Mainly focused on the indian market but in this case the lack of geographical diveristy that smoothes the

performance of some of the larger comeptitors Really important the JIT approach that US industry loosing its market share since 1980 to Japanese carmakers 1990s accelerated the trend of assembling vehicles around the world , with mergers and aquisition of overseas facilities, it gives a greater capacity to infiltrate new markets Competition has become fierce especially entry level compact cars, the major competitors are Maruti Udyog and Hyndai Motor company tht is agressively expanding its sales and network across india. They require constant reduction of prices of their models in order to keep up with Hyndai.. Even with the planned expension to new Indian markets, Muls future success will depend mostly on the capacity to equaly compete with the international competitors. ex. toyota established in 1937 but entered US market in 1957 but sucessful in 1967 and In order to be sucessful: the company needs to psess the following: productione ficiency, well-planned cost structures, manageable size, distributed management of brands, attention to underserved markets, focused strategy, and well-respected brands and products. production efficiency: it had a significant role in making Toyota the most sucessfull. they searched to improve efficiency trough a number of innovative operational strategies such as JIT paradigm and TQM, and fully automated production facilities, that all resulted in decreased labor costs, and faster production high costs can partly be attributed to inefficient production and distribution practices, but increasing health care costs are also ssignificant drain on the big 3. the companies without labour unions have more flexible cost structures in addition to ahving lower overall labor costs.

manageble size: it is much more difficult for sweeping changes to go trough older well established organization then trough the younger one. in addition to targeting market segments by locale, identification of and focused attention to underserved markets have helped smaller producers wedge their way into a larger market share. honda, for example, is not ale to compete with mercedes in the high-end luxury sedan market due to Mercedes brand name and prestige. Honda is not able to compete with Ford or GM in the pickup truck market because of their consumers loyalty. however recoignizing these limitations, honda has instead focused their efforts on producing, reliable inexpensive sedans.. focused strategy: JIT cannot be sucessfull when done halfway (GM) International expension has the potential to be the most lucrative growth sector in thee automotive industry. in US there are 765 cars per 1000 people, in Japan 543, and in the

UK 426, in contrast Brazil has 81, Indonesia 21 and India 12, while china only 10, this unsaturated markets become potential for phenomenal growth. In the past several years China has been the focus of this international expension, although it seems that the growth has slowed considerably. IT is also uncertain if the markets will be taken by the local companies, by some of the large, multinational corporations or my joint ventures between the 2.

The trends point to towards emission controls also in the emerging markets. Also affected by increase in fuel costs.

A larger international company begin to enter those markets, fierce competition puts increasing pressure in the local companies. The changes in these markets such as a downturn in Chinas sales could be disastrous for these companies, which lack geographical diversification. If they can survive there is a lot of opportunity for growth although it will take more than five years before thay can achieve this expansion and stabilization. whether or not the future plays out according to these reccomendations, will depend on factors both internal and external to each company. management decisions will define how the companies are positioned withing the industry and how they prusue new opportunities, fluctioations in emerging markets, global economic trends, and changing customer demand will challange the companies to respond in new ways. Industry analysys:

Indian Industry has had its ups and downs since 1898 since the introduction of the motor vehicle. Since then it became the ninth largest automobile industry in the world with annual production of over 2.3 million units in 2008 and is slowly becoming one of the major global automotive industries with the growth rate of 18% oer year. With the latest available data it is expected to grow at 9-10 percent in near future. At a global level: india is 1st in global two-wheeler market 4th biggest commercial vehicle market 11 in international passanger car market 5th pertaining to the number of bus and truck sold in the world Wolkswagen, Toyoys, Nissan and Ford plan new cars to cash in on fasterst-growing compact car section of car market in india Economic times sales of different auto companies speed up even before festive season Maruti by 29% Tata 11% Skoda 33% Hero Honda 33% Mahindra 42% YAmaha 63%.. Ec Times It is expected that by 2016 Indis would be the 7th largest automobile market with the year 2016.

