analysis of automobile sector in india

7/31/2019 analysis of automobile sector in india

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Group: 1

Rajesh Kumar Meena F-126 (slides 21-26)Tapan Waval F-141 (slides 9-11, 33,34)Gayathri Jayakumar F 101 (slides 7,8)Rushil Agrawal F-202 (slides 27-32)Amar Kumar Bighane F 83 (slides 2-6)Srinath S F-63 (slides 12-18)B. Queenie F-89 (slides 19,20

& compiling/editing)


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Sector overview

3.7 million automotive

vehicles were produced inIndia in 2010.

Annual vehicle sales areprojected to increase to 5

million by 2015.

Over 11 million vehicles aremanufactures of which 1.5million are exported each

year.


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Sector overviewMajor automotive firms with their headquarters


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Protectionism era Early 1980s

Slow growth due to nationalisation and the license raj Production process stagnated, cars were a major luxuryA number of foreign firms initiated joint ventures with Indian companies

Liberalization era 1990s

Increase in competitiveness and relaxedrestrictions

Entry of foreign banks with attractive autofinance schemes helped garner a hugebase of middle class population

However the market was still ruled by the

sellers

Globalization era 2000s

Increase in exports, R&Dactivities

Outsourcing of autocomponents started

Buyers started ruling the

market

Evolution

From Statics to dynamics

Source: http://india-reports.com


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Statistics

Two wheeler sector hasthe biggest share

Turnover is more thanUSD $35 billion

Provides employment toover 13 million people

Source: SIAM, Exim Bank


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Source: SIAM, Exim Bank


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Growth Drivers

0

510

15

2007

2008

2009

2010

2011

GDP Growth Rate

GDPGrowthRate

GrowthDrivers

Higher GDPGrowth

Rising FamilyIncome

Low CarPenetration

FavorableGovernment

Policies

Export Hubof The World

ImprovedInfrastructure

Source : World Bank Site


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Critical Success Factors

Source : SIAM

CriticalSuccessFactors

Fuel andCapital

Efficiency

Brand

Image

GoodAfterSales

Service

Value forMoney

Vehicles

ExportMarkets

EfficientTechnolo

gy andTechniqu

es

OptimumPlant

Utilization


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Risk factors and challenges

Deregulation of fuel prices affects Automobile sales. Petrol

prices reached as high as Rs. 75 recently

Government decisions and policy on NMZ slow moving

Safety requirements & voluntary environmental commitments

Innovation in development and manufacturing needed

Interest rates ranging from 11.25% to 17%

Metro effect = less sale and less use

Input costs like steel and availability of raw material affecting

production and driving up costs


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Ministry of Shipping,Road Transport &

Highways

Standing Committeeon Implementationof EmissionLegislation

CMVR- TechnicalStanding Committee

AutomobileIndustry Standards

Committee

REGULATORY FRAMEWORK

OTHER MINISTRIES Ministries like Ministry of

Environment & Forest Ministry of Petroleum &

Natural Gas Ministry of Non-

conventional EnergySources

CMVR - Central Motor Vehicles rules 1989

Bureau ofIndian

Standards

SafetyEmissions


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Automobiles

Passenger Vehicles

2-wheelers

Mopeds

Scooters

Motor-cycles

Electricbikes

Auto-ricksha

wsFour-wheelers

Hatch

Micro MiniCompa

ct

Sedans

Midsize

Executive

Premium

Luxury SUVs

Commercial Vehicles

LCVs MCVs HCVs

Market Segments


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76.23%

3.58%

15.86%

4.32%

Sales

Two-Wheelers

Three Wheelers

4-wheeler Passenger

Vehicles4-wheeler CommercialVehicles

Segment-wise Market Share

Source: SIAM


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Analysis

Two-wheelers

Highest Market share Heavy domestic demand Large number of players 14% yearly growth Strong replacement demand

Three-wheelers

Employment generators Heavy usage in passenger

segment Mileage of 34-36 kmpl

Decreased usage in cargosegment

Passenger Vehicles Emergence of affordable cars

like the Nano Worlds 7th largest market Greater demand due to rising

income levels Relatively lower car penetration Heavy investment from foreign

players

Commercial Vehicles Recovering market, growth>30% M&HCV segment, especially

tractors, in greater demand Increase in ownership cost Number of JVs like Eicher-Volvo

and Mahindra-Navistar Industrial upturn and improved

financing environment


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Top Players and market shares

