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Automobile project on Buses


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A project on buses

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Automobile project on Buses

  1. 1. School of management AUTOMOBIE PROJECT ON BUSES Centurion University of technology and management Bhubaneswar Odisha Prepared by: PALAS JENA (054) PRIYABRATA DASH (007)
  2. 2. 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 India'sindustrial production. KEY PLAYERS IN INDIAN AUTOMOBILE INDUSTY (PASSENGERBUSES) • Tata Motors • Star Bus • Globus • Marcopolo Tata Motors • AshokLeyland • VikingBS-I- citybus • VikingBS-II- citybus • CheetahBS-I DEMEND DRIVERS 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  Political Factors  Environmental Factors  Social Factors  Technological Factors POLITICAL-LEGAL FACTORS • Governmentregulationandpolicy • Fiscal policy
  3. 3. • Autopolicy ECONOMICALFACTORS • Manufacturingsectorgrowth8-10% • Increase InPerCapital Income • Cheaperandeasier finance scheme • Increasingroaddevelopment • HighGDP growth • India’shuge geographicspread-masstransport system SOCIAL FACTORS • Growth inurbanization • Upward migrationinincome levels • Low interestratestranslatingtolow financingandacquisitioncosthence greater affordability TECHNOLOGICAL FACTORS • Withthe entryof global companiesintothe Indian market,advanced technologies,bothin productand productionprocesseshave developed • Fewglobal companieshave setuptheirR&DcenterinIndia • Governmentinitiativesregardingtax rebateshasledtoglobal playerssettinguptheirR&D centerinIndia PORTER’S DIAMOND MODEL Porter’s(1990) contributedDiamondmodel oncompetitiveness,whichanalyzesnationalorindustry competitivenessthroughfourmajordimensions: factorconditions,demandconditions,firmstrategy structure and rivalry,andrelatedandsupportingindustries.Porter(1990) concludedthatdue to variousnational characteristics,nationscannotsucceedinall industries,andthusitisimportantto identifyanddeveloptheirinternationallycompetitiveindustries.Therefore,he proposedthe diamondmodel with fourmajor(andtwoadditional)determinantsof competitiveadvantage ina particularindustry. Porter’sdiamondmodel providesananalytical frameworkwithmulti measurementsfornational or industrycompetitiveness.AccordingtoPorter(1990) nationsare mostlikelytosucceedinindustries or industrysegmentswherethe diamondfactorsare mostlyfavourable. Factor conditions: Factorconditions forproductionsare the inputsandinfrastructure necessary for Competition,whichinclude:  Human resources:Qualityandquantityof skilledlabour,costof personnel,andlabourskill variety  Physical resources: The abundance,quality,accessibility,andcostof the nation’sland, water,mineral,ortimberdeposits,hydroelectricpowersources,fishinggrounds, andother physical traits.”(Porter,1990, p. 74)  Knowledge resources:Market,scientific,technical knowledgeresidinginanation’sresearch institutions
  4. 4.  Capital resources:Capital availabilityandcostto finance industries.Capital resourcescanbe affectedbythe rate of savingsandnational capital marketstructure  Infrastructure: Availabilityandqualityof infrastructure,includingcommunicationsystem, transportationsystem,paymentorfundstransfer,healthcare,andsoforth(Porter,1990, p. 74-75). 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 demand. 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 coordinationanda communicationnetwork,whichinturnimprovesproductionefficiency.Basedon the availabilityandefficiencyof supportingindustries,the mostsignificantbenefitof home-based suppliersliesinthe abilitytoaccelerate innovationandupgrade inthe overall autoindustry. Firm strategy, structure, and rivalry:Itdiscussesthe contextinwhichfirmsare created, managed,andoperated,giventhe domesticdemandconditions,factorconditions,andsupporting 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 influencedomesticdemandconditionsbyestablishingproductstandardsorregulationsthatdirect customerneeds.Competitionlaws,tax policy,andotherregulatorystatutescanaffectboth supportingindustriesandfirmstructure andstrategy. Chance: It referstoexternal eventsthatmayaffectorbenefitanationor industryandthatare totallyoutside the control of firmsandgovernment.Examplesof chance eventsinclude pure invention,breakthroughsinbasictechnologies,wars,economiccrisis,andmajorshiftsinforeign marketdemand.Theycreate discontinuitiesthatcanunfreeze orreshape industrystructure and thusplayan importantrole inshiftingcompetitiveadvantage inmanyindustries.Firmsevaluate chance eventsdifferentlydue tovariousindustrynaturesandstagesintheirlifecycle.Porter(1990) proposedthatfirmspromote continuousinnovationandimprovement,andendeavourto the opportunity resultingfromchance events.
  5. 5. MICHAEL PORTER FIVE FORCEMODEL Porter'sfive forces include: Three forcesfrom'horizontal'competition FORCE 1: Threatof newentrantsorbarriersto entry FORCE 2: Threatof substitute products orsubstitutes FORCE 3: Threatof establishedrivalsorcompetitiverivalry Two forcesfrom'vertical'competition 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)  Accessto productioninputsandfinancing,  Governmentpoliciesandtaxation  Productioncycle andlearningcurve  Capital requirements  Accessto distributionchannels  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 followingneedstobe analyzed:  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?
  6. 6.  How docustomersidentifythemselveswithyourbrand?  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 STRENGTHS Large domesticmarket Sustainable laborcostadvantage Governmentincentivesfor manufacturingplants Strongengineeringskillsindesign Able toachieve significantgainsinproductivity WEAKNESSES Low laborproductivity Highinterestcostsand highoverheads Risingcostof production Low investmentinResearchand Development OPPORTUNITIES Commercial vehicles Heavythruston miningandconstructionactivity Increase inthe income level Cut inexcise duties Risingrural demand THREATS Risinginterestrates Cut throat competition Lack of technologyforIndianCompanies
  7. 7. ____________________________ 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 Mahindra Navistar AshokLeyland Tata Motors Coach Line industries AglowEngineersPrivateLimited Delite Technologies Gujarat Corporation Bhutani international VolvoBuses EicherMotors Force Motors
  8. 8. 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 categoriessuchas:  ElectricBuses  School Buses  CommuterBuses  Cruiserbuses  Deluxe Buses  Mini Bus  LHD Buses  TouristBuses 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
  9. 9. 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 Businesssolutionwouldbe keyforIndianBusIndustry. 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.
  10. 10. CONCLUSION 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 becomingmore pressing. 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.