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INTRODUCTION

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As of 2009, India is home to 40 million passenger

vehicles and more than 1.5 million cars were sold in

India in 2009 (an increase of 26%), making the country

the second fastest growing automobile market in the

world. By 2050, the country is expected to top the

world in car volumes with approximately 611 million

vehicles . A major chunk of India's car manufacturing

industry is based in and around the city of Chennai(also

known as "Detroit of India"), with the Indian city

accounting for 60 per cent of the country's automotive

exports. Chakan corridor near , Pune is another

prominent vehicular production hub with General

Motors, Volkswagon / Skoda, Mahindra & Mahindra in

the process of setting up or already set up facilities

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The evolution of the automotive industry has been influenced by various

innovations in fuels, vehiclecomponents, societal infrastructure, and manufacturing practices, as well as

changes in markets, suppliers

and business structures. Some historians cite examples as early as the year

1600 of sail-mounted

carriages as the first vehicles to be propelled by something other thananimals or humans. However, it is

believed by most historians that the key starting point for the automobile

was the development of the

Engine.

FORDs model T was develop

during 1906

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The first car ran on India's roads in 1897. Till the 1930s, cars were

imported directly. Embryonic automotive industry emerged in

India in the 1940s. 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. However, the growth was

relatively slow in the 1950s and 1960s due to nationalisation and

the license raj which hampered the Indian private sector. 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. Japanese manufacturers entered

the Indian market ultimately leading to the establishment of

Maruti Udyog . A number of foreign firms initiated joint ventures

with Indian companies.

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Michael Porter identified five forces that influence an industry .

These forces are:

(1) degree of rivalry

(2) threat of substitutes

(3) barriers to entry

(4) buyer power; and

(5) supplier power.

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The degree of rivalry in the automotive industry is further heightened by

high fixed costs associated with manufacturing cars and trucks and the low

switching costs for consumers when buying different makes and models.

The great diversity of rivals in terms of cultures and associated philosophies

has intensified rivalry in the industry.

Example :

The automotive industry in the U.S. is no longer the playground of the Big 3

(GM, Ford, and Daimler Chrysler); global companies compete in the U.S.

market, while U.S. companies have globalized themselves.

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The threat of substitutes to the car industry is fairly mild.

Numerous other forms of transportation are available, but none offer the

utility, convenience, independence, and value afforded by automobiles.

However, the marketing arms of the global automotive manufacturers are

certainly working very hard to change this paradigm, and with

unprecedented production volumes worldwide, all signs indicate that they

are succeeding.

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The barriers to enter the automotive industry are substantial.

An automotive manufacturing facility is quite specialized and in the event of

failure could not be easily retooled.

Although the barriers to new companies are substantial, established

companies are entering new markets through strategic partnerships or

through buying out or merging with other companies.

All of the large automotive companies have globalized and entered foreign

markets with varying degrees of success.

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The automotive industry is comprised of powerful buyers who are

generally able to dictate their terms to their suppliers.

Consumers wield the greatest power in this relationship due to the fairly

standardized nature of the automotive commodity (a vehicle) and the low

switching costs associated with selecting from among competing brands.

However, the automotive industry remains marginally powerful due to thelarge customer to producer ratio.

The automotive industry is a dynamic place. With the

forces above at play, and with history as a guide, it is safe tosay that the automotive industry will continue to change,

evolve, and adapt.

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Pre 1983 1983-1993 1993-2007

Era of

globalization and

evolution of India

as a global

manufacturing hub

Closed market

Growth of market

limited by supply

Outdated models

Players

Hindustan Motors

Premier

Telco

Ashok Leyland

Mahindra &Mahindra

Suzuki, Japan & GOI-

joint venture to form

Maruti Udyog

Joint ventures with

companies in

commercial vehicles

and components

Players

Maruti Udyog

Hindustan Motors Premier

Telco

Ashok Leyland

Mahindra & Mahindra

Delicensing of sector

in 1993

Global major OEMs

start assembly in India(Toyota, GM, Ford,

Honda, Hyundai)

Imports allowed from

April 2001; alignment

of duty on

components and parts

to ASEAN levels

Implementation ofVAT

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The r et f r small arsnowoccupies subst nti l shareof % outof theannual productionof illioncars in India. aruti dyog,with its

legendary aruti - is the leader in the s all car ar et. number of

manufacturingplants arecomingup for advancements in the fieldof small

ca

rs.ample - etz rimeby yundai otor o.

