Automobile Industry

Section-D
Group-4
Arpit Mishra 150103042
Anubhav Gogoi 150102020
Ankush Sinha 150103035
Devanshi Arora 150101043
Kriti Goel 150102051
Nilotpal Mahanty 150102058
Shravan S 150101111
Reena Kadam 150102074

Introduction
Automobile is a very important industry that contributes to a major
portion of the GDP of many nations
The major players in the industry like Volkswagen AG, Toyota, Fiat
Chrysler, Ford and Nissan have their own variety of brands catering
to each segment
The sale of passenger cars hit a 75 million mark

in the year 2015 with China and USA as the largest

markets for automobiles

Shift in the industry trend

Companies are worried about the sustainability of their current business in
case they fail to cater to the needs of the environmentally conscious
population of the world
The industry is undergoing a massive change where manufacturers are coming
up with new strategies, technologies and ways to make their machines
greener
Vehicles from fully electric and Hydrogen F-Cell concepts to hybrid cars are
being launched from most manufacturers
Companies want to showcase to the world their care towards the protection of
the environment

Pestel Analysis
Political Factors
The Make in India movement will allow companies to set up
their manufacturing plants with ease
Many subsidies have been introduced for automobile and
automobile component manufacturers
Government easing up rules like allocation of spectrum for radar
based safety equipment for cars
Indian government planning to make India a manufacturing and
export hub for many automobile companies
Special privileges given to companies investing in developing
alternate fuel vehicles in India

Pestel Analysis
Economic Factors
India, having one of the fastest growing GDPs in the world is a big
market for automobile manufacturers to explore
Overall Indian automobile industry grew by a rate of around 3%
and the passenger vehicle segment registered a growth of over
8% over the previous year
An Infrastructure cess of 1% on small petrol, LPG and CNG cars,
2.5% on diesel cars till a certain capacity and 4% on higher
engine capacity cars and SUVs will be applied. This will affect the
diesel car market particularly
The SUV market which is growing at a high rate will be affected
and the luxury segment will be affected too

Pestel Analysis
Socio-Cultural Factors
The Indians mainly concentrates on factors such as mileage
which makes it the key area of focus for the Automobile
companies
Cost is more important than safety in the Indian market
ABS and Airbags, which are standard safety equipment in
developed nations are offered as optional equipment in India
Performance vehicles do not have a good market in India as
these vehicles offer less mileage
Mileage also makes people prefer diesel cars over petrol ones.
This has forced automobile manufacturers like Honda to enter
this segment

Pestel Analysis
Technological Factors
Cars are becoming more and more economical by replacing cylinders with
the help of turbochargers
Ford have brought into the market a 1 litre Eco-Boost engine
Radar based technologies enable cars to communicate between
themselves and will help in achieving the long term goal of driver less cars
Fully electric cars and Hybrid cars are going to be the next big thing in the
automobile industry
India is lacking behind in this race as the country doesnt even have
proper electric recharge stations
Other nations have also started working on hydrogen F-cell powered cars
like the Mercedes B-Class F-Cell, Audi H-Tron and Toyota Mirai

Pestel Analysis
Environmental Factors
Most vehicles in the planet run on fossil fuels that are soon to be
depleted
Most automobile manufacturers have started coming up with
hybrid cars or concepts to survive in the long run
Many governments like the Delhi government have made it
essential to use only CNG powered vehicles for public transport

Pestel Analysis
Legal Factors
The FDI limit for automobile companies to set up their business in
India is 100% which gives the major players from around the
world a chance in the Indian market
The FDI growth has been very strong in the market and
went to $12.4 billion in FY15 from $9.8 billion in FY14
and is projected to go to $13.4 billion the next year
Delhi government has restricted the registration of diesel
vehicles with engine capacity of over 2000cc

Pestel Analysis
Legal Factors
Automobile manufacturers are forced to voluntarily recall the
vehicles in case of any defects as they predict that this will be
made mandatory under the Motor Vehicles Act
Front and side crash tests are to be made mandatory by October
2017 for new vehicles and by October 2019 for existing vehicles
Airbags and child restraint systems are to be made mandatory to
satisfy these safety norms
India to enforce Bharath stage VI directly, skipping Bharath stage
V. This move is supposedly related to the Volkswagen crises

