Automotive industry

Mahindra scorpio one of the best sellingindegeniously developed suv

foreign car makers have built plant in india

The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's 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 History

The first practical automobile with a petrol engine was built by Karl Benz in 1885 in Mannheim, Germany. Benz was granted a patent for his automobile on 29 January 1886, and began the first production of automobiles in 1888, after Bertha Benz, his wife, had proved with the first longdistance trip in August 1888 (from Mannheim to Pforzheim and back) that the horseless coach was

absolutely suitable for daily use. Since 2008 a Bertha Benz Memorial Route commemorates this event.

Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed a vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an engine. They also are usually credited as inventors of the first motorcycle, the Daimler Reitwagen, in 1885, but Italy's Enrico Bernardi, of the University of Padua, in 1882, patented a 0.024 horsepower (17.9 W) 122 cc (7.4 cu in) one-cylinder petrol motor, fitting it into his son's tricycle, making it at least a candidate for the first automobile, and first motorcycle;.[1]:p.26 Bernardi enlarged the tricycle in 1892 to carry two adults.[1]:p.26 Main article: Automotive industry by country [edit] Economy

About 250 million vehicles are in use in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007, consuming over 260 billion gallons of gasoline and diesel fuel yearly.[2] The automobile is a primary mode of transportation for many developed economies. The Detroit branch of Boston Consulting Group predicts that, by 2014, one -third of world demand will be in the four BRIC markets (Brazil, Russia, India and China). Other potentially powerful automotive markets are Iran and Indonesia.[3] Emerging auto markets already buy more cars than established markets. According to a J.D. Power study, emerging markets accounted for 51 percent of the global light-vehicle sales in 2010. The study expects this trend to accelerate.[4] [5] [edit]

AUTOMOBILE INDUSTRY in india The automobile industry in India the tenth largest in the world with an annual production of approximately 2 million units is expected to become one of the major global automotive industries in the coming years. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. The monthly sales of passenger cars in India exceed 100,000 units.

History In 1953, the government of India and the Indian private sector initiated manufacturing processes to help develop the automobile industry, which had emerged by the 1940s in a nascent form. Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow at a slow pace due to the many government restrictions. A number of Indian manufactures appeared between 1970-1980.Japanese manufacturers entered the Indian market ultimately leading to the establishment of MarutiUdyog. A number of foreign firms initiated joint ventures with Indian companies.

Challenges faced by Indian Automotive Industry in the new age The Indian automotive industry has been facing new challenges due to the rapid changes taking place during the last decade. This article discusses those challenges and initiatives taken by the government to overcome them. The Indian auto industry is changing rapidly. During the last decade, many international auto manufacturers, either by themselves or in partnership with Indian companies, have started manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of production in small- and medium-scale industries has improved to such an extent that they started exporting products to international manufacturers. The major breakthrough of recent years is the unveiling of "Nano" by Tata Motors during the auto expo 2007. This has received worldwide attention and proved that India can not only design an automobile of international standards but also execute the project at a much lower cost through innovative choice of components, materials, engine design etc.

These developments in the auto sector have given new confidence to everyone related to the auto industry and specifically to the government which resulted in the announcement of the Auto Policy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every year two to three million people are expected to purchase new vehicles. Several million vehicles and components are expected to be exported to both developed and developing nations. To achieve these goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to remain at the same level for the next 8-10 years. The government is also giving some concessions to the auto industry. To realize the above growth predictions, it is important to overcome various challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of fuel and the paucity of highly skilled manpower.

Automotive industry in India From Wikipedia, the free encyclopedia

Mahindra Scorpio, one of India's best selling indigenously developed SUV.

Foreign carmakers have built plants in India.

The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year.[1] It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009.[2] India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010.[3] According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12.[4] In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.[5]

As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world.[6][7] According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020.[8] By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.[9]

A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India"[10] with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports.[11] Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured.[12] The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors[13][14] having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again with General Motors, Aurangabad with Audi, Skoda and Volkswagen, Kolkatta with Hindustan Motors, Noida with

Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.[15][16][17]Contents [hide] 1 Overview 2 History 3 Industry Definition 4 Supply Chain of Automobile Industry 5 Key statistics 5.1 Automobile Production 5.2 Automobile Sales 5.3 Automobile Exports 5.4 Product and service segmentation 5.5 Vehicle Registration 5.6 Total Number of Vehicle Registrations in India from 2001 to 2008 6 Emission norms 7 Geographic Segmentation 7.1 Geographical Segmentation:State-wise motor vehicles registration in India from 2001 - 2008 7.2 Geographical Segmentation: Category-wise number of registrations in States of India 7.3 Geographical Segmentation: Category-wise registration in Union Territories of India 8 Exports 8.1 Top 20 Export destinations in 2007-2008 and growth from previous year 9 Passenger vehicles in India 9.1 Indian automotive companies 9.2 Foreign automotive companies in India 9.2.1 Vehicles manufactured or assembled in India 9.2.2 Vehicles brought into India as CBUs 10 Commercial vehicle manufacturers in India 10.1 Indian brands 10.2 Joint Venture Brands

10.3 Foreign brands 11 Electric car manufacturers in India 12 Market Characteristics 13 International Markets 14 International Markets Analysis 15 Basis of Competition 16 Life Cycle 17 Industry Conditions 18 Taxation 19 MODVAT and CENVAT 20 Customs Duty 21 Service Tax 22 Capital and Labour Intensity 23 Industry Volatility 24 Key Competitors 24.1 Tata Motors 24.2 Maruti Suzuki India 24.3 Hyundai Motor India 24.4 Mahindra & Mahindra 24.5 Ashok Leyland 24.6 Hero Honda Motors 24.7 Bajaj Auto 25 Key Factors 26 Key Success Factors 27 Further reading 28 Footnotes

[edit] Overview

The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year.[18] 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%.[18] 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.[18] The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people.[18]

The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers.

Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged.

Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.[18]

The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, India s increasing per capita disposable

income which is expected to rise by 106% by 2015[18] and growth in exports is playing a major role in the rise and competitiveness of the industry.

Tata Motors is leading the commercial vehicle segment with a market share of about 64%.[18] Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%.[18] 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%[18] 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 200809, 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. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India.

Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. [edit] History

The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers.

Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ utility -3A vehicles under license from Willys.[19] The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.[20]

Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of MarutiUdyog. A number of foreign firms initiated joint ventures with Indian companies.[21]

In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.[21]

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers.[22] In February 2009, monthly sales of passenger cars in India exceeded 100,000 units[23] and has since grown rapidly to a record monthly high of 182,992 units in October 2009.[24] From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example [25]) this progression is unlikely to stop in the coming decade.[26] Congestion of Indian roads, more than market demand, will likely be the limiting factor.[27]

SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and international, in India.[28] [edit] Industry Definition

This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines.

Products and Services

The primary activities of this industry are:

Motor cars manufacturing Motor vehicle engine manufacturing The major products and services in this industry are:

Passenger motor vehicle manufacturing segment (Passenger Cars, Utility Vehicles &Multi Purpose Vehicles) Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles) Two Wheelers Three Wheelers [edit] Supply Chain of Automobile Industry

The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry.

The description and the role of each of the contributors to the supply chain are discussed below.

Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminium to the second tier suppliers.

Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc.

First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order to provide black-box solutions for the requirements of their customers. Black-box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers.

First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-tier suppliers.

Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers wants and needs, automakers begin designing models which are tailored to consumers demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies.

Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorised dealers of the companies. The dealers then sell the vehicles to the end customers.

Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers.

Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers. [edit] Key statistics

The production of automobiles has greatly increased in the last decade. It passed the 1 million mark during 2003-2004 and has more than doubled since.[29]

Year

Car Production

% Change

Commercial

% Change

2010 2,814,584 2009 2,175,220 2008 1,846,051 2007 1,713,479 2006 1,473,000 2005 1,264,000 2004 1,178,354 2003 907,968 2002 703,948 2001 654,557 2000 517,957 1999 533,149 Year 2004-2005 Motor Vehicle 8,467,853 Production[18] Industry 24,379 Revenue[18] Exports 629,544 (Units)[18] Exports 1,915 (Revenue)[18]

29.39 17.83 7.74 16.33 16.53 7.27 29.78 28.98 7.55 26.37 -2.85

722,199 54.86 466,330 -4.10 486,277 -9.99 540,250 -1.20 546,808 50.74 362, 755 9.00 332,803 31.25 253,555 32.86 190,848 19.24 160,054 -43.52 283,403 -0.58 285,044 2005-2006 2006-2007 9,743,503 11,087,997 26,969 806,222 2,231 30,507 1,011,529 2,552