Mi -siz ars arenormallycars ranging from s. - lakh andgenerallymeant tobe seaters. Themid-sizedcar sectionhas recently

movedbeyond the lakh target.

ample - Indigo X byTata otors

Luxur arsand r mium arsare uiteexpensiveand theyarepurchased for their design, innovation, and technology. Theyareusually

pricedover s. lakh andhavemany takers in India.

xample - ccordby onda.

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SPORTS UTILITYVEHICLES

Sports Utility Vehicles (SUVs) have also become very popular in India

as they are considered advantageous due to their ability to accommodatemore passengers. They are ideal for trips with the whole family. The

Sport Utility Vehicle market in India is the most booming market in India

presently and SUVs have become the fastest selling cars of India.

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b) BASED ON THE LENGTH OF

THE CAR

A segment- Cars that are less than 3.5

meters long (800, omni)

B segment- Cars between 3.5 meters to 4

meters long( Zen, S 4, Santro)

C Segment- Cars between 4 meters to

4.5 meters long (Verna, Honda city, fordfiesta)

D segment- Cars that are more than 4.5

meters long( Mercedez, Sonata,Accord

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c) BASED ON THE USER

Individual Buyers

Taxi operators

Government /non-government

institutions

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The latest technical advancements in the car market in India include the

following features

Power Steering

Radial Tires

Anti-lock Breaking Systems

Tip-tronic Transmission

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In Nasik , a car manufacture plant has been established as a

result of a joint venture of Renault and Mahindra & Mahindra to

manufacture a comparatively cheap cars (at US$ 9,700), mainly

targeting the Indian middle classes, the youth, and the affluent

classes in rural India. Tata Motors has plans to launch a luxury

car with an engine of 33 horsepower. The recent reduction in

the excise duty of the small cars from 24 to 16 will definitelyprove to be a boon for the India car industry.

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DaimlerChrysler (DC ) was formed in 1998 in a merger of two of the

automotive industrys oldest and most prestigious manufacturers: Daimler-

Benz AG and the Chrysler Corporation. This so-called merger of equals

was the culmination of a long complicated family history that in some sense

follows the history of the automobile itself. Because of this prestigious

history, DaimlerChrysler enjoys a strong reputationon both sides of the Atlantic.

Today, DaimlerChrysler employs a total of 384,723 people in 17 countries.

Their products are sold in over 200 countries. DaimlerChrysler is the fourth

largest vehicle producer in the world.

The company is structured into three main automotive groups: theMercedes Car Group, the Chrysler Group, and the Commercial Vehicles

Division. These groups are parents to a total of 12 different brands. In all,

DaimlerChrysler produces approximately 126 vehicle models.

DaimlerChrysler increased operating profit by 38

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Ford Motor Company (F) was founded in 1903 by automotive and industrial

pioneer Henry Ford in Dearborn, Michigan. Being first to implement amoving assembly line for automotive manufacturing, Ford was able to more

efficiently mass produce their products than their competitors. In 1908 theModel T was introduced and went on to sell over 15 million vehicles, firmlyestablishing Ford as the major player in the early automotive industry with

50 market share by the 1920s. The company went public in 1956.

A key element in Fords success is its relationship with the UAW and abilityto get concessions from the union. Concessions over healthcare costs, which

cost upwards of $2000 per new vehicle sold, and plant consolidations arerequired

for Ford to be leaner, more efficient, and more cost-effective in its business.Ford has announced plans to increase its hybrid vehicle production tenfold

to 250,000 per year by 2010.

