2015

COMPARITIVE
ANALYSIS OF TOP 5
COMPANIES IN
AUTOMOBILE
SECTOR
SUBMITTED TO PROF Y N KAUSHAL
LONG REPORT

ROHIT P L
231122
2/15/2015

EXECUTIVE SUMMARY
The automobile industry, one of the core sectors, has undergone metamorphosis with the advent of
new business and manufacturing practices in the light of liberalization and globalization. The sector
seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge
in demand. The Indian automobile market is gearing towards international standards to meet the needs
of the global automobile giants and become a global hub.
A detailed analysis of Automobile industry has been covered in respect of past growth and
performance. Under this project to better understand the Industry we have used Fundamental and
Technical tools to make it more authentic n meaningful.
The Industry Analysis has been done with the help of five forces model, PEST,SWOT
analysis, industry life cycle and the industry specific index. Based on the market share top 5 players
are identified i.e. Maruti Suzuki, Mahindra, Hero Motocorp, TATA motors, Hyundai India Ltd.
The automobile industry in India is expected to be the world's third largest by 2016, with the country
currently the world's second largest two-wheeler manufacturer. Two-wheeler sales is projected to rise
from 15.9 million in FY13 to 34 million by FY20. The segment registered a growth of 7.31 per cent in
FY14. Furthermore, passenger vehicle sales is expected to increase to 8.6 million in FY21 from 3.2
million in FY13. Strong growth in demand due to rising income, growing middle class, and a young
population is likely to propel India among the world's top five auto manufacturers by 2015.
Automobile export volumes increased at a compound annual growth rate (CAGR) of 19.1 per cent
during FY05-13, out of which two-wheelers accounted for the largest share in exports at 67 per cent
in FY13.
The government aims to develop India as a global manufacturing as well as a research and
development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project
(NATRiP) centres as well as a National Automotive Board to act as facilitator between the
government and the industry. Some other government initiatives, including Auto Policy 2002,
Automotive Mission Plan 2006-2016 and funds allocated in the Union Budget 2014-15 could go a
long way in ensuring the growth of this sector.
Alternative fuel has the potential to provide for the country's energy demand in the auto sector as the
CNG distribution network in India is expected to rise to 250 cities in 2018. Also, the luxury car
market could register high growth and is expected to reach 150,000 units by 2020.
At the end conclusion and recommendations have been specified so as to make the research work
more meaningful and purposeful.
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Table of Contents
AUTHORIZATION................................................................................................................................5
GLOSSARY ...........................................................................................................................................6
INTRODUCTION .................................................................................................................................. 7
BACKGROUND .................................................................................................................................... 8
Market Size ......................................................................................................................................... 8
Investments ......................................................................................................................................... 9
Government Initiatives...................................................................................................................... 10
Road Ahead....................................................................................................................................... 10
Factors determining the growth of the industry ............................................................................ 12
Employment Opportunities........................................................................................................... 13
Employment Trends......................................................................................................................13
Future Trends in the Automobile Industry........................................................................................ 13
PROBLEM............................................................................................................................................ 14
SCOPE .................................................................................................................................................. 14
PURPOSE ............................................................................................................................................. 14
METHODOLOGY ............................................................................................................................... 15
INDUSTRY ANALYSIS...................................................................................................................... 15
PEST ANALYSIS ................................................................................................................................ 16
1.

Political Environment ........................................................................................................... 16

2.

Economic environment: ........................................................................................................ 16

3.

Social Environment:..............................................................................................................17

4.

Technology: .......................................................................................................................... 17

5.

Other Factors:........................................................................................................................17

Porter's five forces ............................................................................................................................ 18

MAJOR PLAYERS ..............................................................................................................................20
PASSENGER CARS SEGMENT ........................................................................................................ 21
ANALYSIS OF TOP FIVE PASSENGER CAR PLAYERS............................................................... 22
MARUTI SUZUKI ............................................................................................................................... 22
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SALES NETWORK ......................................................................................................................... 23

PERFORMANCE ............................................................................................................................. 24
DOMESTIC SALES:.................................................................................................................... 24
EXPORT:......................................................................................................................................26
SWOT ANALYSIS ......................................................................................................................28
HYUNDAI MOTORS INDIA LTD ..................................................................................................... 30
PERFORMANCE EVALUATION OF HYUNDAI MOTOR INDIA LIMITED ........................... 30
DOMESTIC SALES..................................................................................................................... 30
EXPORT....................................................................................................................................... 32
PRODUCTION:............................................................................................................................ 33
SWOT ANALYSIS ......................................................................................................................34
TATA MOTORS .................................................................................................................................. 36
Passenger Vehicles: ......................................................................................................................36
SWOT ANALYSIS .......................................................................................................................... 42
MAHINDRA AND MAHINDRA ........................................................................................................ 43
SWOT ............................................................................................................................................... 44
HERO MOTOCORP ............................................................................................................................ 45
SWOT ANALYSIS .......................................................................................................................... 47
Financial Year '14 ................................................................................................................................. 48
TRENDS IN AUTOMOTIVE INDUSTRY .........................................................................................49
Connected Cars ................................................................................................................................. 50
Intelligent Public Transportation ...................................................................................................... 50
Going Green......................................................................................................................................50
Cloud and Big Data........................................................................................................................... 51
Prospects ...........................................................................................................................................51
Attractiveness of the Automobile Industry for Investment purpose ..................................................... 52
Production......................................................................................................................................... 54
CONCLUSION..................................................................................................................................... 55
RECOMMENDATIONS ......................................................................................................................56
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LIMITATIONS..................................................................................................................................... 57
SOURCES ............................................................................................................................................ 58
INDEX .................................................................................................................................................. 59

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AUTHORIZATION
I, Rohit P L hereby authorize the concerned investor/owner of the document to access this report for
his/her review and analysis purpose and also for his/her research purpose. Publishing of the project
facts and details about the analysis is strictly prohibited.

Rohit P L
New Delhi.
15/02/2015

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GLOSSARY

AUTOMOTIVE INDUSTRY: Industry dealing with the automobiles is called automotive

industry.

CAGR: Cumulative Annual Growth Rate

ACCIF: Andhra Chamber of Commerce and Industry Federation

ACMA: Automotive Components Manufacturers Association of India

GDP : Gross Domestic Product

PEST: political, environmental, socio economical, technology

SWOT: strengths, weakness, opportunities, threats

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INTRODUCTION
The automotive industry in India is one of the largest automotive markets in the world. It was
previously one of the fastest growing markets globally, but is currently experiencing flat or negative
growth rates. India's passenger car and commercial vehicle manufacturing industry is the sixth largest
in the world, with an annual production of more than 3.9 million units in 2011. According to recent
reports, India overtook Brazil to become the sixth largest passenger vehicle producer in the world
(beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia,
Spain, France, Brazil). From 2011 to 2012, the industry grew 16-18%, selling around three million
units. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South
Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of passenger
cars.

As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive
vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after
China) fastest growing automobile market in the world the same year. According to the Society of
Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015,
not 5 million as previously projected.

The majority of India's car manufacturing industry is based around three clusters in the south, west
and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share.
The western hub near Mumbai and Pune contributes up to 33% of the market and the northern cluster
around the National Capital Region contributes 32%. Chennai, houses the India operations of Ford,
Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, Mini, and Datsun.
Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana
form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The
Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors,
Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars,
Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra and
Mahindra with a SUV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and
Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat
with manufacturing facility of General Motors in Halol and further planned for Tata Nano at their

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plant in Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat.
Kolkata with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other
automotive manufacturing regions around the country.

In 2011, there were 3,695 factories producing automotive parts in all of India. The average firm made
US$6 million in annual revenue with profits close to US$400 thousand.

BACKGROUND
With the increasing growth in demand on back of rising income, expanding middle class and young
population base, in addition to a large pool of skilled manpower and growing technology, will propel
India to be among the world's top five auto-producers by 2015.
The automobile industry accounts for 22 per cent of the country's manufacturing gross domestic
product (GDP). The auto sector is one of the biggest job creators, both directly and indirectly. It is
estimated that every job created in an auto company leads to three to five indirect ancillary jobs.
India is expected to become a major automobile manufacturing hub and the third largest market for
automobiles by 2020, according to a report published by Deloitte.
India is currently the seventh-largest automobiles producer in the world with an average annual
production of 17.5 million vehicles, and is on way to become the fourth largest automotive market by
volume, by 2015.

Market Size

The growth story for the Indian automobile industry in 2014 rode on the two-wheeler segment. The
segment has clocked positive growth at 12.9 percent year-on-year to reach sales of nearly 13.5 million
units by October 2014.
India's automobile sector has also picked up pace, with eight of the country's leading manufacturers'
reporting combined passenger vehicle sales of 198,427 in November 2014, a 10 per cent annual rise.
The rise in sales in November 2014 was led by Maruti Suzuki, whose sales increased 17 per cent to
100,024 units in the domestic market.

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The commercial vehicles (CV) industry in India has registered an increase of 8.59 per cent in
September 2014, as fleet owners have started to buy trucks in the anticipation of an improved
economic activity.
The automobile sector in Andhra Pradesh has a potential for US$ 1 billion investment and US$ 1.50
billion output, according to a recent analysis by Automotive Components Manufacturers Association
of India (ACMA) and city-based Andhra Chamber of Commerce and Industry Federation (ACCIF).

Investments

To match production with demand, many auto makers have started to invest heavily in various
segments in the industry in the last few months. The industry has attracted FDI worth US$ 11,351.26
million during the period April 2000 to November 2014, according to the data released by Department
of Industrial Policy and Promotion (DIPP).
Some of the major investments and developments in the automobile sector in India are as follows:

Snapdeal.com has entered into a partnership with Hero MotoCorp Ltd to sell two-wheelers
and expect its online automobile sales to generate Rs 1,000 crore (US$ 162.33 million) of
business in next six to 10 months.

Automotive supplier Uno Minda and Japans Toyoda Gosei Co Ltd have announced a joint
venture (JV) partnership to manufacture and sell rubber hoses to automobile makers in
India. The JV will be set up with a total investment of Rs 85.3 crore (US$ 13.84 million) in
a phased manner.

Tafe Motors and Tractors Ltd (TAFE) has invested around US$ 140 million by way of
equity in the US-based AGCO Corporation, a worldwide manufacturer and distributor of
agricultural equipment.

Flipkart founders Mr Sachin Bansal and Mr Binny Bansal have led a US$ 1 million
investment in Ather, an electric vehicle start-up focused on designing high-speed electric
two-wheelers.

Harley Davidson Motor Co. has expanded their line up in India as it has launched three
new models the Breakout, Street Glide and CVO limited edition.

Hero Electric is looking for merger and acquisition (M&A) options or technology tie-ups to
encourage its next generation electric vehicle technology.

