Automobile 26

Overview Of
Automobile Industry

What Is Automobile Industry:-
The automotive industry is a wide range of companies and organizations involved in
the design, development, manufacture, marketing, and selling of motor vehicles. It is one of the
world's most important economic sectors by revenue. The automotive industry does not include
industries dedicated to the maintenance of automobiles following delivery to the end-user, such
as automobile repair shops and motor fuelfilling stations.
History of Automobile Industry:-
The early history of the auto-mobile can be divided into a number of years, based on the
prevalent means of propulsion. Later periods were defined by trends in exterior styling, size, and
utility preferences.
In 1769 the first steam powered auto-mobile capable of human transportation was built
by Nicolas-Joseph Cugnot.
In 1807, François Isaac de Rivaz designed the first car powered by an internal combustion
engine fuelled by hydrogen.
In 1886 the first petrol or gasoline powered auto-mobile the Benz Patent-Motorwagen was
invented by Karl Benz.
At the turn of the 20th century electrically powered auto-mobiles appeared but only occupied a
niche market until the turn of the 21st century.
In the beginning automobile industry was dominated by steam-powered vehicles. The vehicles
were expensive and difficult to maintain. The incidence of frequent boiler explosions also kept
potential purchasers away. Commercial history of automobiles started with the invention of
gasoline powered internal combustion engines. The German inventor, Karl Benz constructed his
first gasoline powered vehicle in 1885 at Mannheim, Germany. Commercial production of Benz
cars started in 1888. PanhardetLevassor of France was the first company to exclusively build and
sell motor cars from 1889.
Mass production of cars led to cheaper vehicles. This made cars more affordable to the common
American and European citizen. The British automobile manufacturing history was

revolutionized by assembly line production methods employed by two separate car makers-
William Morris and Herbert Austin. Austin Seven was the world's first compact car. The Morris
manufactured vehicles had engine mounted on front.
The 1960s saw rapid developments in automobile manufacturing technology. A milestone in the
history of automobiles was achieved by the invention of efficient fuel injection processes,
independent suspensions and turbochargers. Pontiac Trans Am was the best selling car from
1969 to 1980. Computer Aided Design (CAD) was introduced for designing vehicles from the
1980s. Ford Taurus was the first vehicle to be built using CAD.

Backgroundof Automobile Industry
The automobiles industry for many years operated in a seller's market. In such a scenario the
manufacturer could offer outdated models and also raise prices at will. Little or no attempt was
made to control costs or to offer new products. Lack of innovation restricted the consumer’s
options to the models offered by these companies.
The number of manufacturers (domestic and foreign) increased dramatically after the de-
licensing of the sector. Increased competition has forced companies to focus on cutting costs,
improve technology and styling through research. It has also constrained them to limit price
increases.
Availability of easy credit facilities also resulted in creating demand for automobiles. The car
financing market has boomed from a turnover of Rs 7,000 m in FY95 to nearly Rs 35,000 m in
FY97.

Structure
The Indian automobile industry can be broadly classified into:
 2 /3 Wheelers
 PassengerCars
 Commercial Vehicles (LCV/HCV/MCV)
 UV (Utility vehicles)
 Tractors
https://www.google.co.in/search?newwindow=1&biw=1366&bih=667&tbm=isch&sa=1&q=SEGMENT+I
MAGE+AUTOMOBILE&oq=SEGMENT+IMAGE+AUTOMOBILE&gs_l=img.3...2161.3547.0.4679.6.6.0.0.0.0.
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The models in the car market can be fitted to different segments as given below :
Category Models
Economy segment Maruti Omni, Maruti 800 etc.
Mid-size segment Fiat Uno, Hyundai Santro, tataIndica, Maruti
Alto etc.
Luxury car segment Tata Indigo, Honda City, Mitsibushi Lancer,
Ford Ikon, Opel Astra, Hyundai Accent &
others
Super luxury segment Mercedes Benz & other imported models
Increased urbanisation, low pricing policies, improvement in products and technology have
fuelled demand for 4-wheelers. The markets are clearly segmented between economy models
and premium models. The easy availability of finance and increased levels of disposable incomes
has led to higher demand for premium models. Rural areas have also become an exciting market
to cater to.
The growth of the economy has also resulted in a shift in consumer preferences in each of the
segment. Gradual shift can be seen in buyers from mopeds to economy scooters, from economy
scooters to premium and from premium to motorcycles.
The passenger car segment has seen rapid growth on the back of rise in disposable income,
increased availability of consumer finance, and reduction in excise and customs duties. Post-

1991, this segment has seen maximum foreign investment. There is a clear segmentation of
passenger cars based on price and size. While the lower and medium
range cars (Maruti, Ford, Cielo) have been moderately successful, luxury cars such as Mercedes
have found the going tough.
Demand for utility vehicles and tractors come from rural India. These vehicles have witnessed
steady demand growth over the past few years due to successive monsoons, better procurement
prices, improved irrigation facilities, and availability of finance.
A strong in-house R&D capability allows a manufacturer to develop and introduce products at
lower prices, thus saving costs of importing technology. However, Indian companies spend very
little on R&D.
Availability of quality components is another factor that determines smooth production without
bottlenecks. High rejection rate of auto components has prompted several global majors like
Ford, to get their international suppliers.
The Landmarks Along The Way...
1928- The first imported car was seen on Indian roads
1942- Hindustan Motors incorporated
1944- Premier automobiles started
1948- First car manufactured in India
1953- The Government of India decreed that only those firms which have a manufacturing
program should be allowed to operate
1955- Only seven firms, namely, Hindustan Motors Limited, Automobile Products of India
Limited, Ashok Leyland Limited, Standard Motors Products of India Limited. Premier
Automobiles Limited, Mahindra & Mahindra and TELCO received approval.
1960 - 1970 - The two, three wheeler industries established a foothold in the Indian scenario.
1970 - 1980 - Not much change was witnessed during this period. The major factors affecting the
industry were the implementation of the MRTP Act (Monopolies and Restrictive Trade Practices
Act), FERA (Foreign Exchange Regulation Act) and the Oil Shock of 1973 and 1979.

1980 - 1990 - The first phase of liberalization was announced by the Govt. -With the
liberalization of the Government's protectionist policies, the advantages hitherto enjoyed by the
Indian car manufacturers like monopoly, oligopoly, slowly began to disappear.
1991 - Under the Govt.'s new National Industrial Policy, the license raj was dispensed with, and
the automobile industries were allowed to expand freely.
1993 - With the winds of liberalization sweeping the Indian car market, many multinationals like
Daewoo, Peugeot, general Motors, Mercedes-Benz and Fiat came into the Indian car market.
1997 - The National Highway Policy was announced which will hopefully have a positive impact
on the automobile industry. The Government also laid down the emission standards to be met by
car manufacturers in India in the coming millennium. There were two successively stringent
emission levels to be met by April 2000 and April 2005, respectively. These norms were
benchmarked on the basis of those already adopted in Europe, hence the names Euro I
(equivalent to India 2000) and the Indian equivalent of Euro II.
1999 - The Hon’ble Supreme Court passed an order directing all car manufacturers to comply
with Euro I emission norms (India 2000 norms) by the 1st of May, 1999 in National Capital
Region(NCR) of Delhi. The deadline was later extended to 1st June, 1999
2004 - Tata Motors becomes the first Indian auto company to be listed on the New York Stock
Exchange.

