AUTOMOBILE INDUSTRY

PRESENTERS: NISHA GARG ANJU SAINI DEEPA YADAV

Analysis of Automobile Industry

The origin of automobile is not certain.1940sAn embryonic automotive industry emerges in India 1970 to 1980 India's automotive industry begins to grow relatively fast, fuelled by six automotive companies: Telco (now Tata Motors) Ashok Leyland Mahindra & Mahindra Hindustan Motors Premier Automobiles Bajaj Auto However, having a car is still seen as a luxury.

1985 to 1990The auto component sector, which had been protected by high import tariffs, squares up to competitors as the rules are changed. Maruti Udyog enters the passenger car segment. 1990 to1995Economic liberalisation gets underway, allowing passenger car production without licences, though import restrictions remained in place. Maruti Udyog becomes the leading passenger car maker.

1995 to 2000 International car makers enter the Indian market, a trend that accelerates.

Advanced technology is introduced to meet competitive pressures, and environmental and safety imperatives. Automobile companies start investing in service network to support maintenance of on-road vehicles. Auto financing starts emerging as an important driver for demand. 2000 to presentAs India's car market grows, the country is also emerging as a global automotive production hub

Liberalization of the automotive industry gets underway, with the removal of many trade and investment restrictions. Cars developed and produced entirely in India for both the domestic and exports markets emerge.

 

Snippets The first automobile in India rolled in 1897 in Bombay. India is being recognized as potential emerging auto market. Foreign players are adding to their investments in Indian auto

industry. Within two-wheelers, motorcycles contribute 80% of the segment

size. Unlike the USA, the Indian passenger vehicle market is dominated by

cars (79%). Tata Motors dominates over 60% of the Indian commercial vehicle

market. 2/3rd of auto component production is consumed directly by OEMs. India is the largest three-wheeler market in the world. India is the largest two-wheeler manufacturer in the world. India is the second largest tractor manufacturer in the world. India is the fifth largest commercial vehicle manufacturer in the

world. The number one global motorcycle manufacturer is in India. India is the fourth largest car market in Asia - recently crossed the 1

million mark.

AUTOMOBILE

3 WHEELER2 WHEELER PASSENGER VEHICLE

COMMERCIAL VEHICLE

I.C.V. M.C.V. H.C.V.

MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS

MARKET WISE SEGMENTATION

TWO WHEELER SEGMENT

PASSENGER VEHICLES

MAJOR PLAYERS1. MARUTI UDYOG 2. HYUNDAI3. TATA MOTORS4. TOYOTA5. HONDA6. GENERAL MOTORS

GROWTH RATE OF INDUSTRYThe growth of the Indian middle class along with the

growth of the economy over the past few years has attracted global auto majors to the Indian market.

India provides trained manpower at competitive costs making India a favoured global manufacturing hub.

According to a study released by global consultancy firm Deloitte, at least one Indian company will be among the top six carmakers that would dominate the global auto industry by 2020

overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09.

COMMERCIAL VEHICLES

THREE-WHEELERS SEGMENT

At present the industry is enjoying a growth rate of 14-17% per annum, with domestic sales growth at 12.8%. The growth rate is predicted to double by 2015.

As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-utility vehicles - in the year 2005 reached the mark of 1.06 million. The current growth rate indicates that by 2012 India will overtake Germany and Japan in sales volumes.

IMPACT OF RECESSION All the major auto companies enjoyed the high growth ride till the

mid 2008. But at the end of the year, industry had to face the hard truth and witnessed the fall in sales compared to last year.

In December 2008, overall production fell by 22 % over the same month last year.

Global recession has hit the Indian auto industry, India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined. Passenger Vehicles segment registered negative growth.

One of its supporting facts is that the sales in December 2008 for passenger vehicles fell by 13.86% over December 2007 Two Wheelers registered minor growth of 1.85 % during April – December 2008.

However, Two Wheelers sales recorded 15.43 percent fall in December 2008 over the same month last year.

Although the sector was hit by economic slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09.

INDUSTRY ANALYSIS

Porter Model

Introduction Growth Maturity Decline

TIME

SALES

PRODUCT LIFE CYCLEPRODUCT LIFE CYCLE

2 yr 4 yr 10yr

SWOT ANALYSISStrengths· Large domestic market· Sustainable labor cost advantage· Competitive auto component vendor base· Government incentives for manufacturing plants· Strong engineering skills in design etcWeaknesses· Low labor productivity· High interest costs and high overheads make the

production uncompetitive· Various forms of taxes push up the cost of production· Infrastructure bottleneck

Cont’d………..•Opportunities• · Increase in the income level• · Cut in excise duties• · Rising rural demand

•Threats• · Rising input costs• · Rising interest rates• · Cut throat competition

MAJOR PLAYERS1. MARUTI UDYOG 2. HYUNDAI3. TATA MOTORS4. TOYOTA5. HONDA6. GENERAL MOTORS

3.20%

3.20%

12.70%

1.80%

2.40%

47.30%

MARUTIUDYOGTATAMOTORSTOYOTAMOTORSHONDAMOTORSGM MOTORS

HYUNDAI

Around 1970, Sanjay Gandhi come up with the idea of small passenger cars.

In 1970, govt. passed unanimous resolution of people’s car.

In decade ending 1983, Indian car market stagnated by a volume of 3000-4000.

1983’sMaruti 800 introduced in 1983.

Company concentrate to down the prices and make fuel efficient cars.

Here the era started for more players in the segment.

Joint-ventures start.

In 1980’s, Maruti is leader in market share and in customer satisfaction.

1990’sBy the year 1993 company sold 1,96,820

cars in India.

Here chief product Maruti 800.

By march 1994, 1 million cars produced by company.

By October 1997, 2 million cars produced by company.