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Government Initiatives

The Government of India encourages foreign investment in the automobile sector and allows 100 per
cent FDI under the automatic route. To boost manufacturing, the government had lowered excise duty
on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent, on
sports utility vehicles to 24 per cent from 30 per cent, on mid-segment cars to 20 per cent from 24 per
cent and on large-segment cars to 24 per cent from 27 per cent.
Some of the major initiatives taken by the Government of India are:

The governments decision to resolve VAT disputes has resulted in the top Indian auto
makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors
announcing an investment of around Rs 11,500 crore (US$ 1.86 billion) in Maharashtra.

The Automobile Mission Plan for the period 20062016, designed by the government is
aimed at accelerating and sustaining growth in this sector. Also, the well-established
Regulatory Framework under the Ministry of Shipping, Road Transport and Highways,
plays a part in providing a boost to this sector.

The Government of India-appointed SIAM and Automotive Components Manufacturers

Association (ACMA) are responsible in working for the development of the Indian
automobile industry.

The government plans to come out with policies to introduce clean fuels such as biodiesel,
bioethanol and electricity for public transport vehicles and school buses in big cities to
tackle air pollution.

The Lok Sabha passed the Motor Vehicles Amendment Bill, 2014, paving the way for
regularisation of e-rickshaws.

The government has set up National Automotive Testing and R&D Infrastructure Project
(NATRiP) at a total cost of US$ 388.5 million to enable the industry to be on par with
global standards.

Road Ahead

India is probably the most competitive country in the world for the automotive industry. It does not
cover 100 per cent of technology or components required to make a car but it is giving a good 97 per
cent, highlighted Mr Vicent Cobee, Corporate Vice-President, Nissan Motors Datsun.

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The vision of AMP 2006-2016 sees India, to emerge as the destination of choice in the world for
design and manufacture of automobiles and auto components with output reaching a level of US$ 145
billion; accounting for more than 10 per cent of the GDP and providing additional employment to 25
million people by 2016.
The automobiles sector is compartmentalized in four different sectors which are as follows:

Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-wheelers

Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose
vehicles

Commercial Vehicles that are light and medium-heavy vehicles

Three Wheelers that are passenger carriers and goods carriers.

The automobile industry is one of the key drivers that boosts the economic growth of the country.
Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI
through automatic route, Indian automobile sector has come a long way. Today, almost every global
auto major has set up facilities in the country.
Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the
US and Mahindra & Mahindra have set up manufacturing bases in India. Furthermore, according to
internal projections by Mercedes Benz Cars, India is set to become Mercedes Benzs fastest-growing
market worldwide ahead of China, the US and Europe.
As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of
Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry
during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the
total FDI inflows in terms of US $. The production of compact superbikes is also expected to take
place in India. The country has a mass production base of 16 million two-wheelers and the several
global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out
sports bikes in the 250 cc capacity.
The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is
as follows:

Largest three-wheeler market

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Second largest two-wheeler market

Tenth largest passenger car market

Fourth largest tractor market

Fifth largest commercial vehicle market

Fifth largest bus and truck segment

However, the year 2013-2014 has seen a decline in the industrys otherwise smooth-running growth.
High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with
economic slowdown are the major reason for the downturn of the industry.
Except for the two-wheelers, all other segments in the industry have been weakening. There is a
negative impact on the automakers and dealers who offered high discounts in order to push sales. To
match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which
capacity utilization for most automakers remains at a dismal level.
Despite the comprehensive market being under extreme burden, the luxury car market has observed a
robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at
compelling lower price points. Further, with the measured increases in the price of diesel, the overall
market continues to shift towards petrol-fuelled cars. This has lead to the growth in sales of the 'Mini'
segment of the PV market by of 5.5%.
Factors determining the growth of the industry

Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented products.

Sturdy legal and banking infrastructure

Increased affordability, heightened demand in the small car segment and the surging
income of the Indian population

India is the third largest investor base in the world

The Government technology modernization fund is concentrating on establishing India as

an auto-manufacturing hub.

Availability of inexpensive skilled workers

Industry is perusing to elevate sales by knocking on doors of women, youth, rural and
luxury segments

Market segmentation and product innovation

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Employment Opportunities

There are a wide range of jobs available in the automobile industry. With the number of vehicles
available on the road today, the need and requirement for people who can fix these machines is fast
increasing. Careers like automobile technician, car or bike mechanics are a great option. Becoming a
diesel mechanic is also a significant alternative. Diesel mechanics are responsible for repairing and
servicing diesel engines. As they are also required to repair engines of trucks and buses, other than
cars, they are provided with hefty wages.
If communication with people instead of repairing cars is what interests you, then you have the
opportunity of becoming a salesperson or sales manager in an automobile company. Career
opportunities in automobile design, paint specialists, job on the assembly line and insurance of
vehicles is also available.
Employment Trends

The Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a global
automative hub. The idea is to make India as the destination choice for design and manufacture of
automobiles and auto components, with outputs soaring to reach US$ 145 billion which is basically
accounting for more than 10% of the GDP. This would also provide further employment to over 25
million people by 2016 making the automobile the sunrise sector of the economy.
According to the Confederation of Indian Industry, the automobile sector currently employs over 80
lac people. An extension in production in the automobile industry is forecasted, it is likely to rise to
Rs. 600000 crore by 2016.

Future Trends in the Automobile Industry

As the auto-shows began in January 2014, the industry promised a blend of technology and
automotives. With the recession trend breaking its leashes form the past two years, 2014 is
expected to get back on track with the sales of automobiles in the country.

Almost Self-governing cars are predicted to be on the streets by 2020

More than half the cars on the streets are going to be powered by diesel by 2020

Industry watcher Gartner indicates that 30 percent of motorists want parking info. The facility
is likely to come up after glitches in the infrastructure catch up.

High Performance Hybrid cars are likely to gain greater popularity among consumers.

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The Indian automobile industry has a prominent future in India. Apart from meeting the advancing
domestic demands, it is penetrating the international market too. Favoured with various benefits such
as globally competitive auto-ancillary industry; production of steel at lowest cost; inexpensive and
high skill manpower; entrenched testing and R & D centres etc., the industry provide immense
investment and employment opportunities.

PROBLEM
To identify the investment opportunities in the automobile sector from a long time perspective and to
narrow down to the most profitable option available.

SCOPE
Different investment opportunities with respect to the automobile sector have been identified. The
future growth based on the various literatures has been analysed and various emerging technology has
also been identified.
The Indian automobile industry is going through a phase of rapid change and high growth. With new
projects coming up on a regular
basis, the industry is undergoing technological change. The major players are expanding their plants
and focusing on mass customization, mass production, etc.
Nearly every automobile company is investing at a higher rate than ever before to achieve a high
growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected
that by the end of 2016 Indian automobile sector will be investing a huge amount as Rs. 30,000
crores.
For example, Maruti Udyog has plans of investing Rs. 6,500 crores; the Tata Motors is coming up
with more investment of Rs. 2,000 crores in its compact car project. Not only the Indian companies
but also foreign players like Hyundai are coming up with the investment of more than Rs. 3,800
crores in India.

PURPOSE
The purpose of this report is to scan the environment of the automobile industry of India and look into
the various opportunities available. The opportunities is to be closely evaluated and the best option is
to be recommended for investment which would give better returns to the investor in the long run.
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METHODOLOGY
The methodology behind the analysis and consolidation of the facts into this particular report is as
follows:

Scanning the external environment of the industry by using tools like PEST and Porters Five
Forces.

Examining the market and listing out the top 10 players in the sector.

Considering the top 5 players and analysing their performance based on their past sales and
performing SWOT on each of the shortlisted companies.

The present and future trends of the sector are also examined to help the investor take a
lucrative decision.

INDUSTRY ANALYSIS
The Indian automotive industry has ourished like never before in the recent years. This extraordinary
growth that the Indian automotive industry has witnessed, is a result of a two major factors namely,
the improvement in the living standards of the middle class, and an increase in their disposable
incomes. Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity
regulations, reduction of taris on imports, and rening the banking policies, initiated by the
Government of India, have played an equally important role in bringing the Indian Automotive
industry to great heights.
It is estimated that the sale of passenger cars have tripled compared to their sale in the last ve years.
Thus, the sale of cars has reached a gure of 1 million users and is expected to increase further. Its
also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have
shot up, largely due to increase in the consumers buying capacity. The increased demand for Indian
automobiles has resulted in a large number of multi-national auto companies, especially from Japan,
U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian rms.
Also, the institutionalization of automobile nance has further paved the way to sustain a long-term
high growth for the industry.

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PEST ANALYSIS
PEST analysis is concerned with the environmental inuences on a business. The acronym stands for
the Political, Economic, Social and Technological issues that could aect the strategic development of
a business Identifying PEST inuences is a useful way of summarizing the external environment in
which a business operates. However, it must be followed up by consideration of how a business
should respond to these inuences.
1. Political Environment

Indian Government has changed its role from controller to facilitator with prime focus on
providing better infrastructure, growth oriented economic policies and right environment to
attract investments.This has made giant auto manufacturers enter into India and aect the
competitive environment.

The liberalization steps, such as, relaxation of the foreign exchange and equity regulations,
reduction of taris on imports, and rening the banking policies, have played an equally
important role in bringing the Indian Automotive industry to great heights.

Institutionalization of automobile nance has further paved the way to sustain a long-term
high growth for the industry.

2. Economic environment:

Rising GDP consecutively for the last 5 years has led to increased purchasing power and
hence the automobiles.

Per capita Income is rising , which is aecting the segments of automobiles being ventured
into.

There is cut Throat competition among many players in market.

Increasing urbanization of rural India also has given rise to increase in sales.

The concept of service in auto industry has changed into customer care now , thus
encompassing the greater value into it.

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3. Social Environment:

Indian families are becoming increasingly nuclear

Increasing Propensity to spend

Increasing distances between work-place and residence

Increase in percentage of working women has increased number of earning members in a

family.

4. Technology:

Alternate Fuel: increasing use Use of CNG and LPG instead of conventional fuel has made
the entry of new kinds of vehicles in the market.

Advent of Internet: The customer can now use the Internet to place the order and expect the
manufacturer to fulll his customized demand in the minimum time.

Electric Car: With technological advancements electrical car may emerge as a preferred
option.

5. Other Factors:

Institutionalization of automobile nance has become important factor for sustainable growth.

Car industry is gaining exports orientation due to foreign investment and DE licensing.

Increase in money supply would ensure a reasonable demand for cars.

Car industry is a growth industry which is sustainable.

The changing lifestyles indicate an increase in demand for cars in the all the segments and
especially mid price segment

The changing buying behavior shows preference for styling, comfort, fuel eciency and
conformance to environmental standards

Technologically the industry is experiencing major changes like alternative fuels ,

customization etc.

Intense competition is indicated in the coming years due to increase in market players.

The concept of value has been widened up to include customer care.

