Mergers and Collaborations in Automobile Industry India

Global Scenario: Few decades ago the automobile industry was thriving mainly due to demand in the western nations, namely U.S.A. and European nations. But as developing countries like India, China and other Asian nations are the leading consumers today. The reason for the shift in consumer base is due to over flooding in the western markets, and growth of Asian nations. Currently there are many market players in the automobile industry; this has caused intense competition throughout the automobile sector. Due to the competitive market the profit margin have reduced drastically. There is a shift in production and manufacturing of cars to developing countries due to increase in demand and availability of cheap resources.

Indian Scenario: Before liberalisation there were very few players in the automobile industry namely FIAT, Ambassador, PIAGGIO . Post liberalisation which occurred in 1991,there was an increase Cross-border trade & investments. This led the international players to enter the Indian automobile industry. Financial schemes were available in the market at lower interest rates. Removal of capacity constraints accelerated the growth of automobile companies in India. India is the second largest two wheeler manufacturer in the world. Largest tractor and three wheeler manufacturer in the world. Fourth largest Commercial vehicle market in the world. Eleventh largest passenger car market in the world.

Growth Potential: Can become Worlds third largest automobile market by 2030. By 2016, automotive sector can DOUBLE its percentage contribution to GDP from current levels of 5% (US$50 billion) to 10% ($180 billion).

Joint Ventures in India: 1981 - Maruti Suzuki India Ltd 1984 - Hero Honda Motors Ltd 1995 - Honda Siel Cars India Ltd 1997 - Toyota Kirloskar Motor Private Ltd 2007 - TATA Fiat JV 2007 - Ashok Leyland and Nissan JV 2008 - Volvo Eicher Commercial Vehicles Write about the outcomes in terms of success or failure of the venture and other new mergers post 2008.. Industry drivers: 10-15% minimum reduction in production costs in India (Suzuki, Hyundai) compared with developed markets. Duty reduced on hybrid & electric cars along with batteries imported for such vehicles. Tax concession for Ambulances. Germany, France, the UK, Italy and South Korea decided to give tax breaks and fiscal incentives to people buying small fuel-efficient cars.