Auto policy of the Government of India
VISION
To establish a globally competitive automotive industry in India and to double its contribution to
the economy by 2010.
POLICY OBJECTIVES
This policy aims to promote integrated, phased, enduring and self-sustained growth of the Indian
automotive industry. The objectives are to:-
Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of
value addition in the country;
Promote a globally competitive automotive industry and emerge as a global source for auto
components;
Establish an international hub for manufacturing small, affordable passenger cars and a key
center for manufacturing Tractors and Two-wheelers in the world;
Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local
industry;
Conduce incessant modernization of the industry and facilitate indigenous design, research and
development;
Steer India's software industry into automotive technology;
Assist development of vehicles propelled by alternate energy sources;
Development of domestic safety and environmental standards at par with international standards.
SIAM welcomed the announcement of Auto Policy, and feels that the policy would serve as a
reference document for all stake holders and other interested parties.
The Auto Policy has spelt out the direction of growth for the auto sector in India and addresses
most concerns of the automobile sector, including-
Promotion of R&D in the automotive sector to ensure continuous technology
up gradation, building better designing capacities to remain competitive;

Impetus to Alternative Fuel Vehicles through appropriate long term fiscal structure to facilitate
their acceptance;
Emphasis on low emission fuel auto technologies and availability of appropriate auto fuels and
encouragement to construction of safer bus/truck bodies - subjecting unorganized sector also to
16% excise duty on body building activity as in case of OEMs
The policy has rightly recognized the need for modernizing the profile of vehicles to arrest
degradation of air quality. The terminal life policy for commercial vehicles and move toward
international taxing policies linked to age of vehicles, are steps in the right direction.
SIAM has always been advocating encouragement of value addition within the country against
mere trading activity. However, this aspect has not been fully addressed. The Auto Policy allows
automatic approval for foreign equity investment up to 100% in the automotive sector and does
not lay down any minimum investment criteria.
The recommendation of promoting passenger cars of length up to 3.8 meters through excise
benefits is not in line with the free market concept and may lead to market distortion.
However, with the Auto Policy in place, the automotive industry would get further fillip to
become vibrant and globally competitive. The industry would get the required support from other
Ministries and departments of Government of India in achieving the goals laid down in the auto
policy.

Automobile market share :
Market Share Report (Half Yearly Report)

http://motorbash.com/jan-2015-car-sales-report-list-of-all-manufacturers-their-market-share/

Features of The Automobile Industry :-
The structure of the auto market has been changing at a faster pace along with the global changes
in the Industry. There are several global automobile companies who were averse to come and
invest in India ten years ago, now have kept India as a priority destination for their investment.
Along with the entry of multinational auto companies, the profile of domestic auto companies
too witnessed a structural change.
The stiff competition to access market prompted companies to go for different models with
differing qualities and efficiency. The market too expanded at a rapid pace with the entry of soft
financial assistance from several financial institutions to middle income households.
MNCs need to carefully plan their entry into emerging markets. Early commitment to a market
often results in first mover advantages that are difficult to replicate. On the other hand, later
entrants have the opportunity to learn from the mistakes of the first entrant.
The Indian car market offers useful lessons in this context. In the 1990s, the Indian Government
removed several restrictions in a bid to attract foreign investors into the automobile industry.
Among the first to enter was Daewoo of South Korea, with its model Cielo, targeted at the upper
end of the market. Other MNCs such as Ford and General Motors also entered the Indian market,
followed by Hyundai, Honda, Toyota, Volkswagen etc.
Most MNCs began their operations in India as joint ventures with local partners. Examples
include Suzuki, G.M, Ford and Daewoo. With the exception of Suzuki, these joint ventures have
become fully owned subsidiaries of the foreign partners. In all these cases, the local partners
have just not had enough resources to chip in whenever the equity base has been expanded.
Consequently, the foreign partners have pumped in the additional capital and raised their equity
stakes With the liberalization of the India economy, the Rs 18,500 crore Indian car market is
being opened up to foreign investors. Several companies are setting up or have already set up
operations in India to cater to the Indian market. There are several strategies by which a foreign
enterprise can set - up Indian operations.
This module aims to give the various entry options available to a foreign investor, especially for
foreign direct investment. This module does not deal with portfolio investments.

Broadly, entry strategies may be classified into two major types..
1. A foreign investor may directly set up its operations in India through a branch office or a
representative office or liaison office or project office of the foreign Company
2. It may do so through an Indian arm i.e. through a subsidiary company set - up in India under
Indian laws. Generally, setting up operations through an Indian arm is advisable, especially if the
quantum of investment is huge.
The impact of India’s initiatives in economic liberalization and globalization (post 1991) is most
apparent in the automotive sector. Automotive industry is a key driver of economic growth
contributing around four to five percent to the Indian GDP. Introduction of reforms and entry of
international companies has intensified competition in the Indian automotive sector.
This has resulted in the transformation of a seller’s market (created mainly due to the Indian
government’s protectionist policies) into a buyers market. The changing structure of this industry
has posed many challenges and opportunities to the market participants.
Previously, Indian automotive market was characterized by weak air pollution regulations. In
addition, low labor cost of maintenance and the psyche of Indian consumer to delay the
discarding of the old vehicle reduced the scrap rate. All these factors resulted in prolonged
operational existence of vehicle on Indian roads.
The benefit of this practice is the comparatively higher revenues for automotive component
suppliers, due to increased demand in the aftermarket. This will reduce the average life span of
vehicles on road and the overall impact would be reduced per vehicle parts consumption.
Two wheelers generate the highest volumes and are more popular in rural and semi urban
markets primarily due to lower income levels and poor road conditions. Therefore, these could
be classified as entry-level vehicles. Within two wheeler segments, progressively mopeds are
likely to be replaced by motorcycles. With the growth in the family income of these rural and
semi-urban buyers and the option of numerous used cars, it is expected that a significant shift
would take place from two wheelers (mainly scooters) to four wheelers.

Lucrative finance schemes have made the purchase of mid-sized cars really affordable. The
present owners of the small car are likely to graduate to mid-size cars mainly due to declining
importance of small car as status symbol and the marginal increment in repayment installment in
the finance options.
Good performance of the economy has led to higher all round growth leading to high GDP
growth of 8%. Excise duty reduction on passenger vehicles helped to reduce the ultimate price to
the customer. Brisk activities on infrastructural development will give a boost to the automobile
industry. Softening of interest rates and improved financing of second hand vehicles have made
the purchasing of cars financially viable.
Availability of finance in rural and semi-urban areas have led the low-end customers to put
money in the purchase of vehicles. Emergence of India as a manufacturing hub for the
automobile industry is a good sign for the country’s future prospects.
The automotive industry performance is closely linked to industrial growth. It is hoped that
industrial growth would be around 7 per cent during the year 2003-04 as against around 6.5%
last year. Agriculture output during the year 2003-04 increased by over 10% as compared to (-
)3.2% in the previous year.
Today we are fourth largest economy (USD 2.5 trillion) in the world after USA, Japan and China
in terms of purchasing power parity. The outlook for the year 2004-05 is promising and it is
expected that the current growth rates of GDP and industrial output will be sustainable, which
would ensure robust growth in the automotive sector.
http://www.managementparadise.com/forums/service-sector-management/201391-features-
automobile-industry.html

Innovation in Automobile Industry
The broad aim of this section is to discuss the changing forms of innovation in
Indian automotive firms over the last few years. Starting with a broader contextual
view of the automotive sector, to give a flavour of the general industrial
environment, we will analyze the specific case of auto components industry which
has shown remarkable success over the last two decades. The chapter will build on
two distinct but inter-dependent parts: a historical analytical part (drawing mostly
on existing literature) to understand the genesis and development path of the
industry through the changes in policies/institutions; and an econometric analysis
of quantitative and qualitative data to understand the nature and extent of
capability building processes at the firm level in the automotive industry.
The plan for this section is as follows. In the next sub-section I present the general
industrial and economic environment of automotive industry by providing its
evolutionary pattern since independence and presenting how technological
capability of this industry has evolved through various decades. I also discuss
general industry trends in this sub-section. Data, methodology, empirical model and
results are discussed in following sub-section. Finally, the last sub-section
summarizes the main findings and provides policy perspectives of the results.
Evolution of the Indian Automotive Industry: From Statics to Dynamics
This sub-section presents an evolutionary analysis of Indian automotive industry’s
growth over the four decades since independence. The evolution of India’s
automotive industry from a fairly static/slow-paced growth (from 1940s till 1980s)
to the recent impressive showing of dynamism owes formidable precedence to
history. If one fishes through the not-so yet impressive documentation of Indian
automotive industries’ wholesome development since independence in 1947, one
would most certainly huddle with either political surmise of industrial developments
or a development (or sometimes industrial) economists explanation of the
industry’s evolutionary characters. So far, most of the prologues on India’s
automotive industry’s development story have been written by economists with
industry as specialization or by development thinkers with a political economy bent
of mind. I do not have specific preference for either as I would choose to borrow
the economic historian’s eye and combine both political and economic/industrial
development policy angle to describe Indian automotive industry’s growth
trajectory.

