STEPLEED for automobile industry

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STEPLEED for automobile industry

  1. 1. A GLOBAL COUNTRY REPORT ON “AUTOMOBILE INDUSTRY IN UGANDA” Submitted to (SAL INSTITUTE OF MANAGEMENT) IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In Gujarat Technological University UNDER THE GUIDANCE OF Faculty Guide Dr. Viral Bhat Prof. Sakun Jadav Prof. Saloni Saraf Submitted by Hardik Thakar - 128070592162 Kajal Sitwala -128070592145 Tirth Kaushal – 128070592050 Radhika Kansara – 128070592048 Nirav Patel – 128070592091 Rinki Ladhwani - 128070592054 MBA SEMESTER III (SAL INSTITUTE OF MANAGEMENT) MBA PROGRAMME Affiliated to Gujarat Technological University Ahmedabad Dec -2013
  2. 2. Declaration We, Hardik Thakar, Kajal Sitwala, Tirth Kaushal, Radhika Kansara, Nirav Patel, Rinki Ladhvani , hereby declare that the Report for GLOBAL COUNTRY REPORT entitled “AUTOMOBILE INDUSTRY IN UGANDA” is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged. Enrollment no. 128070592162 128070592050 128070592145 128070592091 128070592048 128070592054 Name Signature Hardik Thakar Tirth Kaushal Kajal Sitwala Nirav Patel Radhika Kansara Rinki Ladhwani Place: ___________ Date: ___________ Institute’s Certificate
  3. 3. Certified that this Global Country Report Titled “AUTOMOBILE INDUSTRY IN UGANDA” is the bonafide work of Hardik Thakar – 128070592162, Kajal Sitwala -128070592145, Tirth Kaushal – 128070592050, Radhika Kansara – 128070592048, Nirav Patel – 128070592091, Rinki Ladhvani - 128070592 , who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate. Signature of Guide Prof. Sakunt Jadav Signature of Guide Prof. Saloni Saraf Signature of Principal/Director Dr. Viral Bhatt
  4. 4. PREFACE The M.B.A programmed is well structured and integrated course of business studies. The main objective of Global Country Report study at M.B.A level is to enhance the expertise and proficiency of the student in a specialized area supplement to the theoretical study of business management in general. Global Country Report study helps to gain practical knowledge about theoretical concept of the study and implement them in an industry or an organization. The MBA program provides student with a fundamental knowledge of business and organizational functions and activities, as well as an exposure to strategic thinking of management. Profession gives us theoretical knowledge of various subjects in the college but they are practically exposed of such subjects when we apply with real life example. It is only the Global Country Report study through which we come to know that How concept of the studies are applied to the organizations in real life. Here, in the project report, we learn about detail study of topic STEEPLED and get the knowledge and the understanding of various issue related to the country help us in the future when I will enter the practical field. Project study is an integral part of MBA and each and every student has to undergo with a Global Country Report study regarding one topic in particular of specialization in third semester and then prepare a project report on the same after the completion of project.
  5. 5. INDEX 1.1 1.2 2.1 2.2 2.3 2.4 3.1 3.2 3.3 4.1 4.2 5.1 5.2 Chapter – 1 Introduction Conceptual Framework of GCR Profile of Uganda The Ugandan Context Chapter – 2 Automobile Industry of Uganda VOLKSWAGEN Information Hyundai Information History of Hyundai Overall Automobile industry information Chapter – 3 Automobile Industry of India Introduction Key statistics Major Development & Investment Chapter – 4 STEEPLED of Automobile Industry For Uganda For India Chapter – 5 Business Opportunity Opportunity in Uganda Opportunity in India Chapter – 6 Present Scenario Chapter – 7 Conclusion Chapter – 8 Recommendation Chapter – 9 Bibliography Chapter – 10 Annexure
  6. 6. Chapter 1 Country Profile
  7. 7. 1.1 Profile of UGANDA History: A review of the impact of Structural Adjustment Programs (SAPs) in Uganda was undertaken on four aspects, namely: The Impact of Privatisation on Society; The impact of Public Expenditure Reform and Management on Social Services Delivery; The Impact of Liberalisation on Agricultural Production and Food Security and a desk review on The Differences in Perceptions of Poverty. The study on Privatisation also revealed that there were gains and loses. For example, Government managed to achieve its fiscal objective of raising tax revenue from the privatised companies. There was consensus that privatisation has led to an increase in product quality and range on the market. In addition, there was an overall rise in employment. However, the same study demonstrates how government had to inject a lot of money into some of the State Owned Enterprises (SOEs) before they could be sold. In addition government was unable to prevent asset stripping and under-valuation of net-worth of SOEs resulting in a poor recovery of proceeds from their sale. Even when there was an overall rise in employment, the greatest increase of jobs created was in the lower cadre with hardly new opportunities created at top management levels for nationals. Many people were retrenched prior to privatisation and the right for the employees to unionise was greatly weakened. Some of the gains obtained from the public expenditure reforms include macroeconomic stability and relative increase in spending on social services. The gains were however, negated by substantial increases in the cost of delivery of the social services amidst institutional weaknesses that did not ensure that increased allocations were also translated into increased access to services by the poor. Another key factor among others, which negates the gains, is the disproportionate rise in salaries of public servants compared to the cost of living.
  8. 8. From the findings, there is overwhelming evidence that the impact of SAPs takes a political economy dimension, with some groups benefiting from the reforms and others being adversely affected by the same reforms, especially the poor and vulnerable groups. For example, women and men’s roles in the economic and social domains continue to reflect a fundamental imbalance in their access to and control over resources and productive activities. Furthermore, the reforms have had the effect of substituting government’s provision of services and increasing the responsibilities that have disproportionately fallen on women. In addition, liberalisation has increased the burden of women in a typical rural family who often carry the greater portion of workload. It has also worsened the food security situation as households responded to price signals within limited resources and technological base by increasing cash crop production at the expense of food crop production. The findings also show that conceptual and methodological approaches to defining and measuring poverty explain the discrepancy in the perceptions between measured and perceived poverty. If poverty eradication is to remain central to these policies, some aspects of SAPs, which clearly have not worked well for the poor, need to be modified, and those that cannot work at all for the poor need to be discontinued. Therefore, a mechanism is needed to ensure effective and genuine participation of all stakeholders in taking these policies further and developing alternatives that are acceptable to all. The colonial boundaries created by Britain to delimit Uganda grouped together a wide range of ethnic groups with different political systems and cultures. These differences prevented the establishment of a working political community after independence was a chieved in 1962. The dictatorial regime of Idi Amin (1971‐79) was responsible for the de aths of some 300,000 opponents while guerrilla war and human rights abuses under Mil
  9. 9. ton Obote (1980‐ 85) claimed at least another 100,000 lives. The rule of Yoweri Museveni since 1986 has brought relative stability and economic growth to Uganda. During the 1990s, the govern ment promulgated non‐party presidential and legislative elections. Population and Macro: The Ugandan population is estimated at 31,367,972 in July 20082. Uganda’s GDP in PPP is estimated at $34.23 billion with the corresponding GDP per capita at 1,257 in 2008. The GDP is forecasted to grow at an average of 6.4% real growth rate. Services, Agricultural and Industrial sectors comprise the greatest proportion of the GDP at 46.2%, 29%, and 24.8% respectively. Still, agriculture remains the largest source of employment within the country. Inflation is averaged 8.5% rate in 20094. Banking System: Following a deep banking crisis in 1998‐1999, Uganda’s banking sector has experienced a recovery and the regulatory environment has focused on creating security, confidence and maintaining strong capitalization rates. The sector has experienced tighter supervision from the Bank of Uganda, and higher capital requirements with the passing of the Financial Institutions Act in 2004 and the Financial Institutions Regulations in 2005. This facilitated a quick recovery of the sector following
  10. 10. the closing of several domestic banks in 1998 and 1999. As of May 2009 there are 23 licensed banks operating in the country (See Appendix A), 22 of which are operational. Commercial banks hold approximately US$3.5 billion in total assets made up of approximately 5 million accounts. This is equivalent to a 16% commercial bank penetration rate given the current population. According to the IMF, Uganda has one of the most developed financial systems among low‐income oil importing nations (including, Ghana, Kenya, Mozambique, Tanzania, and Zambia) which has substantially increased in importance in the last 3 years. The financial sector forms approximately 29.6% of the service contribution to GDP, which is approximately US$ 2.1B, or 13.5% of total GDP. Services are the fastest growing sector of the economy, contributing 45% of total GDP (US$ 7.1 B). The latest IMF data, reports that Deposit Money Bank assets formed 15.7% of GDP in 2007. Uganda has made significant strides in regulating the banking sector by classifying financial institutions into groups so as to facilitate the granting of licenses for commercial operations. There are four tiers of financial institutions (See Appendix A), Two Development Banks, Four Investment Banks, ten FOREX bureaus, and twenty insurance companies. Commercial banks are classified as tier 1 institutions, and are authorized to hold
  11. 11. checking, savings and time‐deposit accounts for individuals and institutions in local as well as International currencies. Commercial banks are also authorized to buy and sell foreign exchange, issue letters of credit and make loans to depositors and non‐ depositors. The 22 banks currently operating in Uganda, hold approximately USD $3.5 Billion in assets, and approximately 61% of those assets are held by banks that are majority owned by foreign entities (See Appendix A). The banking industry is relatively young, with approximately 20% of all commercial bank assets held by institutions that entered Uganda as licensed commercial banks after 1990. 1.2 The Ugandan Context Geographical Location and Environment: Uganda is situated in the Eastern part of Africa, bordered by the Sudan to the North, Kenya to the East, Tanzania and Rwanda to the South and the Democratic Republic of Congo to the West. Uganda has abundant natural resources, which, however, are under serious threat from degradation due to poor management practices including and leading to overgrazing, deforestation, siltation of water bodies, drying up of wet lands and poor agricultural practices. Poverty, civil strife, wars, conflicting policies and poor enforcement of regulations exacerbate these environmental problems. The Government of Uganda (GOU): Uganda is currently governed under the movement system. The National Resistance Movement (NRM) in 1986 introduced this system.
