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Globalization of Globalization of Indian Automobile Indian Automobile

IndustryIndustry

Ajay SinglaAjay SinglaRoll Roll

No.5610No.5610

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IntroductionIntroduction

The Indian automobile industry presents a galaxy of varieties and model. The Indian automobile industry presents a galaxy of varieties and model. Some of the leading names in the Indian automobile industry include Some of the leading names in the Indian automobile industry include Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motors, Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motors, Hero Honda and Hindustan Motors in addition to a number of others.Hero Honda and Hindustan Motors in addition to a number of others.

During the early stages of its development, Indian automobile industry During the early stages of its development, Indian automobile industry heavily depended on foreign technologies but now time has been heavily depended on foreign technologies but now time has been changed.changed.

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The The IndianIndian Automobile industry Automobile industry is the is the seventh largest in the worldseventh largest in the world. . vehicles and exports of about 1.5 vehicles and exports of about 1.5 million. In 2010, India emerged as million. In 2010, India emerged as AsiaAsia's fourth largest exporter of 's fourth largest exporter of automobiles, behind automobiles, behind JapanJapan, South , South Korea and Thailand. Korea and Thailand.

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1.1. Two wheelersTwo wheelers

2.2. Three WheelersThree Wheelers

3.3. Passenger VehiclesPassenger Vehicles

4.4. Commercial VehiclesCommercial Vehicles

Classification of Automobile Classification of Automobile IndustryIndustry

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Growth of Automobile Growth of Automobile IndustryIndustry

Protectionism – Early 1980sProtectionism – Early 1980s This was the pre-1980 era where the manufacturing This was the pre-1980 era where the manufacturing

of automobiles was subject to strict licensing, of automobiles was subject to strict licensing, restrictive tariff structure.restrictive tariff structure.

Liberalization – 1990sLiberalization – 1990s In the early 1990s, with liberalization, some more In the early 1990s, with liberalization, some more

Japanese manufacturers entered the Indian market. Japanese manufacturers entered the Indian market. Automobile Industry was delicensed in July 1991.Automobile Industry was delicensed in July 1991.

Globalization – 2000sGlobalization – 2000s Early 2000 however saw globalization of Indian auto Early 2000 however saw globalization of Indian auto

industry. Several policy changes were introduced industry. Several policy changes were introduced with focus on boosting the auto exports. Foreign with focus on boosting the auto exports. Foreign manufactures started looking at India for sourcing manufactures started looking at India for sourcing auto components. auto components.

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Factors Contributing To The Factors Contributing To The Growth Of Indian Auto Growth Of Indian Auto

SectorSector Rise in Per Capita IncomeRise in Per Capita Income Growth in Road InfrastructureGrowth in Road Infrastructure High GDP-High GDP-Higher GDP means more Higher GDP means more

purchasing powerpurchasing power UrbanizationUrbanization Finance SchemesFinance Schemes

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Key Key PlayersPlayers

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Growth Chart of Indian Growth Chart of Indian IndustryIndustry

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Two WheelersTwo Wheelers Motorcycles segment dominates with Motorcycles segment dominates with

an 80% market share. Apart from the an 80% market share. Apart from the motorcycles that are traditionally used motorcycles that are traditionally used by men, the Scooters (60cc upwards) by men, the Scooters (60cc upwards) have also contributed towards a spurt have also contributed towards a spurt in two-wheeler sales.. Then there are in two-wheeler sales.. Then there are mopeds that are nothing but a mopeds that are nothing but a sophisticated motorized cycle. And now sophisticated motorized cycle. And now a days scooties for girls are there .a days scooties for girls are there .

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Three wheelersThree wheelers

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Four WheelersFour Wheelers The four wheeler segment comprises of The four wheeler segment comprises of

the passenger vehicles and utility the passenger vehicles and utility vehicles.The passenger cars segment has vehicles.The passenger cars segment has the largest share of 78%. Main key the largest share of 78%. Main key players in the market are Maruti Udyog players in the market are Maruti Udyog Ltd. Tata Motors Ltd., Hyundai, Toyota, Ltd. Tata Motors Ltd., Hyundai, Toyota, Honda, Ford and GM. Honda, Ford and GM.

