School of management
AUTOMOBIE PROJECT ON BUSES
Centurion University of technology and management
PALAS JENA (054)
PRIYABRATA DASH (007)
INTRODUCTION TO AUTOMOBILESECTOR
• It beginsasearlyas 1769.
• The automobile industry in India is one of the largest markets in the world.
• India the second fastest growing automobile market in the world
• The automobile sectorisone of the keysegmentsof the economyhavingextensiveforward
and backwardlinkageswith otherkeysegmentsof the economy.
• It contributesabout4 percent inIndia'sGross Domestic Product(GDP) and5 per centin
KEY PLAYERS IN INDIAN AUTOMOBILE INDUSTY (PASSENGERBUSES)
• Tata Motors
• Star Bus
• Marcopolo Tata Motors
• VikingBS-I- citybus
• VikingBS-II- citybus
The growthin domesticdemandisdrive byanumberof factors including:-
• Overall economicgrowth
• Onsetof consumerismandtravellingculture
• Closerlinkageswithglobal autotrendleadingtointroducingof contemporarymodels
• Risingincome levels
• Low cost of finance andeasyavailabilityof finance
PEST ANALYSIS OF AUTOMOBILEINDUSTRY
• Fiscal policy
• Increase InPerCapital Income
• Cheaperandeasier finance scheme
• HighGDP growth
• India’shuge geographicspread-masstransport system
• Growth inurbanization
• Upward migrationinincome levels
• Low interestratestranslatingtolow financingandacquisitioncosthence greater
• Withthe entryof global companiesintothe Indian market,advanced technologies,bothin
productand productionprocesseshave developed
• Fewglobal companieshave setuptheirR&DcenterinIndia
• Governmentinitiativesregardingtax rebateshasledtoglobal playerssettinguptheirR&D
PORTER’S DIAMOND MODEL
Porter’s(1990) contributedDiamondmodel oncompetitiveness,whichanalyzesnationalorindustry
structure and rivalry,andrelatedandsupportingindustries.Porter(1990) concludedthatdue to
variousnational characteristics,nationscannotsucceedinall industries,andthusitisimportantto
diamondmodel with fourmajor(andtwoadditional)determinantsof competitiveadvantage ina
Porter’sdiamondmodel providesananalytical frameworkwithmulti measurementsfornational or
industrycompetitiveness.AccordingtoPorter(1990) nationsare mostlikelytosucceedinindustries
or industrysegmentswherethe diamondfactorsare mostlyfavourable.
Factor conditions: Factorconditions forproductionsare the inputsandinfrastructure necessary
Human resources:Qualityandquantityof skilledlabour,costof personnel,andlabourskill
Physical resources: The abundance,quality,accessibility,andcostof the nation’sland,
physical traits.”(Porter,1990, p. 74)
Knowledge resources:Market,scientific,technical knowledgeresidinginanation’sresearch
Capital resources:Capital availabilityandcostto finance industries.Capital resourcescanbe
affectedbythe rate of savingsandnational capital marketstructure
Infrastructure: Availabilityandqualityof infrastructure,includingcommunicationsystem,
Demand conditions: Itrefertohome demandcondition.Porter(1990) discussedhome demand
throughthree general attributes:the nature of buyerneeds,the size andgrowthrate of home
demand,andthe transferabilityof domesticdemandintoforeignmarkets.Porterhasalsodescribed
inhis locationcompetitivenessstudy,aboutthe advantagesarisingbyhavingsophisticatedand
demandinglocal customersorcustomerswithunusual needforspecializedvarietiesthatare in
Related and supporting industries:It includes partsandservice suppliersanddistributorsinthe
supplychain.AsPorter(1990, p. 101) stated,competitive supplierindustriescanprovide “efficient,
early,rapid,andpreferential accesstoinputs”,whichare basicproduction needs. Moreover,the
geographicproximitywithinternationallycompetitivesuppliersinthe home nationhelpsbuild
the availabilityandefficiencyof supportingindustries,the mostsignificantbenefitof home-based
suppliersliesinthe abilitytoaccelerate innovationandupgrade inthe overall autoindustry.
Firm strategy, structure, and rivalry:Itdiscussesthe contextinwhichfirmsare created,
industrysituations.Ina developedindustry,firmswouldbuildonthe strengthsprovidedbythe
source(s) of competitive advantageandinvestinimprovingthe lesscompetitivefactors.Moreover,
as per hisresearch,the fierce domesticcompetitionforcesfirmstoinnovate constantlyandimprove
productivityandhence increase national competitivenessinthe industry.Thus,stronglocal and
global competitionnotonlysharpensadvantagesathome turf butalsocompelsfirmsinthe
domesticmarkettosell abroadas growthstrategy.
