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					                 PORTER'S FIVE FORCES ANALYSIS
                  INDIAN AUTOMOBILE INDUSTRY

                                         PRESENTED BY:
SUBMITTED TO:                            ASHISH MENDIRATTA (MBA/13)
DR. SHIKHA N. KHERA                      BHARTI VIVEKANAND (MBA/14)
                                         MADHUR AGARWAL (MBA/23)
                                         RAVISH SINGH (MBA/39)
                        INDEX

S.No.                                 Topic
 1.     Introduction to Indian Automobile Industry
 2.     2 Wheeler Industry
 3.     Passenger Vehicle Industry
 4.     Commercial Vehicle Industry
INDIAN AUTOMOBILE
    INDUSTRY
                 Automobile Industry
‡   One of the major industrial sectors in India is the automobile sector.
    Subsequent to the liberalization, the automobile sector has been aptly
    described as the sunrise sector of the Indian economy as this sector has
    witnessed tremendous growth.
‡   Automobile Industry was delicensed in July 1991 with the announcement of
    the New Industrial Policy. The passenger car industry was, however,
    delicensed in 1993. No industrial licence is required for setting up of any
    unit for manufacture of automobiles except
    in some special cases. The norms for Foreign Investment and import of
    technology have also been progressively liberalized over the years for
    manufacture of vehicles including passenger cars in order to make this
    sector globally competitive. At present 100% Foreign Direct Investment
    (FDI) is permissible under automatic route in this sector including passenger
    car segment. With the gradual liberalization of the automobile sector since
    1991, the number of manufacturing facilities in India has grown
    progressively.
‡   The cumulative production data for April-January 2010 shows production
    growth of 23.07 percent over same period last year.
‡ On the canvas of the Indian economy, automotive industry occupies
 a prominent place. A sound transportation system plays a pivotal
 role in the country's rapid economic and industrial development.
‡ Automotive Industry comprises of automobile and auto component
 sectors and is one of the key drivers of the national economy as it
 provides large-scale employment, having a strong multiplier effect.
 Being one of the largest industries in India, this industry has been
 witnessing impressive growth during the last two decades. It has
 been able to restructure itself, absorb newer technology, align itself
 to the global developments and realize its potential. This has
 significantly increased automotive industry's contribution to overall
 industrial growth in the country.
                 Automotive Industry
‡ The automotive industry is one of the most important economic
 sectors by revenue.
‡ The term automotive industry usually does not include industries
 dedicated to automobiles after delivery to the customer, such as
 repair shops and motor fuel filling stations.
                    Domestic Sales
Growth during April-January 2010 period:
  ± Passenger Vehicles: 25.21%
  ± Passenger Cars: 24.75%
  ± Utility Vehicles:21.95%
  ± Multi Purpose Vehicles: 37.05%
  ± Overall Commercial Vehicles: 30.39%
  ± Medium & Heavy Commercial Vehicles (M&HCVs): 20.58%
  ± Light Commercial Vehicles: 39.66%
  ± Two Wheelers: 23.74%
  ± Mopeds: 31.73%
  ± Scooters: 20.56%
  ± Motorcycles: 24.32%
                             Exports
Growth during April-January 2010 period:
  ± Overall Automobile exports: 13.24%
  ± Passenger Vehicles segment: 33.92%
  ± Two Wheelers segments: 8.84%
  ± Commercial Vehicles segment: (-)7.52 percent.
Growth Drivers of Indian Automobile
             Market
‡ Rising industrial and agricultural output
‡ Rising per capita income
‡ Favorable demographic distribution with rising working population
 and middle class urbanization
‡ Increasing disposable incomes in rural agri-sector
‡ Availability of a variety of vehicle models meeting diverse needs and
 preferences
‡ Greater affordability of vehicles
‡ Easy finance schemes
‡ Favorable government policies
‡ Robust production
            India's Position in World's
                     Production
‡   Well-developed, globally competitive auto ancillary industry
‡   Established automobile testing and R&D centers
‡   Among one of the lowest cost producers of steel in the world
‡   World's 2nd largest manufacturer of two wheeler
‡   5th largest manufacturer of commercial vehicles
‡   Largest manufacturers of tractors in the world
‡   4th largest passenger car market in Asia
‡   India is the 2nd largest two-wheeler market in the world
‡   11th largest passenger car market in the world
‡   Expected to be the 7th largest auto industry by 2016
                    Worldwide Trends