In the last 20 years the Indian Automobile industry potential for investment has to be seen trough their higher rate of economic growth rate index against that of the globla powers, so India has become a hub of domestic and exports business. India is the 16th in terms of nominal factory output. The service sector is growing fast. Also the improvement in the living standards.
Michael Porter identified five forces that influence an industry. These forces are: (1) degree of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier power. For more on this framework proposed by Porter, please see Appendix C. Like other industries operating under free market, capitalistic systems, viewing the automotive industry through the lens of Porters Five Forces can be helpful in understanding the forces at play. Degree of Rivalry Despite the high concentration ratios seen in the U.S. market (see Appendix D), which typically signify that a lesser degree of competition is seen in the industry, rivalry in the U.S. and the global automotive industry is intense. Clearly, the concentration ratios do not tell the whole story. The automotive industry in the U.S. is no longer the playground of the Big 3 (GM, Ford, and Daimler Chrysler); global companies compete in the U.S. market, while U.S. companies have globalized themselves. In the 1980s, the Japanese car makers Honda and Toyota entered a fairly disciplined U.S. market and have been very focused in growing their shares of the market. The great diversity of rivals in terms of cultures and associated philosophies has intensified rivalry in the industry. Market growth is slow in the established markets of the U.S. and Western Europe, and companies must fight fiercely to eke out gains or prevent losses in market share. However, growth is potentially huge in the rapidly industrializing nations of China and India; in these booming markets, companies could take advantage of the opportunities to reap handsome rewards. The degree of rivalry in the automotive industry is further heightened by high fixed costs associated with manufacturing cars and trucks and the low switching costs for consumers when buying different makes and models. Threat of Substitutes The threat of substitutes to the automotive industry is fairly mild. Numerous other forms of transportation are available, but none offer the utility, convenience, independence, and value afforded by automobiles. The switching costs associated with using a different mode of transportation, such as train, may be high in terms of personal time (i.e., independence), convenience, and utility (e.g., luggage capacity), but not necessarily monetarily (e.g., round trip train fare on MARTA would most likely be less expensive than the cost of fuel consumed on a similar round trip, daily parking, car insurance, and maintenance). The exception to this statement occurs in the global urban areas with high population densities. In these areas, the substitutes available (e.g., walking, mass transit, bicycles, etc.) can be less costly than automobiles and thus alternative modes of transportation are often preferred. Also, there are inherent underlying social and cultural attitudes that keep people from owning automobiles in some parts of the world. Many nations are not as spread out or as mobile as the U.S.; they are constrained either by geography, race, class, or religion and the need for personal transportation is not as great, yet. The American dream of a car [or two] in every garage is not what the rest of the world currently wants or needs. However, the marketing arms of the global automotive manufacturers are certainly working very hard to change this paradigm, and with unprecedented production volumes world wide, all signs indicate that they are succeeding. Most with the ability and means to own a vehicle, who live in a society with the necessary infrastructure (e.g., roads and fueling stations), will do so. Barriers to Entry The barriers to enter the automotive industry are substantial. For a new company, the startup capital required to establish manufacturing capacity to achieve minimum efficient scale is prohibitive. An automotive manufacturing facility is quite specialized and in the event of failure could not be easily retooled. Although the barriers to new companies are substantial, established companies are entering new markets through strategic partnerships or through buying out or merging with other companies. In fact, the barriers to entry for new (or different) markets may be quite low; in the 1980s, U.S. companies

Today the automobile sector in India is one of the key secots of the economy in terms of employment because it employes more then 10 mil people