Government: Governmentisresponsibleforframingpoliciesandregulationsforall industry
activities.Itistherefore responsible for improvingthe well beingof all itscitizens,thusachieving
economicandpolitical stability.Governmentcaninfluence all the fourgeneral determinantseither
positivelyornegatively.AsPorter(1990) pointedout,governmentcanaffectfactorconditions by
imposingsubsidiarypolicies,capital marketregulations,andeducational policies.Itcanalso
Chance: It referstoexternal eventsthatmayaffectorbenefitanationor industryandthatare
totallyoutside the control of firmsandgovernment.Examplesof chance eventsinclude pure
marketdemand.Theycreate discontinuitiesthatcanunfreeze orreshape industrystructure and
thusplayan importantrole inshiftingcompetitiveadvantage inmanyindustries.Firmsevaluate
chance eventsdifferentlydue tovariousindustrynaturesandstagesintheirlifecycle.Porter(1990)
proposedthatfirmspromote continuousinnovationandimprovement,andendeavourto the
opportunity resultingfromchance events.
MICHAEL PORTER FIVE FORCEMODEL
Porter'sfive forces include:
FORCE 1: Threatof newentrantsorbarriersto entry
FORCE 2: Threatof substitute products orsubstitutes
FORCE 3: Threatof establishedrivalsorcompetitiverivalry
FORCE 4: The bargainingpowerof buyersorbuyers
FORCE 5: The bargainingpowerof suppliersorsuppliers
Force 1: Barriers to entry
Barriers to entry measure how easy or difficult it is for new entrants to enter into the industry. This
can involve forexample:
Cost advantages(economiesof scale,economiesof scope)
Patents,branding,andimage alsofall intothiscategory.
Force 2: Threat of substitutes
Every top decision maker has to ask: How easy can our product or service be substituted? The
How muchdoesit cost the customerto switchtocompetingproductsor services?
How likelyare customerstoswitch?
What isthe price-performance trade-off of substitutes?
If a product can be easily substituted, then it is a threat to the company because it can
compete with price only.
Force 3: Competitive Rivalry
In this,we have toanalyze the level of competitionbetweenexistingplayersinthe industry.
Is one playerverydominantorall equal instrength/size?
Are there exitbarriers?
How fastdoesthe industrygrow?
Doesthe industryoperate atsurplusor shortage?
How isthe industryconcentrated?
Is the productdifferentiated?
How well are rivalsdiversified?
Force 4: Bargaining powerof buyers
Now the question is how strong the position of buyers is. For example, can customer work together
to orderlarge volumesto
SWOT OF AUTOMOBILEINDUSTRY
Able toachieve significantgainsinproductivity
Low investmentinResearchand Development
Increase inthe income level
Cut inexcise duties
Cut throat competition
Lack of technologyforIndianCompanies
The market forbusesinIndiahas reallypickedup. The autoexpo2010 showcaseda few new
automobile giantstryingtomake theirwayintothe Indianheavyvehicle industry.Autogiantssuch
as Tata Motors andAshokLeylandwhoalmostenjoyedasortof sharedmonopolynow have reason
to put theirthinkingcapson.Automobile giantssuchasMercedesBenzhave settheirfootintothe
Indianbusmarketand are all setto roll withtheirlatest3-axle intercityluxurybuspricedatRs. 85
lakhto Rs. 90 lakh.The demandforbusesinIndia,be it publicbusesor luxurybusesjustseemstobe
on a continuousrise.The year2009 saw a host of new publictransportbuseswithlatest
technologiesglidingthe Indianroadsbutthere isstill muchmore tocome.DomesticgiantsAshok
Leylandalone sold63,926 unitsinthe year 2009-10, as against54,431 unitsinthe previousyear,
postinga growthof 17.4 percent.
India'scommercial vehicle hasgrownexponentiallyandahost of new global playerslike Mercedes
Benzare all setto gain a strongfootholdinthe Indiansubcontinent.The latestbusesintroducedin
Indiaare equippedwiththe latesttechnologies,greatlookingexteriorsandinteriorsandmost
importantlyfollowthe normsof emission.
TYPES OF BUSES IN INDIA
Tour buses:These busesare meantfortouriststo show themplaces.
Coach buses:Coach Busesare usedforlongterm tripsacross citiesetc.
Public transit buses: The Public Transit bus is the most common form of buses found on Indian
roads. They are just another form of commuting like the taxi and subway used by civilians to travel
fromoffice tohome etc.
LIST OF BUS MANUFACTURING COMPANIES IN INDIA
KeralaState Road TransportCorporation
Coach Line industries
The Indiabus industryformsanimportantpart of the automobileindustryinthe country.Overthe
lastfewyears,the busindustryhasgrown to a great extentandnew typesof buseswithbetter
facilitieshave come up.Due tothe developmentof infrastructure andmore roads,more andmore
people fromthe rural areasare alsonowadaysavailingof the busservices.Thishasbeenagreat
helpforthe Indiabus industry.
Withthe recentinnovations,more busesare beingintroducedintothe market.Thesebusesare
spaciousandcomfortable.Theyare alsoecofriendlyandthe mileage isalsoprettygood.Nowadays,
newtypesof busesare beingintroducedwhichare equippedwithadvancedfacilitiesandservices
such as air-conditioners,passengerinformationsystem,airsuspensionsystem, highqualityengines
and transmissionsystemsandsoon.Withmore suchbusesbeingintroduced,the customerbase is
alsoexpectedtorise prettywell overthe few years.