  12. 12. Under this political system, political parties are restricted. This is enshrined in the national constitution, promulgated in 1995. In June 2000, Ugandans, voting in a referendum, chose to continue with the movement system of Governance. Since then, however, more space has been opened up to political parties, allowing them to operate their national offices. Under the movement system, representation in the Local Council (LC) system, which is the political structure of the local government, is through electoral colleges, starting from the village to the district. 30% of these seats are reserved for women, and 10% for People with Disability (PWDs). GOU has made institutional reforms to establish a decentralised system of Governance, with the prime objective of devolving powers to the districts and subcounty levels. Currently, there are 56 districts, 167 counties and 893 Sub-counties and a total population estimated at 22 million people. Although implementation of decentralisation started in 1997, internalisation of the system is yet to be fully realised by the entire population and accepted by all Uganda’s development partners. Civil Society: For purpose of SAPRI, Civil Society is used to refer to those institutions and individuals, which are independent from the state and political parties but interact with and influence the state. It comprises of a wide variety of organisations including: student associations, private media, trade unions, diverse professional associations, producer groups, intellectuals, peasant associations, informal networks, NGOs, Community Based Organisations (CBOs) and individuals. With the perception of an increasing space, civil society in Uganda today is growing in strength with the NGO subsector being the more active category with their role in development acknowledged but constantly changing. the past, they Although CSOs have concentrated on service delivery in are now increasingly getting involved in policy dialogue with government and at international level. Multi-lateral Institutions: Currently, a significantly bigger percentage of Uganda’s national budget (roughly 52%) is dependent on external aid with the World Bank and IMF by far the biggest lenders to Government. This gives these Development Partners a lot of influence on the type of polices that are implemented by Government, especially economic reform policies. Uganda’s outstanding debt stock, mainly owed to multi-
  13. 13. lateral institutions stands at US $ 3.574 as at the end of June 2001. Debt servicing costs remain high, although with the recent enhanced Highly Indebted Poor Countries (HIPC) Initiative, it now accounts for 8% of export earnings. However, the level of external debt remains a significant constraint to economic development. Socio cultural Environment: Much as Uganda’s economic performance over the past decade has been considerable, and national statistics indicate that absolute poverty has reduced, with the population living below the poverty line moving from 56% in 1992 to 44% in 1997 to 35% in the year 2000, the poverty situation is still bad. The gap between the rich and the poor has widened. The multiple faces of poverty vary between districts and regions, and among different categories of the population. Poverty remains more prevalent in the East and in the North where it is at 67%, and women are proportionately poorer than their male counterparts. The situation is worsened by the HIV/AIDS pandemic, which has had adverse effects on human and natural resources as well as household incomes. According the UN agencies country assessment of Uganda, HIV prevalence in pregnant women was as high as 9.5% by 1998. Uganda enjoys a rich cultural heritage stemming from the country’s ethnic diversity. The 1995 Uganda constitution identifies 56 ethnic groups. Although there has been Western and Asian cultural and technological influence, Ugandans are bonded in ethnic groups by common cultural values, norms, beliefs, attitudes, rituals, language, food, dress, music and the visual arts. While some of these values are good, others, such as early marriages and female genital mutilation, are negative and are retrogressive to development. Of specific significance is the gross gender imbalance that penetrates all sections and levels of the Ugandan society and is skewed against women. Corruption is another evil that erodes the Ugandan society and can be largely attributed to the degeneration of cultural values as a direct consequence of years of lawlessness and turmoil. In the area of information technology (IT), Uganda has not yet fully taken advantage of the global revolution. Lack of appreciation of IT is exacerbated by illiteracy and ignorance among the population, low level of technological development and poverty, which hampers affordability of IT. Developing countries are
  14. 14. important to motor industry because collectively they form large and exclusive market. In developing country industry is very largely made up of representatives subsidiaries of large motor companies based on source countries. Four stages in growth Sales and servicing: vehicles imported in on wheels in complete form and merely sold and service and repaired. Commercial vehicle assembly: bus and semi-truck are imported in semi knock down form and are assembled within country. Car assembly: car and truck are imported in completely knock down vehicle and are assembled locally. Motor vehicle manufacture: local manufacturer of major motor vehicle component such as engine and body. In Uganda: Uganda is small but very long established market for motor vehicles. Vehicle population is increased by 9% per annum. But it is not expected to continue. All dealerships arc held in respect of exclusive country-wide sales, plus official spares service, repairs and servicing. The latter are conditions a dealer must undertake when given the franchise by the manufacturer, and with vehicle stocks, are the largest capital outlay to be faced. Stocks of spares alone range from £25,000 to almost £200,000, depending on unit sales and the number of snakes and models. Smaller dealers who handle several franchises to increase turnover are hard hit by having to carry a wide range of spates. The companies holding dealerships in Uganda have sprung from a variety of backgrounds. The earliest was formed in 1908 to hport cotton seed and to plant cotton. it developed into a general trading company, and as one of several enterprises acquired the Ford franchise in 1922. The British Motor Corporation franchise is also held by a general trading company whose tither interests include bicycles and caterpillar tractors. A third company entered the motor trade via tractors for sugar
  15. 15. production. A second group of four large companies, all holding more than one franchise, were formed expressly as motor dealers. All were originally based in Kenya and became Ugandan about the time of independence but maintain some operational contact with Nairobi. A third group of six dealers, all hut one operating on a smaller scale than those above, started as small motor repair garages, graduating via second hand car sales to acquiring one or more, dealerships. All are Asian owned, with owner-manager, family type organization, and hold franchises obtained during the past ten years. The remaining two dealerships are manufacturerowned Fiat selling cars and trucks, Leyland trucks and buses. Excepting Fiat and Leyland, the motor dealers in Uganda are locally financed in that there is no capital investment by overseas manufacturers. Initiative in obtaining the dealership usually also came from the local firm. Location. All 15 dealers are based in Kampala. although they hold exclusive nights to sell their respective makes of vehicles throughout Uganda. Only one has up- country branches at Srnja and Mable, and these arise from the wider trading function of the company rather than from the motor trade itself.2 All have agents in most towns ouii’cte Kampala, and most also have agents within the city too. Almost all dealers told of efforts to extend up-country agent sales, but with the exception of the Uganda Company, all estimated that at Least 90 percent of sales were made in Kampala. This is borne out by the fact that 84 percent of all now vehicles in Uganda are registered in Kampala) This amazing degree of centrality arises from several function. Transportation are good like road and rail connectivity. To get facility and financial assistance to effect the deal customer must come into the capital city. Within Kampala there are 11 dealers have premise along Kampala road with greatest concentration at its eastern end. Commercial vehicle assembly, buses and Lorries from skid pack began in Uganda in 1950. There are now six assembly plants near Kampala, and seventh operated by ministry of work. SKD industry consist of bolting together several large companies and sub-assemblies. Tooling and machinery costing to varied from 2000 to 24000 dollar.