‡ In 2007, worldwide production reached a peak at a total of 73.3
 million.
‡ In 2009, worldwide motor vehicle production dropped 13.5% to 61
 million. Sales in the U.S. dropped 21.2% to 10.4 million units.
‡ China became the world's largest motor vehicles market, both by
 sales as well as by production. Sales in China rose 45% in 2009 to
 13.6 million units.
       YEAR           2006-07       2007-08        2008-09
Passenger vehicles        198,452        218,401        335,739

Commercial vehicles        49,537         58,994          42,673

Three-wheelers            143,896        141,225        148,074

Two-wheelers              619,644        819,793       1,004,174
200000
000000
800000
600000
400000
         2006-07
200000   2007-08
     0   2008-09
Global Production of Motor vehicles
 (cars and commercial vehicles)

           Year          Production
           1999          56,258,892
           2000          58,374,162
           2001          56,304,925
           2002          58,994,318
           2003          60,663,225
           2004          64,496,220
           2005          66,482,439
           2006          69,222,975
           2007          73,266,061
           2008          70,520,493
           2009          60,986,985
Vehicle production trend
                                    SWOT ANALYSIS

    Strengths                                     Weaknesses
S                                             W
    ‡   Large domestic market.                    ‡   Low labor productivity.
    ‡   Sustainable labor cost advantage.         ‡   High interest costs and high
    ‡   Competitiveautocomponent                      overheads make the production
        vendor base.                                  uncompetitive.
        Government                                    Various forms of taxes push up the
    ‡                   incentivesfor             ‡   cost of production.
        manufacturing plants.                         Low investment in Research and
    ‡   Strong engineering skills in design       ‡   Development.
        etc.                                          Infrastructure bottleneck.
                                                  ‡



    Opportunities                                 Threats
O                                             T
    ‡   Commercial vehicles: SC ban               ‡   Rising input costs.
        on overloading.                           ‡   Rising interest rates.
    ‡   Heavy thrust on mining and                ‡   Cut throat competition
        construction activity.
        Increase in the income level.
    ‡   Cut in excise duties.
    ‡   Rising rural demand.
    ‡
Two wheeler industry
Manufacturer      Sales
 Hero Honda       41 %
Bajaj Auto Ltd.   27 %
 TVS Motors       18 %
  Others          14 %
Market Share Of Major Players In
    Two-wheeler Industry
                Sales


        14%

                        41%
 18%
                                 r
                               B j j Aut Lt .
                               TVS m t rs
                               Oth rs

         27%
      Types of Two-wheelers in India
There are mainly three types of two-wheelers available in India:
  ± Motorcycles
  ± Scooters
  ± Scooterettes/Mopeds
                        Motorcycles in India
Bajaj Auto Ltd                 HERO HONDA
                               * Hero Honda Achiever
                               * Hero Honda CD Dawn
* Bajaj Avenger                * Hero Honda CD Deluxe
* Bajaj CT 100                 * Hero Honda Glamour
* Bajaj Platina                * Hero Honda Glamour-Fi
* Bajaj Discover DTSi          * Hero Honda Karizma
* Bajaj Pulsar DTSi            * Hero Honda Passion Plus
* Bajaj Wave                   * Hero Honda Pleasure
* Bajaj Wind 125               * Hero Honda Super Splendor
* Sonic DTSi                   * Hero Honda Splendor NXG
                               * Hero Honda CBZ X-Treme