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Porter's five forces

The auto manufacturing industry is considered to be highlycapital and labor intensive. The major
costs for producing and selling automobiles include:
Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still
substantial labor costs in designing and engineering automobiles.
Advertising Each year automakers spend billions on print and broadcast advertising, furthermore,
they spent large amounts of money on market research to anticipate consumer trends and preferences.
The auto market is thought to be made primarily of automakers, but auto parts makes up another
lucrative sector of the market. The major areas of auto parts manufacturing are:
Original Equipment Manufacturers (OEMs) - The big auto manufacturers do produce some of
their own parts, but they can't produce every part and component that goes into a new vehicle.
Companies in this industry manufacture everything from door handles to seats.
Replacement Parts Production and Distribution - These are the parts that are replaced after the
purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this
area of the sector.
Rubber Fabrication - This includes everything from tires, hoses, belts, etc.
In auto industry, a large proportion of revenue comes from selling automobiles. The parts market is
even more lucrative. For example, a new car might cost $18,000 to buy, but if you bought, from the
automaker, all the parts needed to construct that car, it would cost 300-400% more.
A significant portion of an automaker's revenue comes from the services itoffers with the new vehicle.
Offering lower financial rates than financial institutions, the car company makes a profit on financing.
Extended warranties also factor into the bottom line.
Greater emphasis on leasing has also helped increase revenues. The advantage of leasing is that it
eases consumer fears about resale value, and it makes the car sound more affordable. From a maker's
perspective, leasing is a great way to hide the true price of the vehicle through financing costs. Car
companies, then, are able to push more cars through. Unfortunately, profiting on leasing is not as easy
as it sounds. Leasing requires the automakers to accurately judge the value of their vehicles at the end
of the lease, otherwise they may actually lose money.
1. Barriers to Entry - It's true that the average person can't come along and start manufacturing
automobiles. The emergence of foreign competitors with the capital, required technologies
and management skills began to undermine the market share of many automobile companies.
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Globalization the tendency of world investment and businesses to move from national and
domestic markets to a worldwide environment, is a huge factor affecting the auto market.
More than ever, itis becoming easier for foreign automakers to enter the Domestic market
.Automobiles depend heavily on consumer trends and tastes. While car companies do sell a
large proportion of vehicles to businesses and car rental companies (fleet sales), consumer
sales is the largest source of revenue. For this reason, taking consumer and business
confidence into accountshould be ahigher priority than considering the regular factors like
earnings growth anddebt load .
2. Threat of Substitutes - Rather than looking at the threat of someone buying a different car,
there is also need to also look at the likelihood of people taking the bus, train or airplane to
their destination. The higher the cost of operating a vehicle, the more likely people will seek
alternative transportation options. The price of gasoline has a large effect on consumers'
decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but
they also guzzle gas compared to smaller sedans and light trucks. When determining the
availability of substitutes you should also consider time, money, personal preference and
convenience in the auto travel industry. Then decide if one car maker poses a big threat as a
substitute.
3. Competitive Rivalry - Highly competitive industries generally earn low returns because the
cost of competition is high. The auto industry is considered to be an oligopoly (A market
condition in which sellers are so few that the actions of any one of them will materially affect
price) which helps to minimize the effects of price-based competition. The automakers
understand that price-based competition does not necessarily lead to increases in the size of
the marketplace, historically they have tried to avoid price-based competition, but more
recently the competition has intensified - rebates, preferred financing and long-term
warranties have helped to lure in customers, but they also put pressure on the profit margins
for vehicle sales. Every year, car companies update their cars. This is a part of normal
operations, but there can be a problem when a company decides to significantly change the
design of a car. These changes can cause massive delays and glitches, which result in
increased costs and slower revenue growth. While a new design may pay off significantly in
the long run, it's always a risky proposition.
4. Bargaining Power of Suppliers - The automobile supply business is quite fragmented (there
are many firms). Many suppliers rely on one or two automakers to buy a majority of their
products. If an automaker decided to switch suppliers, it could be devastating to the previous
supplier's business. As a result, suppliers are extremely susceptible to the demands and
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requirements of the automobile manufacturer and hold very little power. For parts suppliers,
the life span of an automobile is very important. The longer a car stays operational, thegreater
theneed for replacement parts. On the other hand, new parts are lasting longer, which is great
for consumers, but is not suchgood news for parts makers. When, for example, most car
makers moved from using rolled steel to stainless steel, the change extended the life of parts
by several years.

5. Bargaining Power of Buyers -The bargaining power of automakers are unchallenged.

Consumers may become dissatisfied with many of the products being offered by certain
automakers and began looking for alternatives, namely foreign cars. On the other hand, while
consumers are very price sensitive, they don't have much buying power as they never
purchase huge volumes of cars.

MAJOR PLAYERS
At present major Indian, European, Korean, Japanese automobile companies are holding significant
market shares. In commercial vehicle, Tata Motors dominates over 60% of the Indian commercial
vehicle market. Tata Motors is the largest medium and heavy commercial vehicle manufacturer. Car
manufacturers in India dominate the passenger vehicle market by 79%. Maruti Suzuki is the largest
car producer in India and has 37% share in passenger cars and is a complete monopoly in multi
purpose vehicles. In utility vehicles Mahindra holds 42% share. Hyundai and Tata Motors is the
second and third car producer in India
The automobile Industry in India is now working in terms of the dynamics of an open market. Many
joint ventures have been set up in India with foreign collaboration, both technical and financial with
leading global manufacturers. Also a very large number of joint ventures have been set up in the autocomponents sector and the pace is expected to pick up even further. The Government of India is keen
to provide a suitable economic, and business environment conducive to the success of the established
and prospective foreign partnership ventures. $5.7 billion is the investment envisaged in the new
vehicles projects.

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PASSENGER CARS SEGMENT

Top 10 Automobiles (Passenger Vehicle) Companies in India by market share are as follows
Maruti Suzuki ( 37% Market Share): Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog
Limited) is a subsidiary of Suzuki Motor Corporation of Japan. Maruti Suzuki is a leading
manufacturer of passenger vehicles in India. Lovingly referred to as the peoples car maker; over the
past three decades Maruti Suzuki has changed the way people in India commute and travel.
Hyundai Motors India Limited (14.4% Market Share): Hyundai Motor India Limited (HMIL) is a
wholly owned subsidiary of Hyundai Motor Company (HMC). HMIL is the largest passenger car
exporter and the second largest car manufacturer in India. It currently markets eight passenger car
models across segments in the A2 segment it has the Eon, Santro, i10 and the i20, in the A3
segment the Accent and the Verna, in the A5 segment Sonata and in the SUV segment the Santa Fe.
Tata Motors(13.1% Market Share): Tata Motors Limited is Indias largest automobile company,
with consolidated revenues of INR 1,65,654 crores (USD 32.5 billion) in 2011-12. It is the leader in
commercial vehicles in each segment, and among the top three in passenger vehicles with winning
products in the compact, midsize car and utility vehicle segments. It is the worlds fourth largest truck
and bus manufacturer.
Mahindra & Mahindra (11.4% Market Share): In 1947, Mahindra & Mahindra introduced
India to the utility vehicle. More than 65 years later, It is still Indias premier utility vehicle (UV)
company. In addition to making groundbreaking UVs like the Scorpio and Bolero, Mahindra offers
cars, pickups, and commercial vehicles that are rugged, reliable, environmentally friendly, and fuelefficient.
Toyota (6.4% Market Share): Since its inception in India in 1997, Toyota Kirloskar Motor has
witnessed a steady growth in the Indian automotive market and is today more than ready to seize the
enormous opportunity India offers. Toyotas newly built second plant is a testimony to this
commitment and also, the start of a new era for Toyota in India.
General Motors (3.3% Market Share): General Motors India Private Limited is a 50:50
partnership between General Motors and SAIC that is engaged in the automobile business in India. It

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is the 6th largest automobile manufacturing company in India. General Motors India started its
journey in 1996 and has completed 16 years of operation in India.
Ford (3.2% Market Share): Established in 1995, Ford India is a wholly owned subsidiary of Ford
Motor Company, a global automotive industry leader. Ford India manufactures and distributes
automobiles and engines made at its modern integrated manufacturing facilities at Maraimalai Nagar,
near Chennai. The companys models include the Endeavour, Fiesta and the Figo.
Honda (2.9% Market Share): Honda Cars India Ltd., (HCIL) is a leading manufacturer of premium
cars in India. The company was established in 1995 with a commitment to provide Hondas latest
passenger car models and technologies, to the Indian customers. The company is a subsidiary of
Honda Motor Co. Ltd., Japan.
Volkswagen (2.4% Market Share): With its headquarters in Pune, Maharashtra (India), the
Volkswagen Group is represented by three brands in India: Volkswagen, Audi and Skoda. The
Volkswagen Group is completing 10 years of its India journey which began with the entry of the
Skoda brand in 2001, Audi brand and Volkswagen brand in 2007. Each brand has its own character
and operates as an independent entity in the market.

Nissan ( 1.5% Market Share): Nissan Motor India Private Ltd. (NMIPL), a 100% subsidiary of
Nissan Motor Co., Ltd., was incorporated in 2005 with a vision of Enriching Peoples Lives through
latest Nissan Technology and products. In India, Nissan offers innovative and exciting products across
hatchback, sports, SUV and sedan segments. Nissan has successful introduced two locally-produced
models in India in less than two years Micra & Sunny.

ANALYSIS OF TOP FIVE PASSENGER CAR

PLAYERS
MARUTI SUZUKI
Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan & India
s leading
passenger car manufacturer, accounting for nearly 49 percent of the total industry sales.Maruti Suzuki

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offers 16 brands with near about 150 variants. Maruti offers various brands whichinclude Maruti 800,
Alto 800, Alto K10, Estilo, WagonR, Omni, Eeco, AStar, Ritz, Gypsy, Swift, Swift Dzire, SX4,
Ertiga,Kizashi and Grand Vitara. The company is engaged in the business of Purchase,
Manufacturing, and Sales of vehicles & spare parts. Maruti Suzuki is also engaged in other activities
like Pre owned car sales, Car financing & Fleet management. Maruti Suzuki got various awards and
accolades in its profile. It has ranked no.1 in JD Power Asia Pacific Customer Satisfaction Index
(CSI) survey 2009 for ten times in a row. Maruti Suzuki got CNBC TV18 award 2011 for
manufacturer of the year.
Maruti Suzuki is the only Indian company who has crossed the 10 million sales mark since its
inception. The company has two manufacturing facilities in Manesar and Gurgaon, Haryani, India.
The Gurgaon manufacturing plant has a manufacturing capacity of nine lakh units annually.
According to Mr.R.C.Bhargava Chairman, Maruti Suzuki India Limited, Maruti Suzuki India Limited
finalized Rs.1700 crore investment for doubling the diesel engine capacity at Gurgaon Manufacturing
Facility to 6,00,000 units by 2014 . The Gurgaon plant also having K Series engine plant. Since
inception of this plant, till date over 10 lakh K Series engine have been rolled out. Maruti Suzuki
s
Manesar manufacturing facilities have two fully integrated plants having capacity of 5.5 lakh units
annually.
Maruti Suzuki is also ahead in Social activities. As a responsible corporate citizen Maruti Suzuki
introduced world class driving training facilities to India by launching Institute of Driving & Traffic
Research. These include a specially formulated multilingual theory curriculum, scientifically laid out
driving tracks and advanced driving simulators that replicate Indian driving conditions.
In 2008, Maruti Suzuki introduced National Road Safety Mission. Under this initiatives, the company
took a commitment of training over 5,00,000 people in safe driving practice in a span of three years.
Also with an objective to improve road safety and inculcate safe and systematic driving habits among
people, Maruti Suzuki has opened Maruti Driving Training School (MDS). These driving schools are
equipped with Practical Training and Attitude Training.