The newer entrants are the marquee The newer entrants are the marquee brands like Mercedes-Benz, BMW brands like Mercedes-Benz, BMW and Volkswagen.and Volkswagen.

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Competition from new Competition from new companiescompanies

Now Indian companies are getting Now Indian companies are getting competition from competition from Mercedes-Benz, Mercedes-Benz, BMW and Volkswagen. Its also BMW and Volkswagen. Its also affecting the Indian industryaffecting the Indian industry

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Commercial VehiclesCommercial Vehicles

There are about nine manufacturers of There are about nine manufacturers of commercial vehicles in India. Eicher Motors commercial vehicles in India. Eicher Motors Ltd, Tata Motors Limited, Ashok Leyland, Ltd, Tata Motors Limited, Ashok Leyland, Mahindra and Mahindra Limited and Volvo Mahindra and Mahindra Limited and Volvo Motors. Motors.

Tata Motors has share of 62%, Ashok Tata Motors has share of 62%, Ashok Leyland Ltd. with a total market share of Leyland Ltd. with a total market share of 15%, M & M Ltd. with a total market share of 15%, M & M Ltd. with a total market share of 11%, Eicher Motors Ltd. with a total share of 11%, Eicher Motors Ltd. with a total share of 6%, and others.6%, and others.

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FDI in Automobile SectorFDI in Automobile Sector

The Indian automobile success story has The Indian automobile success story has paved the way for foreign investments, paved the way for foreign investments, making India an attractive destination making India an attractive destination for global players like Japanese, Korean, for global players like Japanese, Korean, European, and American OEMs. European, and American OEMs. International carmakers are now shifting International carmakers are now shifting focus to India, from China, to establish focus to India, from China, to establish their manufacturing plants and units:their manufacturing plants and units:

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Merger & AcquisitionsMerger & Acquisitions

Tata Motors has bought Jaguar and Land Rover Tata Motors has bought Jaguar and Land Rover from US based Ford Motors.from US based Ford Motors.

Mahindra & Mahindra Ltd and private equity Mahindra & Mahindra Ltd and private equity firm ICICI Venture Funds has signed an firm ICICI Venture Funds has signed an agreement to buy Italian gear manufacturer agreement to buy Italian gear manufacturer Metalcastello.Metalcastello.

Daimler Chrysler AG of Germany has taken a Daimler Chrysler AG of Germany has taken a call option to buy 26 per cent in Jalandhar-call option to buy 26 per cent in Jalandhar-basedbased

bus body builder Sutlej Motors.bus body builder Sutlej Motors.

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India stands among the Global India stands among the Global industryindustry

India’s Nano (the world’s cheapest car) and India’s Nano (the world’s cheapest car) and other small cars are forcing the world to go other small cars are forcing the world to go back to their drawing boards. India’s Reva back to their drawing boards. India’s Reva (electric car) is very popular abroad as its (electric car) is very popular abroad as its environment friendly. Spark, the compact environment friendly. Spark, the compact car from General Motors, will now come in car from General Motors, will now come in an electric version, thanks to a tie-up with an electric version, thanks to a tie-up with Bangalore’s Reva Electric Car Co.  Indian Bangalore’s Reva Electric Car Co.  Indian auto industry is all set to grow strong and auto industry is all set to grow strong and become a visible and stronger power in the become a visible and stronger power in the Global auto industry.Global auto industry.

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Future Prospective of Indian Future Prospective of Indian Automobile sectorAutomobile sector

By 2012 India is expected to witness over By 2012 India is expected to witness over Rs 30,000 crore ofRs 30,000 crore ofinvestment. investment.