Swot Analysis
Strengths
Standards of living in India is increasing and there is a huge
unpenetrated market
Railway network is not well connected within the city for most parts in
India except for the major cities
Cars and bikes still remain as the best mode of transport for travelling in
the city
100% FDI has eased up the availability of funds for the international
players
There is a large pool of engineers and the labour rates are very low

Swot Analysis
Weaknesses
Fuel prices going up and people looking for alternate modes of
transport. This will prolong the repurchase frequency
Indian customers do not dump their cars so these used cars get
accumulated in the semi urban and rural areas reducing the
penetration opportunity of the automobile companies
People concentrate more on VFM and so manufacturers are forced
to provide as many features as possible for a low price
Very low demand for performance vehicles
No recharge stations for electric vehicles

Swot Analysis
Opportunities
Electric and Hybrid vehicles market is largely unexplored
Low end performance vehicle market is just opening up
Punta Abarth from Fiat and Polo 1.8TFSI from Volkswagen are the only
options for the customers and these are separated by a huge price bracket
Automobile manufacturers are entering the used car segment on their own
Maruti True Value and Mahindra First Choice are examples
Cab specific models of vehicles can be produced as the cab market in India
is growing and these cab companies do not look for too many features

Swot Analysis
Threats
Limited petroleum resources
Bad road and traffic conditions cause people to shift to other
modes of transport
Governments ban on larger capacity vehicle registration causing
worries among the luxury car manufacturers

Advantages In India

Strong Policy Support

The Automotive Market Is Split Into

Four Segments

Market Break-up By Production

Volume
Two wheelers dominate production
volumes; in FY15, the segment
accounted for about 79.17 % of the total
automotive production in the country
India is the worlds 6th largest vehicles
manufacturer globally. Further, India is
the Asias 2nd largest two- wheeler
manufacturer and 5th largest producer of
commercial vehicles, 4th largest
manufacturer of passenger car and the
largest manufacturer of tractors.

Major Players In Each Segment

Tata Motors: Leading In Terms Of

Innovation And Global Presence

Competitive Analysis

Four Major Competitors

Maruti Suzuki
Maruti Suzuki Limited formerly known as Maruti Udyog Limited is
a subsidiary of Suzuki Motor Corporation based in New Delhi
The group has operations in over 1220 cities with more than
2628 outlets and also exports to other countries in Asia, Africa,
South and Latin America
Marutis car sales in India are unrivalled. Six of its models are in
the top ten best-selling passenger cars list
Hyundai Motor India
Hyundai has three cars in the top ten best-selling passenger cars
list; the Grand i10, the Elite i20 and the Hyundai Eon
Despite having three cars in the top ten best-selling cars list the
companys sales were down 1.23% as it suffered in the exports
department where its sales plummeted by 37.87%

Four Major Competitors

Mahindra & Mahindra
Mahindra & Mahindra is an Indian multinational automobile
manufacturing corporation headquartered in Mumbai
The company reported a 15.7% increase in sales in February
2016
Mahindra and Mahindra launched the KUV100 in the sub 4
meter hatchback segment and it is expected to pose quite a
threat to other cars in the segment
Honda Cars India
Honda is one of the premium car manufacturers of the world. It
is headquartered in Tokyo, Japan
Domestic sales of the company declined 6.52% in January
2016. The cars that helped the company do well the entire year

History - TATA Motors

Established in 1945 as a locomotive producer
Entered the motoring business in 1954 in a joint endeavour with
Daimler-Benz AG
Indica was their first car with low fuel consumption and powerful engine
In 2004, they took over Daewoo Motors followed by other acquisitions
were Jaguar and Land Rover
In 2008, Tata Nano was released GenX Nano released in 2015
The company started suffering losses in 2015 as sales have declined
Also, they have been investing in intangible assets in recent years
They are investing on its Research and Development

Product range of the company

includes
Passenger Cars: Indica Vista, Indica V2, Aria, Zest, Indigo XL, Nano
Utility Vehicles: Safari Dicor, Sumo Grande, Sumo and Xenon XT
Trucks: Medium & Heavy Commercial Vehicles, Tata Novus,
Intermediate Commercial Vehicles, Light Commercial Vehicles, Small
Commercial Vehicles
Commercial Passenger Carriers: Buses, Winger, Magic
Defence Vehicles Subsidiaries of the company: Jaguar Land
Rover, Telco Construction Equipment Co. Ltd. (Telcon), Concorde
Motors (India) Ltd. (Concorde), Tata Daewoo Commercial Vehicle
Company