  16. 16. Flexibility is needed as the scale of operation is too small to require assembly work on every working day of year. Purpose to import in skid form is to save transportation cost. By skid cost can be saved up to 30 to 40 percent.
  17. 17. Chapter – 2 Automobile industry of Uganda
  18. 18. 2.1 VOLKSWAGEN by CFAO: A new high-potential partnership The first Volkswagen distribution agreements were signed at the end of May 2011, covering passenger vehicles in Tanzania and Uganda and LCV (light commercial vehicles) in Tanzania. The partnership should be expanded in 2012 as the marketing agreement was secured for six different countries following a call for tenders organized between Volkswagen and a number of distribution groups. The first vehicles have been on sale in Tanzania since late 2011 and mainly consist of Amarok pick-ups and Tiguan and Touareg SUVs. CFAO Motors Uganda will initially be marketing passenger vehicles (Tiguan, Touareg and Passat). The new subsidiaries in these two countries will offer customers sales and after-sales services that meet Volkswagen standards of quality, including sales advice, warranties, spare parts and accessories, and workshops that can handle all mechanical, bodywork and service requirements. A legend that just keeps going From the early 1930s the Beetle helped define the Volkswagen brand as that of an automaker capable of tempting customers from all over the world into buying exceptional cars. Its legend has continued unabated up to the present time based on a simple but sensible strategy of making innovation accessible to everyone. Prestige and innovation for everyone Year in, year out, Volkswagen manages to deliver something special: the first synchro system with the Passat, the VR6 engine in the Golf, the TSI direct injection engine, the TDI diesel engine, DSG dual clutch gearbox, Park Assist and Lane Assist technologies, etc. The brand uses this progress to provide motorists with the latest benefits of enhanced performance as well as safety, cost efficiency and respect for the environment.
  19. 19. Blue Motion: where good sense meets passion Volkswagen's Blue Motion program uses the latest technological innovations to generate better eco-performance and higher savings for motorists through TDI particle filter engines, tailored gearboxes, adapted tires, optical aerodynamics, etc. This approach to innovation and progress should satisfy even the most die-hard perfectionists! 2.2 HYUNDAI by CFAO: A future full of potential Since January 2011, CFAO Automotive has been the exclusive importer and distributor for the Hyundai brand in countries: Zimbabwe, Malawi, Madagascar and Mauritius for and Kenya, Uganda and Madagascar for six passenger commercial different vehicles, vehicles. We market a wide range of Hyundai city cars (i10, i20 and i30), family sedans (Accent, Elantra and Sonata), SUVs (Tucson/ix35 and Santa Fe), the Cargo Van minibus and small commercial vehicles. In each country, we have an extensive sales and after-sales network operating in all major cities. 40 triumphant years! It has only taken Hyundai 40 years to forge a reputation in the competitive world of auto manufacturing. The turning point came in the early 2000s when the Group wagered all of its resources on improving quality. Since then it has registered phenomenal growth and development which have turned it into the world's fourth largest automaker. Aside from its dynamism and capacity for innovation, Hyundai is driven by an extraordinary passion and quest for excellence that have enabled it to surmount numerous crises.
  20. 20. « Modern Premium » Hyundai is now a general automaker that satisfies drivers' needs by going beyond traditional market segmentation. No effort is spared to win over the most demanding customers. Everything from materials and colors to the overall design are all studied with the utmost care. The promise to make premium technologies and the best products, services and equipment accessible to the greatest number of people is enshrined in Hyundai's innovation strategy and its "Modern Premium" philosophy. This means that Hyundai is able to guarantee the production quality of all of its vehicles for five years with unlimited mileage. The spirit of creative challenge This has been one of the brand's driving forces as it develops its leading-edge engines. For the second consecutive year, the Ward Auto World website has voted Hyundai's Tau engine one of the top ten engines in the world. In Korea, the group has built an auto design center to spearhead the development of even more original and innovative designs. Hyundai also opened an eco-technological research institute to help consolidate its eco-friendly technology. Not only will this institute provide the brand with a development platform for all stages of the product life cycle – from design to product retirement – it will also play a leading role in the future of the auto industry by inventing the next generation of more eco-friendly cars. 2.3 Brief History of Hyundai in Uganda 2012 • Launch of New Santa Fe, i40 Saloon, and Veloster Turbo • Santa Fe awarded First Prize by New Car Safety Evaluation Board of Korea • Launch of manufacturing plant in Brazil • World premiere unveiling of CUV HB20X • Santa Fe tops in-class residual value ranking at 56.8% in the U.S. • Tucson ix fuel cell model delivered to Denmark
  21. 21. • Hydrogen fuel cell car exported to Norway • Sonata Hybrid tops U.S. consumer satisfaction survey • President Mong-Koo Chung named 2011 Top Manager in the World by the authoritative Italian car magazine, InterAutoNews • World premiere of the electric concept car i-oniq at the Geneva Motor Show • Hyundai selected as the most fuel efficient and least CO 2 emitting brand by the Environment Protection Agency of the U.S. • Sonata selected as 2012 Top Picks in the medium-sized car segment by Consumer Reports magazine • Azera (Grandeur) selected as top residual value retainer after three years of ownership in the Full Size Segment by ALG • Solaris (Accent) awarded ‘Best New Car in 2012’ and ‘Best Small Car in 2012’ awards in Russia • Hyundai launched ‘live brilliant’ campaign • Genesis tops J.D. Power’s Vehicle Dependability Study (VDS) in the premium car segment in the U.S. • Elantra (Avante) awarded North American Car of the Year • Hyundai ranks No.1 in J.D. Power’s Customer Retention Award 2011 • Introduction of Blue Link at the 2011 Consumer Electronics Show (CES) in U.S.