SALES NETWORK

Maruti Suzuki has the largest sales and service network amongst car manufacturers in India. It had
802 sales outlets in 555 cities and 2740 service workshops in 1335 cities. The service network of the
Maruti Suzuki includes Dealer workshops, Authorized service stations and Maruti service zones. The
following pie chart clearly describes the sales network of Maruti Suzuki.

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It is amply clear from the above pie chart that, Maruti Suzuki gradually increased its sales and service
network. In year 2005 -06, the total sales network were 375 whereas in year 2006-07 the number of
sales network reached to 491. In year 2009-10 the number of Sales network increased by 121 over
2008-09 and reached to 802. In year 2011-12 the total number of Sales network was 1100 i.e a growth
of 17.89 percent over 2010-11.

PERFORMANCE
DOMESTIC SALES:

Maruti Suzuki is the only Indian company who has crossed the 10 million sales mark since its
inception. The company has the largest sales and service network amongst car manufacturers in India.
In the month of October 2012, Maruti Suzuki reported 85.46 percent increase in total sales at 1,03,108
vehicles, in same month the company had recorded domestic sales of 96,002 vehicles compared to
51,458 vehicles in 2011. In November 2012 the company sold total 1,03,200 vehicles and in the same
month last year, the company sold 91,772 vehicles. We can see the performance of Maruti Suzuki
with respect to Domestic Sales through following graph

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From the above chart it is revealed that the domestic sales of Maruti Suzuki India Limited in year
2009-10 was 8,70,790 vehicles i.e a growth of 20.58 percent than domestic sales of 2008-09. In year
2011-12 Maruti Suzuki sold 1006316 vehicles i.e a negative growth of

(-) 11.16 percent over

2010-11. In year 2010-11, the company sold 1132739 vehicles.

The following pie chart describes the net sales of Maruti Suzuki during 2004-05 to 2011-12.

From the above pie chart it is revealed that Maruti Suzuki
s total Net Sales in year 2004-05 was
109108 million whereas the net sales in year 2005-06 was 120,034 million. In year 2010-11,
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Maruti
s total net sale was 361,282 million whereas the total net sale in year 2011-12 was 347,059
million. In year 2011-12 Maruti Suzuki
s net sale was decreased by (-) 3.93 percent over 2010-11.
EXPORT:

Maruti Suzuki India Limited exporting to 98 countries in Europe, Asia, Latin America, Africa and
Oceania. Some leading overseas markets of Maruti include Germany, Netherland, France & UK.
Presently the company exports various models like A-Star, Ritz, Estilo and Maruti 800. In year 200910, Maruti Suzuki clocked export sales of 147,575 units its highest ever and in 201112, the company
exported 1,27,300 units.
The following are the top ten export destinations of Maruti Suzuki India Limited.

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The following chart clearly focuses on Export of Maruti Suzuki during 2004-05 to 2011-12.

It is revealed from the above chart that the export of Maruti Suzuki in year 2009-10 was 147,575
vehicles whereas the company exported 138,266 vehicles in year 2010-11 i.e the year 2010-11 saw
negative growth by (-) 6.30 percent over 2009-10. The year 2011-12 had also seen a negative growth
by (-) 7.87 percent over 2010-11. The year 2009-10, recorded marvellous growth of 110.75 percent
over 2008-09.
The following graph stated the economic performance of Maruti Suzuki India Limited during 2004-05
to 2011-12. The graph depicts the profit of company after tax.

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It is amply clear from the above chart that Marutis profit after tax in year 2004-05 was 8536 million
whereas after 2004-05, the profit of Maruti Suzuki gradually increased till 2007-08 as the year 200809 recorded less profit over 2007-08. Also from 2009-10, Maruti Suzuki recorded less profit. In year
2009-10, Maruti
s profit after tax was 24,976 million whereas in year 2010-11 the companys profit
reached to 22,886 million. In year 2011-12, Maruti
s profit after tax was not remarkable. In this year
the company recorded 16,351 million profit.
SWOT ANALYSIS

Strengths

Maruti Udyog limited (MUL) is in a leadership position in the market with a market share of
48.74

Major strength of MUL is having largest network of dealers and after sales service centers in
the country.

Good promotional strategy is adopted by MUL to transfer its thoughts to the people about its
products.

Maruti Suzuki recorded highest number of domestic sales with 9,66,447 units from 7,65,533
units in the previous fiscal. It recently attained the 10million domestic sales mark.

Strong Brand Value and Loyal Customer Base are big strengths for MUL

There are around 15 vehicles in Maruti Product portfolio. Has good product lines with good
fuel efficiency like Maruti Swift, Diesel, Alto etc

Alto still beats the small car segment with highest number of sales

MUL is the first automobile company to start second hand vehicle sales through its Truevalue entity.

MUL has good market share and hence its after sales service is a major revenue contributor.

Weaknesses

Low interior quality inside the cars when compared to quality players like Hyundai and other
new foreign players like Volkswagen,Nissan etc.

Government intervention due to having share in MUL.

Younger generations started getting a great affinity towards new foreign brands

The management and the companys labor unions are not in good terms. The recent strikes of
the employees have slowed down production and in turn affecting sales.

Maruti hasnt proved itself in SUV segment like other players.

Opportunities

MUL has launched its LPG version of Wagon R and it was a good move simultaneously

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MUL can start R&D on electric cars for a much better substitute of the fuel.

Marutis cervo 600 has a huge potential in tapping the middle class segment and act as a
strong threat to Nano

New DZire from Maruti will capture the market share and expected to create the same magic
as Maruti Esteem(currently not available)

Export capacity of the company is giving new hopes in American and UK markets

Economic growth of the country is constantly increasing and the government is working hard
to increase the gdp to double digit.

Threats

MUL recently faced a decline in market share from its 50.09% to 48.09 % in the previous
year(2011)

Major players like Maruti Suzuki, Hyundai, Tata has lost its market share due to many small
players like Volkswagen- polo. Ford has shown a considerable increase in market share due to
its Figo.

Tata Motors recent launches like Nano 2012, Indigo e-cs are imposing major threats to its
respective competitors segment

China may give a good competition as they are also planning to enter into Indian car segment

Launch of Hyundais H800 may result in the decline of Alto sales

The automobile industry is considered an engine for economic growth of the country. Maruti Suzuki
has proven that it is always ahead than its competitors because of continuous innovations and
technological up gradations. The company has set a benchmark of excellence because of Research &
Development activity as Maruti Suzuli believes that this activity will enable the company to offer
superior and environment friendly products to customer with complete satisfaction. Maruti Suzukis
environmental performance is really uncountable. Considering the growing vehicle pollution, the
company introduced advanced K-Series engine in its vehicles which resulted in reduction of CO, THC
and NOx emissions by almost 50 percent. As far as economic performance is concerned, Maruti
Suzukis last few year
s statistics of Domestic sales, Export, narrates that still Maruti Suzuki is the
leader of Indian Automobile sector.

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HYUNDAI MOTORS INDIA LTD

Hyundai Motors India Limited is India
s second largest car manufacturer & largest passenger car
exporter. Hyundai
s popular brands in A2 segment include Eon, Santro, i10 & i20 whereas the A3
segment includes Accent & Verna. The A5 segment of Hyundai Motor consist Sonata &Santa Fe in
sports utility vehicle segment. Hyundai Motors India Limited
s fully integrated state of the art
manufacturing plant near Chennai boasts of the most advanced Production, Quality & Testing
capabilities in the country. The company commissioned its second plant in February 2008 having an
installed capacity of 3,30,000 units per annum. Hyundai Motors India Limited has two manufacturing
plants in India located at Sriperumbudur of Tamil Nadu. Both plants of Hyundai Motors have a
combined annual capacity of 6,00,000 units per annum. Presently the company has 346 dealers with
805 service points across India. The company currently exports to more than 120 countries across
Africa, Middle East, Latin America and the Asia Pacific. As far as export is concerned, Hyundai
Motors touched 1.5 million vehicles in year 2012.
With a view to focus on constant innovation & up gradation, vehicle test & evaluation, design
engineering, Hyundai Motors has set up the research & development centre at Hyderabad. This is
Hyundai
s fourth overseas R&D centre which is spread across 2,00,000 square foot facility with an
investment of Rs.184 crore.
Hyundai Motors bagged various awards and achievements in its profile. In year 2011, Santa Fe
awarded SUV of the year
by Car India awards 2011 & in year 2012, Hyundai Verna awarded as
Sedan of the year 2011
Golden steering award. In the same year Eon awarded Entry Level
Hatchback of the year
at ET Zig wheels awards 2011.

PERFORMANCE EVALUATION OF HYUNDAI MOTOR INDIA LIMITED

DOMESTIC SALES
In December 2011, Hyundai Motor India Limited reported 3.6 percent jump in total sales to 48,949
units. In the domestic market, company
s sales increased by 12.8 percent to 29,516 units from
26,168 units in December 2010. In December 2011, the company sold 42,624 units in A2 segment
while in A3 segment the company sold 6,247 units. In the same month the company sold 11 units of
Sonata Transform model in A5 segment.

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In the month of November 2012, Hyundai Motor India Limited reported 2.29 percent fall in total sales
at 55,762 units while the company sold 57,071 units in same month last year. In the domestic market,
Hyundai recorded a marginal decline in sales at 34,751 units compared to 35,000 units in November
2011. The company sold 48,650 units in A2 segment while sales in the A3 segment stood at 6,526
units. During November 2012, the company sold 53 units of Santa Fe and 20 units of luxury sedan
Sonata.
The following graph shows the sales of Hyundai Motors during 1997-2007.

