Analysis of Automobile Industry In India with special focus on Motorcycle section. Industry Analysis by Porter's 5 force framework. Swot Analysis of Yamaha 2 wheeler Competition Analysis

1. Analysis
of
Automobile Industry
In India
(special focus on Motorcycle
section)
Prepared by
Suraj Prakash Nayak
MBA final Semester
Dept. of Business Management

2. General Environment
• The Indian automobile industry is the one of the
largest in world contributing 7.1% to GDP &
providing employment to 29 million people.
• India has overtaken China to emerge as the
world's biggest market for two-wheelers. A total
of 17.7 million two-wheelers were sold here last
year, that's over 48,000 units every day.
Neighboring China trailed with 16.8 million units
sold, according to officials from industry body
Society of Indian Automobile Manufacturers
(Siam) as well as data from China Association of
Automobile Manufacturers.

3. Indian Automobile Industry
Passenger Vehicles
Passenger Cars- Max
sitting capacity of 6
(including driver).
Utility vehicles- Max
body mass of up to 5
tonnes and seating
capacity of up to 13
passengers (including
driver).
Multipurpose
vehicles- Also
referred as ‘Mini-van’
or ‘Multi utility
vehicle. Taller than
sedans and
hatchbacks.
14% of total
automobile
production in FY16
Commercial Vehicles
Light Commercial
Vehicles- Primarily
caters to the goods and
passenger segments,
<7.5 tonnes.
Medium and Heavy
commercial vehicles-
Primarily trucks and
buses, >7.5 tonnes.
3% of total automobile
production in FY16
2 Wheeler Vehicles
Mopeds- Derived from
two words ‘Motor’ and
‘Pedal’. Usually vehicles
<50cc are classified as
Mopeds.
Scooters- Fastest
growing segment in
the 2W space.
Motorcycles- Leader in
the 2W industry in
regards to the number
of vehicles sold.
Electric 2W- Have not
been able to penetrate
the market
significantly.
79% of total
automobile production
in FY16
3 Wheeler Vehicles
It is a 0.9 Million
market (Domestic and
Exports), can be
classified as :
Passenger- 78% of 3W
are passenger vehicles.
Goods- 22% of the 3W
are goods carrier.
4% of total automobile
production in FY16.

4. Porter’s Five Forces Model
Rivalry
among
Existing
Competitors
Threat of
New
Entrants
Bargaining
Power of
Buyers
Threat of
Substitute
products
& Services
Bargaining
Power of
Suppliers

5. Bargaining Power Of Buyers
Bargaining power is high in a customer group as:
• Products are not unique.
• Switching costs are low.
• Buyers in India have a wide variety of choice.
There are more than 20 foreign manufacturers
selling in India (including ultra-high-end such
as Indian Scout and Kawasaki). Of course
there are also a plethora of incredibly cheap
choices, like the famous Hero motorcycles.
• Result: Unfavorable

6. Bargaining Power Of Suppliers
Powerful suppliers can influence profitability of an industry through
charging higher prices, limiting service quality or by shifting costs
to the industry participants. A supplier group is powerful if:
• It is more concentrated than the industry it is selling to.
• It doesn't heavily rely on the industry to gain revenue.
• Switching costs are high for the industry members.
• Suppliers produce unique products that have no substitutes
• The industry itself is making a higher amount of money in relation
to the supplier, it may provoke them to enter the market.
This limits the profitability of an industry as there is not only the
threat of a new entrant; there is also the threat of losing the supplier.
It is likely that the suppliers to the manufacturers have considerable
bargaining power. They are not held ransom by one single
manufacturer as they can market their products to any of the others in
India.
• Result: Unfavorable

7. Rivalry Among Existing Competitors
• There are several dimensions that rivals within an industry can compete
on – price discounting (cost leadership strategy), introduction of new
services/ products (innovation strategy), and improvement of service
quality (customer-orientation strategy) etc. High competition between
rivals can stifle an industry's profitability.
Intensity of competition is highest as:
• Competitors are equal in size and power.
• Industry growth is slow. This causes competing organizations to fight for
market share.
• Exit barriers are high (e.g. highly specialized assets and management
devotion). This can cause companies making low or negative returns to
stay in the market leading to excess capacity meaning that healthy
competitors' profitability will suffer.
• Competitors are competing on price. Price competition is particularly
destructive to profitability . This can lead to a vicious cycle of price
reductions, reducing profitability and training customers to overlook
service/product quality in favor of the cheapest option available to them.