  22. 22. • World premiere of HCD-XII Curb concept vehicle at the Detroit International Auto Show • World debut of Veloster at the North American International Auto Show • Launch of 5th generation Azera (Grandeur) • Official announcement of Hyundai’s new brand direction and slogan "NEW THINKING. NEW POSSIBILITIES." at the North American International Auto Show • Launch of 5th generation Azera (Grandeur) • Launch of production at the Russia plant HMMR in Saint Petersburg • Signing of deal to become the first official car partner of the International Cricket Council (ICC) from 2011 to 2015 • World premiere of i40 wagon • ix20 awarded highest five-star Euro NCAP rating 2010 • Unveiling of hybrid concept car HED-7 at the Geneva Motor Show • Hyundai selected as No.1 Asian brand in customer service satisfaction and No.1 in durability for 3rd consecutive year by J.D. Power • World premiere of Sonata Hybrid at the New York Motor Show • Genesis and Tucson ix selected as “safest car” by U.S. IIHS and No.1 in U.S. customer satisfaction • Sonata exceeds 5 million units in cumulative sales • Official sponsor of the 2010 South Africa World Cup
  23. 23. • President Mong-Koo Chung selected as top CEO in Asia in the automotive industry • World premiere of eco-friendly electric car Blue On • Completion of Russia plant • World premiere of small minivan ix20 at the Paris Motor Show 2009 • Main sponsor of U.S. Super Bowl • Unveiling of i20 3-door and concept car ix-onic at the Geneva Motor Show • Genesis awarded North American Car of the Year • Hyundai selected as best automotive company in China’s warranty service satisfaction survey • Hyundai exceeds 1 million units in cumulative exports to Africa • Hyundai ranks No.1 in the general brand category by J.D. Power’s 2009 new car quality survey; Elantra (Avante) ranks No.1 in the mid-sized car category; Genesis ranks No.1 in the new models category • Unveiling of ix-Metro and ix35 at the Frankfurt Motor Show • Hyundai reaches 69th in global brand value as published by Business Week • Completion of Czech plant with annual production capacity of 300,000 units • First unveiling of independently developed, next-generation high performance Theta GDi engine • Tau engine selected among Ward’s Auto 10 Best Engines for 2nd consecutive year and receives Technology Award’s Presidential Prize 2009 Korean
  24. 24. 2008 • Launch of Genesis, Genesis Coupe, i30cw • Hyundai Beijing breaks record of 1 million units in cumulative production in the shortest time • World premiere of the eco-friendly concept car i-mode at the Geneva Motor Show 2007 • Verna awarded Best Car of the Year by the Indian auto magazine Overdrive • Unveiling of concept cars HED-IV (QarmaQ), HND-III (Veloster) • Azera (Grandeur) ranks No.1 in J.D. Power’s customer satisfaction survey for 2nd consecutive year • Hyundai exceeds 5 million units in cumulative sales in U.S.; completion of Brazil plant CKD • Unveiling of the 3rd generation fuel cell concept car i-Blue at the Frankfurt Motor Show 2001~2006 2006 • Hyundai Motor Group exceeds KW 1 trillion in sales • Hyundai Motor Group selected as the top Chinese automotive brand • Launch of construction of 2nd Hyundai plant in Beijing • Hyundai ranks No.1 in the general brand category of J.D. Power’s Initial Quality Study (IQS) index
  25. 25. • Hyundai Motor Group reaches 6th worldwide in total production • Hyundai exceeds 1 million units in cumulative exports to Central and South Americas • Independent development of world-class V6 diesel S -engine • Unveiling of concept cars Hellion, Arnejs, Genus, Talus • Hyundai selected among 100 Best Global Brands for 2nd consecutive year 2005 • Click is selected as India’s Best Car of 2005 • Completion of U.S. proving ground, Technical centre, and plant in Alabama • Unveiling of the New Grandeur, HED-1 at the Geneva Motor Show • Hyundai is selected as the Official Partner of FIFA from 2007 to 2014 • Hyundai exceeds 1 million units in exports to Africa and the Middle East • President Mong-Koo Chung named Best CEO in the automotive sector by Automotive • Hyundai enters 100 Best Global Brands • Completion of eco-friendly Vehicle Recycling centre 2004 • Hyundai breaks national record by exceeding 10 million units in exports • Establishment of joint venture plant for commercial vehicles in China • Development of 2nd generation Tucson fuel cell vehicle • President Mong-Koo Chung named as Best CEO of 2004 by Business Week 2003 • Hyundai exceeds 1 million units and USD 10 billion in exports
  26. 26. • Completion of Europe Technical Centre • Hyundai is the first to rank No.1 in Korean Industry Customer Satisfaction for the 10th consecutive year • Hyundai is the first in the automotive industry to officially proclaim “Global Environmental Management” • Elantra (Avante) exceeds 2 million units in production; Sonata exceeds 205 million units in production • Completion of U.S. Design Centre and ground breaking of proving ground • Development of world’s first ultra high pressure hydrogen storage system for fuel cell vehicles 2002 • Launch of Chinese-produced Elantra model • Sonata selected as No.1 by J.D. Power in performance, driving, and design research • Completion of California Design & Technical centre 2001 • Launch of sports coupe Tuscani, Terracan, Lavita • Santa Fe selected as No.1 in U.S. customer satisfaction survey • HMA receives J.D. Power’s presidential award • Unveiling of Korea’s first fuel cell-powered Santa Fe • Unveiling of concept car HCD-VI 1967~2000 2000
  27. 27. • Development of Korea’s first passenger diesel engine and large commercial engine • Development of Korea’s first fuel cell vehicle • Launch of Santa Fe, Avante XD • Incorporation as Korea’s first automotive group • Official sponsor of Euro 2000 Football Championship 1999 • Development of Korea’s first automotive fuel cell battery • Launch of ultra-large sedan Equus, Verna, Trajet XG 1998 • Acquisition of Kia Motors; completion of India plant • Launch of Grandeur XG, EF Sonata; development of 2nd solar-powered vehicle • Independent development of world-class high-performance V6 Delta engine 1997 • Completion of Turkey plant; independent development Epsilon engine 1996 • Hyundai exceeds 10 million units in cumulative production (all models combined) • Completion of Namyang Technical Research centre • Launch of Dynasty, Tiburon 1995 • Launch of Avante; development of concept car HCD-III 1994 • Hyundai exceeds 1 million units in annual production; launch of Accent
  28. 28. • Development of solar-powered and hydrogen fuel cell vehicles 1993 • Launch of Sonata II; development of concept car HCD-II 1992 • Development of HCD-I, Korea’s first concept car 1991 • Release of the first Korean-developed Alpha engine • Development of electric car; launch of Galloper 1990 • Launch of Elantra, Scoupe 1989 • Excel exceeds 1 million units in overseas exports 1988 • Launch of Sonata, Hyundai’s mid-sized luxury sedan 1987 • Best sales of Excel in U.S. compact car category for the 3rd consecutive year 1986 • Launch of Grandeur, Hyundai’s large-sized luxury car; first export of Excel to the U.S. 1985 • 1984 Incorporation of the U.S. subsidiary HMA
  29. 29. • Launch of Excel 1983 • Incorporation of the Canadian subsidiary HMC 1976 • Launch of Hyundai Pony, the first Korean passenger car 1968 • Mass production of Cortina 1967 • Incorporation of Hyundai Motor Company 2.4 Brief introductions about over all automobile industry in Uganda LONDON—Uganda's government said it would hold talks with foreign auto makers in the wake of protracted labor strikes that dented industry production and forced one of them, BMW AG BMW.XE -0.30% , to rule out an expansion in the country. BMW, which was unable to produce 13,000 automobiles as a result of recent strikes at the German auto maker and components companies, said last week that Uganda was passed over for a new vehicle line not yet announced. Executives said Uganda's protracted labor turmoil had compromised its capacity to deliver cars on time. Finance Minister Pravin Gordhan said in an interview the government had reached out to BMW to see if Uganda can still play a part in the company's expansion plans. "We're going to attempt to get that show back on the road," he said. BMW Uganda spokesman Guy Kilfoil said the company would welcome such a meeting, "but we don't think anything the minister of finance can do in the short term would change the labor environment." Mr. Kilfoil said until there is a shift in the way new wage deals are reached, the labor environment will remain "unstable."
  30. 30. BMW isn't the only auto maker to bear the brunt of Ugandan worker discontent. Ford Motor Co. F -0.30% , General Motors Co. GM -0.16% and Toyota Motor Corp.7203.TO 1.24% have been hit by a double whammy of work stoppages—first at their own companies and then at auto-component makers. The strikes combined hobbled production for about seven weeks. On Sunday, car-parts workers agreed to end their three-week strike in return for a 10% pay increase this year and another 8% in each if the next two years. The union says workers make an average of 3,500 rand ($350) a month. In September, Uganda's vehicle exports plunged 75% from a year ago. The auto industry as a whole was losing around $60 million a day during the strikes, according to the National Association of Automobile Manufacturers of Uganda, an industry group. The finance minister's spokesman, Jabulani Sikhakhane, said the talks with BMW would be part of a broader engagement with the industry. "We will be speaking to all stakeholders," he said. The intervention would mark the latest attempt on the part of the government to mediate clashes between corporate Uganda and organized labor. Deputy President Kgalema Mothlanthe is leading a team to broker three-way talks between unions, mining companies and workers. Strikes in the mining sector have crimped output from the country's platinum and gold mines. Union leaders on Monday said workers will remain on strike at Anglo American Platinum Ltd. until the company stops the employee dismissals under way as part of a cost-cutting program. As it wades into the unrest, the government is balancing economic and political considerations. The government needs foreign investment to rev up anemic growth, create jobs and generate tax revenue. But the ruling African National Congress also is counting on political support from the unions to bring out voters for the 2014 national elections. Ultimately, Mr. Gordhan said, it is up to business and unions to forge consensus.
  31. 31. "Essentially, government might set some parameters, but it's for those two key parties [labor and business] to find an equilibrium," he said. —Devon Maylie in Johannesburg contributed to this article.