As will become clear from the ensuing discussions, India’s industrial development is
characterized by more complex processes than one can find in other transition
economies and industrialized nations. If one keenly observes the differences in
industrial development of some transition economies (for instance, Republic of
Korea) with India, among many distinct observations (e.g., a clear and favorable
state patronage to liberalization at the initial phase of development), an interesting
aspect would emerge, which to my knowledge has flayed the probing eyes of
industrial economists or political scientists. The state of development and its
sustainability in any economy is contingent upon the stock and accumulation of
human capital. The number of educated people among young generations during
1960s and 1970s could make the key difference between the paces of industrial
development in the comparable nations. This may appear anecdotal, but it has
interesting political economy evolutionary outcome which I believe has shaped the
economic and industrial policies in the next decades.
Chronology and typology of India’s automotive growth
Indian automotive industry’s building up characteristics from the pre-independence
period till date shows distinct phases. It all started in 1940s for the first embryonic
automotive industry to emerge in the pre-independent India. Almost after a decade
and a half since then, leading entrepreneurs and the government in the
independent India have extended efforts to create a manufacturing industry to
supply the automotive industry with components in 1953. This was the beginning of
the take-off phase of Indian economy. In the next three decades, the growth in the
automotive industry did not really kick-start as the national economic growth was
constantly following the Hindu rate of growth – an annual growth that stagnated
between 3.5 percent over 1950-1980. Despite the sluggish growth of the economy
during that time, the automotive industry began to witness a relatively fast growth
during 1970-1980 mainly due to the leading production role of Telso, Ashok
Leylands, Mahindra & Mahindra, Hindustan Motors, Premier Automobiles, and Bajaj
Auto. Having experienced several decades of colonial power, openness to risk of
admission in the global automotive production were severely checked by the Indian
government by introducing several licenses, trade restrictions and barriers.
However, the growing demand for more cars since 1980s has changed the whole
growth scenario. During 1980-1985 the first major change was sighted as Japanese
manufacturers began to build car and commercial vehicle factories in India in

partnership with Indian firms. At the same time, component manufacturers also
entered the joint-venture scenario with European and US firms.
From the mid period of phase 3 and the beginning of phase 4 of economic reforms
(that is during 1985-1990) the industry marked the entry of Maruti Udyog into the
production of passenger car segment as persistent high import tariffs were relaxed
to a great extent, and with lesser import cost adding to the overhead production
cost, higher productions were possible leading to the start of growing exports. This
period (the phase 4 of economic reforms: 1988-2006) registered the triumph of
liberalization which kick-started the much awaited reform for the automotive sector
paving the way for the firms which were genuinely waiting for join-ventures, private
investment with duty-free technology transfer indirectly through FDI and directly by
importing the new technologies. It is during 1990-1995, Hero Honda emerged as a
major operator in the motorcycle market while Maruti Udyog established itself as
the leading passenger car maker. During 1995-2000, leading international car
makers entered the Indian market, a trend that continues to accelerate till this
date. During this time advanced technology was introduced to meet competitive
pressures, and environmental and safety imperatives. The automobile companies
started investing in service network to support maintenance of on-road vehicles and
auto financing started emerging as an important driver for demand.
Since 2000, significant trade and investment restrictions were removed to speed up
the momentum of liberalization of the automotive industry. Indigenous production
of cars started since then with an eye to the domestic and international market
needs. Increasing efficiency was achieved with growing investment in research and
development while satisfying the strictest environmental standards. As a result, an
influx of overseas technology know-how has improved the impetus for
improvements in quality and productivity, to a point where many global companies
now view India more favorably than China as a source point for components. It
seems that global Tier 1s are increasingly confident about India's ability to build
more complex parts, and are relocating more complicated systems work to India
rather than simply building basic parts there.
Growth Dynamics of Automotive Segment: Past and Recent Trends
The automobile industry in India has long been recognized as a core manufacturing
sector with the potential to drive national economic growth and foster the
development of technological capabilities through its powerful backward and

forward linkages, and the localization of high value added manufacturing processes
within domestic economies (Humphrey, 2000; Shapiro, 1994). In recent years, for
instance, the contribution of the automotive industry to GDP has risen noticeably -
from 2.77 percent in 1992-93 to 4 percent in 2003-2004.i
The automotive industry in India comprises of all vehicles, including 2-3 wheelers,
passenger cars and multi-utility vehicles, light and heavy commercial vehicles, and
agricultural tractors and other earth moving machineries, besides the component
segment for all these categories (see GenreChart for the various types of vehicles
produced in India). The vehicles segment and the allied components segment are
sometimes alternatively termed as automotive industry. The industry is
characterized by a very high percentage (about 80%) of 2-3 wheelers production.
To mention, India ranks as the largest manufacturer of motorcycles and
second largest in manufacturing of scooters in the world.ii
In tractor manufacturing
also India is the second largest producer in the world.
It was noted in the preceding section that the auto industry witnessed a radical
transformation in terms of competition with de-licensing and liberalization in the
1990s. Following this, two major developments took place. First, there was an
upsurge in the volumes of vehicles produced. And secondly, there was a flux of
entry of global auto manufacturers into India and in some cases, also along with
their parts suppliers.iii
The major contributions came from the passenger car
segment, followed by the Multi Utility Vehicles (MUVs). As a result, the 4-wheeler
segment (including tractors), for the first time, crossed the million marks in 1996-
97, registering a growth of about 12.2 percent in the 1990-97 period (Intecos-cier,
2001). The 2- and 3- wheeler segments also showed good performance during the
same period with a growth rate of nearly 9 percent (Intecos-cier, 2001).
Some of the more recent trends of production are presented in the Figure 1a, which
depicts that starting from a meagre 0.5 million (in number) in 1970s, the total
production of vehicles has gone up to as high as 6.5 million in 2002. The production
accelerated after 1980s when partial decontrol was introduced. The result is notable
– from a modest 1 million during 1980s it became three fold in 1991. The effect of
complete decontrol took time to exert an all round impact on the economy as it
shows there was a short recessionary period 1991–1994, after which there was sign
of revival. Towards 1998-99, the industry again showed an upward trend reaching a
record high in 2002. The production of vehicles in terms of value also shows a
positive growth in the more recent periods (see Figure 1 b).

