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The key players have framed the strategies to tap the sector as per their features of the automotives. The increasing GDP and economical resources have boost up during the last decade which has increased purchasing power of the Indian peoples. The car segment in India has emerged as one of the promising sector and has shown growth trends in tremendous sales. Tata Motors has emerged as key player in Indian automobile industry and its share in Commercial Vehicles has 63.94%, Passenger Vehicles 16.45%. Tata Motors Limited is Indias largest automobile company, with consolidated revenues of USD 14 billion in 2008-09. It is the leader in commercial vehicles and among the top three in passenger vehicles. Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, one of the India's largest passenger car companies has grabbed a share for over 45% of the domestic car market. Other key players in automobile segment of India have contributed significantly and their existence in market has made others players to act actively in India. Despite economic slowdown, the Indian automobile sector has shown high growth. The passenger vehicle market, which constitutes around 80% of automobile sales, has immense growth potential as passenger car stock stood at around 11 per 1,000 people in 2008. Anticipating the future market potential, the production of passenger vehicle is forecasted to grow at a CAGR of around 10% from 2009-10 to 2012-13. De-licensing in 1991 has put the Indian automobile industry on a new growth track, attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. This took the Indian automobile production from 5.3 Million Units in 2001-02 to 10.8 Million Units in 2007-08. The other reasons attracting global auto manufacturers to India are the countrys large middle class population, growing earning power, strong technological capability and availability of trained manpower at competitive prices. These are the major findings of our new report, 'Indian Automobile Sector - A Booming Market In 2006-07, the Indian automotive industry provided direct employment to more than 300,000 people, exported auto component worth around US$ 2.87 Billion, and contributed 5% to the GDP. Due to this large contribution of the industry in the national economy, the Indian government lifted the requirement of forging joint ventures for foreign companies, which attracted global to the India market to establish their plants, resulting in heightened automobile production. The Indian automobile market is currently dominated by two-wheeler segment but in future, the demand for passenger cars and commercial vehicles will increase with industrial development. Also, as India has low vehicle presence it possesses substantial potential for growth. Indian Automobile Market Scenario: De-licensing in 1991 put the Indian automobile industry on a new growth trajectory, which attracted foreign auto giants to set up their production facilities in the country to take advantage of the various benefits it offers. Large middle class population, growing earning
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power and strong technological capability have been boosting automobile demand for the past few years. Despite economic slowdown, the Indian automobile sector has recorded phenomenal growth, especially in passenger cars segment. The passenger vehicle market, which constitutes around 80% of automobile sales, has immense growth potential. Anticipating the future market potential, the production of passenger vehicle is forecasted to grow around 10% till 2012-13. Tata Nano has brought about a new revolution in the countrys small car segment. Seeing the good initial response from consumers, many other players in the industry are chalking out their plans to launch cars in this segment in the next few years. A CAGR analysis shows growth of around 14.5% in domestic volume sales of passenger vehicles during the coming years. Other segments, such as two-wheelers, multi-purpose vehicle and light commercial vehicle, are also expected to witness fast growth in coming years. The research covers various aspects of the Indian automobile market and gives a detailed analysis of its various segments such as passenger vehicle, commercial vehicle, utility vehicles, multi-purpose, two wheelers and three wheelers. Each section concisely explains the current and future market trends, and developments in the Indian automobile market. There are immense opportunities for various industry players including automobile manufacturers and players of automobile components. According to new research report Indian Passenger Car Market Analysis, the passenger car market, which constitutes around 78.5% of passenger vehicle sales (in FY 2010), has immense growth potential as passenger car stock stood at around 11.6 per 1,000 people in 2009. Realizing booming passenger car demand in the country, many domestic and foreign automobile giants are formulating capacity expansion strategies, and billions of dollar worth of investments is already in pipeline. Considering huge market potential, production of passenger cars is projected to grow at a CAGR of around 11% between 2010-11 and 2013-14.
to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected.