Hyundai will bring in more than Rs 3,800 Hyundai will bring in more than Rs 3,800 crore to India. crore to India.

Tata Motors will be investing Rs 2,000 Tata Motors will be investing Rs 2,000 crore in its crore in its

small car project. small car project. General Motors will be investing Rs 100 General Motors will be investing Rs 100

crore and Ford about Rs 350 crore. crore and Ford about Rs 350 crore.

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Impact of Global Recession on Impact of Global Recession on Indian Car IndustryIndian Car Industry

India is one of the few countries where car India is one of the few countries where car sales have been increasing in the course of sales have been increasing in the course of the worldwide economic downturn.the worldwide economic downturn.

Research and observations have led to theResearch and observations have led to theconclusion that in the year 2008, the carconclusion that in the year 2008, the carmarket and the car industry is expected tomarket and the car industry is expected towitness 8-9% fall witness 8-9% fall

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Problems of Automobile Problems of Automobile SectorSector

Effect of Rising Fuel Prices on Car Effect of Rising Fuel Prices on Car SalesSales The hike in petrol wentThe hike in petrol went

by 5% whereas the price of dieselby 5% whereas the price of dieselwent up by 3%. The rise in thewent up by 3%. The rise in theprice of the fuel has depreciatedprice of the fuel has depreciatedthe sales of cars by 8%. the sales of cars by 8%.

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Steps taken by Government to Steps taken by Government to overcome Recessionovercome Recession

Vehicle makers cut prices following a Vehicle makers cut prices following a government reduction in value-government reduction in value-added tax last December.added tax last December.

A huge package of funds to help the A huge package of funds to help the sector, and the central bank has sector, and the central bank has made amade aseries of rate cuts to spur theseries of rate cuts to spur theeconomy. economy.

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SWOT ANALYSISSWOT ANALYSIS STRENGTHSTRENGTH – 1.Automobile industry is an – 1.Automobile industry is an

established and an evergreen industry. established and an evergreen industry. 2. India is the strongest player in the 2. India is the strongest player in the

small car segment of the global small car segment of the global

WEAKNESS WEAKNESS – 1.Companies are not – 1.Companies are not improving after sale services.improving after sale services.

2. Lack of Proper Infrastructure. This is 2. Lack of Proper Infrastructure. This is slowing the pace of growth of auto slowing the pace of growth of auto industry industry

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OPPURTUNITIES OPPURTUNITIES - The - The automotive ecosystem is in the automotive ecosystem is in the midst of significant change, with midst of significant change, with increasing challenges in Consumer increasing challenges in Consumer demands, technology dev., and demands, technology dev., and globalization.globalization.

THREATS THREATS – High Competition, – High Competition, Lack of Technology and Global Lack of Technology and Global crisis a.nd companies not focusing crisis a.nd companies not focusing on R & Don R & D

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The FutureThe Future

It is expected to grow to US $40 It is expected to grow to US $40 Billions by 2015 and its expected to Billions by 2015 and its expected to contribute 10% in GDP.contribute 10% in GDP.

Low cost of manufacturing should Low cost of manufacturing should place India in good Global position.place India in good Global position.

It is expected to be the largest It is expected to be the largest automobile industry in production by automobile industry in production by 2030.2030.

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ConclusionConclusion Indian Industry is in a good developed Indian Industry is in a good developed

position just because of Globalisation. Indian position just because of Globalisation. Indian companies adopt foreign technologies and companies adopt foreign technologies and made their own technologies also and help made their own technologies also and help Indian Industry to grow superbly.The industry Indian Industry to grow superbly.The industry expects the growth in the automotive sector expects the growth in the automotive sector to continue. It is also believed that global to continue. It is also believed that global automakers will continue to allocate a rising automakers will continue to allocate a rising proportion of their foreign direct investment proportion of their foreign direct investment into India. If all going well then Indian into India. If all going well then Indian Industry will be at top in future.Industry will be at top in future.

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