Genre of Indian Automotive Industry
Source:ACMA,India
http://www.nistads.res.in/indiasnt2008/t4industry/t4ind12.html

INDUSTRY STUDY
“STUDY OF WORLD
MARKET”

Global Scenario of Automobile Industry:-
In the initial years, most of the manufacturing activities were concentrated in the USA and in
some of the European countries. Though, these countries still account for a significant share in
the
production, more and more volume of production comes from other parts of the world, like
China, Japan
and Korea. Around three-fourths of the global production is being carried out in top 10
producing
countries, in 2007. Of these, Japan, USA and China, cumulatively constitute over 40% of global
production[3].
The last decade has experienced a growing level of motorization, as reflected by the production
of automobiles. According to OICA, Japan is the largest producer of cars in the world followed
by
China, Germany, USA, South Korea and France. India ranks 9th in the production of cars in the
world
ahead of UK, Canada, Russia and Mexico. USA is the largest producer of commercial vehicles;
close
competitors in production of commercial vehicles are China, Japan, Canada, Thailand and
Mexico. India
ranks 8th in the production of commercial vehicles and is ahead of countries like Brazil,
Germany,
France and Turkey[4].
Select Trends in Global Automotive Industry
Addressing the Challenge of Volatility in Fuel Prices. One of the major challenges of the world
automotive industry is the volatile oil prices. The year 2008 witnessed crude oil prices breaching
the US
$ 140 mark per barrel, and thereafter slipped below US $ 40, in the later part of the year. The
volatility in
oil prices does not directly affect the growth in automotive industry; however, volatility in oil
prices is
one of the influential factors in automobile demand. In order to address the challenge of volatility
in oil
prices, the automotive industry is innovating new technologies and inventing usage of alternative

energy. Hydrogen cars, driven either by a combination of fuel cells and an electric motor; hybrid
electric
technology; electric vehicles with rechargeable batteries; or alternatively, compressed air
technology to
drive the pistons in a specially designed engine, are thought to be replacing fossil fuel- powered
motors
in the decades to come[5].
Emergence of New Generation Automobiles
Innovation is expected to drive the automotive industry in future as the producers are involved
in differentiating their products and services. There are already growing interface of electronics
and IT in
the automotive functionalities, such as entertainment, navigation and safety. According to a
survey,
conducted by IBM across the auto- majors, majority of them felt that by 2020 the level of
innovation
would be greater in software and electrical systems of automobiles. It is also expected that by
2020 the
vehicles may become another node on internet, connecting with other vehicles, the transportation
infrastructure, homes and businesses. However, there are challenges associated with this trend,
with
regard to consumer acceptance, technological development and adoption of standards[5].
Supply Chain Management in the World of Global Sourcing
Global auto-component firms are giving greater level of thrust in supply chain management to
address the challenge of cost pressures. This is particularly important in the context of global
sourcing.
Though there is a perceived belief that global sourcing helps in reduction of cost of components,
there
are logistical challenges. Thus, it is being recognized that collaboration between the OEMs and
component producers are crucial to develop capabilities and solve the challenges associated with
global
delivery, especially in the areas of inventory management, scheduling, and timely delivery. In
addition,
both OEMs and suppliers view that the collaborative efforts in supply chain management
enhances the

capacity and performance visibility[6].
Customer Management Systems
Earlier, automotive manufacturers had to get feedback from the customers through
intermediaries, such as vendors or service workshops. This trend has been changing with the
introduction
of customer management systems through ICT interface. Even vehicle buyers are also browsing
the net
to know the features of a new model, evaluate them with the existing models, and compare the
prices. IT
firms are developing customer relationship management (CRM) tools that help the
manufacturers to
realise and optimize individual customer value, increase the post-warranty service retention,
predict
model demand and provide supply chain solutions.
Growing Small Car Segment
The volatility in crude oil prises witnessed during the year 2008 re-emphasized the need for
small and fuel-efficient vehicles. Some of the automobile majors have plans to hike their R & D
budget
for designing of small and fuel efficient vehicles. Added to this is the need for reduction in prices
to
target the middle income groups of population /new buyers, especially in developing countries
like India,
where the vehicle penetration is low as compared to the population. An auto research firm CSM
Worldwide Inc. has estimated that global demand for small cars would grow by 30% per annum
to 27
million vehicles a year by 2013. The fast- growing small cars market has encouraged several
global auto-
majors (such as Renault, Toyota, and Nissan) to plan for launch of small cars[8].

48 Saurabh Mohan Saxena & R.K. Shukla
Green Motoring
Automobile manufacturers are increasing the thrust on fuel efficiency than before; the initiatives
are mainly through improvements in technology and introduction of new fuel variants, thereby
reducing
toxic emissions. It may be mentioned that China, the EU, Japan and the USA have already
established
fuel economy rules or agreements of varying stringency. The FIA’s declaration for green
motoring has
set a fuel economy target of 140 gCO2/km for passenger cars. Such a global fuel economy target
could
be used as an international benchmark to assess progress in the fuel efficiency of the global fleet
of new
motor vehicles. Some countries are also undertaking ‘Green Rating’ of automobiles[7].
Cross Border M&A Deals
The global automotive industry is increasingly getting more active in cross border mergers and
acquisition (M&A) deals. On a global basis, the number of cross- border deals has grown in the
past few
years, and this trend is expected to continue after the recovery of economic activity in the world.
The
expansion outside the home markets of some of the major automotive companies from traditional
low-
cost countries, such as China and India, is bringing in new capital and a fresh look at certain
sectors of
the automotive market. With the recession in the US market and its consequent impact in other
markets,
automotive assets in developed countries are becoming attractive to buyers from emerging
economies, as
well.
Entry of Private Equity Players
The traditional funding model in the automotive industry is slowly being replaced with
aggressive funding structures. There has been a structural change in the automotive industry with

the
entry of private equity players in the past. Traditional and family-owned businesses were taken
over by
the private equity players and hedge funds, which are expecting more profit or investment
realization
from the industry. Though the business activities of private equity players have come down,
following
the financial market meltdown, this is expected to be revived soon, either when the market
sentiments
improve or once consolidation happens among the private equity players[9].
Growing Collaboration for Technology Enhancement
Technology-enhancing collaboration in the automotive sector helps in preserving design
integrity, despite minor engineering adjustments. There are also software/ programmes that make
the
global data sharing possible among designers, engineers, suppliers, partners and even customers.
Such
better and faster integration of design / engineering ideas help in necessary adjustments and
adaptations
in designs to suit the requirements.
Trendy Cars, Shorter Life-spans
An automobile is a highly- engineered collection of complex components, each of which has its
own lifespan and longevity characteristics. While some components require frequent
replacement, others
that are relatively expensive are expected to have longer lifespan to justify the economics of a
vehicle.
(DATA SOURCE:International Journal of Business Management & Research(IJBMR)
ISSN 2249-6920 Vol. 2 Issue 3 Sep 2012 45-53 © TJPRC Pvt. Ltd.,)

Marketing Of Automobile Product- Emerging Market, Challenges
& New Strategies
The Indian auto industry is one of the largest in the world with an annual production of 23.37
million vehicles in FY 2014-15, following a growth of 8.68 per cent over the last year.
The automobile industry accounts for 7.1 per cent of the country's gross domestic product
(GDP).
The Two Wheelers segment with 81 per cent market share is the leader of the Indian Automobile
market owing to a growing middle class and a young population. Moreover, the growing interest
of the companies in exploring the rural markets further aided the growth of the sector. The
overall Passenger Vehicle (PV) segment has 13 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near
future. In FY 2014-15, automobile exports grew by 15 per cent over the last year. In addition,
several initiatives by the Government of India and the major automobile players in the Indian
market are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W)
market in the world by 2020.
Market Size
The industry produced a total 14.25 million vehicles including PVs, commercial vehicles (CVs),
three wheelers (3W) and 2W in April-October 2015 as against 13.83 in April-October 2014,
registering a marginal growth of 3.07 per cent year-on-year.
The sales of PVs grew by 8.51 per cent in April-October 2015 over the same period last year.
The overall CVs segment registered a growth of 8.02 per cent in April-October 2015 as
compared to same period last year. Medium & Heavy Commercial Vehicles (M&HCVs)
registered very strong growth of 32.3 per cent while sales of Light Commercial Vehicles (LCVs)
reduced by 5.24 per cent during April-October 2015 year-on-year.
In April-October 2015, overall automobile exports grew by 5.78 per cent. PVs, CVs, 3Ws and
2Ws registered growth of 6.34 per cent, 17.95 per cent, 18.59 per cent and 3.22 per cent
respectively in April-October 2015 over April- October 2014.
Investments
In order to keep up with the growing demand, several auto makers have started investing heavily
in various segments of the industry during the last few months. The industry has attracted foreign
direct investment (FDI) worth US$ 13.48 billion during the period April 2000 to June 2015,
according to data released by Department of Industrial Policy and Promotion (DIPP).
Some of the major investments and developments in the automobile sector in India are as
follows:
 Global auto major Ford plans to manufacture in India two families of engines by 2017, a 2.2
litre diesel engine codenamed Panther, and a 1.2 litre petrol engine codenamed Dragon, which
are expected to power 270,000 Ford vehicles globally.