59%24.00%

6.00%

7.00% 4.00% Hero Moto

CorpBajaj Auto

HondaMotorcyclesTVS Motors

Others

2 Wheelers

*as of Nov.2011

41%

40.00%

10.00%

3.31% 5.69%

Piaggio

Bajaj Auto

Mahindra

Scooters India

Others

3 Wheelers

Source: SIAM


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Players

45%

16.00%

15.00%

7.00%17.00%

Maruti

Hyundai

Tata Motors

Mahindra

Others

Passenger

59%

30.00%

4.00%4.00% 3.00%

Tata Motors

Mahindra

Force Motors

Piaggio

Others

LCVs

Source: SIAM

63%

23.00%

7.00%7.00%

Tata Motors

Mahindra

Force Motors

Others

HCVs and MCVs

*as of Nov.2011


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Analysis of Top Players

Maruti Suzuki 55% market share in the Indian car Market

Diverse product portfolio across segments

True Value replacement and servicing; Insurance

Aggressive Pricing strategies Lowest cost of ownership

Technological Advantages

Established distribution networks

Tata Motors Continuous innovation; product diversity Acquisition of Jaguar Landrover

Strong presence across segments

Unique understanding of customer needs

Exceptional skill base; R & D

People strength; over 22000 employees


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Analysis of Top Players

Hero MotoCorp Excellent technological expertise, courtesy Honda

Presence across geographical barriers-from cities to villages

Excellent after-sales service across the country

High volumes, pervasive sales and distribution network Strong brand, built steadily over 25 years

Bajaj Auto Heavy R & D investment; Pioneer in DTS engines

Excellent product development capability

Strong presence across segments

Strong branding and mind share through advertisements; Hamara Bajaj,Definitely Male and Hoodibaabaa

Shift from scooter to motorcycle segment


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Sector Analysis

Potential Entrants

Average

(Foreign makers finding it lucrativeto manufacture)

Buyers

High

(highly competitive, lots of optionsto choose)

SuppliersLow

(Location factor - suppliers close tofactories are preferred, too many

suppliers)

SubstitutesAverage

(public transportation like metrohas potential to trouble the

automakers

Desire to own a car is high)

Industrycompetitors

High(Most competitive auto

market in the world,presence of most majorplayers in each category

with competitive pricingschemes)


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Future TrendsFuture trends

Passenger carproduction: over3mn in 2014-15

Turnover of theIndian autocomponent

industry to surpassUS$ 50 Billion in2014-15

2W sales growth tobe slower (10%CAGR) over FY12-16E

Decline in growthto 10% in FY13E

M&HCV Volumegrowth willremain muted

CV sales growth toslow to 10%

Compulsory emission norms for companies to invest in fuel-efficient technologies by 2015

An umbrella organization National Automotive Board (NAB)being constituted by Govt. of India

India would become the third largest auto industry by

volumes by 2015 (source Rothschild)


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HARMFULTo achieving the

objectives

HELPFULTo achieving the

objectives

INTERNAL

FACTORS

EXTERNAL

FACT

ORS

MSIL has the largest share inpassenger car segmentMSIL has the largest network ofdealers and after sales service centresin IndiaMSIL is the first automobile company

to start a second hand vehicle salesthrough its True-value entityBrand strength and loyal customerbase

Low interior quality as compared toother playersThe management and the companyslabour unions are not in good termsMSIL has not been able to penetrate

SUV and Luxury segment

Economic slowdown Rising fuel cost Depreciating value of

rupeeRising input costHyundais Eon and Tata MotorsNano are making a dent on Alto sshare

With the launch of Ertiga MSIL

can stake claim in the MUV segmentExport Hatchbacks to Europeanmarkets

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

MARUTI


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Maruti offers a low cost hatchback topremium sedanIt offers its products in Petrol, Diesel,

CNG and recently in LPG variant as wellMaruti 800Alto K10Wagon RSwift and Swift DzireSX4Ertiga

Kizashi

Pricing is one the major forte of MarutiPrice is lower than its competitorsRs3,20,000-Rs16,00,000

As of now it is mainly inM Metropolitan, urban and

semi urban areasMSIL has the largest network of dealers

and after sales service centres in India.