8. Threat of New Entrants
It is Moderate.
• Unequal access to distribution channels.
• Capital requirements is high.
• Supply-side economies of scale – spreading the fixed
costs over a larger volume of units thus reducing the
cost per unit.
• Demand-side economies of scale – this occurs when a
buyers willingness to purchase a particular product or
service increases with other people's willingness to
purchase it. Also known as network effect, people tend
to value being in a 'network' with a larger number of
people who use the same company. Eg: Hero
motorcycles or Honda Activa scooty.

9. Threat Of Substitute Products
The threat of substitutes on the other hand does exist.
Increasing fuel prices have been pushing some urban drivers
to use public transportation.
Most vehicle owners still agree that the convenience of using
a personal vehicle offsets increases in fuel prices, however if
this trend continues and automobile manufacturers are not
able to provide a more cost-efficient solution, this threat will
increase.
The factors that influence the threat of existing customer
being getting attracted towards the substitution products
are:
• Switching costs (What is the price of Substitute Product)
• Substitute Variety (What is the variety present in
substitute products)
• Substitute Availability (What is the availability of
Substitutes)

10. Analysis of Yamaha Two wheelers India Ltd.
• USP of Yamaha 2W : Design & Quality
• Tagline : Yes….Yamaha
• Yamaha in two wheeler industry comes at 5th position for
market share.
• The big four – Hero, Honda, TVS and Bajaj – dominate the
two-wheeler industry as they jointly command an market
share of 89.68 percent (Q1 FY2018) in the domestic market.
Company Units Sold (mkt. share)
Hero Motocorp 66,77,844 units (36.19%)
HMSI (Honda) 53,57,907 units (29.04%)
TVS Moto corp 26,10,300 units (14.15%)
Bajaj Auto ltd 18,15,590 units (9.84%)
India Yamaha Motor 7,27,892 units (3.94%)
Royal Enfield 7,27,020 units (3.92%)

11. SWOT Analysis
STRENGTHS
1. Excellent branding, advertising &
distribution channels.
2. One of the major brand in
motorsport like MotoGP, World
superbike etc.
3. Wide product range , scooters 110cc
to 125 cc, & motorcycles 110 to 998 cc,
including sport touring, commuter &
sport.
4. Extremely high Size and reach of
company
5. Star in BCG Matrix
OPPORTUNITIES
1. Commuters and Low tier Two-
wheeler segment is one of the most
growing industries.
2.Export of bikes is limited i.e.
untapped international markets.
3. Need to revamp the 150 cc Brand
leader FZ series just like bajaj is
revamping Pulsar Brand & Hero is
doing for Passion/Glamour/Splendor
brands.
WEAKNESSES
1. Bikes like R15, R1 are quite expensive
2. Spare parts availability is of prime cause
and also the spare parts cost is high as
compared to competitors like Bajaj and
Honda.
THREATS
1. Strong competition from Indian as well
as international brands.
2. Indirect competition from Automatic
Scooters like Activa, Maestro etc.
3. Better public transport will affect two-
wheeler sale.

12. Competitor’s Analysis
• Major Competitor’s of Yamaha in Indian Market
are:
1. Hero Motorcorp
2. Honda Motorcycles
3. Suzuki Motorcycles
4. TVS Motorcycles
5. Bajaj Motorcycles
6. Royal Enfield Motorcycles.
Other noteworthy companies are KTM, Kawasaki
motorcycles.

13. Competitive Advantage for Yamaha Motorcycles
• Yamaha employs the competitive price strategy on
its products. This is not at the expense of quality. In
fact, Yamaha products have the best price to
performance ratios in the world. Product price
difference is based on the product’s power and
type.
• Yamaha mainly targets the middle-class people
who are looking for something stylish, offering
good mileage guarantee and will not break the
bank. It also targets youths who are within the 25-
35 year group bracket. Fortunately, the biggest part
of the population today comprises of the middle
class, with the youth age group also taking a great
claim of the population.