Kinetic Motor Company          TVS MOTOR                     Yamaha Motor India

* Kinetic Aquila
* Kinetic Boss                 * TVS Apache
* Kinetic Challenger           * TVS Centra                  * Yamaha Crux S
* Kinetic Comet                * TVS Fiero                   * Yamaha G5
* Kinetic GF                   * TVS Star                    * Yamaha Gladiator
* Kinetic Stryker              * TVS Victor
* Kinetic Velocity
                     Scooters in India
‡ The scooter and the scooterette share in the Indian two wheeler
 market is 13.4%.
‡ The main models available in India are:
  ± Bajaj Chetak
  ± Honda Eterno
  ± Kinetic Blaze
  ± LML NV SPL
  ± LML Select II
                      Scooterettes/Mopeds
‡   TVS Motors launched India's first 50cc, 2 seater moped: TVS Moped 50.
‡   TVS also launched India's first indigenous scooterette: Scooty in 1994.
‡   This segment has about one-fourth share in the Indian two wheeler industry.
‡   The major models available in India are:
     ±   Bajaj Wave
     ±   Bajaj Kristal DTSi
     ±   Bajaj Blade DTSi
     ±   Hero Honda Pleasure
     ±   Kinetic Kine
     ±   Kinetic 4S
     ±   Kinetic Nova
     ±   Kinetic Zoom
     ±   Kinetic V2 Range
     ±   Kinetic King 100
     ±   Kinetic Luna Super
     ±   Kinetic Luna TFR
     ±   Yo Smart
     ±   Honda Dio
     ±   Honda Activa
     ±   TVS Scooty
     ±   TVS XL
Factor which influence the growth of two-wheeler industries are as
follows:
‡ Lower interest rates
‡ Easing liquidity situation
‡ Modernization of young generation
‡ A well-equipped middle- class transport
‡ Fuel-Efficient
P                Threat of
O                 New
R
T                Entrants -
E                 LOW
R
¶
S



5

    Bargaining   Rivalry      Bargaining
F
O    Power of    Among         Power of
R   Customers-                Suppliers -
C
                 Firms-
      HIGH                      Low
E                 High
S



A
N
A
L
Y
                 Threat of
S                Substitute
I                Products-
S
                  Low to
                 Moderate
              Rivalry Among Firms
                      HIGH
‡ The key players in two-wheeler industries are Hero Honda motor ltd.
 (HHML), Bajaj Auto ltd and TVS motor Company ltd. The other
 players are Kinetic, LML, Yamaha, Majestic auto ltd, Royal Enfield
 ltd and Honda motorcycle & scooter India.
‡ Two-wheelers domestic market growth rate for 2008-09 is 19.4%
 which is very high when compared to that of three
 wheelers, Passenger and commercial vehicles.
‡ Indian Auto policy 2002 gives added advantage to two-wheeler
 manufacturers to enter even other countries outside India.
‡ Since big manufacturer plant with high technology and good R&D
 team needed many of them dose not enter in two-wheeler
 Industries. Only the companies which are in automobile line will
 expand their product line like Mahindra.
            Threat of New Entrants
              Low to Moderate
‡ Capital investment is very huge
‡ Sportsbikes entering in Indian market
‡ Harley Davidson launching in India
    Threat of Substitute Products
         Low to Moderate
‡ Substitute products for two-wheeler industries are bus
 transportation, Auto transportation and even low-end cars, but
 people using two-wheelers can only use the service of buses and
 auto as a substitute product.
‡ Sometimes low-end car is a substitute product for the people using
 high-end motorcycles.
‡ Normal buses to hi-tech ac buses which is threat to two-wheeler
 industry.
‡ Penetration of Metro trains in Metropolitans.
   Bargaining Power of Suppliers
              Low
‡ Some of the components in two-wheeler industry are very common
 for all the two-wheeler industries like steel, aluminum, tyres and
 tubes, these material are available in abundant. This makes them to
 drive a smooth production of their finished products.
  Bargaining Power of Customer
             High
‡ Buyer has added advantage than seller because there are five to six
 big popular brands of two-wheelers are available in India, so that
 they can switch brand from one another.
‡ Buyers are very conscious in spending their money to purchase
 two-wheeler, because it attracts most of the middle-income group¶s
 seller cannot price their product very high.
PASSENGER VEHICLE INDUSTRY
       Rankwise Largest Automobile
       Manufacturers in India by Sales
1.    Maruti Suzuki
2.    Tata Motors
3.    Hyundai Motors
4.    Mahindra
5.    GM Chevrolet
6.    Honda
7.    Toyota
8.    Ford
9.    Fiat Motors
10.    koda
P
O                Threat of
R                 New
T
E                Entrants
R
¶
S



5

F   Bargaining   Rivalry      Bargaining
O
R    Power of    Among         Power of
C   Customers                 Suppliers
E
S
                  Firms

A
N
A
L
Y
S                Threat of
I                Substitute
S
                 Products
                Threat Of New Entrants

‡   High
‡   In most markets, the capital and expertise needed to setup an auto or
    parts manufacturing facility, would be a great enough barrier to entry to
    prevent many new entrants from setting up.
‡   However, given India's incredible growth forecasts, infrastructure
    progress (especially new and better roads), and ever-expanding
    financing options to rural residents, the market is attractive. As such, we
    expect the threat of new entrants to be high.
‡     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.
     Bargaining Power Of Customers