Total % Change Vehicles Prodn. 3,536,783 33.89 2,641,550 13.25 2,332,328 3.35 2,253,999 10.39 2,019,808 19.36 1,628,755 7.22 1,511,157 23.13 1,161,523 22.96 894796 8.96 814611 1.62 801360 -2.10 818193 2007-2008 2008-2009 10,853,930 11,175,479 32,383 1,238,333 3,008 33,342* 1,530,660 3,718*

[edit] Automobile Production Type of Vehicle Passenger Vehicles [18] Commercial Vehicles [18] Three Wheelers [18] Two Wheelers [18] Total 2005-2006 1,209,876 353,703 374,445 6,529,829 8,467,853 2006-2007 1,309,300 391,083 434,423 7,608,697 9,743,503 2007-2008 1,545,223 519,982 556,126 8,466,666 11,087,997 2008-2009 1,777,583 549,006 500,660 8,026,681 10,853,930 2009-2010 1,838,697 417,126 501,030 8,418,626 11,175,479

[edit]

Automobile Sales Type of Vehicle Passenger Vehicles [18] Commercial Vehicles [18] Three Wheelers [18] Two Wheelers [18] Total 2004-2005 1,061,572 318,430 307,862 6,209,765 7,897,629 2005-2006 1,143,076 351,041 359,920 7,052,391 8,906,428 2006-2007 1,379,979 467,765 403,910 7,872,334 10,123,988 2007-2008 1,549,882 490,494 364,781 7,249,278 9,654,435 2008-2009 1,551,880 384,122 349,719 7,437,670 9,723,391

[edit] Automobile Exports Type of Vehicle Passenger Vehicles [18] Commercial Vehicles [18] Three Wheelers [18] Two Wheelers [18] Total 2004-2005 166,402 29,940 66,795 366,407 629,544 2005-2006 175,572 40,600 76,881 513,169 806,222 2006-2007 198,452 49,537 143,896 619,644 1,011,529 2007-2008 218,401 58,994 141,225 819,713 1,238,333 2008-2009 335,739 42,673 148,074 1,004,174 1,530,660

[edit] Product and service segmentation

The automotive industry of India is categorised into passenger cars, two wheelers, commercial vehicles and three wheelers, with two wheelers dominating the market. More than 75% of the vehicles sold are two wheelers. Nearly 59% of these two wheelers sold were motorcycles and about 12% were scooters. Mopeds occupy a small portion in the two wheeler market however; electric two wheelers are yet to penetrate.

The passenger vehicles are further categorised into passenger cars, utility vehicles and multipurpose vehicles. All sedan, hatchback, station wagon and sports cars fall under passenger cars. Tata Nano, is the world s cheapest passenger car, manufactured by Tata Motors - a leading automaker of

India. Multi-purpose vehicles or people-carriers are similar in shape to a van and are taller than a sedan, hatchback or a station wagon, and are designed for maximum interior room. Utility vehicles are designed for specific tasks. The passenger vehicles manufacturing account for about 15% of the market in India.

Commercial vehicles are categorised into heavy, medium and light. They account for about 5% of the market. Three wheelers are categorised into passenger carriers and goods carriers. Three wheelers account for about 4% of the market in India. segment Passenger Car[18] (%) Utility Vehicles (UVs) (%) Multi Purpose Vehicles (MPVs) (%) Total Passenger Vehicles[18] (%) Passenger Carriers (%) Goods Carriers (%) Total Medium & Heavy Commercial Vehicles[18] (%) Passenger Carriers (%) Goods Carriers (%) Total Light Commercial Vehicles (%) Total Commercial Vehicles[18] (%) Passenger Carriers (%) Goods Carriers (%) Total Three Wheelers[18] (%) Scoters/Scooterettee (%) Motorcycles/StepThroughs (%) Mopeds (%) Electric Two Wheelers (%) Total Two Wheelers[18] (%) Grand Total[18] (%) 2003-04 10.22 2.15 0.87 13.25 0.36 2.01 2.37 2004-05 10.39 2.23 0.82 13.44 0.32 2.19 2.51 2005-06 9.91 2.18 0.75 12.83 0.32 2.01 2.33 2006-07 10.65 2.18 0.82 13.65 0.28 2.44 2.73 2007-2008 12.42 2.39 0.98 15.79 0.43 2.10 2.53