From the above pie chart it is revealed that the sales of Hyundai Motor India Limited in year March
1999 was 509.73 crore whereas in year 2000, Hyundai
s total sales was 2333.86 crore. In 2002, the
company
s sale was 3,385 crore i.e in this year the company registered growth of 11.56 percent over
2001. In year 2007, the company registered growth of 16.53 percent over 2006. In this year
Hyundai
s sales was 10,353 crore whereas the sale in 2006 was 8,898 crore.
The following pie chart describes the domestic sales of Hyundai Motors during 1998 to 2010.

31 | P a g e

From the above graph it is disclosed that since 1998 to 2010, Hyundai Motors domestic sales have
been increased drastically. In year 2008, by selling 245,397 vehicles Hyundai recorded growth of
22.44 percent over 2007 whereas in year 2009, the company recorded growth of 18.12 percent over
2008. In 2010, the company sold 3,56,717 vehicles & recorded growth of 23.06 percent over 2009.
EXPORT:
Hyundai Motor India Limited is a leading exporter of passenger cars with a market share of 48
percent of the total exports of passenger cars from India. In October 2005, the company exported its
2,00,000th car followed by its 3,00,000th and 4,00,000th car in October 2006 and August 2007
respectively. Currently, Hyundai Motor India is exporting six of its popular models namelySantro,
i10, i20, Accent, Eon & Verna to 119 countries across East Europe, Africa, Middle East, Latin
America & Asia Pacific. Hyundai Motor India Limited has been India
s number one exporter for
seven years in a row.
In September 2012, Hyundai Motors exports grew by 3.9 percent to 22,707 units whereas the
company exported 21,849 vehicles in September 2011 whereas the company exported 23,007 vehicles
in October 2012 & recorded growth of 50 percent over October 2011. In October 2011, the company
had exported 15,321 vehicles.
The following graph shows the performance of Hyundai Motors India Limited in Export during 19992012.

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From the above chart it is amply clear that as far as export is concerned the year 2009 recorded
growth of 10.72 percent over 2008. Hyundai Motors exported 247,102 vehicles in year 2010 i.e in this
year; Hyundai saw a decrease in export of (-) 8.50 percent over 2009. The year 2011, also recorded a
negative growth of (-) 1.93 percent by exporting 2,42,330 vehicles over 2010.
The following graph focuses on Hyundai Motor
s Profit after tax during 1997-2007.

It is amply clear from the above pie chart that Hyundai Motor
s profit after tax in year 2001 was
171.96 crore whereas in 1997 and 1999 the profit after tax of company was negative as in initial years
the company was newly entered in Indian automobile market. In year 2003, Hyundai
s profit after
tax was 164.75 crore whereas in 2004, the company
s profit after tax was 378.85 crore. In year 2006,
Hyundai
s profit after tax was increased and reached to 525.1 crore.
PRODUCTION:
In year 1998, Hyundai Motors India Limited has started its production. Currently Hyundai Motor is
known as India
s second largest passenger car manufacturer. On 14 January 2003, the company
awarded Manufacturer of the year at the CNBC autocar India awards. Hyundai Motor touches
milestone of 30 lakh car production on 4 August 2010 whereas on 30 November 2010, the company
reaches milestone of 20 lakh domestic productions in a span of 12 years. On 30 December 2010,
Hyundai Motor India Limited achieved a historic milestone by reaching the production of 6 lakh
units, the highest since inception.
According to Mr.Park-Managing Director & Chief Executive Officer, Hyundai Motors India Limited
plans to increase its production capacity from 6.3 lakh units a year to 6.7 units, in a year and ten new
models will be launched by 2015 in the mid segment
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SWOT ANALYSIS

Strengths of HMIL

Hyundai India has such a brand equity that it is almost assumed to be an Indian brand, with
lot of good accolades for being Indias second most selling brand next to MUL in market
share

Hyundai Motor India limited is the largest car exporter from Asian Market which showed a
10% growth compared to last FY

The domestic sales is increasing at an average rate of 19.1%

HMIL is known for its quality products which has better performance and it has constantly
been ahead in the race with Maruti Udyog limited in many parameters

The product length includes around 8 cars, starting from new Eon in small car segment to
SUV segment Santa Fe

Among the automobile players only HMIL is known for its CSR activities

Hyundai products never fail to win laurels in each segment from various automobile ratings
ever since its operations in India

Hyundai , has the largest network of showrooms and service station next to Maruti in India

An article in Economic times quoted that Hyundai Eon launched , treads on Alto territory
indicated that Eon will act as a threat to reduction in Altos market share

Weaknesses of HMIL

HMIL took a long time to gain the market share as its not the first mover in India

In terms of most reliable and trusted brand; Maruti is more strong in Indian subcontinent

Spare parts of Hyundai vehicles are comparatively priced higher and spare parts do not have
PAN India presence

In SUV segment both Tucson and its next model Santa Fe didnt make a major impact

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Increase in commodity prices such as steel, aluminium and ancillary parts has affected
margins

Since HMIL concentrates on both domestic and International sales there are higher risks of
exchange rate fluctuations

As Hyundai majorly concentrates on quality, most of its product are in premium category in
each segment. Hyundai is still struggling to make a better impact in small car segment in
terms of cost efficiency like other manufactures

Hyundai doesnt have any product match to compete in Corporate orders like Tata Indica V2,
Tata Sumo, Tata Indigo, Chevy Tavera, Ford Fiesta etc. These vehicles are most preferred in
both cab segment and government booking for bulk orders

Opportunities of HMIL

SIAM Society of Indian automobile Manufacturers, have stated that there is steady increase
in Car sales both Domestic and Indian contributing a valuable share in Indias Gdp

The export markets growth rate is 22.30% compared to last fiscal year

The saving consumption pattern of India is an added advantage for any segment doing
business in India. This was one of the major reason for Indian market to survive amidst global
recession

There is more scope of HMIL to enter into small car segment as its has dedicated R&D plant
in Hyderabad, India. Hyundai is one of the very few companies that has widest R&D network
across the world located in Korea, Europe, India, US, Japan

Hyundai has very good opportunity in entering into commercial vehicles and Recreational
vehicles as they are already doing well outside India. Currently HMIL has its focus only on
Passenger car segment.

Threats of HMIL

Though Hyundai claims itself to have no direct competitors other than MUL, there are Indian
players like Tata, Mahindra imposing a strong threat for Hyundai Motors India to expand its
product category

Foreign Direct Investments flowing in Indian automobile space are not good signs for already
existing Giants like MUL and Hyundai.

Almost all major automobile players have started invading India to open up their market and
their manufacturing plant in India.Chennai is referred to as the Detroit of Asia!

Hyundai faced a slight decline in market share due to tough competition from Fords Figo and
Volkswagen- Polo

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Many manufacturers have started to concentrate on small car segment as an alternative to

Nano. These will slowdown the expected sales of Eon.

Today, despite tough competition, Hyundai Motor India Limited has created a different identity in
Indian automobile market. Hyundai
s growth has been driven by volume oriented revenues coupled
with technological soundness, constant innovations and superior designs. Currently, Hyundai have a
complete line up of cars across all segments. Considering the changing needs of Indian customers, the
company always fulfilled the expectations of customers by giving them technologically advanced cars
with more features and more value for money. Evaluating the past performances of Hyundai Motor,
no doubt that in coming future Hyundai Motor will be the leader in Indian Automobile industry.

TATA MOTORS
The Indian automobile industry posted a decline of 9.3% in FY 2013-14, as compared to 1.1% growth
in the last fiscal. The commercial vehicles declined by 22.4% (last year growth of 1.7%) and
passenger vehicles declined by 4.7% (last year growth of 0.9%).

Passenger Vehicles:
The Passenger Vehicle Industry contracted for the first time in the last five years, in FY 2013-14 with
decline of 4.7%. The last such instance was during the economic slowdown of FY 2008-09 when it
remained close to flat at negative 0.5%. The decline in sales volumes is seen across segments, but
sedans bore the biggest brunt. Hatchbacks and UV's continue to be the volume segments. The high
growth in UV segment last year, with the onset of Soft Roaders could not be repeated this year. The
premium and luxury vehicles segment however has seen a growth even in an otherwise declining
year.

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During the year, the Company recorded sales of 141,846 vehicles (including Jaguar Land Rover) in
the domestic market; a decline of 38.1%. The domestic market share was 5.8% as compared to 9.0%
last year.
The Company introduced a host of new products including the E-max range of CNG vehicles, Vista
tech, the refreshed and improved Sumo Gold.
Nano Awesome Campaign was launched during the year, along with the launch of Nano Twist with
electronic power steering, thereby continuing to take the Nano Brand closer to the youth.
During the Delhi Auto Expo 2014, Tata Motors Flagship products, the Bolt hatchback and the Zest
Sedan were unveiled, to much appreciation. The Company's Horizonext strategy was unveiled,
showcasing the direction of Design, Performance & Connectivity that are going to be the brand pillars
going ahead. The Expo also saw the Nexon Compact SUV concept and the connectivity concept for
the Company's future cars being unveiled.
The drive to improve sales experience for customer with a focus on dcor and ambience in
showrooms across country continues. The dealership network is also being augmented to cater to the
demand for Bolt and Zest launch.
The Company sold 2,805 Jaguar and Land Rover vehicles through its exclusive dealerships in India
registering an impressive growth of 12.5%. The globally popular Range Rover Sport and Jaguar XF
3.0D was launched during the year. New brand touch points were created in social media for both
Jaguar and Land Rover in a short span. Besides Land Rover Experience events were launched through
which over 600 Dynamic Drive Off-road Experiences were delivered. 1st ever Land Rover Expedition
was also launched in India that received a stupendous response. A new after-sales customer
engagement initiative was introduced through Service Clinics in various dealer cities. Used Car
program was introduced through 11 Outlets and achieved a 48% penetration in March 2014.
Tata Motors Sales, Distribution and Support: The sales and distribution network in India as of
March 31, 2014, comprised 2,420 sales contact points for the Passenger and Commercial Vehicle
businesses. The Company has deployed a Customer Relations Management (CRM) system at all its
37 | P a g e

dealerships and offices across the country, largest such deployment in the automotive market. The
combined online CRM / DMS system supports users both within the Company and among the
distributors in India and abroad.
The Company's 100% subsidiary, TML Distribution Company Ltd (TDCL), acts as a dedicated
distribution and logistics management company to support the sales and distribution operations of
vehicles in India. TDCL provides distribution and logistics support for vehicles manufactured at the
Company's facilities. TDCL helps us improve planning, inventory management, transport
management and timely delivery.
The Company provides financing support through its wholly-owned subsidiary, Tata Motors Finance
Ltd (TMFL). (Refer discussion on TMFL).
In addition to dealer service workshops, the Company uses a network of service centers on highways
and a toll-free customer assistance center to provide 24-hour on-road maintenance (including
replacement of parts) to vehicle owners. The Company believes that the reach of the sales, service and
maintenance network, provides us with a significant advantage over the competitors.
Tata Motors Exports: The Company markets its commercial and passenger vehicles in several
countries in Europe, Africa, the Middle East, South East Asia and South Asia. However, the
Company's exports of vehicles manufactured in India decreased marginally by 2% in FY 2013-14 to
49,922 units from 50,938 units in FY 2012-13. Commercial vehicles export sales of the Company
shrunk by 2.3% to 43,083 units impacted by the external environment influencers in Europe, the
Middle East, and South Asia and passenger vehicle sales remained flat 6,839 units.
For FY 2013-14, the Company's top five export destinations accounted for approximately 73% and
88% of the exports of commercial vehicles and passenger vehicle units, respectively. The Company
continues to strengthen its position in the geographic areas it is currently operating in and exploring
possibilities of entering new markets with market characteristics similar to the Indian market.
The Company has set up a network of distributors in almost all countries where the vehicles are
exported. The distribution network includes local dealers for sales and servicing products in the
respective regions. The Company has also deputed its representatives overseas to support sales and
services and to identify opportunities.
Jaguar Land Rover business: JLR has significantly consolidated its position in the premium car
segment. The strengths of JLR include iconic globally positioned brands, strong product portfolio of
award-winning luxury and high performance cars and premium all-terrain vehicles, global distribution
network, strong product development and engineering capabilities, and a strong management team.
The brand-wise wholesale sales of JLR are set forth in the table below:38 | P a g e

