SWOT analysis of Indian automobile industry: Strengths:

Large domestic market Sustainable labour cost Competitive auto component vendor base Government incentives to manufacturing plants Strong engineering skills in design etc. Easy access to raw material Upcoming bases for R&D Low cost with good technology base Ability to cater to low volumes Proficiency in understanding of all technical drawings and well conversant with all global automotive standards: Japanese, Korean, and European etc. Appropriate automation leading to economic production costs Flexibility in small batch production Growing IT capability in design, development and simulation. Respect for intellectual property (IPR)High skilled manpower Adoption of high quality and productive initiatives (TQM, TPM, Six sigma etc.) Proximity to market.

Weaknesses:
Low labour productivity High interests and high over heads make the production uncompetitive. Various forms of taxes push up the cost of production and price of produced. Inadequate and low investment in R&D Supply chain infrastructural bottlenecks Multiple tax components in the cost of the vehicle Lack of economies of scale

Opportunities:
Commercial vehicle: SC ban on overloading Heavy thrust on mining and construction activity Increase in income level Cut in excise duties Rising demand in rural areas MNC focussing on low cost outsourcing opportunities. Viewed as global hub for manufacturing of small cars Export projected to grow at over 30% p.a. Indias share in global auto components is expected to grow over 2.5% by 2015. National Automotive Testing and R&D Infrastructure Projects (NATRIP), a US$ 400 million initiative, aims to create the state-of-art dedicated testing, validation and R&D infrastructure across the country. Opportunity to R&D centres in India.

High level of sourcing of components from Low Cost Countries (LCC) to act as a growth driver.

Threats
Rising input costs of raw materials Rising interest rates Cut throat competition Increase in fuel prices may lead to slow down in the sales Import of components from ASEAN and China will have adverse effect on GDP.

Future prospects of Indian automobile industry:

Future prospect of Indian Automobile Sector is looking bright. As per industry forecasts, by 2016 India is expected to be the worlds seventh-largest automobile market and third-largest by 2030, behind only the US and China. This confidence is based on strong sector fundamentals which include extremely low current levels of vehicle penetration in the country, projected high rate of GDP growth for the Indian economy, huge investments being made by the Government in infrastructure along with a very large upwardly mobile middle class population with aspirations for better living standards. The key points of the future growth of Indian automobile industry: Passenger car production in India is projected to cross three million units in 2014-15. Sales of passenger cars are expected to grow at a CAGR of around 10% up to 20015-16. Export of passenger cars is anticipated to rise more than the domestic sales during 2008-09 to 2015-16. Motorcycle sales will perform positively in future, exceeding 10 million units in 201213. Value of auto components export is likely to attain a double digit figure in 2012-13. Turnover of the Indian auto component industry is forecasted to surpass US$ 50 Billion in 2014-15.

The auto sector reported a robust growth rate of 26 percent in the last two years (20102012). The BSE AUTO Index outperformed the benchmark Nifty by 79%, 12% and 19% in FY10, FY11 and FY12, respectively. However, the sector has shown a sluggish growth of 12 percent in 2012 first quarter. The trend is likely to stay with a 10 percent growth outlined for 2013 citing high ownership costs and slow rural income growth. Solid but cautious growth is expected over the next few years. However, from a long-term perspective, rising incomes, improved affordability and untapped markets present promising opportunities for automobile manufactures in India. According to Macquaire equities research, sale of passenger vehicles is expected to double in the next four years and growth anticipated is higher than the 16 percent achieved in the past 10 years. Two-wheeler vehicle segment is expected to show slow growth of 10 percent CAGR over the period of 2012-2016, suggests the report. The Government recognizes the impact of the sector on the nations economy, and consequently, the Automotive Mission Plan 2016 launched by it seeks to grow the industry to a size of US $145bn by 2016 and make it contribute 10 percent to the nations GDP.

Factors that will drive growth in the sector Rising incomes among Indian population will lead to increased affordability, increasing domestic demand for vehicles, especially in the small car segment. Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products. Product innovation and market segmentation will channelize growth. Vehicles based on alternative fuels will be an area of interest for both consumers and auto makers. Focus on establishing India as auto-manufacturing hub is reigning in policy support in form of Governments technology modernisation fund. Industry will seek to augment sales by tapping into rural markets, youth, women and luxury segments.

Upcoming trends India is emerging as a strong automotive R&D hub with foreign players like Hyundai, Suzuki, and General Motors setting up base in India. This move is further enhanced by Governments support towards setting up centres for development and innovation. Tata Nanos successful entry in the Indian market has steamed up the opportunities of growth available in alternative segments like electric cars, vehicles run on natural gas, etc. Job opportunities in automobile sector According to the Confederation of Indian Industry, auto sector currently employs 787, 7702 people, 58 percent of who are in the passenger car segment. However, there is an increasing demand for skilled professionals in the domain of effective service delivery, spares management and support functions. ITIs and Polytechnics provide 530,000 graduates every year, but there is an urgent need for updating courses to keep up with changing trends in technology, manufacturing, and processes.