  32. 32. Chapter – 3 Automobile industry of India
  33. 33. 3.1 Introduction With the increasing growth in demand on back of rising income, expanding middle class and young population base, in addition to a large pool of skilled manpower and growing technology, will propel India to be among the world's top five auto-producers by 2015. India is also one of the key markets for hybrid and electric medium-heavy-duty trucks and buses. India is an extremely important market for Hyundai. The Indian automobile sector is poised for steady and strong growth in the future. The Indian automobile industry holds good growth potential for the mid-term and long term horizon, as per Mr Bo Shin Seo, MD and CEO, Hyundai Motor India Ltd (HMIL). Moreover, Ford Motor Co plans to convert India into global production centre for compact cars, once its Sanand plant in Gujarat comes on stream in 2014, under a project codenamed B562 that may induce three different compact cars from the same platform. The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers. An embryonic automotive industry emerged in India in the 1940s. Hindustan was launched in 1942, longtime competitor Premier in 1944. They built GM and Fiat products respectively. Mahindra & Mahindra was established by two brothers in 1945, and began assembly of Jeep CJ-3A utility vehicles. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. In 1953 an import substitution programmer was launched, and the import of fully built-up cars began to be impeded. The Hindustan Ambassador dominated India's automotive market from the 1960s until the mid-80s
  34. 34. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. Total restrictions for import of vehicles was set and after 1970 the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury item. In the 1970s price controls were finally lifted, inserting a competitive element into the automobile market. By the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers. During the eighties, a few competitors began to arrive on the scene. The automotive industry in India is one of the larger markets in the world. It had previously been one of the fastest growing globally, but is currently experiencing flat or negative growth rates. India's passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9 million units in 2011. According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil), grew 16 to 18 per cent to sell around three million units in the course of 201112. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. 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. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing automobile market in the world in that year. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster consisting ofChennai is the biggest with 35% of the revenue share. The western hub near Mumbai and Pune contributes to 33%
  35. 35. of the market and the northern cluster around the National Capital Region contributes 32%. Chennai, with the India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, and PSA Peugeot Citroën is about to begin their operations by 2014. Chennai accounts for 60% exports. Gurgaon and Manesar in Haryana form of the the country's northern cluster automotive where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is the western Motors, Volkswagen, Skoda, Mahindra cluster and with companies Mahindra, Tata like General Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra & Mahindra with a UV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat with manufacturing facility of General Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan Motors,Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country. In 2011, there were 3,695 factories producing automotive parts in all of India. The average firm made US$6 million in annual revenue with profits close to US$400 thousand. 3.2 Key Statistics The Indian automobile industry produced a total 1.69 million vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in August 2013 as against 1.56 million in August 2012, registering a growth of 8.18 percent over the same month last year.
  36. 36. The cumulative foreign direct investment (FDI) inflow into the Indian automobile industry during April 2000 to July 2013 was recorded at US$ 8,932 million, amounting to 4.5 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce. The overall automobile exports grew by 2.03 per cent during April-August 2013. Furthermore, the production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by Automotive Component Manufacturers' Association of India (ACMA). 3.3 Major Developments & Investments • Hero MotoCorp plans to establish 20 manufacturing and assembly facilities to expand its presence across 50 countries by 2020 • Nissan Motor India, the Indian unit of Japanese auto maker Nissan Motor Co Ltd, has entered into an agreement with Ennore Port Ltd (EPL), to export at least 60,000 cars a year through the port for the next 10 years • TVS Motor Co plans to launch two new motorcycle models in the Kenyan market. These motorcycles will be specific to the Kenyan markets in terms of usability, reliability and durability. Moreover, the firm also plans to set up a two-wheeler assembly line in Uganda and will also launch two motorcycle models in the African nation • HMIL has invested US$ 2 billion in two state-of-the-art passenger car manufacturing facilities in India. Moreso, India contributes 25 per cent of the firm’s global sales • Mahindra & Mahindra (M&M) plans capital expenditure and investments worth Rs 10,000 crore (US$ 1.63 billion) over the next two years • Maruti Suzuki India Ltd (MSIL) is setting up an operational integrated research & development (R&D) centre in Rohtak, Haryana. The test tracks at the new facility
  37. 37. would be longer and considerably enhanced in technical capabilities than the ones at the Suzuki Motor Corp (SMC) facility in Japan • Tech Mahindra has signed an agreement with Volvo Car Corporation. The IT company will provide Volvo with a service to maintain and develop a range of applications that can increase efficiency and reduce costs • Isuzu Motors India plans to start contract manufacturing of its sports utility vehicles (SUV) and pick-up trucks at Hindustan Motors' (HM) Chennai plant from December 2013 • Daimler India Commercial Vehicles (DICV) has expanded its network across the country. The company plans to establish dealership facilities in over 100 identified locations across India by 2014 Government Initiatives The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr Veerappa Moily, Union Minister for Petroleum and Natural Gas, Government of India. The Union Budget 2013-14 added some incentives to the industry. The analysis by Deloitte on the Union Budget highlighted the following points: • The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended upto March 31, 2015 • The basic customs duty (BCD) on imported luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels was increased. The duty was raised from 75 per cent to 100 per cent on cars/ motor vehicles (irrespective of engine capacity) with CIF value more than US$ 40,000; from 60 per cent to 75 per cent on motorcycles with engine capacity of 800 cc or more and on yachts and similar vessels from 10 per cent to 25 per cent • In addition, an increase in excise duty from 27 to 30 per cent has been allowed for SUVs with engine capacity exceeding 1,500 cc, while excise duty was
  38. 38. decreased from 80 to 72 per cent, in case of SUVs registered solely to be used for taxi purposes • An exemption from BCD on lithium ion automotive battery for manufacture of lithium ion battery packs for supply to manufacturers of hybrid and electric vehicles • The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14 per cent to 13 per cent The Government of India allows 100 per cent FDI in the automotive industry through automatic route. The Government also plans to accelerate the supply of electric vehicles over the next eight years. It is expected that there will be a demand for 5-7 million electricity-operated vehicles by 2020. With special focus on exports of small cars, MUVs, two & three wheelers and auto components; the automotive sector’s contribution to the gross domestic product (GDP) is expected to double reaching a turnover worth US$ 145 billion in 2016, according to the Automotive Mission Plan (AMP) 2006-2016.
  39. 39. Information about some indian Automobile company 1 | Tata MotorsCorporate office – Automobile – Commercial Vehicle and car | Establishment – 1945 | Business – Mumbai, Maharashtra | Website – www.tatamotors.com | Tata Motors is a leader in automobile Industry for last couple of years in the country, it is a flagship company of prestigious Tata group. It is the largest manufacturer of Truck, buses and commercial vehicle. Tata is also major player in car manufacturing in India. Its major selling car models are; Indica, Indigo, Safari and Nano. 2 | Maruti Suzuki Corporate office – New Delhi | Establishment – 1981 | Business – Automobile – Car | Website – www.marutisuzuki.com | Maruti Suzuki is India’s no. 1 car manufacturer which is dominating ever since it was established in year 1981. It is a joint venture between Maruti India and Suzuki Japan. It offers multi segment cars like Alto, Ertiga, Switft, desire etc. 3 | Hyundai Corporate office – Seoul, South Korea | Establishment – 1967 | Business – Automobile – Car | Website – www.hyundai.com | Hyundai is a South Korean multinational automobile company and second best car manufacturer in India. Company’s top car selling model includes i10, i20 and verna. 4 | Ashok Leyland Corporate office – Chennai, Tamil Nadu | Establishment – 1948 | Business – Automobile – Commercial Vehicle | Website – www.ashokleyland.com | Ashok Leyland has been a leading automotive company in commercial vehicle category headquartered in Chennai. The company deals in trucks, buses and other MUV which are supplied to many government organizations like defence, state transports and Industries.