‡ High
‡ Buyers in India have a wide variety of choice. There are more than
 20 foreign manufacturers selling in India (including ultra high-end
 such as Rolls-Royce and Lamborghini). Of course there are also a
 plethora of incredibly cheap choices, like the famous Tata Nano.
‡ In the relationship between the 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.
        Threat of Substitute Products

‡ Moderate
‡ India is famous for its two-wheelers (bikes and mopeds) and three-
 wheelers. These are very real and obvious threats to auto
 manufacturers.
‡ 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.
       Bargaining Power of Suppliers

‡ Low to Moderate
‡ It is likely that the suppliers to the manufacturers have considerable
 bargaining power. They are not held ransom by one single
 manufacturer as they can market their products to any of the others
 in India.
‡ In the relationship between the industry and its suppliers, the power
 axis is tipped in industry¶s favor. The industry is comprised of
 powerful buyers who are generally able to dictate their terms to the
 suppliers.
                  Rivalry Among Firms
‡ High
‡ The industry is not yet in its shake-out phase and is still struggling to
 find the up-and-coming stars and possibly topple the leaders.
‡ 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.
Maruti Suzuki
                        Maruti Suzuki
‡ Founded in 1981 as Maruti Udyog Limited (MUL)
‡ Suzuki Motor Corporation of Japan holds a majority stake (54.2%) in
 the company.
‡ On 17 September 2007, Maruti Udyog Limited was renamed
 Maruti Suzuki India Limited.
‡ It is the largest automobile manufacturer in South Asia.
‡ It was the first company in India to mass-produce and sell more
 than a million cars.
‡ Revenues of $4.8 billion in 2009-10
                  Company History

‡ 1983 : Maruti 800, a hatchback, India¶s first affordable car, is
 released in the market.
‡ 1984 : Installed capacity of the plant in Gurgaon, reaches 40,000
 units
‡ 1987 : The company's first export, when a lot of 500 cars were sent
 to Hungary.
‡ 1989 : Maruti 1000, India¶s first contemporary sedan is released into
 the market
‡ 1994 : Esteem LX released in market, Maruti's second sedan model
‡ 1996 : 5 new models launched
‡ 2000 : New Alto model released
‡ 2003 : Enters into partnership with State Bank of India
‡ 2005 : The fiftieth lakh (5 millionth) car rolls out in April
                                   SWOT ANALYSIS

    Strengths                                       Weaknesses
S                                               W
    ‡ Brand Image                                   ‡ Not diversified
    ‡ Experience in Indian market                   ‡ Lack of experience with the foreign
    ‡ Established distribution & after sales         market
     service network                                ‡ Inexperience with foreign workforce
    ‡ Understanding of Indian Market                ‡ Comparatively new to diesel car segment
    ‡ Abilitytodesignproductswith                   ‡ People resistant to upper segment
     differentiating features                        models
    ‡ Experience and knowhow in technology




    Opportunities                                   Threats
O                                               T
    ‡Mergers & Acquisitions                         ‡ Competition
    ‡Innovation                                     ‡ Cheaper technology
    ‡Product and services expansion                 ‡ Externalchanges
    ‡Increased purchasing power of Indian            (government, politics, taxes, etc.)
     middle class category                          ‡ Lower cost competitors or imports
    ‡ Government subsidies                          ‡ Price wars
    ‡ Prospective buyers from the two-wheeler       ‡ Competition from second hand cars and
     segments                                        Tata Nano
    ‡ Foreign collaboration
INDIAN COMMERCIAL VEHICLE
       INDUSTRY
    Structure of the Indian CV Industry
‡   The CV industry in India is split between the LCV and M&HCV segments.
‡   GVW less than 7.5 tonnes are classified as LCVs.
‡   The ones heavier than these are termed M&HCVs.
‡   In terms of usage, CVs may be categorised as goods carriers and passenger
    carriers.
    The overall CV industry is split between the LCV and M/HCV segments roughly in the
    ratio of 45:55.
‡   Around 13% of the vehicles sold in the LCV as well as the M/HCV segment are
    passenger carriers.
    Most market segments of the Indian CV industry currently operate as duopolies, with
‡   the top two players¶ together accounting for a market share of over 85%.