 The world’s largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and
Toyoda Gosei Co are setting up plants and increasing capacity in India.
 General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the capacity
at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
 US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$ 525 million) in
Maharashtra, to manufacture Jeep Grand Cherokee model.
 Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has
doubled its India assembly capacity to 20,000 units per annum.
 Germany-based luxury car maker Bayerische Motoren Werke AG’s (BMW) local unit has
announced to procure components from seven India-based auto parts makers.
 Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based
Peugeot Motorcycles (PMTC).
Government Initiatives
The Government of India encourages foreign investment in the automobile sector and allows 100
per cent FDI under the automatic route.
Some of the major initiatives taken by the Government of India are:
 Government of India aims to make automobiles manufacturing the main driver of ‘Make in
India’ initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026,
as highlighted in the Auto Mission Plan (AMP) 2016-26.
 In the Union budget of 2015-16, the Government has announced to provide credit of Rs
850,000 crore (US$ 127.5 billion) to farmers, which is expected to boost the tractors segment
sales.
 The Government plans to promote eco-friendly cars in the country i.e. CNG based vehicle,
hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent ethanol blending in
petrol.
 The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric
and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to encourage
the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the
country.
 The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the government is
aimed at accelerating and sustaining growth in this sector. Also, the well-established
Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a
part in providing a boost to this sector.
Road Ahead
India’s automotive industry is one of the most competitive in the world. It does not cover 100 per
cent of technology or components required to make a car but it is giving a good 97 per cent, as
highlighted by Mr Vicent Cobee, Corporate Vice-President, Nissan Motor’s Datsun.
Leading auto maker Maruti Suzuki expects Indian passenger car market to reach four million
units by 2020, up from 1.97 million units in 2014-15.
The Indian automotive sector has the potential to generate up to US$ 300 billion in annual
revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s
Gross Domestic Product, as per the Automotive Mission Plan 2016-26 prepared jointly by the
Society of Indian Automobile Manufacturers (SIAM) and government.
Exchange Rate Used: INR 1 = US$ 0.0151 as on November 15, 2015

References: Media Reports, Press Releases, Department of Industrial Policy and Promotion
(DIPP), Automotive Component Manufacturers Association of India (ACMA), Society of Indian
Automobile Manufacturers (SIAM), Union Budget 2015-16
http://indiainbusiness.nic.in/newdesign/index.php?param=industryservices_la
nding/329/1

PESTEL ANALYSIS
• Political
Political climate in a different countries producing an buying automobiles regarding
policies on import, export and manufacture of automobiles and automobile
components. This will also include policies on allowing setting up of manufacturing
plants by foreign companies.
• Stability of governments. This may affect the future conditions in a country.
• Taxation policy
• 6th largest passenger vehicle in the world.
• Growing 16 to 18 % to sell around three million units in the course of 2011-12.
• In 2010, India beat Thailand to become Asia's third largest exporter of passenger
cars.
• As of 2010, India is home to 40 million passenger vehicles.
• Annual vehicle sales are projected to increase to 5 million by 2015 and more
than 9 million by 2020.
• Economic
• Level of economic activity that affects need for commercial use of automobiles.
• Weighted tax deduction.
• Manufacturing sector 8-10%
• Indian economy growth by 8.5%
• Social
• Lifestyle and preferences of people, that impact their choice of types of
automobiles.
• Social norms that impact the decision to own and use automobiles versus other
means of transport.
• Price sensitive Indian customer
• Customer base service
• Growth in urbanization
• Technology
• Technology relating to automobile designs
• Technology of automobile manufacture
• Technological developments that may increase use of automobiles.

• R&D
• Renewable energy development.
• Environmental
Physical conditions effecting ability to use automobiles of different types.
This will also include state infrastructure such as roads for driving vehicles.
• Infrastructural development
• Acquisition of land.
• Global warming
• Roof of a car
• Hybrid & electric car.
• Legal
• Legal provision relating to environmental population by automobiles.
• Legal provisions relating to safety measures.
• Open trade with minimum risk
• Govt. tax on import decrease by 60%.
•
http://www.slideshare.net/shuklaankur/assignment-on-automobile-industry

Facts and figures on the automobile market
Global sales of passenger cars are forecast to hit 73.9 million vehicles in 2015. Along with China, the
United States is counted among the largest automobile markets worldwide, both in terms of
production and sales. About 7.7 million passenger cars were sold to U.S. customers in 2014, and
around 4.25 million cars were produced here in the same year. The United States became a key
automotive market when Ford introduced assembly line car production in the early 1900s to mass-
manufacture its Model T. Today, the Ford Motor Company still ranks among the leading
manufacturers of passenger cars, its most popular model currently being the Ford Focus, which was
also 2013’s best selling car worldwide. In terms of revenue, Toyota, Volkswagen and General Motors top
the list of major automobile makers, while the automotive supplier industry is dominated by Bosch,
Continental, Denso and Magna.
Over the next decade, Internet-connected car technologies and autonomous vehicles are set to stir
up yet another revolution in the automotive sector. In 2014, some 23 percent of U.S. respondents
stated that they were very likely to buy a fully autonomous car, mainly because they consider autonomous
vehicles to be safer than conventional cars. Theglobal market for autonomous driving hardware
components is expected to grow from 400 million U.S. dollars in 2015 to 40 billion U.S. dollars in
2030.
http://www.statista.com/topics/1487/automotive-industry/

Diversification in the automobile industries
Greater diversification will be an important slogan for the automobile industry in the next two
decades and can be observed at four levels:
 Diversification of the available propulsion concepts with electricity, biogas and hydrogen
being offered as new energy sources alongside fossil fuels and a wide variety of hybrids
combining two energy sources or two drive motors in the same vehicle.
 Diversification of the materials used with an emphasis on using lighter materials to
reduce weight and save energy, as well as combining new materials such as e.g.
aluminum, magnesium or carbon-fibre-reinforced plastics.
 Diversification of the range of models with new variations of car body types and new city
and micro cars.
 Diversification of the value added of OEM as they evolve from purely product suppliers
(i. e. vehicles) to suppliers of products and mobility services such as car-sharing.