During FY 2013-14, total sales increased to 429,861 units from 372,062 units in FY 2012-13; an
increase of 15.5%. Jaguar volumes increased by 37.2% mainly contributed by the introduction of the
Jaguar F-TYPE and the smaller powertrain derivative of XF and XJ and XF Sportbrake. Land Rover
volumes increased by 11.6%, mainly contributed by the New Range Rover, New Range Rover Sport,
and Range Rover Evoque sales. JLR exported 354,005 units in FY 2013-14 compared to 304,034
units in FY 2012-13; an increase of 16.4%. JLR had a successful year of continued growth in all
markets led by China up 34% from last year to record retail sales of 103,077. North America and Asia
Pacific regions also performed strongly, up 20.2% and 27.7% to 75,671 and 22,795 respectively. The
UK and Europe, partly reflecting the economic headwinds, showed more modest growth, up 6.2% and
2.3% to 76,721 and 82,854 units respectively.
Jaguar designs, develops and manufactures a range of premium cars and sports cars recognised for
their design, performance and quality. Jaguar's range of products comprises the XF and XJ saloons,
the F-TYPE two seater sports car and the XK coup and convertible.
The XF, launched in 2008, is a premium executive car that merges sports car styling with the
sophistication of a luxury saloon. The 2013 Model Year XF range also included for the first time an
all-wheel drive version of the new V6 petrol engine for the US and European markets and a 2.0 litre
petrol version for the US and Chinese markets which helped to grow the volumes for Jaguar in FY
2013-14.
The XJ is Jaguar's largest luxury saloon vehicle, powered by a range of supercharged and naturally
aspirated 5.0-litre V8 petrol engine and a 3.0-litre diesel engine. Using Jaguar's aerospace inspired
aluminium body architecture, the new XJ's lightweight aluminium body provides improved agility,
and fuel and CO2 efficiency. The 2013 Model Year also included an all-wheel drive version and a 3.0
litre V6 petrol version for the US and European markets excluding the United Kingdom and a 2.0 litre
petrol version for the Chinese market.
The F-TYPE, a two seat sports car, inspired by the 2001 C-X16 concept cars, with an all-aluminium
structure and enhanced technology with the power of Jaguar's latest 3.0 litre V6 and 5.0 litre V8
engines, was available for retail customers from April 2013 onwards and since then, has received
numerous awards and appreciation by the auto media. In November 2013, Jaguar unveiled the FTYPE Coup which went on sale in April 2014.
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In March 2013, Jaguar unveiled two new additions to its R performance range, the XJR sedan and the
XKR-S GT. The 550PS XJR - Jaguar's new flagship sports saloon - combines a supercar performance
and assertive looks with the high level of luxury already associated with the XJ range. The XKR-S
GT is the ultimate road-going but track-ready version of the XK coupe.
At the Frankfurt Motor Show in September 2013, Jaguar revealed its first ever crossover concept
vehicle, the Jaguar CX17, based on a new modular scalable advanced aluminum architecture. JLR has
also announced the new Jaguar XE, a mid-sized sedan which will be built on this new modular
architecture. This will allow Jaguar to grow its product portfolio and target high growth areas of the
premium market.
Land Rover designs, develops and manufactures premium all-terrain vehicles that aim to differentiate
themselves from the competition by their capability, design, durability, versatility and refinement.
Land Rover's range of products comprises the Defender, Discovery, Freelander, Range Rover
(including the new Range Rover), Range Rover Evoque and Range Rover Sport (including the new
Range Rover Sport).
The Defender is one of Land Rover's most capable SUVs, and is recognised as an iconic vehicle in the
segment targeting extreme all-terrain capabilities and payload/towing capability.
The Freelander 2 is a versatile vehicle for active lifestyles, matching style with sophisticated
technology and offroad capability. The Freelander 2, offering was significantly enhanced for the 2013
Model Year with the introduction of a turbocharged 2.0-litre petrol engine, giving superior
performance as compared to the 3.2-litre engine it replaces, while also reducing CO2 emissions.
The Discovery 4 is a mid-size SUV that features genuine all-terrain capability and versatility,
including full seven-seat capacity. Recent power train innovations have delivered an improvement in
CO2 for the 3.0-litre LR-TDV6 engine.
The Range Rover Evoque is the smallest, lightest and most fuel-efficient Range Rover to date,
available in 5-door and coupe body styles and in both front-wheel drive and allwheel drive
derivatives. Since its launch in September 2011, consumer interest and demand have been consistent
across the globe and the car has been a major success for JLR.
The Range Rover Sport combines the performance of a sports tourer with the versatility of a Land
Rover. At the 2013 New York International Auto Show, Land Rover debuted the All New 2014 MY
Range Rover Sport built on a weight saving aluminium architecture, to save upto 420kgs. The All
New Range Rover Sport is the fastest, most agile and most responsive Land Rover ever, and has been
a tremendous success since launch.

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The Range Rover is the flagship product under the Land Rover brand with a unique blend of British
luxury, classic design, high-quality interiors and outstanding all-terrain ability. The new allaluminium version, was launched in the third quarter of FY 2012-13. The new Range Rover was
declared the world's top SUV by The Sunday Times, won Top Gear magazine's ''Luxury Car of the
Year'' and was recently awarded the maximum 5-star safety rating by Euro NCAP.
New Product Launches: The new "Discovery Vision" Concept car was unveiled at New York
International Auto Show in April 2014 to an enthusiastic response amongst auto media and
journalists. Land Rover Discovery Sport (Freelander replacement) was announced as the first new
member of Discovery family. It is expected to be available for retail sales in 2015.
Jaguar Land Rover's performance in key geographical markets on retail basis
United Kingdom: Against the backdrop of improved labour market conditions, rising consumer and
business confidence and buoyed by cash compensation from the mis-selling of payment protection
insurance, total vehicle sales jumped 12.5% compared to the previous year. Jaguar Land Rover sales
climbed 6.2% on the year, supported by a strong performance from Jaguar (10.7% growth) and the
launch of JLR F-TYPE convertible. 5% annual growth in Land Rover sales reflects JLR dominant
market position in the UK for SUVs.
United States and North America: In FY 2013-14, total passenger car sales expanded by 6.2%. The
launch of the Jaguar F-TYPE and new Range Rover Sport helped Jaguar Land Rover beat the US
market three times, growing sales by 19.2%. Alongside a strong expansion of business in Canada,
total Jaguar Land Rover sales in North America grew 20.2%.
Europe: In Germany, Jaguar Land Rover sales grew 6.5%, against a meagre 0.2% for total passenger
cars. In Italy, Jaguar Land Rover sales edged up 1.1%, driven by Land Rover, against a total market
contraction of 1.3%. Although in France sales fell across the board, the most surprising performance
came from Spain where, after three years of double-digit contraction, the market rebounded by 11.7%
and Jaguar Land Rover sales rose 14.7%.
China: Passenger car sales reached a new peak of almost 18.4 million units in the year to March,
growing faster than either of the previous two years. Total JLR sales in the China Region reached
103,077 up from 77,075 in FY 2012-13. Jaguar volumes more than doubled to 19,891, while Land
Rover sales reached 83,186.
Although it is already the largest car market in the world, unlike the UK or US, China's car market
remains immature, with low vehicle ownership rates and huge growth potential. A rapidly expanding
middle class, fast rising incomes, and a strong preference for premium vehicles mean considerable
opportunities exist for JLR to increase sales further.
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SWOT ANALYSIS
STRENGTHS

One of the most established company in automobile sector

Wide & extensive distribution and service network

Good market penetration in the taxi & rental segment

Expert service professionals available

Many associations like Jaguar Land Rover, Hispanso, Macropolo etc which increases
international presence

Dedicated engineering and R&D department

More than 60,000 employees

Highly diversified product portfolio

WEAKNESS

Limited international presence

Sometimes faces alleged quality and durability issues

Not much customer engagement programs and activities

OPPORTUNITIES

Expanding automobile market and available space for competitors

Increasing per capita income and purchasing capability of potential customer base

Leveraging customer engagement experience to acquire new customers

Leveraging mergers and acquisitions to acquire newer technology

Augmenting the distribution and service network in various countries

THREATS

Increasing fuel costs

Competition from other big automobile giants

Competitive products offering same level features at a lesser price

Product innovations and frugal engineering by competitors

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MAHINDRA AND MAHINDRA

Mahindra & Mahindra Ltd. (M&M Ltd.), Indias leading SUV manufacturer, today announced its
auto sales numbers which stood at 38,466 units during June 2014, as against 38,092 units during June
2013.
The Passenger Vehicles segment (which includes UVs and the Verito) sold 16,780 units in June 2014,
as against 17,232 units during June 2013. The companys domestic sales stood at 36,452 units during
June 2014, as against 36,207 units during June 2013. In June 2014, the 4-wheelers commercial
segment sold 14,138 units, while the 3-wheelers segment clocked 4,544 units. Exports for the month
stood at 2,014 units.
Commenting on the monthly performance, Pravin Shah, Chief Executive, Automotive Division &
International Operations(AFS), Mahindra & Mahindra Ltd. said, "We have achieved a marginal
growth in our sales during June 2014 and do hope that the auto industry will continue to stay in a
positive zone. The recent announcement by the government of an extension in the lowering of excise
duty will provide a fillip leading upto the festive season. At Mahindra, we are happy with our exports
performance for the first quarter of FY 2015, which has grown by 38% ".