The Market value of Automobile industry is more then 8bl US$ and Contribution of Indian GDP is near about 5% and it will double by 2016. Despite the negative inflation in 2009 we saw an increasing trend of sales in auto sector. A moderate inflation amount is important for the growing economies like India becase it attracts more investment. But the increase of the price of fuel and steel dye to inflation has let to a slower growth. Exports of automobile sales in the overseas markets increased from 1.23 mil in 2007-8 to 1.53 mil in 2008-9

practically invited Japanese makers into the U.S. by failing to offer quality vehicles in the lower price markets. All of the large automotive companies have globalized and entered foreign markets with varying degrees of success. In the newer, undeveloped markets of Asia, Africa, and South America, the barriers to entry similarly exist. However, a domestic start up, with local knowledge and expertise, has the potential to compete in its home market against the global firms who are not yet well established there. Such an operation, if successful, would surely be snatched up by one of the global giants and incorporated into its fold. Buyer and Supplier Power In the relationship between the automotive industry and its suppliers, the power axis is substantially tipped in the industrys favor. The automotive industry is comprised of powerful buyers who are generally able to dictate their terms to their suppliers. There are specific characteristics that make members of the automotive industry powerful buyers: (1) there is not a grand proliferation of companies manufacturing automotives, and the four largest automotive companies in the U.S. have roughly 90% of the value of shipments and value added in the U.S. (see Appendix D); (2) automotive parts (e.g., oil filters, mufflers, belts, etc.) are standardized commodities and these parts are only used on automobiles; and (3) backward integration can and does occur, as seen in summer 2005 when Ford purchased struggling parts maker Visteon. In the relationship between the automotive industry and its ultimate consumers, purchasers of finished vehicles, the power axis is tipped in the consumers favor. Consumers wield the greatest power in this relationship due to the fairly standardized nature of the automotive commodity (a vehicle) and the low switching costs associated with selecting from among competing brands. However, the automotive industry remains marginally powerful due to the large customer to producer ratio. The automotive industry is a dynamic place. With the forces above at play, and with history as a guide, it is safe to say that the automotive industry will continue to change, evolve, and adapt.

1.) Five Forces Model

Michael Porter identifies five forces that influence an industry. These forces are Degree of Rivalry Despite the high concentration ratio seen in the automotive sector, rivalry in the Indian auto sector is intense due to the entry of foreign companies in the market. The industry rivalry is extremely high with any being product being matched in a few months by the competitors. This instinct of the industry is primarily driven by technical capabilities acquired over years of gestation under the technical collaboration with international players. Threat of Substitutes The threat of substitutes to the automotive industry is fairly mild. Numerous other forms of transportation are available, but none offer the utility, convenience, independence and value offered by automobiles. The switching cost associated with using a different mode of transportation, may be high in terms of personal time, convenience and utility.

 Barriers to entry The barriers to enter automotive industry are substantial. For a new company, the startup capital required to establish manufacturing capacity to achieve minimum efficient scale is prohibitive. Although the barriers to new companies are substantial, establishing companies are entering the new markets through strategic partnerships or through buying out or merging with other companies. However, a domestic company, with local knowledge and expertise, has the potential to compete its home market against the global firms who are not well established there. Suppliers power In the relationship between the industry and its suppliers, the power axis is tipped in industrys favor. The industry is comprised of powerful buyers who are generally able to dictate their terms to the suppliers. Buyers Power In the relationship between the automotive industry and its ultimate consumers, the power axis is tipped in the consumers favor. This is due to the fairly standardized nature and the low switching costs associated with selecting from among competing brands.
2.) BCG

Matrix

In an economy, different industries are present and different industries have different growth rate as compared to the growth of the economy. In an economy, there are a number of major industries and they all occupy different positions in the BCG matrix according to their growth and contribution towards the economy. In the Indian economy, some of the major sectors are FMCG, automobiles, banking and insurance, steel, telecom, software, pharmacology and retail sectors and these can be placed in the different positions in the matrix as shown below: BCG matrix is used to determine the relative position of the companies of an industry or different SBUs of any institution, in terms of the market growth rate and the market share of the company in the industry. In the Indian automobile sector, the major players are Maruti Suzuki Limited, General motors, Mahindra and Mahindra, Tata Motors, Hero Honda and Bajaj auto. In the BCG matrix, the companies are placed in one of the following four categories: Star, Cash Cows, Dogs and Question marks. In the Stars we place the companies with high market growth and high market share, cash cows are the companies who have low market growth rate and high relative market share, the category of the question marks include the companies with low relative market share and high market growth rate and dogs include the companies who have low relative market share and low market growth rate.

