2. OVERVIEW
• Auto sector – companies and organizations – design, development, manufacturing,
marketing, selling of motor vehicles.
• Began in 1860s – US led the world in total automobile production – about 90%
produced by them.
• Japan overtook in 1980 – US became leader again in 1994
• China increased production – largest producing country in 2009
• 2010: India overtakes Canada, Spain, Korea – 5th largest automobile producer.
• 2018: India overtakes Germany to become 4th largest automobile producer.
3. World Motor Vehicle Production:2018 Statistics
Country Cars Commercial vehicles Total
%
change
China 23529423 4279773 27809196 -4.2
USA 2795971 8518734 11314705 1.1
Japan 8358220 1370308 9728528 0.4
India 4064774 1109871 5174645 8.0
Germany 5120409 0 5120409 -9.3
Source: OICA
http://www.oica.net/category/production-statistics/2018-statistics/
% of total
29.07
11.8
10.17
5.41
5.35
4. 1 Toyota Japan 10,466,051
2
Volkswagen
Group
Germany 10,382,334
3 Hyundai South Korea 7,218,391
4 General Motors United States 6,856,880
5 Ford United States 6,386,818
Source: OICA
List of manufacturers by motor vehicle production
14. New Developments
• Autonomous cars
• https://www.livemint.com/companies/news/india-latest-test-bed-for-intel-s-autonomous-driving-
push-1549304558020.html
• Block chain
• https://public.dhe.ibm.com/common/ssi/ecm/29/en/29022329usen/29022329usen-
00_29022329USEN.pdf
• Examples:
• Ford has launched a blockchain pilot on IBM platform to ensure ethical sourcing of cobalt
• Volkswagen is building a blockchain-based tracking system to prevent odometer fraud
15. New Developments
• Electric Vehicles
• India's electric vehicle (EV) sales increased to 25,000 units during FY 2016-17
• Government of India’s vision to see 6 million electric and hybrid vehicles in India by 2020.
• Electric policy finalized by the Government of Kerala has a aim to get 6,000 electric buses for the
state road transport corporation by 2025
• IBEF report April 2019
19. Why auto industry is facing trouble
• Cost of ownership increased due to increase in fuel cost, higher
interest rates and hike in vehicle insurance cost
• IL and FS crisis led to a severe liquidity crunch
• The NBFC crisis
• Customers waiting to buy Bharat Stage-6 emission standard vehicles
https://www.thehindu.com/business/Industry/why-is-the-auto-industry-
facing-trouble/article29121023.ece
20. Developments and Strategies by different companies
• Maruti Suzuki
• Maruti Suzuki sheds 1,000 temporary staff and may place a hiring freeze as the
company's sales continue to decline.
• Announced a partnership with Uber India through a Memorandum of
Understanding (MoU).
• Maruti Suzuki India has cut vehicle production by around18% in May.
• Plan to invest INR 150bn towards the purchase of land, warehouses, and transport
infrastructure
21. Developments and Strategies by different companies
• TATA Motors
• Indian Government to procure 10,000 EVs from Tata motors in two phases.
• Tie up with Uber- provides financing to own vehicles, insurance etc.
• Expand market share in passenger vehicle segment by 2020
• TATA JLR – increase market share in the luxury car segment to 20% within
3 years
India Autos Report-Q4,2019
24. Threat of new entrant- Moderate to Higher
• Economies of Scale and Capital requirement
• https://www.thehindubusinessline.com/companies/volkswagen-to-
reposition-skoda-other-brands-in-india/article20523797.ece1
• Access to raw material, technology and distribution channel
• https://www.business-standard.com/article/news-cd/mercedes-benz-to-
launch-12-new-models-in-2016-116011200705_1.html
• https://www.india.com/car-and-bike/car-articles/car-features/ford-ecosport-
and-the-upcoming-crop-of-compact-crossovers-3304869/
• Favorable macroeconomic and demographic trends
• Development of India as a manufacturing hub
• Government policies and protection
• https://www.mckinsey.com/industries/automotive-and-assembly/our-
insights/the-future-of-mobility-in-indias-passenger-vehicle-market
25. Industrial Rivalry-High
• Low switching cost
• https://www.capgemini.com/consulting/wp-
content/uploads/sites/30/2017/07/cars-online-2017_report_cc.pdf
• Large number of players in passenger segment
• https://www.livemint.com/auto-news/why-carmakers-are-still-betting-on-
india-1557855432498.html
• Frequent launch of new models and investments, intense competition
• https://www.ibef.org/industry/india-automobiles.aspx
26. Bargaining power of suppliers- Low to
Moderate
• More number of suppliers
• 500 number of component manufacturers in the organized sector
• 5000 suppliers in unorganized sector
• http://oaji.net/articles/2016/3050-1456208479.pdf