The globalmarket -cenarios
In the initial years, most of the manufacturing activities were concentrated in the USA and in
some of the European countries. Though, these countries still account for a significant share in
the
production, more and more volume of production comes from other parts of the world, like
China, Japan
and Korea. Around three-fourths of the global production is being carried out in top 10
producing
countries, in 2007. Of these, Japan, USA and China, cumulatively constitute over 40% of global
production[3].
The last decade has experienced a growing level of motorization, as reflected by the production
of automobiles. According to OICA, Japan is the largest producer of cars in the world followed
by
China, Germany, USA, South Korea and France. India ranks 9th in the production of cars in the
world
ahead of UK, Canada, Russia and Mexico. USA is the largest producer of commercial vehicles;
close
competitors in production of commercial vehicles are China, Japan, Canada, Thailand and
Mexico. India
ranks 8th in the production of commercial vehicles and is ahead of countries like Brazil,
Germany,
France and Turkey[4].
Select Trends in Global Automotive Industry
Addressing the Challenge of Volatility in Fuel Prices. One of the major challenges of the world
automotive industry is the volatile oil prices. The year 2008 witnessed crude oil prices breaching
the US
$ 140 mark per barrel, and thereafter slipped below US $ 40, in the later part of the year. The
volatility in
oil prices does not directly affect the growth in automotive industry; however, volatility in oil
prices is
one of the influential factors in automobile demand. In order to address the challenge of volatility
in oil

prices, the automotive industry is innovating new technologies and inventing usage of alternative
energy. Hydrogen cars, driven either by a combination of fuel cells and an electric motor; hybrid
electric
technology; electric vehicles with rechargeable batteries; or alternatively, compressed air
technology to
drive the pistons in a specially designed engine, are thought to be replacing fossil fuel- powered
motors
in the decades to come[5].

Emergence of New Generation Automobiles
Innovation is expected to drive the automotive industry in future as the producers are involved
in differentiating their products and services. There are already growing interface of electronics
and IT in
the automotive functionalities, such as entertainment, navigation and safety. According to a
survey,
conducted by IBM across the auto- majors, majority of them felt that by 2020 the level of
innovation
would be greater in software and electrical systems of automobiles. It is also expected that by
2020 the
vehicles may become another node on internet, connecting with other vehicles, the transportation
infrastructure, homes and businesses. However, there are challenges associated with this trend,
with
regard to consumer acceptance, technological development and adoption of standards[5].
Supply Chain Management in the World of Global Sourcing
Global auto-component firms are giving greater level of thrust in supply chain management to
address the challenge of cost pressures. This is particularly important in the context of global
sourcing.
Though there is a perceived belief that global sourcing helps in reduction of cost of components,
there
are logistical challenges. Thus, it is being recognized that collaboration between the OEMs and
component producers are crucial to develop capabilities and solve the challenges associated with
global
delivery, especially in the areas of inventory management, scheduling, and timely delivery. In
addition,
both OEMs and suppliers view that the collaborative efforts in supply chain management
enhances the
capacity and performance visibility[6].
Customer Management Systems
Earlier, automotive manufacturers had to get feedback from the customers through
intermediaries, such as vendors or service workshops. This trend has been changing with the
introduction

of customer management systems through ICT interface. Even vehicle buyers are also browsing
the net
to know the features of a new model, evaluate them with the existing models, and compare the
prices. IT
firms are developing customer relationship management (CRM) tools that help the
manufacturers to
realise and optimize individual customer value, increase the post-warranty service retention,
predict
model demand and provide supply chain solutions.
Growing Small Car Segment
The volatility in crude oil prises witnessed during the year 2008 re-emphasized the need for
small and fuel-efficient vehicles. Some of the automobile majors have plans to hike their R & D
budget
for designing of small and fuel efficient vehicles. Added to this is the need for reduction in prices
to
target the middle income groups of population /new buyers, especially in developing countries
like India,
where the vehicle penetration is low as compared to the population. An auto research firm CSM
Worldwide Inc. has estimated that global demand for small cars would grow by 30% per annum
to 27
million vehicles a year by 2013. The fast- growing small cars market has encouraged several
global auto-
majors (such as Renault, Toyota, and Nissan) to plan for launch of small cars[8].

Green Motoring
Automobile manufacturers are increasing the thrust on fuel efficiency than before; the initiatives
are mainly through improvements in technology and introduction of new fuel variants, thereby
reducing
toxic emissions. It may be mentioned that China, the EU, Japan and the USA have already
established
fuel economy rules or agreements of varying stringency. The FIA’s declaration for green
motoring has
set a fuel economy target of 140 gCO2/km for passenger cars. Such a global fuel economy target
could
be used as an international benchmark to assess progress in the fuel efficiency of the global fleet
of new
motor vehicles. Some countries are also undertaking ‘Green Rating’ of automobiles[7].
Cross Border M&A Deals
The global automotive industry is increasingly getting more active in cross border mergers and
acquisition (M&A) deals. On a global basis, the number of cross- border deals has grown in the
past few
years, and this trend is expected to continue after the recovery of economic activity in the world.
The
expansion outside the home markets of some of the major automotive companies from traditional
low-
cost countries, such as China and India, is bringing in new capital and a fresh look at certain
sectors of
the automotive market. With the recession in the US market and its consequent impact in other
markets,
automotive assets in developed countries are becoming attractive to buyers from emerging
economies, as
well.
Entry of Private Equity Players
The traditional funding model in the automotive industry is slowly being replaced with
aggressive funding structures. There has been a structural change in the automotive industry with
the

entry of private equity players in the past. Traditional and family-owned businesses were taken
over by
the private equity players and hedge funds, which are expecting more profit or investment
realization
from the industry. Though the business activities of private equity players have come down,
following
the financial market meltdown, this is expected to be revived soon, either when the market
sentiments
improve or once consolidation happens among the private equity players[9].
Growing Collaboration for Technology Enhancement
Technology-enhancing collaboration in the automotive sector helps in preserving design
integrity, despite minor engineering adjustments. There are also software/ programmes that make
the
global data sharing possible among designers, engineers, suppliers, partners and even customers.
Such
better and faster integration of design / engineering ideas help in necessary adjustments and
adaptations
in designs to suit the requirements.
Trendy Cars, Shorter Life-spans
An automobile is a highly- engineered collection of complex components, each of which has its
own lifespan and longevity characteristics. While some components require frequent
replacement, others
that are relatively expensive are expected to have longer lifespan to justify the economics of a
vehicle

buyer. However, change in fashion and design trends may outweigh the pure economics, which
may lead
to planned obsolescence. In the world of changing fashion trends, auto manufacturers are
developing
new designs meeting the changing consumer preferences. More frequently the new models are
introduced, the shorter will be the life span of the old models.
Preserving Brand Identity
With growing mergers and takeovers in automobile industry, players are carefully devising
strategies to strengthen the backroom operational synergies, in terms of common logistics and
supply
chain management, but avoid losing the brand identities. A group owning different brands
prefers not to
use the same platform that has same kind of technology, management, and designers to preserve
the
brand identity. In this sense, the automobile sector is different from monolythic branding
strategies of
consumer goods.
Designfor Recycling
It is being increasingly realized that natural resources of the earth are depleting fast. Hence,
there is a growing concern amongst manufacturers as also the consumers to conserve the
resources;
one such way is through recycling. The automobile industry is one of the pioneers in usage of
recyclable
materials. Also, the rising input prices are making the automobile manufacturers to design the
vehicles
that can be easily recycled.
Emergence of DesignStudios
As efficiency in design and manufacturing improves, vehicle manufacturers across the world are
focusing on making models for niche market, though the sale would be in lower volume. This is
in
contrast to the earlier strategy of designing models for mass consumption. With the increase in

number of
models to be designed and developed, auto majors are outsourcing the designing jobs to
independent
design studios who take care of the design and execution of the process management in the value
chain.
Outsourcing
Stiff competition to enhance the market share forces the OEMs in developed countries to
outsource their engineering requirements to low cost countries like India. Global auto-majors
such as
General Motors, Ford, Toyota, BMW are increasingly outsourcing the vehicle design and
engineering
services to developing countries such as India, either through their captive centers or through
third-party
vendors. Long term trends indicate that global auto-component outsourcing from the US is
expected to
reach US $ 25 billion by 2015, and India, China and Mexico are likely to benefit the most from
such
trend. An online survey conducted by A T Kearney, revealed that around one-fourth of global
auto-
majors have considered India as a favorable destination for automobile-engineering outsourcing.
Advanced RFID Practices in Auto Manufacturing
RFID has been in use in the automotive industry for several years, though to a limited extent.
The trend is changing now with adoption of technology in wide variety of applications, the
dominant
being vehicle entry and security. According to a study by ABI Research, 40% of new cars
manufactured
in North America are equipped with RFID immobilizers and the worldwide revenue generated
by
this application alone was estimated to be US $ 3.7 billion. In addition, RFID solutions are
increasingly
being used in automobile manufacturing processes and supply chain applications.
(DATA OF SORCE; Indian Automotive Industry: Global And Indian Scenario 47)