Mahindra & Mahindra sales grew by five per cent in the last month compared to the same period last
year. The Indian auto major managed to sell 19,893 units in September, 2014 about 1,000 units
more than corresponding month last year.
The numbers firmly position Mahindra as the third largest passenger car manufacturer, behind Maruti
Suzuki and Hyundai. The overall positive sentiments in the Indian economy post elections have
helped the auto industry as well. The auto industry has also benefited from this, showing a positive

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trend for five months on the trot. Mahindra will be hoping to see further growth next month owing to
the festive season and launch of the new Mahindra Scorpio
Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive Division &
International Operations (AFS), Mahindra & Mahindra Ltd. said, "The sales numbers for September
have been encouraging and we are glad that the automotive industry is turning the bend. We expect
the ensuing festive season to bring in some much needed cheer with a slew of new launches from
manufacturers as well as a reduction in the Current Account Deficit and stable and reducing fuel
prices. At Mahindra, we are very happy with the positive growth, especially in our stronghold
segments of UVs and Pick Ups which have grown by 9 per cent and 30 per cent, respectively. We do
hope that the recently launched New Generation Scorpio will continue to be a trendsetter.

SWOT ANALYSIS
STRENGTHS

Mahindra has been one of the strongest brands in the Indian automobile market

Mahindra group give employment to over 110,000 employees

Excellent branding and advertising, and low after sales service cost

Sturdy SUVs good for Indian roads and off-road terrain

WEAKNESS

Mahindras partnership with Renault did not live up to international quality standards through
their brand Logan

OPPORTUNITIES

Developing hybrid cars and fuel efficient cars for the future

Tapping emerging markets across the world and building a global brand

Fast growing automobile market

Growing in the market through electric car Reva (controlling stake) and entry into twowheeler segments

THREATS

Government policies for the automobile sector across the world

Ever increasing fuel prices

Intense competition from global automobile brands

Substitute modes of public transport like buses, metro trains etc

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HERO MOTOCORP
Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based
in New Delhi, India. The company is the largest two wheeler manufacturer in the world.In India, it
has a market share of about 46% share in 2-wheeler category.The 2006 Forbes 200 Most Respected
companies list has Hero Honda Motors ranked at #108.[5] On 31 March 2013, the market
capitalisation of the company was INR 308 billion (USD 5.66 billion).
Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. In
2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by
Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new
corporate identity.
In June 2012, Hero Motocorp approved a proposal to merge the investment arm of its parent Hero
Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda
Motors

SALES PERFORMANCE

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46 | P a g e

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization. PBT
stands for Profit Before Tax, and PAT stands for Profit After Tax.
The graph visually shows how the net profit of the company stand reduced due to the impact of
Interest, Depreciation, and Tax.

SWOT ANALYSIS
STRENGTHS

Huge brand equity and one of the biggest players in the two wheelers Indian market

Excellent R&D, and wide variety of products in every segment.

Excellent distribution, over 3000 dealerships and service centers

Good advertising and excellent rebranding from Hero Honda to Hero Moto Corp

WEAKNESS

Absence in the premium bike segment

High imports for its spare parts i.e. over 30% imports

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Most of the products have similar features and low on design and innovation

OPPORTUNITIES

Two-wheeler segment is one of the most growing industries

Export of bikes is limited i.e. untapped international markets

THREATS

Strong competition from Indian as well as international brands

Dependence on government policies and rising fuel prices

Better public transport will affect two-wheeler sales

Financial Year '14

A total of 16.9 m two-wheelers were sold in FY14, a growth of a tepid 7% over the previous
year. The slow growth was on account of the overall slowdown in the Indian economy and firm
interest rates and fuel prices that dampened demand. Motorcycles accounted for 74% of the total two
wheelers sold and grew by a mere 4% YoY. The scooters (geared & ungeared) segment was the star
of the two wheeler industry logging in a growth rate of 22% YoY. In the domestic market, the 3wheeler segment did badly as volumes were down 11% YoY, but the exports growth was strong at
17% YoY.
It was a second consecutive challenging year for the medium and heavy commercial vehicles
(M/HCVs) segment as volumes plunged by 25% during the fiscal given the sluggishness in industrial
activity and low freight rates. LCVs were at the receiving end as well as volumes dropped by 17.6%
YoY. As a result, volumes for the overall CV industry fell by 20% YoY. The HCV industry is highly
cyclical and because the industrial and construction sectors slowed down, its effect was felt on HCVs
as well. Both Tata Motors and Ashok Leyland faced heavy challenges during the year given that both
of them corner a significant chunk of the CV pie.
Tractors did very well during the year as monsoons in 2013 were quite healthy and M&M,
which is a market leader in the tractors space, benefitted from this as its auto division faced rough
weather.
Passenger vehicles (PV) also did badly as volumes declined by 6%. Slowdown in the
economy, firm interest rates and fuel prices had an adverse impact on demand. This time the decline
was seen across the segments of the PV space viz., passenger cars, utility vehicles (UVs) and vans.
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Maruti Suzuki, which is the market leader in the PV space, was not spared either and saw its volumes
fall.
As volumes took a beating, few of the companies did manage to report an improvement in
operating margins largely on account of various cost rationalization measures undertaken.

TRENDS IN AUTOMOTIVE INDUSTRY

Reasons like high inflation, fuel prices and unfavourable interest rates, resulting in high cost of
ownership, have affected car sales in India over the past year. According to a study by the Society of
Indian Automobile Manufacturers (SIAM), passenger car sales fell 9.6% in 2013 to 1,807,011
vehicles from 1,998,703 in 2012. This decline in annual car sales occurred for the first time in the past
11 years owing to customers deferring their purchases amidst a slowing economy.

These numbers signal tough times ahead for the car industry, but theres still a lot to look forward to.
According to global marketing information services company, JD Power, car sales in India would
bounce-back by 9% in the current year with leading manufacturers introducing new models and an
expected improvement in buying sentiment post the general elections.

Apart from these, some of the technology drivers for car sales in the year 2014-15 would be:

1) Connected Cars
2) Intelligent Public Transportation
3) Green Cars
4) Cloud & Big Data
Lets look at each of these in detail.

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Connected Cars

Connected cars and infotainment are the future. Auto manufacturers are increasingly focusing (and
should continue to focus) on connected cars to significantly advance the driving experience of drivers.
A connected vehicle could also have Predictive Diagnostic Tools to check vehicles health and
accordingly warn the driver in case there are any issues with the vehicle, eliminating any unexpected
breakdowns. With additional features like parking assistance, driver warning systems, weather and
traffic reports, and music streaming, connected cars promise to make driving more safe, convenient
and enjoyable. However, this trend is not restricted to passenger vehicles alone and is applicable to
public transportation as well.

Intelligent Public Transportation

State transport buses funded under the Indian governments JnNURM II (Jawaharlal Nehru National
Urban Renewal Mission) program are required to have On-Bus Intelligent Transport Systems. The
first ARAI approved ITS, which is compliant to JNNURM II standards has been recently developed
and launched by KPIT. The On-Bus ITS comes with features like automatic vehicle location, vehicle
health monitoring & diagnostics along with back-end support from KPIT via cloud and remote
diagnostics. The console displays information about the passengers, routes and vehicle health,
ensuring the safety and security of both the bus driver and passengers.

Going Green

Indian Government is on a serious mission to go green. Rising fuels costs and pollution levels are
some of the reasons for this endeavour. In fact, the India National Electric Mobility Mission Plan
2020 envisages that by 2020, there will be 5-7 million electric vehicles (EVs) on the roads. There has
also been a conscious shift by auto manufacturers to move towards energy efficient vehicles and
hybrid/ electric vehicles.
However, there is still the issue of old cars on the roads. Currently, India has over 115mn vehicles
plying on its roads (source: Urban Transport in India), 15.5mn of which are passenger vehicles. Older
vehicles pollute far more than new ones, especially if they have been on the road for more than 8
years, producing more than 90% of the automotive pollution. According to Polk, a global automotive
market intelligence firm, the average age of all light vehicles now stands at 11.4 years compared to
the 10 year mark in 2009. Therefore, there is an immediate need to specifically target these vehicles
for improving their fuel/energy efficiency and emissions.
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This has given rise to another area of research: hybrid plugins. For example, KPITs Revolo can
transform any vehicle into a fuel efficient and green automobile. Revolo is capable of improving both,
emission levels and performance of older vehicles.

Cloud and Big Data

Indian auto industry has usually carried out processes for marketing and sales manually. Cloud and
big data has the potential to not just bring in operational efficiency in the automotive functions but
also drive down IT applications and infrastructure costs. Adopting cloud-based solutions will enable
Indian auto manufacturers to standardize processes and automate data-heavy transactions that come in
the form of invoices, purchase orders and shipping notices, and so on, thereby eliminating delays and
human errors. Through cloud collaboration on a common platform, auto manufacturers will be able to
exchange data quickly, securely, and accurately. Cloud-based big data analytics will also become a
game changer and can be used to gather business insights and spot trends.

Prospects
Given that the Modi government has now come into power, there are expectations of increased focus
on reforms and ramp up in infrastructure. Thus, government spending on infrastructure in roads and
airports and higher GDP growth in the future will benefit the auto sector in general. We expect a slew
of launches both in passenger cars and utility vehicles (UVs) given that the competition has
intensified. Since diesel prices have also been hiked, the differential between petrol and diesel will
reduce further and this will play an important bearing on a consumers purchasing decision.
In the 2-wheeler segment, motorcycles are expected to witness a flurry of new model
launches. Though the market size is expected to grow by 10% to 12%, competitive pressure could
keep prices and margins under control. TVS, Honda and Hero Motocorp are poised to benefit from
higher demand for ungeared scooters in the urban and rural markets. The 3 wheeler industry, where
Bajaj Auto is the market leader, is also poised for growth on the back of new permits opening up and
increase in exports.
While good monsoon is a positive for the tractor sector, given the fact that non-farm incomes
have continued to climb up, volumes should still hold up well in the longer run despite a year or two
of poor monsoons. The longer-term picture is impressive in light of poor mechanisation levels in the
countrys farm sector and the thrust of the government on improving rural infrastructure.
With an estimated 40% of CVs plying on the roads being 10 years old, demand for HCVs is
expected to grow by 7% to 8% over the long term. While the industry is going through cyclical

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hiccups currently, we expect this factor to weaken in the future on account of strong structural
tailwinds. The privatisation of select state transport undertakings bodes well for the bus segment.

