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Presentation on Landscape of Automobile Industry in India Consulting Club

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Evolution of Automobile Industry <ul><li>Initial Years </li></ul><ul><li>Manufacturing was licensed </li></ul><ul><li>High Customs duty on import </li></ul><ul><li>Steep excise duties & </li></ul><ul><li>sales tax </li></ul><ul><li>2 Major players: </li></ul><ul><li>Premier Automobiles Ltd </li></ul><ul><li>& Hindustan Motors </li></ul><ul><li>1980s </li></ul><ul><li>Entry of MUL, better product, </li></ul><ul><li>with government support </li></ul><ul><li>Seller’s Market </li></ul><ul><li>Long Waiting Periods </li></ul><ul><li>Early to mid 90s </li></ul><ul><li>Seller’s market and long waiting periods </li></ul><ul><li>Delicensing in 1993 </li></ul><ul><li>Removal of capacity restrictions </li></ul><ul><li>Decrease in customs & excise </li></ul><ul><li>Auto finance boom- more players (foreign banks & non banking companies, better schemes. </li></ul><ul><li>Mid 90s – Early 2000s </li></ul><ul><li>Buyers market </li></ul><ul><li>Increase in Indigenization </li></ul><ul><li>Easy Auto finance </li></ul><ul><li>Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market </li></ul>

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AUTOMOBILE 2 WHEELER 3 WHEELER PASSENGER VEHICLE COMMERCIAL VEHICLE MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS I.C.V. M.C.V. H.C.V.

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Trends in the automobile sector… CAGR 15.4% CAGR 14.2% CAGR 39% <ul><li>Domestic Sales have been growing strongly </li></ul><ul><li>Exports have nearly tripled in the last 5 years </li></ul><ul><li>Largest three wheeler market in the world </li></ul><ul><li>4 th largest passenger vehicle in Asia </li></ul><ul><li>4 th largest tractor in the market </li></ul><ul><li>5 th largest commercial vehicle market in the world </li></ul>

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Segment wise market share… Two Wheeler Three Wheeler Passenger vehicles CVs <ul><li>The industry has not experienced much change in its structure over the last 6 years </li></ul><ul><li>Two- wheelers form the major share of domestic sales </li></ul><ul><li>Passenger vehicles lead the exports market(57.4%) </li></ul><ul><li>2 wheelers form the bulk of exports as well, but are losing share to Passenger vehicles </li></ul><ul><li>The growth in the two wheeler market is driven by the motorcycle market and is expected to grow at 14-15 % YOY </li></ul>

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The Key Players… Two wheeler Passenger vehicle Bajaj Auto, Piaggio India Three Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors Two Wheeler TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors Passenger vehicle TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors Commercial vehicles

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<ul><li>Favorable Demographics </li></ul><ul><li>Improving income curve </li></ul><ul><li>Reducing interest rates </li></ul><ul><li>Cost Pressure </li></ul><ul><li>High Expectations </li></ul><ul><li>Inadequate Infrastructure Development </li></ul>KEY CHALLENGES KEY ENABLERS <ul><li>Key Focus Areas </li></ul><ul><li>Product development ( includes collaboration, new products developed) </li></ul><ul><li>Vendor base (quality of vendors, skill levels , size etc.) </li></ul><ul><li>Manufacturing capability ( quality levels, productivity & skill levels, technology ) </li></ul><ul><li>Service levels </li></ul><ul><li>Supply chain </li></ul><ul><li>Labor law </li></ul><ul><li>Leverage IT </li></ul><ul><li>Key Features of Future Auto Policy </li></ul><ul><li>Foreign Direct Investment </li></ul><ul><li>Import tariff </li></ul><ul><li>Incentives for Research and Development (R&D) </li></ul><ul><li>Environmental Aspects </li></ul><ul><li>Other measures </li></ul>

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<ul><li>THANK YOU </li></ul>