0.28 1.17 1.45

0.25 1.27 1.52

0.25 1.36 1.61

0.24 1.67 1.90

0.32 1.77 2.10

3.82 2.56 1.61 4.17 13.01 61.24 4.52 78.76 100.00

4.03 2.17 1.73 3.90 11.68 62.86 4.08 78.63 100.00

3.94 2.39 1.65 4.04 10.21 65.24 3.74 79.18 100.00

4.63 2.34 1.65 4.00 9.31 64.83 3.52 0.07 77.73 100.00

4.63 2.51 1.51 4.01 11.57 59.35 4.47 0.19 75.57 100.00

[edit] Vehicle Registration

India had over 100 million vehicles registered on its roads in the year 2008.[18] This is a growth of about 100% in the past 9 years. Over 77% and about 77 million of these vehicles are two wheelers, about 14% and over 14 million are cars, jeeps and taxis. Over 5 million and over 1 million vehicles registered are goods vehicles and buses respectively.[18]

Two wheelers account a significant market share. Tata Motors with the launch of Tata Nano is trying to attract some of these two wheeler buyers to buy a small, cheap and affordable passenger car. [edit] Total Number of Vehicle Registrations in India from 2001 to 2008Year All Vehicles (in '000) Two Wheelers (in '000) Cars, Jeeps and Taxis (in '000) Buses (in '000) Goods Vehicles (in '000) Other Vehicles (in '000) 2001 2002 2003 2004 2005 2006 2007 2008 54,991 38,556 7,058 634 58,924 41,581 7,613 635 67,007 47,519 8,599 721 72,718 51,922 9,451 768 80,045 57,417 10,460 822 88,068 63,487 11,571 879 96,808 70,141 12,810 936 106,591 2,948 5,795 2,974 6,121 3,492 6,676 3,749 6,828 4,053 7,337 4,345 7,891 4,652 8,464

77,588 14,222 1,003 5,018 9,065

[edit] Emission norms See also: Bharat Stage emission standards

In tune with international standards to reduce vehicular pollution, the central government unveiled the standards titled 'India 2000' in 2000 with later upgraded guidelines as 'Bharat Stage'. These standards are quite similar to the more stringent European standards and have been traditionally implemented in a phased manner, with the latest upgrade getting implemented in 13 cities and

later, in the rest of the nation. Delhi(NCR), Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra are the 13 cities where Bharat Stage IV has been imposed while the rest of the nation is still under Bharat Stage III. [edit] Geographic Segmentation

The total number of new vehicles registered in the 28 states and 7 union territories of India in the year 2008 were about 106,591,000. The diagram above displays the registration of new vehicles in various states and union territories. About 16 states and 1 union territory had over a million new vehicles registered. Tamil Nadu had about 16 million new vehicles registered, Maharashtra had over 13 million, and Gujarat had over 10 million. About 91% of these vehicles are non-commercial vehicles purchased by households looking for a two wheeler, or a car. Only about 9% of new vehicles registered are used for commercial purposes. Details of category wise new vehicle registrations in the various states and union territories are displayed. The number of new vehicles registrations has grown by about 66% in the past five years. [edit] Geographical Segmentation:State-wise motor vehicles registration in India from 2001 2008States\Year 2001 (in '000) 2002 (in '000) 2003 (in '000) 2004 (in '000) 2005 (in '000) 2006 (in '000) 2007 (in '000) 2008 (in '000) Andhra Pradesh3,966 4,389 5,002 5,720 6,446 7,232 8,042 8,989 Arunachal Pradesh Assam 542 Bihar 949 596 21 657 21 727 21 798 726 21 883 694 21 973 647 21 1,086 593 21 21

1,024 1,121 751 857 366 948 397

Chhattisgarh Goa 341

1,076 1,216 1,367 1,536 1,726 1,939 436 483 537 585 638

Gujarat 5,576 6,008 6,508 7,087 7,892 8,785 9,633 10,543 Haryana 1,949 2,122 2,279 2,548 2,883 3,267 3,689 4,164 217 330 984 244 364 269 399 289 439 329 493 375 556 421 628 480 719

Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka 909

1,101 1,217 1,341 1,479 1,630 1,796

3,537 3,636 3,738 3,977 4,338 4,717 5,036 5,360

Kerala 2,112 2,315 2,552 2,792 3,180 3,612 4,034 4,564

Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland

3,095 3,173 3,459 3,804 4,119 4,442 4,710 4,968

6,760 7,414 8,134 8,969 10,055 11,281 12,477 13,817 77 62 31 160 90 67 34 177 97 73 37 162 106 73 42 172 114 78 48 186 123 84 54 201 134 89 61 215 145 95 70 230

Orissa 1,096 1,215 1,359 1,525 1,717 1,936 2,159 2,417 Punjab 2,910 3,103 3,308 3,529 3,859 4,225 4,571 4,992 Rajasthan Sikkim 12 Tamil Nadu Tripura 50 Uttarakhand 2,943 3,197 3,487 3,834 4,285 4,791 5,281 5,815 13 15 17 19 21 23 25

5,162 5,658 8,005 8,575 10,085 11,901 13,860 16,207 57 364 66 406 76 457 85 516 95 580 105 651 117 732 822

Uttar Pradesh 4,921 5,171 5,928 6,460 7,271 8,144 8,970 9,919 West Bengal 1,690 1,690 2,366 2,548 2,816 3,138 3,464 3,833 25 562 13 44 28 586 31 48 28 629 35 55 28 677 43 63 31 732 54 71 34 799 67 79 86 38 42

Andaman & Nicobar Islands Chandigarh 386 386 13 41

Dadra & Nagar Haveli Daman & Diu Delhi 37

3,635 3,699 3,971 4,237 4,544 4,868 5,166 5,469 5 270 5 293 5 313 6 359 7 418 7 495 8 552

Lakshadweep 4 Pondicherry 252

[edit] Exports

Mahindra Scorpio Jeep in service with the Italy's CNSAS.

India's automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India's largest export market followed by Italy, Germany, Netherlands and South Africa.[30] India's automobile exports are expected to cross $12 billion by 2014.[31]

According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.[32]

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011.[33] Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.[34]

In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export.[35] The company said that the plant was a part of its plan to make India the hub for its global production business.[36] Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.[37]

In July 2010, The Economic Times reported that PSA Peugeot Citron was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation.[38] PSA's intention to utilise this production facility for export purposes however remains unclear as of December 2010.

A Tata Safari on display in Poznan, Poland.

In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign carmakers 100% ownership of factories in India, which China does not allow.[5]

In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch

electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its lowcost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project.[39] While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.

Automotive industry analysis: The automotive Industry in India is now working in terms of the dynamics of an open market. Many joint ventures have been set up in India with foreign collaboration, both technical and financial with leading global manufacturers. Also a very large number of joint ventures have been set up in the auto-components sector and the pace is expected to pick up even further. The Government of India is keen to provide a suitable economic, and business environment conducive to the success of the established and prospective foreign partnership ventures. $5.7 billion is the investment envisaged in the new vehicles projects.

The market research report "Indian Automobile Industry - An Analysis (2005-2010)" clarifies all doubts regarding sales satisfaction index and customer satisfaction index. With the inclusion of initial quality study, and the Government policy and competitive analysis, this report in itself is a complete guide to the producers and consumers in the auto industry. Porter's Five Forces Analysis

Porter's 5 forces model is a powerful way of analysing the competitive forces that shapes every industry in general. This was developed by Michael E. Porter of Havard Business School in 1979. This tool helps you to identify whether a new product, investment, services or business have the potential to be profitable.

The 5 competative forces that are taken into consideration are: Competition in the Industry Potential of new entrant into Industry Power of Suppliers Power of Customers Threat to substitute products Lets discuss each of these points in detail::

