range of price. • Barriers to entry and exit very minor. • Branding, advertising and personal selling to differentiate the product.
  • The Causes of Transformation – The First Big Step • 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. + =
  • The Causes of Transformation • 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. • New Industrial Policy in July 1991 by Congress Government led by Mr. Narsimha Rao:  It introduced Liberalization policies . • April 1993 – Government removed motor cars from list of industries reserved for compulsory licensing.
  • Effects of the Transformation • 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. • Demand for small and compact cars by highly educated, wellinformed Indian customers. • Easy Auto Finances attracted the buyers leading to sharp rise in the demand.
  • Indian Automobile Industry – The Monopolistic Market
  • Current Trends in the Current Monopolistic Automobile Market • Considering huge market potential, production of passenger cars is projected to grow at CAGR of 11% between 2010-11 and 2013-14. Comparison: • 1982 Number of manufacturers: 3 Vehicle sales: 20000 Number of models: 3 • 2011: Number of manufacturers: 20 Vehicle sales: 23,80,000 approx. Number of models: 78
  • KEY Competitors Source: http://www.imaginmor.com/automobileindustryindia.html
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  • KEY Competitors Contd… Source: http://www.imaginmor.com/automobileindustryindia.html
  • KEY Competitors Contd… Source: http://www.imaginmor.com/automobileindustryindia.html
  • KEY Competitors Contd… Source: http://www.imaginmor.com/automobileindustryindia.html
  • Sources of data  www.wikipedia.org  www.automobileindia.com  www.investropedia.com  For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM) and for auto component revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)  Economic Times  http://www.imaginmor.com/automobileindustryindia.html