‡
                 Threat of
P
O                  New
R                Entrants ±
T
E
                  Low to
R                Moderate
¶
S



5
    Bargaining
F                   Rivalry    Bargaining
     Power of
O                   Among       Power of
R   Customers-
                  Firms- Low   Suppliers ±
C     Low to
E                to Moderate     Low
     Moderate
S



A
N
A
L
Y                 Threat of
S
I
                  Substitute
S                 Products-
                    Low
            Low - Moderate
Threat of   ‡ Its not easy to enter
 New         H&MCV market.
Entrants    ‡ New entrants can enter
             LCV market.
                Bargaining
                 Power of
                Suppliers




Low
‡ More number of suppliers.
‡ Threat of chinese suppliers.
Low - Moderate :
As companies working
                       Bargaining
in duopoly in most
                        Power of
segments.
                         Buyers
Low
No substitute product for
commercial vehicles for road
transport.




              Threat of
              Substitute
              Products
     Rivalry among
      Competitors
      Low - Moderate
‡ Less Players in market
catering to large demand
TATA MOTORS
TATA MOTORS
                               TATA MOTORS

‡   India's largest automobile company, with revenues of Rs. 92,519 crores in 2009-10.
‡   India¶s largest Commercial vehicle manufacturer.
‡   Third largest passenger vehicle manufacturer in India.
‡   The company is the world's fourth largest truck manufacturer, and the world's second
    largest bus manufacturer.
                                     COMPANY HISTORY


‡   Established in 1945 as TELCO.
‡   Its first vehicle rolled out in 1954 in collaboration with Daimler Benz.




‡   1969 : Tata¶s first truck rolled out after ending collaboration with Daimler Benz.
‡   1986 : Production of first light commercial vehicle, Tata 407.
‡   1991 : Launch of the 1st passenger car Tata Sierra.
‡   1994 : Launch of Tata Sumo - the multi utility vehicle.
‡   1994 : Joint venture agreement signed with M/s Daimler - Benz for
    manufacture of Mercedes Benz passenger cars in India.
    1995 : Mercedes Benz car E220 launched.
‡
‡   1998 : Tata Safari - India's first sports utility
    vehicle launched.

‡   1998 : Indica, India's first fully indigenous
    passenger car launched.

‡   2002 : Introduced its sedan Tata Indigo.

‡   2003 : Tata Engineering formally changes to
    Tata Motors.

‡   First company from India's engineering
    sector to be listed in NYSE(September
    2004).
‡   2004 : Tata Motors acquires Daewoo
    Commercial Vehicle, South Korea.

‡   2004 : Tata Motors starts its
    globalization drive and launches Tata
    Indica in South Africa.


‡   2008 : Launch of Tata Nano, a People¶s
    Car (Rs. 1 Lakh only)
                                    SWOT ANALYSIS

    Strengths                                         Weaknesses
S                                                 W
    ‡ Wide variety of offerings from low end          ‡ The company's passenger car products
     cars to SUVs for the Indian market.               are based upon 3rd and 4th generation
    ‡ Strong brand recognition amongst                 platforms.
     truckers and transportation firms                ‡ Tata has not got a foothold in the luxury
    ‡ This also implies a wide network of              car segment in its domestic, Indian
     support facilities, making them cheaper to        market.
     run and maintain than many.                      ‡ Customer¶s perceive TATA as commercial
    ‡ The company has had a successful                 vehicle manufacturers.
     alliance with Italian mass producer Fiat
     since 2006.




    Opportunities                                     Threats
O                                                 T
    ‡ Nano is the cheapest car in the World -         ‡ Other competing car manufacturers have
     retailing at little more than a motorbike.        been in the passenger car business for
    ‡ The new Land Rover and Jaguar models             40, 50 or more years.
     will help gaining share in luxury segment.       ‡ Sustainability and environmentalism could
    ‡ The new global track platform is about to        mean extra costs for this low-cost
     be launched from its Korean (previously           producer.
     Daewoo) plant.                                   ‡ Other players developing luxury cars
    ‡ The range of Super Milo fuel efficient           targeted at the Indian market include
     busesarepoweredbysuper-                           Ford, Honda, Toyota and Volks Wagon.
     efficient, eco-friendly engines.                 ‡ Rising diesel prices in Global Market.
THANK
 YOU

				
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