Over 1000 sales outlet as of March 2012Over 3000 sales outlet as of March 2012

Maruti has a huge customer baseFor Promotion they usually followTVC Recently they showcased their productsin Delhi Auto Expo

Their tagline is Kitna deti hai whichconnects really well with Indian mentalityMaruti also offers heavy discounts infestive season and also at the end of year

PRODUCTS PRICE

PROMOTION PLACE

MARUTI


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objectives


objectives

INTERNAL

FACTORS

EXTERNAL

FACT

ORS

HERO has the largest market sharein two wheeler market with 57 %Hero has a distribution network of700 dealersand 3,700 service centresStrong brand nameEasy availability of spare parts

After the partition from HONDA,HERO does not have fullydeveloped R&DHERO is not a prominent player inscooters segment

Economic slowdownRising fuel costDepreciating value of

rupeeRising input cost

Rural market, being under-penetrated at 22%, providesample opportunities for

two-wheeler manufacturersFocus on targeting students andwomen for light ungeared scooters



HERO


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HERO offers both motorcycle and

scootersPassion, Splendor, CD Dawn, CD Deluxe,Glamour, Achiever, CBZ, Karizma, Hunk,Impulse ,Ignitor(new launch)Ungeared scooter Pleasure and 110ccscooter Maestro (new launch)Diversified products

Pricing is one the major forte of HERO

There is almost no price differencebetween hero and its competitorsRs40,000-Rs1,00,000

HERO caters to all areasHero has a distribution

network of 700 dealers

HERO is the sponsor of MumbaiIndiansHERO use various mediumsSuch as TV, Radio and printHERO launched it IMPULSE at DelhiAuto Expo

PRODUCTS PRICE

PROMOTION PLACE

HERO


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objectives


objectives

INTERNAL

FACTORS

EXTERNAL

FACT

ORS

Strong distribution networkEngineering Know howBrand strengthDiversified products

Expenses incurred on postretirement plans

Economic slowdownDepreciating value ofrupee

Tough competition

Rural market, being under-penetrated at 22%, providesample opportunities for

two-wheeler manufacturersFocus on targeting students andwomen for light ungeared scooters



HONDA


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HMSI has covered all the

segment of motorcycle andscooter in IndiaAviator, Activa, Dio, EternoUnicornShineTwisterStunnerDream Yuga

HMSIs Pricing as compared to

other brands is on lower sideCurrently for low cc engineRs40,000-Rs1,20,000

As of now it is mainly inMetropolitan, and urbanareas

HMSI has a distribution networkof 800 dealers

For Promotion they namedAkshay Kumar as their BrandAmbassador

PRODUCTS PRICE

PROMOTION PLACE

HONDA


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$2.3 billion acquisition of the Jaguar and Land Rover brands from Ford Motor Co.

All-cash deal; biggest automobile buy out by an Indian company; completed in June

2008

Included manufacturing plants, two advanced design centers in the UK; worldwide

network of sales companies


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TATA raised $3bn from bridge loans; Banks included JP Morgan, Citigroup, State

Bank of India

Positives for TATA instant recognition across the globe, access to advance design

studios & Technology

Points of Concern Difficult market conditions for JLR, another $1bn investment

required, inexperience in luxury automobiles, R&D abilities


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M&M acquired 80% stakes KMCL for Rs. 110 Crores

Mahindra Kinetic Scooters & Motorcycles Ltd.

Not a sell off; a Joint Venture


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Mahindras entry into two wheeler segment

Struggling KMCL emerge as a debt-free company

Kinetic s Taiwan partner SYM - technical partners to the new alliance


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522.5 billion won (approx $470 million) deal

February 9-10 2011; M&M allotted 70% of the Korean company's total shareholding

Both firms will work together, will share technology and will develop sales and

services outlet


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2007: Bajaj picked up a 14.9% stake in Austria based KTM power sports AG for around

Rs300Cr

Gradually increasing, recent additional 6.3% stake in KTM, taking its stake to around

47%

Instant Foothold in Europe; jointly working on a series of platforms and engines-cost

and quality benefits


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Wayforward

IncreasedModel Variety

Growth InLow PriceMarkets

Environment& Safety

Cost reductionVirtualised

Testing

CollaborationEngineering

Quality &Reliability

Awareness

ReducedModel Cycles

ROAD AHEAD YES WE HAVE TO

BUILD IT OURSELVES

SIAMs Timeframe for Fuels


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ALL STAKEHOLDERS IN LINE = BRIGHTER

FUTURE FOR THE AUTOMOBILE SECTOR

analysis of automobile sector in india

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