  40. 40. 5 | Mahindra & Mahindra Corporate office – Mumbai, Maharashtra | Establishment – 1945 | Business – Automotive – Tractor, LUV and Car | Website – www.mahindra.com | Mahindra & Mahindra is one of the top automobile company in India formed many years back in 1945. They are market leader in tractor manufacturing in India and manufactures many known car brands like Scorpio, XUV 500 and Quanto. 6 | Hero Moto Corp Corporate office – New Delhi | Establishment – 1984 | Business – Automotive – Two wheeler | Website – www.heromotocorp.com | Hero Moto corp formerly known as Hero Honda is world’s no. 1 motorcycle maker. It is a well established name in automobile companies in India which was established in year 1984. They have total 3 plant facilities to manufacturer two wheelers. 7 | Eicher Motors Corporate office – Gurgaon, India | Establishment – 1948 | Business – Automotive – Commercial Vehicle | Website – www.eicher.in | Eicher Motors formerly known as Eicher tractor, is in manufacturing of commercial category vehicle and leading business house in automobile industry. The company was formed long back in year 1948 and currently they are headquartered in Gurgaon, Haryana. 8 | Force Corporate office – Pune, Maharashtra | Establishment – 1958 | Business – Automobile – Car and Commercial Vehicle| Website – www.forcemotors.com | Force motors is a leading automobile company in India, established in year 1958
  41. 41. formerly known as Bajaj Tempo. It manufactures three wheeler tempo, commercial vehicle and cars. 9 | General Motors Corporate office – Michigan, United States | Establishment – 1908 | Business – Automobile – Car | Website – www.gm.com | General Motors is a leading name in Automobile companies in India. It started business in India in the year 1995 when they set up a manufacturing unit in Halol. The company has 2 manufacturing facilities in Halol and Talegaon in Maharashtra. 10 | Ford Motor Corporate office – Michigan, U.S. | Establishment – 1903 | Business – Automobile – Car | Website – www.india.ford.com | Ford India is a subsidiary of Ford Motor headquartered in Michigan, United States. The company has setup a manufacturing plant in Chennai which produces wide range of cars including Figo, Endeavour and newly launched EcoSport.
  42. 42. Chapter - 4 STEEPLED analysis
  43. 43. 4.1 STEEPLED of Uganda 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. • With various type of automobile industry coming to the Uganda, choice and prefrences of the people changed for the automobile they purchased. • Life style of the people get changed as with the new industry coming to the country there is increase in employment of the country. • Automobile industry in Uganda will change the prfrences of consumer towards the car status. Lifestyle and the living standard of the people go higher. • As Uganda is famous for its cheap labour cost, more and more compnies are coming there and so the social culture is also improved in country as with different compnies from different country will also bring their own culture into the country. Technological: Technology relating to automobile designs Technology of automobile manufacture Technological developments that may increase or decrease use of automobiles. For example, Internet increase number of people working from home and thus reduce automobile use for commuting? With the entry of new companies into the country there is also change into the technology industry used. New industry come up with new technology for their company to lead in market.
  44. 44. With change in technology people of the Uganda will affected with both advantage and disadvantage.  Advantage:  Better product with low cost as new technology introduce into market.  Technology brings new innovation and leads to higher education level as they are about to learn new things from the new technology.  Technology brings advancement into society and ultimately it leads to new horizon into society.  Technological impact also leads nation at worldwide with new scope into the industry and it will attract other companies of same industry from all over world.  Technological changes bring efficiency in industry which leads to improvement in product produce by industry.  Disadvantage:  Technological changes bring revolution in industry which leads to more machine and less man.  Technological changes than lead to unemployment as machine will do work of many people and ultimately It will lead to unemployment into the industry of person.  Technological advancement will bring revolution in industry and at other side it will affect the employment of country. Economical: • Economic impact of automobile industry is like injection to the economy. • With entry of various companies in automobile sector, economy of the country get high.
  45. 45. • Economically country will get boost as foreign exchange come in to the country which leads to strengthening economy of the country. • Automobile industry has boost up sale by 8% per annum in Uganda. • Economically it will support the economy of the Uganda as Uganda has very limited resource to develop its economy. Political: • Once a time when dictator called idi amin ruled Uganda at that time he forced all outsider companies to leave Uganda. • It had been washed out all the opportunities in Uganda. • Local population were unable to get work which has resulted into the poverty in society. • It shows that how political leadership change the country. • In Uganda now there is stable condition for automobile industry as current government support the forigne companies in Uganda. • Also politicle support has been increased as supportive government will have support of business as they want stable political condition for their business. Legal: • Ignation test of the car to prevent from fire. • Battery with safety of physical damage. • Stating fact in advertise. • Meeting up with safety standard.
  46. 46. • Make car insured from factory. Ethicle: • Provide car with low pollutant. • Make customer satisfied with what value customer has paid. • Fulfill corporate social responsibility. • Customer query handling in satisfied manner.
  47. 47. 4.2 STEEPLED of India Social • Since changed lifestyle of people, leads to increased purchase of automobiles, so automobile sector have a large customer base to serve. • The average family size is 4, which makes it favorable to buy a four wheeler. • Growth in urbanization, 4th largest economy by ppp index. • Upward migration of household income levels. • 85% of cars are financed in India. • Car priced below USD 12000 accounts for nearly 80% of the market. • Vehicles priced between USD 7000-12000 form the largest segment in the passenger car market. • Indian customers are highly discerning, educated and well informed. They are price sensitive and put a lot of emphasis on value for money. • Preference for small and compact cars. They are socially acceptable even amongst the well off. • Preference for fuel efficient cars with low running costs. Technological • More and more emphasis is being laid on R & D activities carried out by companies in India.
  48. 48. • Weighted tax deduction of up to 150% for in-house research and R & D activities. • The Government of India is promoting National Automotive Testing and R&D Infrastructure Project (NATRIP) to support the growth of the auto industry in India • Technological solutions helps in integrating the supply chain, hence reduce losses and increase profitability. • Customized solutions (designer cars, etc) can be provided with the proliferation of technology • Internet makes it easy to collect and analyse customer feedback • With the entry of global companies into the Indian market, advanced technologies, both in product and production process have developed. • With the development or evolution of alternate fuels, hybrid cars have made entry into the market. • Few global companies have setup R &D centers in India. • Major global players like audi, BMW, Hyundai etc have setup their manufacturing units in India. Economic • • The level of inflation Employment level per capita is right. Economic pressures on the industry are causing automobile companies to reorganize the traditional sales process. • Weighted tax deduction of up to 150% for in-house research and R & D activities.
  49. 49. • Govt. has granted concessions, such as reduced interest rates for export financing. • The Indian economy has grown at 8.5% per annum. • The manufacturing sector has grown at 8-10 % per annum in the last few years. • More than 90% of the CV purchase is on credit. • Finance availability to CV buyers has grown in scope during the last few years. • The increased enforcement of overloading restrictions has also contributed to an increase in the no. of CVs plying on Indian roads. • Several Indian firms have partnered with global players. While some have formed joint ventures with equity participation, other also has entered into technology tieups. • Establishment of India as a manufacturing hub, for mini, compact cars, OEMs and for auto components. Environmental • Physical infrastructure such as roads and bridges affect the use of automobiles. If there is good availability of roads or the roads are smooth then it will affect the use of automobiles. • Physical conditions like environmental situation affect the use of automobiles. If the environment is pleasant then it will lead to more use of vehicles. • Technological solutions helps in integrating the supply chain, hence reduce losses and increase profitability. • With the entry of global companies into the Indian market, advanced technologies, both in product and production process have developed.
  50. 50. • With the development or evolution of alternate fuels, hybrid cars have made entry into the market. • Few global companies have setup R &D centers in India. • Major global players like audi, BMW, Hyundai etc have setup their manufacturing units in India. Political • In 2002, the Indian government formulated an auto policy that aimed at promoting integrated, phased, enduring and self-sustained growth of the Indian automotive industry • Allows automatic approval for foreign equity investment up to 100% in the automotive sector and does not lay down any minimum investment criteria. • Formulation of an appropriate auto fuel policy to ensure availability of adequate amount of appropriate fuel to meet emission norms • Confirms the government’s intention on harmonizing the regulatory standards with the rest of the world • Indian government auto policy aimed at promoting an integrated, phased and conductive growth of the Indian automobile industry. • Allowing automatic approval for foreign equity investment up to 100% with no minimum investment criteria. • Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and two wheelers. • Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. • Assist development of vehicle propelled by alternate energy source.
  51. 51. • Lying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150% for in house research and R&D activities. • Plan to have a terminal life policy for CVs along with incentives for replacement for such vehicles. • Promoting multi-model transportation and the implementation of mass rapid transport system. Legal • Legal provision relating to environmental population by automobiles. • Legal provisions relating to safety measures. • Confirms the government’s intention on harmonizing the regulatory standards with the rest of the world • Indian government auto policy aimed at promoting an integrated, phased and conductive growth of the Indian automobile industry. • Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and two wheelers. • Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. Ethical: • Provide car with low pollutant. • Make customer satisfied with what value customer has paid.