3.) Industrial Life Cycle

The industrial life cycle is a term used for classifying industry vitality over time. Industry life cycle classification generally groups industries into one of four stages: pioneer, growth, maturity and decline. In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. In the growth phase, the product market has been established and there is at least some historical guide to ground demand estimates. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The cumulative growth of the Passenger Vehicles segment during April 2007 March 2008 was 12.17 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07 percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent during April- March 2008 compared to the last year. Two Wheelers registered a negative growth rate of 7.92 % during this period, with motorcycles and electric two wheelers segments declining by 11.90 percent and 44.93% respect. However, Scooters and Mopeds segment grew by 11.64% and 16.63% respect. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase. As the product matures, growth slows as penetration reaches practical limits. Companies began to focus on market share rather than growth. Industry demand tends to follow the overall economy, but the scope of growth of the automobile sector is very much possible in India due to the increasing income of the middle class and their income as well as standard of living.

4.) SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the

strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points:
NEW DELHI INSTITUTE OF MANAGEMENT- PGDM

Strengths Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc Weaknesses Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck Opportunities Commercial vehicles: SC ban on overloading Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties Rising rural demand Threats Rising input costs Rising interest rates Cut throat competition CONCLUSION Indian Automobile Industry is in the growth phase and the expected growth rate is 9-10% for FY2009-10 compare to last year growth rate which was just 0.7% and the above facts and figures in our study also support this truth. Indian Automobile has a lot of scope for both two wheelers and four wheelers due to development in infrastructure of the country and especially the rural sector in which demand of two wheeler has increased even in recession. According to Indian Statistical Organization the per capita income (Rs.38000) is increasing and national income at the rate of 14.4% which shows potential to buy vehicle in auto industry. The growth rate of Indian Automobile is so fast that by 2016 Indian Industry will be world 7 largest manufacturer in all sections. The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra

grow even more than expectations. From the Technical Analysis of both companies we come to know that the share price of Maruti will move in the band of Rs.1275 to Rs.1425 and that of TATA Motors will move in the range of Rs. 430 to Rs. 490 if certain correction made in the market. We have also come to know that share price movement of TATA Motors is just according to the movement of SENSEX, whenever there is a negative sentiment in the market regarding TATA Motors there is a steep fall in the stock price of TATA Motors but we have seen quick recovery in its share prices to regain its primary trend E.g as we seen in last 3-4 months TATA recovers approx.90% after downfall. By analyzing the current trend of Indian Economy and Automobile Industry we can say that being a developing economy there is lot of scope for growth and this industry still have to cross many levels so there is huge opportunities to invest in and this is proving as more and more foreign Companies setting up there ventures in India. By analyzing the industry on various parameters with the help of implementing Fundamental and Technical tools we came to know that this industry has a lot of potential to grow in future. So recommending to invest in Automobile Industry have no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all around the world. The returns which came out of this industry were very impressive recently, as if we take an example of TATA motors it gives approx 90% return in a period of just 3 months while Maruti Suzuki shows always a buy and hold position because there is possibility of growth in future, same situation is in two wheeler segment with market leader Hero-Honda a debt free company also have bright future ahead. The numbers which came out in the end of financial year 2009 prove that even in the period of recession the overall sales went up is sufficient to support to this fact. Through Technical analysis of TATA Motors and Maruti it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope in further rise in share prices until and unless any negative reaction or sentiments comes in the Economy. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time so holding the shares for long time could be a wrong step, so at this point of time those who invested earlier can book their profit or new investors can buy now and sell with in short period of time by earning profit in short period of time.