Core Competencies
Engineering : create the most effective and low cost vehicles available in the
market
Mergers & Acquisitions and expansion
Located in India : understanding of Indian Markets and Emerging markets as
well

Positioning
Company is working on repositioning
Known for diesel engines, but launched Revotron (gasoline) , Bolt and Zest
( petrol variants)
Older products like Indica are re-segmented to target smaller towns

Factors of Success
Strong Presence in the Marketplace : only company that have presence in
all segments of the industry heavy/medium/light commercial vehicles,
pickups, midsize cars and utility vehicles
Unique Understanding of Customer Need : they launched Indica to cater to
the need of affordable family car led by Launch of Nano in 2008
Skill Base Developed Over the Last 40 Years: 1400 scientists and engineers
and state of the art development, testing and validation facilities
People Strength : 60,000 employees with broad talent base

BCG Matrix

Acquisition of Jaguar Land Rover

Jaguar and Land Rover were premier luxury automotive brands from Britain
The acquisition would give Tata entry into the luxury automotive segment and provide it a foothold
in the U.S. and European markets

Competitiv

e
advantage
s behind
acquisition

Strategic
Changes

Cost control : Consultants was brought in to keep a tab on costs

Workforce being trimmed by around 11,000 from 27,000
Introduction of newer, more fuel-efficient and contemporary models

But just within four years of acquisition JLR is now one of Britains most profitable companies. JLR
posted 2.6bn of pre-tax profit on 21.9bn of revenue
Impact To meet rising demand and JLR is set to build factories in Brazil and Slovakia

China is a major market for luxury cars in the world. China accounts for 80pc of all JLRs profit.
Challeng Slump in the Chinese market has led to a 30 percent decrease in sales, which is will affect the topline as well as the bottom-line of the company.
es

TATA NANO worlds cheapest car

Indias low labour cost meant that Tata could engineer a new model for 20% of the
$350 million it would cost in a developed nation
The car was kept very simple. The car did not have features like antilock brakes, air
bags or support beams to protect passengers in case of a crash
Competitive
Although Tata motors intended to initially sell the car in the India and offer it in other
advantages
developing markets management felt that they could build a car that would meet US
behind Tata Nano or European specifications for around $6000- Still a low price for an automobile

Challenges

High Expectations: High pre-launch expectations limits the ability to perfect the business
model post-launch
Fulfilling Demand: Proved problematic when the company ran into problems purchasing
land for a new factory in West Bengal. Production for the first 100,000 cars was delayed for
more than 18 months
Selling Price: Nano was supposed to be the worlds first one lakh car. It turned out that
the car doesnt really sell for 1 lakh.
Safety issues: The Nano was designed without Airbag

Current Scenario Market Overview

Multiplier effect on the economy
30 new major factories
Automobile component industry to grow 3-fold
India to become the 4th largest car market
Market share by volume:
Passenger Vehicles : 13%
Commercial Vehicles : 3%
Three Wheelers : 3%
Two Wheelers : 81%

Current Scenario Market Overview

Price war is inevitable due to market clutter
Lower profits for industry overall
Price hike in component despite lower demand
Large sums of money are being spent on advertising and
marketing

Automobile Market
Car market has grown by 6.8%
YOY
Commercial Vehicle sales grew
by 2.8%
Three Wheeler segment grew
by 4.7%
Sub 100cc category of two
wheelers has contracted by 1%
150cc category has shown a
growth of 11.8%

Market Projection: Domestic

Demand
AUTOMOBILE DOMESTIC SALE TRENDS
90000000
80000000
70000000
60000000
50000000
40000000
30000000
20000000
10000000
0
Passenger Vehicles

Commercial Vehicles

Two Wheelers

Total

Three Wheelers

Market Projection: Export Trends

EXPORT
TRENDS

Passenger

Commercial

Three

Two

Category

Vehicles

Vehicles

Wheelers

Wheelers

Total

2009

446145

45009

173214

1140058

1804426

2010

444326

74043

269968

1531619

2319956

2011

508783

92258

361753

1975111

2937905

2012

559783

80027

303088

1956378

2899276

2013

596142

77050

353392

2084000

3110584

2014

622470

85782

407957

2457597

3573806

2015

671645

101317

518554

3025548

4274629

2016

724705

119666

659134

3724752

5262496

2017

781957

141337

837825

4585542

6478659

2018

843731

255961

1064960

5645261

7975877

2019

910386

463546

1353671

6949880

9819102

2020

982307

839482

1720651

8555998

12088297

2021

1059909

1520302

2187119

10533289

14881902

2022

1143642

2753268

2780047

12967532

18321110

2023

1233989

4986168

3533718

15964328

22555119

2024

1331475

9029950

4491709

19653685

27767606

2025

1436661

16353239

5709411

24195651

34184700

CAGR(%)