• Technology upgradation
27. Bargaining power of buyers-Higher to
Moderate
• Increased purchasing power, Number of potential customers(Rural areas)
• https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/manufacturing/de
loitte-nl-driving-through-bric-markets.pdf
• https://www.livemint.com/auto-news/why-carmakers-are-still-betting-on-india-
1557855432498.html
• Low switching costs
• Rising income and large young population
• Changing preferences, income graphs
• https://www.capgemini.com/consulting/wp-content/uploads/sites/30/2017/07/cars-
online-2017_report_cc.pdf
• https://www.mckinsey.com/industries/automotive-and-assembly/our-
insights/the-future-of-mobility-in-indias-passenger-vehicle-market
28. Threat of substitution- Higher
• Shared mobility
• https://www.mckinsey.com/industries/automotive-and-assembly/our-
insights/the-future-of-mobility-in-indias-passenger-vehicle-market
• Public transport (Metros, Buses, Railways)
• https://indianexpress.com/article/india/cabinet-approves-new-metro-rail-
policy/
• https://www.mapsofindia.com/maps/india/metro-rail-projects.html
30. POLITICAL
• Reduce GST on LPG used in automobiles to 5%
o Auto LPG body seeks GST cut, level playing field to spur
usage
https://economictimes.indiatimes.com/industry/auto/auto-news/auto-lpg-body-seeks-gst-cut-
level-playing-field-to-spur-usage/articleshow/70857003.cms
Date- Aug 27,2019
• Government will provide tax incentives for
discarding vehicles older than 15 years
https://economictimes.indiatimes.com/industry/auto/auto-news/tax-incentives-likely-for-
discarding-vehicles-older-than-15-years/articleshow/70868032.cms?from=mdr
31. ECONOMIC
• Fall in passenger vehicles sales
o India’s passenger vehicle market going through the worst
slow down
https://economictimes.indiatimes.com/industry/auto/auto-news/indias-passenger-vehicle-
market-going-through-the-worst-slowdown/articleshow/70151463.cms?from=mdr
Date- July 11,2019
Employee lay off
oSlow down blues: Maruti Suzuki cuts 3000 contract jobs
due to auto slumps
https://www.businesstoday.in/sectors/auto/maruti-suzuki-cuts-3000-contract-jobs-due-to-
auto-slump/story/375597.html
o Auto layoffs continue as M&M joins list amid sales dip
https://www.deccanherald.com/business/business-news/auto-layoffs-continue-as-mm-
joins-list-amid-sales-dip-755247.html
Date-Aug 19,2019
32. • Industrial development and wealth creation to help
demand in local automobile market
o State Government need to realise their role in promoting
manufacturing in auto sector: RC Bhargav
https://economictimes.indiatimes.com/industry/auto/auto-news/state-governments-need-
to-realise-their-role-in-promoting-manufacturing-in-auto-sector-rc-
bhargava/articleshow/70855004.cms
Date- Aug 27,2019
33. SOCIAL
• Change in Customer preferences
o MG Motor unveils India's first internet car technology
iSMART Next Gen
https://auto.economictimes.indiatimes.com/news/auto-technology/mg-motors-unveils-
indias-first-internet-car-technology-ismart-next-gen/68687735
• New requirement of urban and individual mobility
https://www.ey.com/en_gl/automotive-transportation/the-six-trends-driving-change-in-the-
automotive-industry
34. TECNOLOGICAL
• BS6 Emission model to roll out
o Hyundai plans to start rolling out BS6 model early this year
https://economictimes.indiatimes.com/industry/auto/auto-news/hyundai-plans-to-start-
rolling-out-bs6-models-early-next-year/articleshow/70855338.cms
Date- August 27,2019
• Focus on SMART Factory
oSlowdown hits auto companies get tech ready for turn to
ride
https://economictimes.indiatimes.com/industry/auto/auto-news/slowdown-hit-auto-
companies-get-tech-ready-for-turn-of-tide/articleshow/70850984.cms
Date-Aug 27.2019
• Digital platform has changed the automobile
industry
https://www.digitalistmag.com/customer-experience/2017/06/20/how-social-media-
changed-automobile-industry-05160532
Date- June 20,2017
35. ENVIRONMENTAL
• Physical infrastructure affect the use of automobiles
• Future is Electric Vehicle
Source The future of Automobile industry in India- CNBC Awaaz
Disposal of ELVs
o The enormous test that awaits India as the date with mandatory vehicle
scrapping nears
https://economictimes.indiatimes.com/industry/auto/auto-news/the-enormous-test-that-awaits-india-as-the-date-with-
mandatory-vehicle-scrapping-nears/articleshow/66897364.cms
Date- Dec 02,2018
https://youtu.be/17xh_VRrnMU
36. LEGAL
• 5.09% of total FDI inflows to India from April 2000 to
March 2019 went into the automobile sector
• The GOI has introduced a policy which allows
organization and researchers to buy bulk data related
to vehicle registration on an annual basis
• Planning to implement FAME till 2020
IBEF report