The India bus industry comprises a number of classes and categories which are broadly based
according to their uses and the services offered. Usually, the buses in the country consist of different
With the liberalization of the Indian market and also the increase in the commuter base, even
foreign companies have started investing in the India bus industry. Premier global bus company
Volvo set the standards by entering the luxury and tourister bus segment in the country. Recently,
Mercedes has also entered the luxury bus sector in the country with its high class and advanced air
conditioned buses. Apart from these, some well known bus companies are thinking of entering the
luxury bus segment. They are Mobitec, Konevekta, Bitzer, and Allison Transmission and so on.
Temsa,the global buscompanyfrom TurkeyalsoplanstoenterIndiaby the year2010.
The main domestic players in the bus industry in India are Tata Motors, Ashok Leyland, Swaraj
Mazda, and Eicher and so on. In most of the cities in India, the skyline buses that ply are
manufactured by Eicher. Most of the school buses and custom made buses are manufactured by
HindustanMotorsLtd while the mainmanufacturerof minibusesisMahindra&Mahindra Ltd.
With more companies investing in the market and new varieties being introduced, the India bus
industrywill surelyreaplotsof profits.
STRATEGIC ANALYSIS OF BUSES
Indian Bus Market Strategy Analysis and Forecast report is the latest research report. Indian Bus
Market is becoming more competitive day by day. Market leader like Ashok Leyland, Tata Motors &
Eicher needs to re define its product portfolio and Sales Strategy. The current Bus Market size is
around 82,000 Units in India which is expecting to be double by 2025. New initiative like Delhi Govt
is planning to buy new buses with advance technology & safety. Technology is going to be the key
feature in Bus Industry. The OEMs need to make balance between Technology and Pricing. Running
cost of the Busetc.
BharatBenz is ready to enter into Indian Bus market with its latest product portfolio. All segment are
having different buying behaviour like Small Buses, Light Buses, Medium Buses, Heavy Buses and
Luxury Buses. School Buses need to be fit with safety equipment as per Govt guideline. As per our
survey, 80% parents are ready to pay extra amount for their children safety. Mid Class and Corporate
persons are willing to pay extra amount for comfort and discipline time table. Volvo is leading brand
in Luxury segment is also targeting Budget segment Bus market in India. MAN Bus is the market
leader in South Africa but could not penetrate in Indian market. Force Motors's Traveller is having
manyvariantsand thishelpcompanyto be a leadingplayerinLCV category.
SML Isuzu is popular in defence segment. The market would be more dynamic and complete
DRIVERS TO GROWTH
RisingpercapitaIncome and the changingdemographicdistributionare conducive inclusive for
growth.Indiahas the highestproportionof populationbelow 35years,70% potential buyerswhich
meansthat 130 millionpeople will getaddedtothe workingpopulationbetween2003 and 2009.
The trendsindicate thatsmall andmediumcars wouldremaindominantandashifttowardshigh
endcars is expectedata fasterrate.The SUV (Small UtilityVehicle) marketisexpectedtodevelop
rapidlyinfuture.Higherdisposableincomescoupledwithavailability of easyfinance optionshave
driventhe Passengervehiclesegment.The growthof Indianmiddleclasswithincreasingpurchasing
poweralongwithstronggrowthof economyovera pastfew yearshave attractedthe majorauto
manufacturerstoIndianmarket.The marketlinkedexchangerate andavailabilityof trained
manpoweratcompetitive costhave furtheraddedtothe attractionof Indiandomesticmarket.
Industry across countries will have to meet challenges of newer technologies, alternative fuels and
affordability of automobiles by people at large through constructive cooperation. The earlier we are
able to achieve thisthe betteritwouldbe forthe worldperformance.
The industry expects the growth in the automotive sector to continue, fuelled by rising disposable
incomes and increasing consumerism. They also believe that global automakers will continue to
allocate a rising proportion of their foreign direct investment into India, growing auto manufacturing
first and later auto engineering and R&D services. But even as the sector grows, some concerns are
The leading concern is the continuing cost imposed by India’s relatively poor physical infrastructure,
and the slow pace of improvement in road, rail and port facilities. Add to this the fact that the
automotive industry lags behind other sectors such as IT and financial services in management
training, reward and retention. Above all, Indian companies recognize that to achieve global scale
they will need to meet the challenge of building persuasive global brands. Nevertheless, the overall
impression is that India’s auto sector has passed a critical turning point. The inherent strengths of
India’s manufacturing economy – an exceptional human resource base, the capacity to deliver high
quality engineering products, and the strategic geographical positioning – have been reinforced by a
strong domestic economy and a new readiness on the part of global auto manufacturers to make
key investments in India. The opportunity for India’s automotive companies to emerge as leading
participant in the global industry is clearly present: the challenge is no longer to create the
opportunity,butto manage it.