GM, Toyota, Ford, Hyundai, Maruti Suzuki, Honda, Ford, Skoda, Volvo, Mercedes, Tata Motors, Bajaj Auto, Mahindra & Mahindra, TVS Motors, Hero Moto Corp., Bajaj Tempo, Ashok Leyland. The auto industry is highly competitive with a number of global and domestic auto industries present in the country. MUL is the largest passenger car manufacturer in India. TATA is the largest player in the Indian industry. Always plans to launch new and exciting products in the Indian markets.
Hyundai is the third largest manufacturer in India and one of the largest exporters of the vehicles. This has established India as one of its manufacturing bases in the world. This is planning to invest heavily to boost exports from India. Toyota has vision of capturing 10% share of the Indian passenger car market by 2010. Honda is one of the leading players of the Indian premium cars segment. Ford is one of the leading players in the Indian premium cars segment. GM is one of the leading players in the Indian premium cars segment. plans to enter the small car segment by relaunching the Matiz. Mahindra is one of the largest domestic players in the UV / MUV segment. Fiat, Tata motors manages the marketing and distribution of the fiat branded cars through selected Tata outlets throughout India. Hindustan Motors is one of the original three car manufacturers in India, founded in 1942, it was the leader in car sales until the 1980's, when the industry was opened up from protection HM has joint venture with Mitsubishi, producing versions of the lancer and Pajero. Daimler Chrysler, E, C, and S class passenger cars are assembled in India; other models are imported as completely built units and retailed in India.
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 to 33% of the market and the northern cluster around the National Capital Region contributes 32%. Chennai, with the India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, and PSA Peugeot Citron is about to begin their operations by 2014. 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 & Mahindra with a UV 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 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. As Maruti Suzuki's production took a hit because of recent labour woes at its Manesar factory in Haryana, the Indian operations of two Japanese carmakers, Toyota and Honda, have emerged as the biggest gainers. In the first five months of fiscal 2013, even as passenger vehicle sales slowed down into single digits, Toyota Kirloskar has gained more than a percentage point in market share by moving from 6.97% to 5.57% a year ago. Honda Cars India has moved up to 2.85% from 1.9% in the April-August period of fiscal 2012. Honda now moves above Volkswagen (VW) whose market share has dipped from 3.19% to 2.41% in the first five months of the ongoing fiscal year.
Pleasant Interiors:
Fabric seats in dual tone of Barley Beige and Shadow Grey make for soothing interiors and provide total comfort for your family on long travel distances.
Dual HVAC: The dual AC vents with individual roof mounted louvers provide uniform cooling to all 3 rows and offer superior passenger comfort.
Power Steering: Be it driving long distance or through crowded city spaces, power steering makes it a breeze.
Low Turning Radius: The Venture's low turning radius of 4.5 meters aids sharp turning in tight corners and make for comfortable city driving.
Front Power Windows: No more manual rolling up of the windows. One touch Power windows aid effortless rolling with just the touch of a button.
In-built Music System : Experience crystal clear music on the go with built-in high fidelity music system and say goodbye boring journeys with the new Tata Venture.
Tachometer
Vanity mirror
Mobile charger
Roof lamps
2 glove boxes
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Economic Growth: Overall freight movement in the country is a function of industrial and agricultural growth. High growth in GDP reflects higher economic activity, which typically results in transportation of more freight and hence higher demand for commercial vehicles. Interest Rates and Availability of Finance: Automobile sales are heavily dependent on the availability of retail finance. Higher interest rate can adversely affect the demand. On the other hand, lower interest rates stimulate demand as it result in lower cost of acquisition. Cost of Fuel: Demand for commercial vehicles is driven to a considerable extent by the profitability of the truck operator. The profitability of truck operators remains very sensitive to diesel prices, as any increase in fuel price results in higher operating cost, although fuel prices in India continue to be artificially supported at lower levels by the government. Taxes and Duties: Reduction in excise duties and the introduction of VAT regime can act as catalyst for higher demand of automobiles. A cut in excise duty reduces prices, which, if passed on, enhances the affordability for buyers.