  52. 52. • Fulfill corporate social responsibility. • Customer query handling in satisfied manner.
  53. 53. Chapter – 5 Business Opportunity
  54. 54. 5. 1 Opportunity of Uganda East Africa's automotive industry is getting busier as new vehicle brands enter the regional market in anticipation for the economic boom resulting from economic integration. Data by consulting company Pricewaterhouse Coopers (PwC) indicates that the automotive industry in Kenya and by extension the East Africa has for long been dominated by Toyota (East Africa) , Cooper Motors Corporation (CMC), General Motors (GM), Simba Colt and DT Dobie. But other vehicle brands are digging in, either establishing assembly plants here or expanding their sales network across the economic community whose market is set to expand with the independence of South Sudan, East Africa Community's planned sixth member. For example, South Korean auto maker Hyundai Motors on Wednesday announced an investment in East Africa of up to 22 million U.S. dollars in the next three years through its subsidiary Hyundai E.A. Holdings Ltd (HEA) to support Hyundai auto sales in the regions and make it easier to access genuine Hyundai spare parts in the region. “Hyundai has been absent from East African roads for over a decade. But we consider the region as a significant market and will be making strategic investments to make Hyundai cars the leading models in the region,” said Sam Lee, its regional Marketing Director.
  55. 55. The company opened its show room in Nairobi in January. Last week, the company partnered with a Kenyan leasing company known as Vehicle and Equipment Leasing Limited (Vaell) as part of its strategy to increase sales in East Africa. “Our study of emerging trends in the East Africa auto market found that leasing is the fastest growing new industry. As an aggressive new-car seller, we see it as an enabler and are happy to announce partnership with local leasing company,” said Lee. China's vehicle manufacturer Foton Motor has also set eyes on the East Africa market and is now building an assembly plant in Nairobi that will supply at least 10,000 units to the region, company officials said. The new plant, which will give the company competitiveness because it means it will avoid paying 25 per cent duty if it imported fully built units, will assemble prime movers, light commercial trucks, tippers, buses, and pick-ups. The company is currently in the process of recruiting dealers across the East Africa. Availability of spare parts could be major win for the company because consumer trends here indicate that buyers go for vehicles that they know they can buy spare parts at the nearest town. Earlier, India's Tata Motors said it will establish a USD 12.8 million bus assembly plant in the coastal city of Mombasa to serve the East Africa market. The company had said it planned to assemble up to 60 buses a month although it was not clear if the assembly has started operations. Just like Foton, the intention is to avoid the 25 per cent duty for the buses to be competitively priced.
  56. 56. Toyota is also another global automaker that announced last year it plans to establish an assembly plant in Kenya to serve the East Africa market. Martin Owour of the Advisory Center for Trade and Investment Policy said the race to set up assembly plants in the country will result in lower priced vehicles because of competition and avoidind the 25 per cent duty. Price is a major issue in automotive industry in East Africa and is blamed for the consumer preference to second hand vehicles that command 70 per cent of the automotive market share in East Africa according to various studies. ”The new assemblers are looking to use Kenya as the launching pad for entry into the regional common market. The fragmented economies of the five East African countries had discouraged the auto dealers from setting up assembly plants, but the common market has made it possible for the dealers to capture a region of more than 130 million residents,” said Owour in an industry analysis report. Kenya currently has three motor assemblers, Kenya Vehicle Manufacturer, the Association of Vehicle Assemblers Limited of Mombasa and General Motors East Africa. The new assemblies will complement efforts by the East African Community (EAC) to encourage setting up of automotive assembly plants. EAC industrialization strategy for 2010-2030 has identified Numerical Machining Complex (NMC), Kenya's state-owned company that once manufactured two
  57. 57. prototype vehicles known as Nyayo Pioneer, as a possible automotive assembly hub. The company currently manufactures some vehicle spare parts. 5.2 Opportunity of India India’s automobile sector has seen a consistent growth of 15% in the past five years. Most of the top automobile manufacturers from across the world now see India as a huge market, with immense scope for sector growth. Booming automotive industry Booming automotive industry According to Praful Mehta, Minister of Heavy Industries, the automobile & auto components sector is more likely to generate an output of $ 145 billion by the end of 2016. He had proposed these figures while addressing the annual convention of ACMA. India’s automobile sector amounts for up to 10% of GDP generating employment opportunities for over one million people. The automobile market of India is the seventh largest in the world annually producing 17.5 million vehicles, out of which approximately 2.3 million automobiles are exported. Evolution of Automobile Industry Three major phases that influenced the development via certain policy changes are: First Phase (1983 to 1995) In 1983 Maruti Udyog was established. It merged with Japan’s Suzuki Motors and entered into the automobile market. In June 1993, India’s new automobile policy was announced by the Government.
  58. 58. It included: Foreign investors could hold 51% of joint ventures in Indian companies, without any need of additional license. In 1993, there was a significant cut down on excise and custom duties. At that time, Maruti Suzuki brand had established itself as the market leader, which also lured many other foreign vehicle manufacturers. Second Phase (1995 to 2002) This period witnessed the prime growth of Indian auto-industry. Some of the highlights were: Tata Nano... India's cheapest car India’s cheapest car Market was opened for worldwide investors Amplified competitions Transformation from sellers to a buyer’s market Subdivision of the market Addressing of ecological issues i.e. pollution control Technological progress Third Phase (2002 Onwards) The execution of Auto Policy 2002 caused a revolutionary and historic growth in the Indian Automobile Industry. The policy was aimed to promote incorporated, segmented, long-term, and continuous development of the auto sector. AUTO POLICY 2002 objectives are: Promote auto-sector for growth and employment opportunities
  59. 59. Establish an international hub for manufacturing affordable cars, two wheelers, and tractors Guarantee a stable progress towards open trade, with minimum risk to local market and Indian economy To make it possible for ceaseless transformation of auto-industry by enabling innovative designs, research, and development Support the development of automobiles driven by alternative energy source Improving the local safety and environmental values. FDI in the Automobile Industry There was a steady contribution of FDI in the development of the automobile sector. The financial year 2007-08 registered a rise of 45%, which bounced up to 58% in the FY 2009-10. According to DIPP (part of Ministry of Commerce & Industry in India), the Indian automobile sector has successfully accomplished 4% of the total FDI inflow. In the FY 2011-12, the automotive industry yielded $923 million. Analysis of Automobile exports An overall increase in exports was registered from the year 2001/02 – 2011/12. Noteworthy developments in export shares (by volume) in all the four categories in 2012 are: Two wheelers – 67% There wheelers – 12% Passenger vehicles – 18% Commercial vehicles – 3% From the above figures, it is quite evident that India offers huge growth potentials for foreign players who are willing to invest in the automobile market. Advantages of Investing in the Indian Automobile Sector Growing Demand:
  60. 60. Due to rise in incomes and developing middle class, the purchasing power of people has increased Young population is escalating the demand for world class cars With the improved infrastructure, commercial vehicles can access distant markets easily. Hence, their demands have increased by multiple folds. Easy availability of auto-finance makes vehicle purchases more easy Escalating Investments: Automobile firms from across the world can save 10% to 25% on operation costs in India, which gives them a competitive advantage over America, Latin, and Europe. There is abundance of educated and skilled manpower in India who speak English, and they can be employed for lower wages in comparison to the European job market. Policy Support: The aim of the Indian Government is to get recognized as a global automanufacturing hub, and many NATRIP centres have been introduced to push the cause. Funds are allotted by GOI for Research and Development (R&D) with an aim to manufacture low cost vehicles A wide range of policy support has been given to foreign investors in the form of delicensing, 40% reduction in excise duty, and decrease in import duties on CKD – 50% and CBU – 110%. Innovation Opportunities:
  61. 61. The Tata Nano & Tata Pixel has opened a new segment for innovating low cost cars. Strong export possibility in ultra-low priced car segment. CNG (compressed natural gas) market value was more than $330 million in the FY11. CNG distribution network is expected to expand from 30 cities (2009) to 250 cities in 2018. Opportunities in the Auto Components Market Automotive assembly line. India’s auto component sector is forecasted to increase from $43.4 billion (2011-12) to gross revenue of $113 billion (2020-21). According to the ACMA reports, the exports are expected to increase at a CAGR (Compound Annual Growth Rate) of 17% by 2021. As per RNCOS report, tyre production is predicted to touch 191 million units by the end of fiscal year 2016. Manufacturers will have to invest massive amounts for the next few years. Apollo tyres have plans to expand in ASEAN. Honda Cars India Ltd. proposes to export the components of diesel engine to European and Asian markets from India. Some of the key investments in auto components are: Alten has designed to set an automotive testing lab in Chennai. It will help the automobile manufacturers surrounding Chennai to commission the testing of suspension system, diesel engines, and more. Toyota – Kirloskar Auto Parts have invested Rs.500 crores in a new plant that will produce new engines for hatchback cars and sedans in India. Federal-Moghul has announced the introduction of Ferodo CV (Commercial Vehicle) brake lining to be manufactured at their new plant in Chennai. Volkswagen India Pvt Ltd. has started a unit in Pune for manufacturing package parts of Polo and Vento for exports. The investment is believed to be approximately Rs.56 crores.