2000+Now company produced 4 million cars in

April 19,2003.

Here company’s market share is approx 50 % in passenger car market.

Here maruti 800 step-out by Alto-Lx.

In India maruti is a giant auto mobile company after 2005.

SWOT ANALYSIS OF MARUTI UDYOG

STRENGTH:- Strong presence in commercial vehicle market.

Brand Recognition.

High investment in R & D.

Wide Distribution channels.

WEAKNESS

Limited product portfolio in passenger segment.

Operations mainly restricted in india.

OPPURTUNITY

Increasing demand for cars in India.

Expansion in Indian market.

Indian community want high price cars.

THREATIncrement in prices of raw material.

Intense competition from global players.

Low prices passenger car introduce by the other companies in the Indian market.

HYUNDAI

specialize in own production for all auto mobile parts.

Manufacturing presence in India, china and Europe.

Company headquarter in seol, south Korea.

In India 54,700 employees for Hyundai.

The company’s recorded revenues 63,648,025 million during year ended December 2007.

This is an increment of 8.2% over 2006 revenues.

Operating of the company was 17,96,690 million during year 2007.

Hyundai is world’s seventh largest auto-moblie company.

SWOT ANALYSIS OF HYUNDAI

STRENGTH HYUNDAI has used reverse engineering in the development of their products.

Innovator in the auto industry when it comes to small segment cars.

Rather than relying on windfall profits from a couple of hot-selling models that might cool off later, the company showed a mastery of the myriad that bolster the bottom line.

WEAKNESSHYUNDAI needs to stop using reverse

engineering on the development of their automobiles.

HYUNDAI has not done enough testing and surveys of potential customers.

Rising costs are not under a full control.

OPPORTUNITIESReleasing new products by HYUNDAI would be

the potential profit making opportunity.

Selling large no. of cars to meet the economies of scale.

THREATSInitial cost of the innovation will be high.

Innovation may fail also due to which company will lose lots of money.

TATA MOTORSTATA empire has changed dramatically in

1991.

Company was known only by trucks.

TATA has 60% share in India's vehicle market .

TATA introduces its first passenger car in 1997.

TATA Indica and Indigo has 16% total share of Indian car market.

TATA motors sale volume grew 27% than last year while car market grew17%.

Market value of TATA is 3.5 billion $.

Revenues of TATA motors up by 32% from previous year.

SWOT ANALYSIS OF TATA MOTORS

STRENGTHSTATA is currently a leader in fuel efficient car

technology.

TATA is considered to be one of most respected company worldwide.

Strategic partnership with Jaquar motors (only for selected models).

wide variety of automobile products.

WEAKNESS

Not strongly represented in the European markets.

None of Tata's brands are truly marketable to worldwide consumers.

The growing use of hybrid engines could also cause problems for TATA.

OPPORTUNITIESWith Tata's current shortage of European

market share there Truck brand could be a bright spot.

The decision to focus on hydrogen power research and development could also bode well for TATA.

THREATSShaky alliance between TATA and FORD (for

limited models).

Tata's decision to put all its eggs into the fuel efficient engine basket

TOYOTAToyota is a Japanese company.

In 1936 Toyota is named by Toyoda.

From 1936 to 1943 only 1757 cars were made by Toyota.

In 1955 company made 8400 car per year.

In 1959 company go for globalization.

Dramatic production in 1965 6 lakh car produced by company per year.

Lexus is hot model or a profit earn guy

SWOT ANALYSIS OF TOYOTA

TOYOTA STRENGTHS

Partnerships

EPA Global 500 Award

1 of Japanese Producers

SUVs

TOYOTA WEEKNESS

POOR WEBSITE

POOR RESPONSE IN CUSTOMER SATISFACTION

TOYOTA OPPOURNITIES

Hybrid Engines

Matrix level for all cars

TOYOTA THEARTS

Consumer Confidence for others .Raw material prices.

HONDA MOTORS1950’s In 1946 Soichiro Honda establish Honda

Motors in Hamamatsu.

In 1947 start making 50 cc engines.

In 1948 company start making light weight motor bikes.

In 1950-1960 Honda auto-mobile greatly expanded.

In 1960 Honda introduced T-360 light trucks.

In 1964-1965 Honda product line expand in light trucks and passenger cars.

In 1970’s

In 1973 Honda civic firstly launched.

In 1976 Honda launched its first accord model.

In 1986-1996 Honda make their cars best in terms of performance and in designing.

Firstly Honda introduces V-6 engine.

In 2000 decade company investing in small car (passenger cars) and try to come up with hybrid cars.

SWOT ANALYSIS- HONDA

STRENGHTS:- Producing High Quality Cars. Automobiles are reliable. Generally Fuel efficient.

WEAKNESSES:- Products are fairly Bland & inoffensive in terms of styling. Prices are higher.

CONTD…..OPPURTUNITIES:- Economic development in India.

Fuel Efficiency

THREATS:-

Second Movers.Entry of the big players.

GM MOTORS

Beginning in 1902.

Founded by William Durant .

In 1908 many company folded into a single unit named by GM.

In 1915 GM renamed by Chevrolet in 1915.

In 1920 company is on the apex in auto-mobile sector in Europe and Asia.

But in recent time GM facing financial woes.

November 2006 show GM booking a 4 billion $ loss.

Within two years 3000 employees laid off from the GM motors all over the world.

In these two years 12 plants were close down of GM motors (Chevrolet).

SWOT ANALYSIS- GM

STRENGHTS:- Spend time & money in its R&D department Developing Hybrid Cars Ad spending

OPPURTUNITIES:- With sales growing at 60% in the Middle east last year ( GM) would like to institute a dealership network in world.

THREATS:-

Worker dissatisfaction

WEAKNESSES:-

Employee disatisfaction

CONTD…..