7.9

18.11

27.1

23.11

19.61

EXPORT TRENDS

Passenger Vehicles

Commercial Vehicles

Two Wheelers

Total

Three Wheelers

Market Projection: Overall Size

Passenger

Commercial Three

Two

Category

Vehicles

Vehicles

Wheelers

Wheelers

Total

2009

2397478

577730

613606

10511009

14099823

2010

945868

758948

795992

13300529

15801337

2011

3138622

901757

875034

15384261

20299674

2012

3063292

873238

841378

15753563

20531471

2013

3099651

709901

833477

16890778

21533807

2014

3223581

700743

939884

18462178

23326386

2015

3446008

730595

1039831

21249967

26382143

2016

3683783

761718

1150407

24458712

29838203

MARKET

2017

3937964

794167

1272741

28151977

33747008

SIZE

2018

4209683

827999

1408084

32402926

38167866

2019

4500151

863271

1557820

37295768

43167856

2020

4810662

900047

1723479

42927429

48822846

2021

5142597

938389

1906754

49409470

55218638

2022

5497437

978364

2109518

56870300

62452280

2023

5876760

1020042

2333844

65457716

70633529

2024

6282256

1063496

2582025

75341831

79886521

2025

6715732

1108801

2856597

86718447

90351655.01

CAGR(%)

6.9

4.26

10.634

15.1

13.1

Market Size
100000000
90000000
80000000
70000000
60000000
50000000
40000000
30000000
20000000
10000000
0

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers

Government Initiatives
Automotive Mission Plan : 2006-2016
Formation of National Automotive Board
Reduction of Excise Duty on small cars
Promoting growth of Hybrid cars and Electric Vehicles
Open to Public Private Partnerships (PPP)
FAME ( Faster Adoption and Manufacturing of Electric Vehicles)
Part of Make in India and NEMMP (National Electric Mobility
Mission Plan)
Objective to establish national fuel security, a competitive EV
System and environment friendly transport for future

Government Initiatives
Initial outlay of Rs795 Crores
Target to achieve 6-7 million EVs by 2020
Allocated Rs340 Crore for demand generation and Rs 20 crore for
charging infrastructure for FY16
Incentive Structure:
Rs1,800 to Rs22,000 for scooters
Rs3,500 to Rs29,000 for motorcycles
Rs3,300 to Rs54,000 for CNG/diesel three-wheeler variants
Rs3,300 to Rs61,000 for petrol-engine three-wheelers
Rs13,000 to Rs124,000 for sub-4-metre four-wheelers
Rs11,000 to Rs138,000 for four-wheelers above 4 metres long
Rs17,000 to Rs187,000 for LCVs (CNG / diesel variants)
Rs34 lakh to Rs66 lakh for buses (CNG variants)

World Of Electric Mobility

Target Segment:
Passenger Cars
Reach : 200 kms
Top Speed : 100 km/hr
Target Market : 6- 7 million units
/ year (2020)
Intracity Transportation Vehicle
Reach : 100 kms
Top Speed : 50 km/hr
Target Market : 24+ million
Competitors
Mahindra Reva
Bajaj
Maruti Suzuki
Tata Motors

Porters Five Forces Analysis

New Entrants - threat
Small no of competing
Vehicles
Different Niches
Low threat as it is
capital intensive

Industry Rivalry
Compete with existing
Established business
model
Existing players have
economies of scale
New Entrants - threat
Small no of competing
Vehicles
Different Niches
Low threat as it is
capital intensive

Supplier Power
Power is low due to low
switching cost
Fragmented Suppliers
High Ability to
substitute
Buyer Power
Perceived as a rich
mans toy
Consumer acceptance
is there but operational
costs need to be
reduced

Critical Success Factors

Operational Efficiency
Flexible and responsive to customer demand
Implementation of Six Sigma Approach
Necessary to bring cost down
Standardization
Benchmarking
Just-in Time inventory system
Resource Sharing
Customer Preferences

Thank You