Price Elasticity Of Demand: Motors to determine if the company should increase or decrease the price of its Sport Utility Vehicle (SUV).. Cross-Over Utility Vehicles: housing market, favorable interest rates, higher corporate profits, and lower motor vehicle sales. Section IV Fiscal Policy Federal Funds Rate The monetary... Motor Insurance: Time brought in new types of protection. Thus, motor insurance is not limited to the insurance of the vehicle, but offer also other types of protection related to
8. SUPPLY FACTORS
Presence across Segment: Manufacturers with presence across various product segments can ensure higher volume and better capacity utilization by using the common manufacturing capacity. Typically a customer upgrades from one segment to higher segment and the presence across various segments ensures that the company retains its existing customers. Efficient Operations: Competition in PV segment is very intense and this requires the existing players to initiate steps to reduce their cost of production. Effective and successful operation methods like platform commonality, reduction in vendor base and workforce rationalization can help a company immensely.
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Wide Dealer Network and Availability Of Finance: A wide dealer network helps the company serve customers over wide geographical area. For e.g. Maruti has used its available wide service network as point of difference over competitors. The companies are tying up with the financial institutions having rural presence to provide additional financing options to customers in such areas Access to Latest Technologies : Indian PV segment is highly competitive with as many as 14 players operating in it and more than 80 models on the offering. But still any new model launch meets with increase in sales volume for the company. Moreover in a time when a substantial portion of Indian customer is looking to upgrade in higher segment, companies with latest technologies and latest models will catch more attentions. Price of the Car: Price of the car is one of the major factors that affect the supply as well as the demand of a car. If the price of the car is high in the market, the manufacturer or the supplier will want to supply more units in the market so he can earn more profits. In the automotive industry where the market type is oligopoly, if one company drops its price for the car, there is a huge impact on the sales of the other cars as well as the same car. In the market the price of one car is inter-related to the price of the other cars in the same segment. The best solution is that market equilibrium should be achieved so that the amount of the quantity demanded should be equal to the amount of the quantity supplied to achieve maximum profits. A Market Equilibrium is achieved at the point of intersection of the demand line and the supply line. The point is the equilibrium point where the quantity demanded is equal to the quantity supplied. Factors of Production: There are some factors of production which influence the supply of a car like Cost of Raw Material Labour Cost Machinery Input Cost These factors influence the supply of a car largely. If the cost of the raw material (Steel, Spare Parts, Rubber) increases there will be an increase in the cost of production leading to decrease in profit margins. Costs like labour costs, machinery and input costs also influence the supply with the increase or decrease in these costs. Government Policies and Taxes: If there is a change in the government policies regarding the increase in the road tax charged or the tax which is to be paid per unit sold, the supply of a car will fluctuate with the nature of the change. Recently the government has reduced the custom duty on inputs and raw material from 20% to 15% which has increased the supply.
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WEAKNESS: India lack proper infrastructural facilities Poor after sales service the automotive industry lags behind other sectors such as IT and financial services in management training, reward and retention. OPPURTUNITIES: Small cars are a future Green cars Auto financing Royalty through Patents. THREATS: Global Crisis Companies not focusing on R & D are under great risk High competition from foreign players Lack of technology for Indian companies.
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include these things, we can see that coal-powered electric cars are likely to be better users of fossil fuels than diesel or petrol vehicles. Where wind, solar, waves, tide or nuclear power is used to charge batteries, electric cars have zero emissions. Either way, air quality improves dramatically in cities as the use of electric vehicles increases. Owners can also save a huge amount of vehicle tax on petrol or diesel since taxation is far lower on electricity. It typically costs only 1-2 cents a mile in electricity. One thing is certain: if half a million people are driving electric cars across a nation, oil consumption will fall dramatically, while coal or gas power consumption will rise in the short term. Batteries are going to be one of the biggest green tech businesses powering not only phones and other small devices, but also cars, trucks, buses and just about any large piece of equipment that does not have a permanent electricity connection. Expect sales of hundreds of billions of dollars. President Obamas economic stimulus provided $2.4 billion to fund battery innovation and electric car drive projects. Car batteries will have another purpose: linked together when charging at peoples homes, to create Virtual Storage by power companies, to assist their power management at off peak times. This will make it easier for them to plug in huge numbers of wind and solar generators. Smart grids will allow power to flow in both directions, so that each battery can become a power source to other people in the neighbourhood for short periods of time. If 200,000 electric cars were plugged into the German national grid, it could make 8 megawatts of power available almost instantly, giving more flexibility than the nation currently needs. Expect many governments to give huge incentives to people who want to buy electric cars. Israel and Denmark are leading the way.