Challenges forthe automobile industry:
The global automobile industry is currently facing great changes and upheavals. New markets for
cars are rapidly becoming more important. In 2010, China became the world’s largest market for
new cars, while sales on established markets in the so called triad cluster (EU, USA, Japan) are
close to stagnation point. Essential framework conditions are changing and the car has to be
adapted to meet them. These include the expected continuous rise in fossil energy prices and the
implementation of ambitious climate policy targets in the transport sector. These developments
will trigger innovation and market dynamics, which result in a greater diversification of the
propulsion concepts in the direction of highly efficient and alternative drives, but which also
make the introduction of new mobility concepts attractive as well. The automobile industry
should be a major stakeholder in this transformation phase.
The report identifies seven major challenges for the automobile industry over the next 2 decades,
which can be summed up as follows:
 Development of efficient vehicles
 Development of alternative propulsion concepts
 Retaining the position of the German automobile industry as a technology leader and
manufacturer of premium products on the global market
 Complementing the product portfolio with new micro and city car concepts
 Penetrating the growth markets in the BRICS countries and managing the crisis in Europe
 Reducing the number of vehicle platforms in spite of continued differentiation of the
product portfolio
 Participation in the introduction of new mobility concepts
 . Dealing with overcapacity
 . Finding the balance between marketing and branding and short-term sales volume
 . Becoming sustainable – from image to substance
 Dealing with simultaneous pressure to be efficient, customer-orientated and build strong
rands
 . Urbanization
 Understanding mobility and car culture in the future

 Learning from and cooperating with other industries
 . Applying a modern view on competition
 Making money in transparent, commoditised markets
 Attracting key talent
http://www.koganpage.com/article/free-excerpt-from-auto-brand-what-are-the-10-
challenges-facing-the-car-industry

History of Automobile Industry in India
With a scintillating 2.3 million units produced in 2008 the Indian automobile industry bagged the
position of being the ninth largest in the world. Following economic liberalization, Indian
domestic automobile companies like Tata Motors Maruti Suzuki and Mahindra and Mahindra
expanded their production and export operations in and across the country and since then the
industry has only shown signs of growth. The automobile industry comprises of heavy vehicles
(trucks, buses, tempos, tractors), passenger cars, and two-wheelers.
The Indian automobile industry seems to come a long way since the first car that was
manufactured in Mumbai in 1898. The automobile sector today is one of the key sectors of the
country contributing majorly to the economy of India. It directly and indirectly
provides employment to over 10 million people in the country. The Indian automobile industry
has a well established name globally being the second largest two wheeler market in the world,
fourth largest commercial vehicle market in the world, and eleventh largest passenger car market
in the world and expected to become the third largest automobile market in the world only
behind USA and China.
The growth of the Indian middleclass along with the growth of the economy over the last few
years has resulted in a host of global auto giants setting their foot inside the Indian Territory.
Moreover India also provides trained manpower at competitive costs making the country a
manufacturing hub for many foreign automobile companies. India proves to be a potential
market as compared to most of the other countries which are witnessing stagnation as far as
automobile industry growth is concerned.
A recent research conducted by the global consultancy firm Deloitte says that at least one Indian
automobile company will feature among the top six automobile companies that will dominate the
car market by 2020.
The Indian automobile industry proved to be in good shape last year even after the economic
downturn. This was majorly due to the fact of renewed interest shown by global automobile
players like Nissan Motors which consider India to be a potential market.

As far as authorized dealer networks and service stations are concerned Maruti Suzuki is the
most widespread. The other automobile companies are also showing rapid progression in this
field.
Indian Automobile Export market
India is a very favorable market for small cars be it production, sales or export. Since the Indian
automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan
Motors export about 2,40,000 and 2,50,000 annually. India emerged as Asia's fourth largest
exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile
exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows:
Two Wheelers- 32.31 percent, Commercial Vehicle - 19.10 percent and Passenger Cars grew by
- 19.10 percent.
Key automobile manufactures in India
 Maruti Udyog
 General Motors
 Ford India Limited
 Eicher Motors
 Bajaj Auto
 Daewoo Motors india
 Hero Motors
 Hindustan Motors
 Hyundai Motors India Limited
 Royal Enfield Motors
 Telco
 TVS Motors
 DC Designs
 Swaraj Mazda Limited

 Indian scenario of Automobile Industry:
The last few decades have brought with them monumental changes in the way India
drives; especially the last one – the decade of the automobile.
With the countless automotive blogs and columns mushrooming on social media and web
domains alike, we simply could not resist coming up with our own something special for
our readers and enthusiasts. We aim at doing things a bit differently and plan to come up
with multiple forms of reads, reviews and stories not only on market trends and new
product ranges, but also on the journey of automobiles in India from an embryonic
industry in the early sixties to potentially becoming the sixth largest Automobile
manufacturer in the world by 2015.
List of Top 10 Automobile Companies in India (Figures in Crores)
ET 500 Rank Company Turnover
7 Tata Motors Ltd. 123222.91
21 Mahindra & Mahindra Ltd. 37026.37
19 Maruti Suzuki India Ltd. 38140.69
41 Hero MotoCorp Ltd. 19669.29
46 Bajaj Auto Ltd. 17008.05
67 Ashok Leyland Ltd. 11133.04
101 Sundaram Clayton Ltd. 7419.41
110 TVS Motor Company Ltd. 6569.99
148 Eicher Motors Ltd. 5138.64
396 Force Motors Ltd. 1574.05
About Top Automobile Companies in India:
Tata Motors
Tata Motors is the largest automobile company of Asia headquartered in Mumbai, India. Annual Projected
revenue for 2010-11 is US$ 27.629 billion. It also occupies the number one position in commercial car
segment. Tata Motors enjoys 31.2% of market share in the multi-utility vehicles, which in luxury car segment,
it has 6.4% market share. Most of the Tata Motors' vehicles are sold predominantly in India and over 4 million

vehicles have been produced domestically within India.
Tata sold 52,531 units of vehicles during September 2009, comparing to 49,647 units during September 2008
(a growth of 6%). In domestic market, Tata Motors sold 49,650 units during the same period, comparing to
45,234 units in September 2008
Maruti Suzuki India Limited (MSIL) -
Maruti Suzuki India is an undisputed leader in the Indian automobile industry. Started its journey in February
1981 as Maurti Udyog Limited, the company created history in the Indian automobile market with its hugely
popular four-wheeler model Maruti 800. The company became the first Indian automobile company to
manufacture one million vehicles in 1994. The company became Maruti Suzuki India Limited on September
17, 2007.
Maruti's average revenue for the year ending 2010-11 is US$7.13 billion. Maruti sold 83,306 units of vehicles
in September 2009, comparing to 71,000 units in the same month in the previous year (with a growth rate of
17.3%). It also exported 11,712 units during September 2009, comparing to 6,318 units in the same month in
the previous year (with a growth rate of 85.4%).
Hyundai Motor India Limited (HMIL) -
Hyundai Motor India Limited, founded in 1998 and a subsidiary of Korean auto giant Hyundai Motor
Company, is the second largest car manufacturer in India. It is also country's largest passenger car exporter.
Hyundai Motor came very close to the hearts of the Indian auto lovers through its flagship model Santro.
After the recession, Hyundai Motor saw a growth rate of 25% in the domestic market. During September 2009,
HMIL sold 53,804 units, comparing to 46,218 units during September 2008. In the domestic market, it sold
27,803 units in September 2009, comparing to 22,311 during September 2008. The overseas sales during the
same period also grew up 9% as it sold 26,001 units in September 2009, comparing to 23,907 units during the
same month in the previous year.
Mahindra & Mahindra Limited(M&M)
Mahindra &Mahindra Limited is another auto-giant in India. A part of the Mahindra Group, M&M is the
largest SUV maker in the country. In September 2009, M&M registered a domestic sale of record 26,921 units,
comparing to 22,729 units in September 2008 (with an increase of 18.4%). On the other hand, it sold 15,296
units of UV in the same period comparing to 10,641 units in September 2008 (with a whooping growth of
43.7%).
General Motors India Private Limited (GM India)-
General Motors India Private Limited is another top player in Indian automobile industry. A wholly-owned
subsidiary of the auto giant General Motors, GM India saw a Y-o-Y sales growth of 49% in September 2009
with a sale of 7,654 units, comparing to 5,154 units in September 2008.
Hero MotoCorp Limited