If the organi ational restructuring comes off well and newproduct offerings are a hit with consumers Ford stands a

good chance to see another 100 years as an industry leader.

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After its organization in 1908, General Motors (GM) proceeded to acquireseven companies by the end of 1909. GM is the largest automobile

manufacturer in the world, selling nearly nine million cars in 2004, which

equated to a 14.5 global market share. GM is focuses on increasing market

share in growing countries such as India and China. They are also offering

more hybrids to increase their fuel efficient offerings, which is a fast

growing market in America and has been one of the main ways that foreign

manufacturers have increased their market share in GMs primary markets.

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Honda Motor Co. (HMC) was established by Soichiro Honda in 1946. Itoriginally began producing motorcycles in the mid 20th century and began

manufacturing automobiles (the Honda Civic) in 1972.

Since Honda began producing automobiles it has been a leader in

producing fuel efficient and low

emissions vehicles. In 1977 and 1983, Civic models ranked first in U.S. fuel-

economy tests. Honda has

also introduced hybrid vehicles such as the Insight, Civic, and Accord, in

1999, 2002, and 2004,

respectively, with the 2006 Insight being the most fuel efficient car of 2006.

Currently, Honda ranks sixth in sales within the automotive industry

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Hyundai Motor Co. (HMC) was established in Korea in 1967. The companys

first model (Cotina) was released, in cooperation with Ford Motor Company,

in 1968. In 1998, Hyundai acquired a 51 stake in

Kia, but has since reduced its share to 37 . In 2004, Hyundai was South

Koreas largest car maker and the worlds seventh largest car maker selling

2.3 million units. Hyundais growth is fueled by increasing internationalsales.

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A license and Joint Venture agreement was signed between the

government of India and Suzuki Motor Company (SMC) in Oct.

1982 to launch Maruti Udyog Limited (MUL). Today, MUL offers

11 models, like the Maruti 800, Omni, premium small car Zen,

international brands Alto and Wagon R .

MULs dominant position in the Indian car market and its abilityto satisfy its customers have made it the success it is today . MUL

has been the leader in the Indian car market for

two decades. Today, MUL holds about 50 of the total Indian

market. For a record sixth year in a row, MUL was ranked highest

in customer satisfaction.

The companys revenue for the fiscal 2008-2009 stood over USD

4 billion and Profits After Tax at over USD 243 million.

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Toyota was established as a public company in Japan in 1937. It

entered the U.S. market in 1957, but only became successful with the

introductions of the Corona in 1965 and the Corolla in 1968. By 1970,

Toyota was the worlds fourth-largest carmaker and by 1975 had

displaced Volkswagen as the U.S.s #1 auto importer.

Toyotas success is based largely on its forward-thinking, innovativemanagement style and its rigorous standards of quality.

In addition, Toyota has repeatedly been ahead of the trend in investing

in new technologies. Instead of focusing on reducing labour costs .

75 of Toyotas current market is in Japan and North America, it aims

to reach markets in 140 countries

and regions in the future.

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MARKET S

IZE

The Indian Automotive Industry after de-licensing in July 1991

has grown at a spectacular rate on an average of 17 for last few

years. The industry has attained a turnover of USD 35.8 billion,

(INR 165,000 crores) and an investment of USD 10.9 billion. The

industry has provided direct and indirect employment to 13.1million people.

Indias current GDP is about USD 650 billion and is expected to

grow to USD 1,390 billion by 2016. The projected size in 2016 of

the Indian automotive industry varies between USD 122 billion

and UDS 159 billion including USD 35 billion in exports. Thistranslates into a contribution of 10 to 11 towards Indias GDP

by 2016, which is more than double the current contribution.

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Determinants of demand for this industry include vehicle prices

(which are determined largely by wage, material and equipmentcosts) and exchange rates, preferences, the running cost of a

vehicle (mainly determined by the price of petrol), income,

interest rates, scrapping rates, and product innovation.