Evolution of Porter's Five Forces Model: Five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. Michael Porter is a professor at Harvard Business School and is a leading authority on competitive strategy and international competitiveness. Michael Porter was born in Ann Arbor, Michigan.
Five forces uses concepts developing, Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition".
Five Forces Model by Michael Porter: Five Forces model of Michael Porter is a very elaborate concept for evaluating company's competitive position. Michael Porter provided a framework that models an industry and therefore implicitly also businesses as being influenced by five forces. Michael Porter's Five
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Forces model is often used in strategic planning. Porter's competitive five forces model is probably one of the most commonly used business strategy tools and have proven its usefulness in numerous situations when exploring strategic management models. Three of Porter's five forces refer to competition from external sources. The remainder are internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).
A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average.
Three forces from 'horizontal' competition Threat of new entrants or barriers to entry Threat of substitute products or substitutes Threat of established rivals or competitive rivalry Two forces from 'vertical' competition The bargaining power of buyers or buyers The bargaining power of suppliers or suppliers
Force 1: Barriers to entry Barriers to entry measure how easy or difficult it is for new entrants to enter into the industry. This can involve for example:
Cost advantages (economies of scale, economies of scope) Access to production inputs and financing, Government policies and taxation Production cycle and learning curve Capital requirements Access to distribution channels Patents, branding, and image also fall into this category.
Force 2: Threat of substitutes Every top decision maker has to ask: How easy can our product or service be substituted? The following needs to be analyzed:
How much does it cost the customer to switch to competing products or services? How likely are customers to switch?
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What is the price-performance trade-off of substitutes? If a product can be easily substituted, then it is a threat to the company because it can compete with price only.
Force 3: Competitive Rivalry In this, we have to analyze the level of competition between existing players in the industry.
Is one player very dominant or all equal in strength/size? Are there exit barriers? How fast does the industry grow? Does the industry operate at surplus or shortage? How is the industry concentrated? How do customers identify themselves with your brand? Is the product differentiated? How well are rivals diversified?
Force 4: Bargaining power of buyers Now the question is how strong the position of buyers is. For example, can customers work together to order large volumes to squeeze your profit margins? The following is a list of other examples:
Buyer volume and concentration What information buyers have Competitive price How loyal are customers to your brand.
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 pricebased 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 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, the greater the need for replacement parts. On the other hand, new parts are lasting longer, which is great for consumers, but is not such good 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 is 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
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other hand, while consumers are very price sensitive, they don't have much buying power as they never purchase huge volumes of cars. Example: Porter's 5 Forces Model of the NANO car
There is continuing interest in the study of the forces that impact on an organisation, particularly those that can be harnessed to provide competitive advantage. The ideas and models which emerged during the period from 1979 to the mid-1980s were based on the idea that competitive advantage came from the ability to earn a return on investment that was better than the average for the industry sector. As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industry (microenvironment) that influence the way in which firms compete .
Price sensitivity Threat of backward integration How well differentiated your product is Availability of substitutes Having a customer that has the leverage to dictate your prices is not a good position.
This relates to what your suppliers can do in relationship with you. How strong is the position of sellers? Are there many or only few potential suppliers? Is there a monopoly? Do you take inputs from a single supplier or from a group? (Concentration) How much do you take from each of your suppliers? Can you easily switch from one supplier to another one? (Switching costs) If you switch to another supplier, will it affect the cost and differentiation of your product? Are there other suppliers with the same inputs available? (Substitute inputs)
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