In 2010, When Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda.
Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity.
Hero Honda Motors Limited, the joint venture between Hero Group and Honda, was the biggest two-wheeler
manufacturers in the world. It shook the Indian two-wheeler market with its famous model Hero Honda
Splendor, which became the largest selling motorcycle in the world. It consistently sold more than 1 million
units of Splendors every year.
In 2008-09, Hero Honda sold about 3.28 million bikes and registered a net profit of ` 1281.7 crore. It sold
4,01,290 units of two-wheeler in September 2009, comparing to 3,85,262 in September 2008. It already sold
11,83,235 units of two-wheelers in Q2 of FY10 with a growth rate of 21.7% against the corresponding period
of the previous year.
Bajaj Auto
Bajaj Auto is the second largest two-wheeler manufacturer in India. It is also the fourth largest two and three-
wheeler maker in the world. In September 2009, Bajaj Auto sold 249,795 units of two-wheelers, comparing to
218,494 units in September 2008 (with a growth rate of 14.3%). During September 2009, it also registered a
growth of 12.4% in the domestic two-wheeler sales and 19.9% in two-wheeler export.
Honda Cars India Limited
Honda Siel Cars India Limited, a joint venture between the Japanese auto giant Honda Motor Company
Limited and the Indian company Siel Limited, started its operation in December 1995. In September 2009,
HSCI sold 5,794 units, comparing to 3,104 units in September 2008 (with a growth rate of 86.7%).
Toyota Kirloskar Motor Private Limited (TKM)-
Toyota Kirloskar Motor Private Limited is another top Indian automobile company. A joint venture between
the Japanese auto giant Toyota Motor Corporation and Kirloskar Group, TKM has a number of car models
including Innova, Corolla, Fortuner, Camry and the Land Cruiser Prado. It sold 7,657 units in December
2009..
Hindustan Motors

Hindustan Motors is another top automobile company in India. It was once country's largest car
manufacturer before Maruti Udyog overpowered it. Its popular model 'Ambassador' has been
extensively used as government limousine as well as taxi cab in India.
http://business.mapsofindia.com/automobile/top-automobile-companies.html

Govt’s Make in India pitch points to auto sector turnaround
Aim is to make India the world’s fourth largest market for automobiles by 2015 and third largest
by 2016, behind only China, US
Delhi: The Indian government plans to make the automobile industry a lynchpin of Prime
Minister Narendra Modi’s ‘Make in India’ programme, aimed at attracting foreign investments
and turning the country into a manufacturing hub.
The aim is to make India the world’s fourth largest market for automobiles by 2015 and third
largest by 2016, behind only China and the US.
“Auto industry will be the main driver for manufacturing growth in the India. Therefore, the
automotive sector has been chosen as a top priority area under the Prime Minister’s Make in
India programme. We are working on the plan,” a top government official said on condition of
anonymity.
(CAGR) of 14.04% between 2001-01 and 2011-12 before slowing to a pace of 1.17% in 2012-13
and declining by 9.86% in 2013-14. According to industry lobby group Society of Indian
Automobile Manufacturers (Siam), combined sales of passenger and commercial vehicles grew
at a compounded annual growth rate
In a pitch to investors on its Make in India website, the government said the country is poised to
become the third largest automobile market by 2016—next only to China and the US—and
account for 5% of global vehicle sales. The site made no mention of absolute sales numbers.
India is now the sixth-largest automobile market, behind China, the US, Japan, Brazil and
Germany.
In calendar year 2013 the Chinese market for passenger and commercial vehicles was 22 million
units, followed by the US (15.88 million), Japan (5.37 million), Brazil (3.76 million), Germany
(3.25 million) and India (3.24 million), according to Siam quoting the Organization
Internationale des Constructeurs d’Automobiles, or OICA, a Paris-based federation of
automobile manufacturers.
Modi launched the Make In India campaign in September to attract foreign companies to invest
and manufacture in India and export to other countries after leading the National Democratic
Alliance to victory in the April-May general election.
Modi and his Bharatiya Janata Party (BJP) have placed special emphasis on manufacturing, in
which India lags behind Asian economies such as China, to boost economic growth that slumped
to sub-5% levels in each of the past two fiscal years. India has set for itself an ambitious target of
increasing the contribution of manufacturing output to 25% of gross domestic product (GDP) by
2025, from 16% now.

The automobile industry accounts for almost 7% of India’s GDP and employs about 19 million
people, both directly and indirectly. India is currently the seventh largest automobile producer in
the world with an average annual production of 17.5 million vehicles, of which 2.3 million are
exported.
Passenger vehicles sales are to increase at a CAGR of 16% between 2013 and 2020 to more than
6 million units, according to the government’s Make in India pitch. Two-wheelers and three-
wheelers are projected to expand at a CAGR of 9% between 2013 and 2020.
“A growing working population, an expanding middle class and increasing disposable incomes
in the rural agri-sector are expected to remain key demand drivers,” the government said on its
Make in India website, adding that India’s per capita GDP, which rose from $1,432.25 in 2010 to
$1,500 in 2012, is expected to reach $1,869.34 by 2018.
India has the world’s 12th largest number of high net-worth individuals, with an annual growth
of 20.8%, the highest among the top 12 countries, according to the Make in India pitch.
The new government faces the task of re-igniting investors’ interest, he said. “Its ability to do so
will also be a function of its ability and intent to reform antiquated laws and make doing business
easier in the country,” he said.
According to the latest ranking of the World Bank’s Doing Business Index, India ranks 142
among 189 countries in terms of the ease of doing business.
http://www.livemint.com/Industry/RreKVJzrKFwVHU9XVg5uZJ/Govts-Make-in-India-pitch-points-to-
auto-sector-turnaround.html

MICHEL PORTER’S FIVE FORCE MODEL:
Porter's five force analysis is a framework for industry analysis and business strategy development
formed by Michael E. Porter of Harvard Business School in 1979. Michael Porter's Five Forces have
become a standard framework for the assessment of profit potential.
According to Michael E. Porter, “Awareness of the five forces can help a company understand the
structure of its industry and stake out a position that is more profitable and less vulnerable to
attack”. Together these forces determine the strength of the industry, competition and profitability.
Companies must be flexible to respond rapidly to competition and market changes and it can surpass its
competitors only if it can establish a difference that it can maintain.

1. The threat of new entrants
2. The bargaining power of buyer
3.The threat of substitute product
4. The amount of bargaining power supplier
5. The amount of rivalry among competitors

http://stockshastra.moneyworks4me.com/indian-automobile-industry-sector-
analysis/

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