SRI AUROBINDO INSTITUTE OF MANAGEMENT & SCIENCE, INDORE

SYNOPSIS ON Analysis Of Indian Automobile Industry

Opportunities and Challenges

Submitted in partial fulfillment of the requirement for the award of the degree/diploma of (MBA)

GUIDED BY: Prof. Vishwas SharmaAGESH PARASHAR SACHIN PATIDAR

(FACULTY SAIM&S)

SUBMITTED BY:

Imtiyaz Shaikh
MBA II YEAR

Index

Introduction Objectives of the proposed research work Hypothesis of Proposed Research Work Literature Review Research Methodology for Proposed Research Work
Information Sources Analysis Method

1 2 3 4 6

Limitations of the proposed research work

Barriers to entry in this industry is high Infrastructure Price of Petrol Taxation

Expected outcomes of the Proposed Research Work References & Bibliography

8 9

IntroductionThe Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year. The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilizing manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India.

Objectives of the proposed research work

The objective of this project is deeply analyze our Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data.The main objectives of the Project study are:

(a) To review the current situation of the automobile industry sector such as demand and supply situation, investment pattern, market aces and share, foreign direct investment and technology transfer arrangements and so on; (b) To identify the best practices and major policies related to promoting trade and joint venture in the automotive industry; and (c) To provide a forum for discussion and evaluation of new and innovative measures to promote linkages between producers of parts and components and the main assemblers.

India today is well known as a potential emerging automobile market and jobs in the automobile industry are rising. Several foreign investments are pouring into indian automobile industry

Hypothesis of Proposed Research Work:-

NULL HYPOTHESIS (

-Automobile manufacturing sector is not having highly growth patterns. ALTERNATIVE HYPOTHESIS ( )

- Automobile manufacturing sector is having highly growth patterns.

Literature Review
As noted by NMCC (2006), competitiveness of manufacturing sector is a very broad multi-dimensional concept that embraces numerous aspects such as price, quality, productivity, efficiency and macro-economic environment. The OECD definition of competitiveness, which is most widely quoted, also considers employment and sustainability, while being exposed to international competition, as features pertaining to competitiveness. There are numerous studies on auto industry in India, published by industry associations, consultancy organisations, research bodies and peer-reviewed journals. In this section, various studies on auto industry in India are reviewed, under different heads pertaining to competitiveness, namely, global comparisons, policy environment and evolution of Indian auto industry, productivity, aspects related to supply-chain and industrial structure and technology and other aspects.

Research Methodology for Proposed Research Work

Information Sources

The information has been sourced from various authentic and reliable sources like books, newspapers, trade journals and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to paid databases.

Analysis Method: Industry analysis is based on various macro and microeconomic factors, sector and industry specific databases. The research takes into account the past and current trends in an economy, and more specifically in an industry, to bring out an objective market analysis. The statistical tools are used to analyse the data such as the excel software.

Limitations of the proposed research work

Barriers to entry in this industry is high These barriers are study

The cost of developing high volume production facilities. The ability to gain access to technology of major global operators. The relatively high competition between established domestic companies and foreign companies. The automobile manufacturing sector is characterised by a high cyclical growth patterns, high fixed cost and break-even point levels, and an excessive number of participants. Barriers to entry into automobile manufacturing activity are formidable. Some of the barriers that need to be overcome by a new entrant include: the cost of developing high volume production facilities, in order to benefit from economies of scale; and the ability to gain access to technology of major operators, as the present incumbents include some of the largest multinationals, that have considerable claims to new technology. The relative large size of domestic market, together with high competition, has already seen significant rationalisation of this industry. Infrastructure: Longer-term determinants of demand include development in Indians infrastructure. Indias banking giant State Bank of India and Australias Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair its infrastructure such as ports, roads, and power units. These investments are been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. Price of Petrol: Movement in oil prices also have an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and first half of 2008, demand for large cars declined in favor of smaller, more fuel efficient vehicles. The changing patterns in customer preferences for smaller more fuel efficient vehicles led to the launch of Tata Motors Nano one of worlds smallest and cheapest cars. Taxation;India has a well developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government, in accordance with the provisions of the Indian Constitution. The main taxes/duties that the Union Government is empowered to levy are:- Income Tax (except tax on agricultural income, which the State Governments can levy), Customs duties, Central Excise and Sales Tax and Service Tax. The principal taxes levied by the State Governments are:- Sales Tax (tax on intraState sale of goods), Stamp Duty (duty on transfer of property), State Excise (duty on manufacture of alcohol), Land Revenue (levy on land used for agricultural/non-agricultural purposes), Duty on Entertainment and Tax on Professions & Callings. The Local Bodies are empowered to levy tax on properties (buildings, etc.), Octroi (tax on entry of goods for use/consumption within areas of the Local Bodies), Tax on Markets and Tax/User Charges for utilities.

Expected outcomes of the Proposed Research Work

Examines the production, sales, and export growth rates of the sector, along with a mention of the major manufacturers. Identification of the opportunities for foreign and Indian companies in terms of exports, import, technology transfers, strategic alliances, financial collaborations and JV's, in the Indian vehicle sector. The component-wise share of production is assessed. Assessment of the implications of vehicle emissions Porter's Five Forces Analysis of the Industry. An overview of the major changes occurring in the Indian market. A study of the market access strategies for companies. opportunities and challenges in terms of future Indian automobile industry.

References & Bibliography

[1] Maps of India,Effects of Globalization on Indian Industry, http://business.mapsofindia.com/globalization/india-industry/ [2] Dilip Chenoy,The Automobile Industry in India: Challenges Ahead, 25 November 2009, New Delhi, SIAM. [3] The Indian Automotive Market,http://trade.gov/static/India%20White%20Paper.pdf

www.wikipedia.org www.imaginmor.com www.justauto.com www.autonews.com