Attractiveness of the Automobile Industry for

Investment purpose
Economic reforms and deregulation have transformed that scene. India has already become one of the
fastest growing automobile markets in the world. The Indian automobile industry is going through a
technological change where each firm is engaged in changing its processes and technologies to
maintain the competitive advantage and provide customers with the optimized products and services.
Starting from the two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles
and the luxury vehicles, the Indian automobile industry has achieved splendid achievement in the
recent years.
In the Indian economy, auto industry maintains a high-flying place. Automobile industry has a strong
multiplier effect and is capable of being the driver of economic growth. A sound transportation
system plays an essential role in the country's rapid economic and industrial development. The welldeveloped Indian automotive industry skillfully fulfils this catalytic role by producing a wide variety
of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such
as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.
The automotive sector is one of the core industries of the Indian economy, whose prospect is
reflective of the economic resilience of the country. Continuous economic liberalization over the
years by the government of India has resulted in making India as one of the prime business destination
for many global automotive players. The automotive sector in India is growing at around 18 per cent
per annum.
The auto industry is just a multiplier, a driver for employment, for investment, for technology. The
Indian automotive industry started its new journey from 1991 with delicensing of the sector and
subsequent opening up for 100 per cent FDI through automatic route.The automobile sector has been
contributing its share to the shining economic performance of India in the recent years. With the
Indian middle class earning higher per capita income, more people are ready to own private vehicles
including cars and two-wheelers. Product movements and manned services have boosted in the sales
of medium and sized commercial vehicles for passenger and goods transport.

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Side by side with fresh vehicle sales growth, the automotive components sector has witnessed big
growth. The domestic auto components consumption has crossed rupees 9000 crore and an export of
one half size of this figure.
India is on the peak of the Foreign Direct Investment wave. FDI flows into India trebled from $19
billion in 2006-07 and $25 billion in 2007-08. By AT Kearney's FDI Confidence Index 2006, India is
the second most attractive FDI destination after China, pushing the US to the third position. It is
commonly believed that soon India will catch up with China.
India is up-and-coming a significant manufacturer, especially of electrical and electronic equipment,
automobiles and auto-parts . The country is expected to witness over Rs 30,000 crore of investment
by 2010.Over the next one year, some 20 new cars will be seen on Indian roads.
Maruti Udyog has set up the second car plant with a manufacturing capacity of 2.5 lakh units per
annum for an investment of Rs 6,500 crore (Rs 3,200 crore for diesel engines and Rs 2,718 crore for
the car plant itself). Hyundai and Tata Motors have announced plans for investing a similar amount
over the next 3 years. Hyundai will bring in more than Rs 3,800 crore to India, Tata Motors will be
investing Rs 2,000 crore in its small car project.
General Motors will be investing Rs 100 crore, Ford about Rs 350 crore and Toyota announced
modest expansion plans even as Honda Siel has earmarked Rs 3,000 crore over the next decade for
India - a sizeable chunk of this should come by 2010 since the company is also looking to enter the
lucrative small car segment.
Commercial vehicle segment, Ashok Leyland and Tata Motors have each announced well over Rs
1,000 crore of investment. Mahindra & Mahindra's joint venture with International Trucks is expected
to see an infusion of at least Rs 500 crore. Hero Honda is about to establish its fourth manufacturing
plant. Bajaj Auto and TVS Motors are moving to the excise-free zones of Himachal Pradesh and
Uttaranchal for putting up new capacity.
The 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. Moreover, India provides trained manpower at
competitive costs making India a favoured global manufacturing hub. The attractiveness of the Indian
markets on one hand and the stagnation of the auto sector in markets such as Europe, US and Japan on
the other have resulted in shifting of new capacities and flow of capital to the Indian automobile
industry.
Global auto majors such as Japanese auto majors Suzuki, Honda and Korean car giant Hyundai are
increasingly banking on their Indian operations to add weight to their businesses, even as numbers
stay uncertain in developed markets due to economic recession and slowdown.
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Moreover, 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.
According to the study, the car industry would see a massive capacity building in low-cost locations
like India as manufacturers shift base from developed regions.

Production
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. Passenger vehicles increased marginally from 1.77
million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million.
In recent times, India has emerged as one of the favourite investment destinations for automotive
manufacturers.
German car major Audi will start assembling its sports utility vehicle Audi Q5 from mid-2010. The
company plans to assemble more cars locally at its Aurangabad plant instead of importing completely
built units (CBUs).
Ford India commenced commercial production of its compact car Figo, and diesel and petrol
engines at a new factory in Chennai. The Figo will be built exclusively in India and exported to Asian
countries and South Africa.
Japanese major Nissan has decided to shift the entire production of its small car, Micra, from the
UK to India. After production of the Micra begins here, Nissan plans to manufacture four more
models in India, involving a total investment of over US$ 412.2 million.
Suzuki Motorcycle India (SMIPL), a wholly-owned subsidiary of Japanese auto major Suzuki
Motor Corporation, plans to double production capacity of its two-wheelers to 300,000 units by the
end of the current fiscal year. The company will invest US$ 26.77 million.
Volkswagen has set a target to localise production in India to about 80 per cent in 2-3 years from
the current levels of almost 50 per cent as it seeks to offer cars at more competitive prices.

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CONCLUSION
The average person can't come along and start manufacturing automobiles. The emergence of foreign
competitors with the capital, required technologies and management skills began to undermine the
market share of many automobile companies. Rather than looking at the threat of someone buying a
different car, there is also need to also look at the likelihood of people taking the bus, train or airplane
to their destination. The auto industry is considered to be an oligopoly. Many suppliers rely on one or
two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it
could be devastating to the previous supplier's business. The bargaining power of automakers is
unchallenged. Consumers are very price sensitive, they don't have much buying power as they never
purchase huge volumes of cars
Indian automobile industry has achieved splendid achievement in the recent years. India is on the
peak of the Foreign Direct Investment. The attractiveness of the Indian markets on one hand and the
stagnation of the auto sector in markets such as Europe, US and Japan on the other have resulted in
shifting of new capacities and flow of capital to the Indian automobile industry. India is a significant
manufacturer of automobiles and auto-parts. Global auto majors such as Japanese auto majors Suzuki,
Honda and Korean car giant Hyundai are increasingly banking on their Indian operations to add
weight to their businesses .The car industry would see a massive capacity building in low-cost
locations like India as manufacturers shift base from developed regions. Although the sector was hit
by economic slowdown but it doesn't effect the overall production of automobiles. In recent times,
India has emerged as one of the favourite investment destinations for automotive manufacturers. The
Indian auto industry is likely to see a growth of 10-12 per cent in sales in 2015.Competition in the
country's auto sector is likely to increase due to increasing penetration of global original equipment
manufacturers.
Indian market is full of tremendous opportunities. The density of cars currently in India is 13 per
1000, whereas in US, Germany and France it is 641, 532 and 499 respectively. According to reports
from IHS Automotive, sales of cars and light CVs are believed to reach 6-7 million by 2020, up from
a predicted 3.7 million this year. Based on these numbers, it can be predicted that by 2016, India is
most likely overtake Germany, Japan and Brazil to become the worlds 3rd largest automotive market.

By focusing more on areas like driver safety, fuel efficiency, vehicular emissions, cost optimization
and other innovations, the India auto industry is capable of scaling to greater heights.

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RECOMMENDATIONS
Looking at the above analysis and the trends which different companies has witnessed it would be
highly recommended to invest in the passenger car segment as this segment is expected to grow at a
rate of about 10-12% in the coming financial year and the rate is expected to increase in the coming
years. With the allowance of upto 100% FDI in the automobile sector the industry seems very
attractive.
Now coming to the specific company which shows signs of good returns for the investors is
surely Maruti Suzuki LTD. Looking at the rich history and the amount of goodwill that surrounds the
company and the position of market leader in the present scenario, it seems that the company is set to
hold that position for quite some time.
Hence it can be recommended that a major chunk of investment can be made in the passenger
car segment and in the company Maruti Suzuki Ltd.

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LIMITATIONS
One of the measurements of economic development in a low-income economy is the increase in the
nations level of capital stock. A developing nation may increase the amount of capital stock by
incentivizing and encouraging capital inflows, and this is done more commonly through the attraction
of foreign direct investments, or FDIs. It has been widely discussed and upheld that amongst various
forms and modes of capital inflows, FDIs are favoured in particular because of its long term durability
and commitment to a host countries economy and would be less susceptible to short term changes in
market conditions, therefore ensuring a certain level of continuity and stability in the money flow.
However, many developing economies have tried to restrict, and even resist, foreign investments
because of nationalist sentiments and concerns over foreign economic and political influence.
One pertinent reason for this sentiment is that many developing countries, or at least countries with a
history of colonialism, fear that foreign direct investment may result in a form of modern day
economic colonialism, exposing host countries and leaving them and their resources vulnerable to the
exploitations of the foreign company.
While FDIs may increase the aggregate demand of the host economy in the short run, via productivity
improvements and technological transfers, critics have also raised concerns over the efficacy of
purported benefits of direct investments. This theory follows the rationale that the long-run balance of
payment position of the host economy is jeopardized when the investor manages to recover its initial
outlay. Once the initial investment starts to turn profitable, it is inevitable that capital returns from the
host country to where it originated from, that is the home country.
The key implication is this: While the levels of FDI tend to be resilient during periods of economic
uncertainty, it has the potential of adversely affecting the net capital flow of a developing economy
especially if it does not have a healthy and sustainable FDI schedule. It is also often argued that FDIs
generate negative externalities in the labour market of the host economy. Why so? All firms are profit
maximizing entities, and one way to achieve this is often the most direct approach of cost reduction.
FDIs may enter the host country for unique strategic reasons but there is ultimately the need to
achieve returns on investments.Evidence shows that multinational companies do pay a slight premium
over local-term wages, but does this really benefit the host economy? Paying a premium for the price
of labour may improve the consumption power of workers, but it also has the detrimental ability of
disrupting the local employment market. When prices rise, supply increases while demand falls.
Similarly, when the price of labour increase, wage premiums in this case, this creates a distortion and
creates a disequilibrium in the labour market. Job matching stops being efficient and may even create
unemployment.

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SOURCES
http://indiainbusiness.nic.in
http://info.shine.com/industry/automobiles-auto-ancillaries
https://www.equitymaster.com
http://www.ibef.org
http://articles.economictimes.indiatimes.com/2011-10-14/news/30279409_1_800cc-small-car-alto
http://www.economywatch.com
http://www.nistads.res.in
http://www.marketing91.com
http://www.mbaskool.com
http://www.tatamotors.com
http://www.mahindra.com
http://mmb.moneycontrol.com
http://www.autobei.com
http://www.isca.in
http://www.heromotocorp.com/en-in/
http://www.hyundai.com/in/
http://www.marutisuzuki.com/
http://www.kpit.com
http://companiesinindia.net
http://www.crisil.com
http://indiainbusiness.nic.in
http://www.businessteacher.org.uk

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INDEX

CAGR: PAGE 8

ACCIF: PAGE 9

ACMA: PAGE 9

GDP : PAGE 8

PEST: PAGE 16

SWOT: PAGE 34, 44, 28, 32, 47

PORTERS FIVE FORCES: PAGE 18

DIPP: PAGE 11

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