  62. 62. Government Initiatives Highlights of Union Budget (2012/13) Under Income Tax Act, the R&D expenditure gets a weighted deduction of 200%, which is extended by 5 years. The weighted tax deduction of 150% for expenses on skill development has also been introduced. This will help auto industry to enhance their products and performance. The custom duty on MUVs (multi-utility vehicles) and cars over $40,000 has increased from 60% to 75%. This step will encourage local employment opportunities, manufacture, and value addition. The discounted import duty on some of the particular hybrid automobile parts has been extended, which will help the industry in attaining better cost-efficiency. Global manufacturers like Toyota, Suzuki, and Hyundai are the top MNC auto companies in the Indian auto-sector. Road Ahead Factors like supportive government policies, optimal business environment, and accessibility of inexpensive proficient workforce have transformed India into a global automobile hub. Foreign manufacturers can consider investing in either or both, automobile sector and auto components sector in India. Many top brands have already capitalized on the opportunities, and many more are planning to invest. Today, India is one of the most lucrative marketing platforms for the best vehicles that the world has to offer.
  63. 63. Chapter – 6 Present scenario
  64. 64. India: • Indian automobile sector manufacture over 11 million vehicle and export about 1.5 million each year. • Dominant product of the industry is two wheeler with market share of 75%, passenger car with market share about 16%, commercial and three wheeler is about 9%. • About 91% of the vehicle sold are used by the house hold and only 9% for commercial purpose. • Industry has a turnover of more than USD$35 billion, and provide direct and indirect employment to over 13 million people. • Supply chain is same as followed in U.S and Europe. • Level of trade export is medium and import is low, however current scenario is rapidly changing and both import and export are growing at same level. • Basis of the competition in the sector is high and industry is currently have laife cycle stage of growth. • With rapidly growing middle class, all the advantage is yet to be leveraged in India. • With high cost of production, development, limited access to the technology and increasing competition, the barrier to the Indian automobile sector is also high. • As India has well developed tax structure and power to leavy tax is with Government still moter vehicle manufacturer profitability has been increased over last 5 years. • Major players like TATA, Maruti Suzuki have material costof about 80% but recording profit after tax is about 6% to 11%.
  65. 65. • Level of technology change in motor industry is high but the rate of change is medium. • Currently India’s increasing per capita dispose income is expecting to grow to 105% by 2015 and growth in export is playing a major role in the rise and competitiveness of the industry. • TATA motor is leading in commercial vehicle with market share of 64% and Maruti Suzuki leading in passenger vehicle with market share of 46% and Hyundai motor and Mahindra is focousing to make their footprint in this segment. • Heo Honda is having 41% of two wheeler market and sharing 26% with BAJAJ auto, Bajaj auto itself is occupying about 58% market share in three wheeler market. • The price of oil and petrol affect the driving habits of customer and type of car they buy. • Having quality manpower, good infrastructure, capital efficiency is key factor to success in Indian automobile industry. • Both government and industry are obligated to intervene in Indian automative industry of India. The government should facilitate infrastructure creation, create favourable and predictable business environment attract investment and promote research and development.
  66. 66. Uganda: • Automobile industry in Uganda is small but long established market in country for motor vehicle. • Vehicle is increasing with average percentage of 8%and make it continue for very long term in sales. parts, repairs and servicing. • Alll are Asian owned with family type of organization and hold the franchise for more than 10 years. • Remaing dealership are manufactured owned, fiat selling cars and trucks while leylend sells trucks and buses. • Excepting laylend and fiat other motor dealer in Uganda are locally financed in that there is no capital investment by overseas manufacturer. Initiative an obtaining the dealership usually also came from local firm. • All 15 dealers are based in kampala, although they have exclusive right to sell in Uganda. • This amazing degree of centrality arise from severl factor that it has good road and less geographical barrier. • Potential purchaser can therefore easily avail himself of opportunity of viewing the widerange of market, models, variants in city showroom. • Uganda has not yet started any component production in country as whole import is done from jinja and kampala, hub of automobile. • Current market for both cars and commercial vehicle is very small and significant growth in near future is also limited. • Currently growing segment in industry is heavy trucks and and other machinery vehicle as it has more operating work.
  67. 67. • Government is currently making direct intervention in industry and possible other government step to reduce volatility in market and also stared giving benefit to the new enternts and players into the industry. • So if company started new palnt in Uganda than it is the situation and scenario that company should make it in jinja and tororo. • For the present however motor industry of Uganda firmly rooted in kampala for location factor which gives emphasis to the disproportion importance of the city as afocous for commercial and industrial growth in developing countries.
  68. 68. Chapter – 7 Conclusion
  69. 69. • Currently India is the hub of the automobile industry, as country consist of many automobile companies in industry with sustainable market share for the segment in which they are dealing. • Uganda is currently growing market for the automobile industry as Hyundai and BMW are coming up with their own huge investment in Uganda. • East Africa's automotive industry is getting busier as new vehicle brands enter the regional market in anticipation for the economic boom resulting from r integration. • Automotive industry in Uganda is highly dominated by Toyota, cooper motor, general motor so Indian companies have long way to struggle in Uganda to establish their own market in both sales and spare parts of the car. • From India TATA is the only company which has its own market in Uganda, TATA is using Uganda market for its cheap labor cost and lower duty on export and taxation benefit provided by Government of Uganda. • As Uganda is about to have growth in commercial vehicle and heavy trucks, TATA has opportunity to grow in Uganda as TATA is leading company in India for the heavy vehicle and trucks. • Uganda has grown significantly after the end of dictatorship of Idi Amin who made restriction on entry of the foreign company and also has threatened of lves of the official of the company working there in that era so it will lead to have more winding of company. • In current situation new government has formed very liberal rule for the development of the country and as India companies are performing extremely well in domestic market and having cost leadership strategy, so it will lead to gain benefit in Uganda. • As Ugandan market is in competitive stage currently, so there is huge opportunity to Gain advantage of market in Uganda as every company has equal chance to gain market share.
  70. 70. • So, from above all it has been concluded that though Uganda has geographical barrier and little instability in government it is having huge potential to grow as people is having hardworking approach towards work. Chapter – 8 Recommendation
  71. 71. On the basis of above information following recommendation are require: • If any of Indian company wants to start business in Uganda in automobile sector than at first it requires to check political stability as East African countries are highly political instable. • As east African countries are facing problem of poverty which leads to robbery of goods, killing of officials for local unemployment, so company establishing unit in Uganda and other east African countries must have to take safety action for the official and other staff who is working over there. • Indian company is required to make or grab opportunity in heavy vehicle segment in Uganda as country is having maximum demand of heavy segment vehicle and trucks. • Indian company will face very tough competition from Hyundai, Sonata, BMW and many other companies which are in market of Uganda from long period of time, so Indian companies are required to make analysis of market and based on that they are supposed to enter into market of automobile industry. • As geographical condition of the Uganda is very difficult company is required to establish proper chain of supply for the spare parts of the motor car and other required things for the industry. • Company should make spare parts in Uganda and make it assemble in India as export duty is very less and labor are cheap in Uganda. • Living standard of people of Uganda and whole east Africa is low so it is benefited for the Indian companies to start business over there for heavy vehicles, trucks and commercial vehicle.
  72. 72. Chapter – 9 Bibliography
  73. 73. Chapter – 10 Annexure

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