industrial analysis of automobile sector

Presented by Chaithra C N

Aruna K N

A number of environmental factors influence the organization.

For the firm to make profit it must create value for customers or buyers, while creating value for its buyers the firm must closely look at the rivals who are there in the arena competing for the same ‘space’.

The Indian automobile industry has emerged as a sunrise sector in the Indian economy.

India is emerging as one of the world`s fastest growing passenger car markets and second largest two wheeler manufacturer.

India is the largest base to export compact cars to Europe.

While the industry is highly capital intensive in nature in case of four-wheelers, capital intensity is a lot less for two-wheelers.

Though three-wheelers and tractors have low barriers to entry in terms of technology, four wheelers is technology intensive. .

As compared to their global counterparts, both the two-wheeler as well as four wheeler segments are relatively lesser fragmented. However, things are changing, especially on the passenger cars front as many foreign majors are eyeing the Indian market.

As a result, pricing power is likely to diminish going forward.

The automobile industry, one of the core sectors has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization.

Example of Indian automobile industries in India- ford motors, Audi, Maruthi Suzuki, Mahindra and Mahindra, fiat etc.

Strengths1. Increase in the

export levels.2. Low cost and cheap

labor.3. Investments by

foreign car manufacturers.

4. Large pool of engineers.

Weaknesses:1. Low labour

productivity.2. High interest rate

and overhead level. 3. Low investment in

R&D area.4. Low quality

compared to other automotive countries.

Opportunities:1. Growing population in

the country.2. Rising living standars. 3. Incrase in income

levels.4. Better car technology

is demanded. 5. Rising rural demand.6. Women drivers have

increased.

Threats:1. Less skilled labour.2. Lack of technologies for Indian

companies. 3. Increase in import tariff and

technological cost,4. Increased congestion in the urban

areas.