Competition in the Industry This describes the competition between the existing firms in an industry. Greater the competitive riverly (companies providing equally good products or services) lesser are the profit margin. The price of the product/services is the single most defining factor that influences the customer's buy decision. Hence to maintain low cost, companies consistently has to make manufacturing improvements to keep the business competitive. This requires additional capital expenditure which tends to eat up company's earning. On the other hand if no one else can provide products/ services the way you do you have a monopoly. Lets try to explore these points in more detail. Look at the current senario, the small car market in India is very competitive with players like Maruti Suzuki, Tata Motors, Huyndai etc. which was preety much dominated by Maruti. But with launch of Nano the 1 lakh car the whole momentum of the market has shifted. Now to be competitive in market other companies have to either slash rates of their existing model or have to go back to the drawing board and build again. Now look it from Tata Motor's perspective what price they had to pay to gain such advantage. Building new production plant, raw material &equiptments, labor etc. which accounts to huge capital expenditure. And as mentioned earlier price is the most important thing, you have to offer lower price to the customers. Huge inital expenditure and lower price leave very less profit margin. The bottom line is a competitor's single innovation can change the whole senario of the industry. Lets take an example of a monopoly industry. Chocklate industry in India has just one big player Cadbury. Go to any Big Bazaar or a D-Mart outlet you will find 90% of chocklate by Cadbury. When you go to purchase chocklate what you look for ...Dairy Milk, Perk, Eclairs, Temptation, Celebration,Halls all are produced by Cadbury. As far as I remember I have seen Dairy Milk's ad on TV when I was 5 years old and its still there in market and in all probability it will be there for next 20 years.The current market share of Cadbury stands at impressive 71% even the 2003 worm were not able to eat its market share. What we can conclude a monopoly and a great business!!

Potential of new entrant into Industry: Its not only the existing players in an industry pose threat to each other, a new entrant can also affect the competition. The easier it is for a new firm to enter in a business, the more cut-throat competition there willbe.The factors that can limit threat of new entrant are called as Barriers to Entry. Following are some some barriers to entry:

Government Restrictions and legislations: Although government's job is to preserve free competitive market, it restricts competition through regualtions and restrictions. Oil sector in India is an example. Pre liberization era it was a dominated by Public sector. However after liberization the sector has opened up for private players and FDI but it still remains highly regulated sector. Also the telecom sector, first to make an entry you need TRAI's approval and licensing also you have to compete for the finite radio spectrum available.

Patents: Ideas and Knowledge that provides competitive advantage over others when patented, preventing others from using it and thus creates barrier to entry. Pharma and Software sectors sees maximum number of patents being filed making it difficult for new firms to replicate their products.

High Entry Cost: If the initial cost to set up a new firm is difficult, then the chances of new entrants are very less. Once again coming back to oil sector, Exploration and Production of oil and gas involves a highly capital and technology intensive process of finding oil reserves, assessing its feasibility, drilling and extracting.Hence creating a very high entry cost

Existing loyalty to major brands: If the existing brands are very well-established, then chances of a new firm giving them competition is minimal. Pepsi and Coca Cola dominate the soft drinks industry worldwide making it difficult for any new entrant to survive in front of them. On the other hand, if the industry uses common technology, there is little or no brand franchise and if the entry cost is low then it is very easy for a new entrant to enter into the industry.

Power of Suppliers: A company to manufacture its products requires raw material, laboretc.Thiscreats a buyer-supplier relationship in an industry.If there are few suppliers providing material essential to make a product then they can set the price high to capture more profit. Take a look at the PC industry, it faces a monoplistic power of an operating system supplier. Yes you guessed it right Microsoft. Go to purchase a Dell, Toshiba or HP's laptop it will come with Windows Vista. PCs have to be compatible with Windows platform.On the other hand if there are lot of suppliers competing for few buyers, then the buyers take control of the price. Walmart has a monoploy over its suppliers. If your product is not in Walmart, then you are out of business. To give its customers a better buy, Walmart can control the prices of the suppliers.

Power of Customers: This is the pressure a customer can place on a business. If there are few buyers then they are able to dictate the terms. For example, defence contractors have to approach Governments to sell their aircrafts, submarines, missiles and amunutions. Also if switching to another product is simple and cheap. An example can be telecommunication industry. The bargaining power of buyer is high as there are lot of choice available to the buyer and the service do not vary from one service provider to the other. Switching to another service provider is also simple and cheap. Some industries such as retail industry has very weak or almost no power. It is very difficult to bargain for the rate of potatoes at say Reliance fresh store.

Threat to substitute products : Substitute products refer to to products in other industry. The threath that consumer will switch to a substitute product if there has been an increase in price of the product or there has been a decrease in price of the substitute product. Suppose if the price of coffee increases substantially then consumers may switch to other beverages like tea. In early times print media was the only way of advertisement. But the advent of electronic media and internet provides alternative medium to advertise and market products. The strong 2 wheeler market in India can face a stiff competition from a substitute Tata Nano which is providing a car which is just shade costlier than the bikes. Travelling by airlines or by railway AC -II tier can be a substitute for each other depending on the factors like time, money, personal prefrence etc.