Exchange Rate : Movement in the value of Rupee determines

the attractiveness of Indian products overseas and the price of

import for domestic consumption.

Affordability:Movement in income and interest rates

determine the affordability of new motor vehicles. Allowing

unrestricted Foreign Direct Investment (FDI) led to increase incompetition in the domestic market hence, making better

vehicles available at affordable prices.

Product Innovation is an important determinant as it allows

better models to be available each year and also encourages

manufacturing of environmental friendly cars.

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Price ofPetrol:Movement in oil prices also have an impact on demand

for large cars in India. During periods of high fuel cost as experienced

in 2007 and first half of 2008, demand for large cars declined in favour

of smaller, more fuel efficient vehicles. The changing patterns in

customer preferences for smaller more fuel efficient vehicles led to thelaunch of Tata Motors Nano one of worlds smallest and cheapest

cars.

International Markets Exports

The level of trade export is medium

The level of trade export is increasingInternational Markets Imports

The level of trade import is low

The level of trade import is increasing

Basis of Competition

Competition in this industry is highCompetition in this industry is increasing

Automotive industry is a volume driven industry and certain critical mass is a pre-requisite for

attracting the much needed investment in research and development and new product design and

development. Research and development investment is needed for innovations which is the

lifeline for achieving and retaining competitiveness in the industry. This competitiveness in turn

depends on the capacity and the speed of the industry to innovate and upgrade. The mostimportant indices of competitiveness are productivity of both labour and capital.

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STRENGTH1)Automobile industry is an established and an

evergreen industry.

2)India is the strongest player in the small carsegment of the global automobile market .

3)Through the use of advanced technologies,assembly line

manufacturing, and JIT inventory management, theautomotive

industry has been able to achieve significant gains inproductivity.

4)Indian companies are the best cost innovators.

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1)India is lacking in proper infrastructure

2)Companies are not improving after sale services

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1)The automotive ecosystem is in the midst of significant change,

with increasing challenges in consumer demands, technology

development, and globalization.

2)More realistic scenario will emerge for technologies using

Hydrogen as automotive fuel.

3)Intelligent use of NCES (Non conventional energy sources) for

powering public transport.

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1)Global crisis

2)Companies not focusing on research & development under

great risk

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India's car exports have consistently grown and reached $4.5 billion in 2009,

with United Kingdom being India's largest export market followed by

Germany, Netherlands and South Africa. India's automobile exports are

expected to cross $12 billion by 2014.

India's strong engineering base and expertise in the manufacturing of low-

cost, fuel-efficient cars has resulted in the expansion of manufacturing

facilities of several automobile companies like Hyundai Motors, Nissan,Toyota, Volkswagen and Suzuki.

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan

Motors plans to export 250,000 vehicles manufactured in its India plant by

2011. Similarly, General Motors announced its plans to export about 50,000

cars manufactured in India by 2011.

In recent years, India has emerged as a leading centre for the manufacture

of small cars. Hyundai, the biggest exporter from the country, now ships

more than 250,000 cars annually from India.

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Sunny Days are here for the Indianautomobile Industry as is

corroborated by the latest report

made public by Society ofautomobile Manufacturers. Thereport speaks of the growth of car

sales by 22.42% in the month ofSeptember. The month saw the

sales climb as high as to 94,734units as opposed to 77,384 units

in the same month last year.The growth spree seems to havespilled onto the sale of

commercial vehicles as well; thesegment experienced a growthrate of 33.54% in the month of

September.

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THE RACE HAS JUST BEGUN . . . With increasing disposable

incomes and ever-growing burden on the public modes oftransport, the Indian passenger car industry is heading for a

bright future provided car manufacturers offer a world class cars

that give value for money, use novel marketing concepts to

entice potential buyers and offer good after-sales service.

Some point which a customer want to see while purchasing the

product are as

follows:-

Mileage

Comfort

Power

CostLook

Low maintenance etc.

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www.yahoo.com

www.google.com

www.wikipedia.org

www.autoindia.com

www.automobileindustry.com

www.aotomart.com

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