BAJAJ AUTO LTD IN CHILE & URUGUAY

Presented By (Group 3, Sec A) Neha Mehta Nitin Sharma Nitin Baranwal Prinsu Jain Rajesh SIngh

Social & Economical environment for Bajaj Auto in Chile & Uruguay

CHILE

Demographics Population 16,888,760 urban population: 89% of total population (2010) rate of urbanization: 1.1% annual rate of change.

Age and sex distribution for the year 2010:

The richest 10% have nearly 45.6% income at their disposal.

Population consists mainly of middle class that are in the age group of 20 to 65 with income at their hands. There has been a constant increase in the per-cpita income from 5,000 USD in 1990 to 14,700 USD in 2009 , the highest in Latin America.

Chilean Households distribution by segments (1: Poorest 5: Richest)

Chilean Auto sector

Motor vehicle sales reached all-time highs, with an estimated total for the year of 275,000 units, while in 2011 the forecast is for a new record of 312,000 units.
Some 38% of households have at least one vehicle, and most of these (85%) have only one. As is to be expected, the demand for cars is strongly linked to household income. The richest 20% of the population owns 44% of the total cars, while the poorest quintile owns only 7%.

URUGUAY

Age and sex distribution for the year 2010:

Uruguay has majority of its population living in urban areas. GDP: USD 32,200 million Per capita GDP: USD 12,600 The number of people per car in Uruguay is among the lowest in the region, as the vehicle fleet has not yet fully recovered from the crisis of 2002.

The motorcycle and moped market of Uruguay is around 46.4% of the total vehicels in Uruguay.

Competition & Environmental Factors for Bajaj Auto in Chile & Uruguay

Competition

Uruguay n Chile:
Taste n Preferences: In these countries, people like heavy bikes such as Harley Davidson, Tomos Motorcycles, Zundapp Motorcycles etc. Due to its diverse cultural heritage and stunning mountains, there is a craze for biking.
However, there are other players like

Honda Motors Kawasaki BMW

Industry Growth Rate: 10% GDP per capita: $15400 (Chile) Population: 16.8m GDP per capita: $12600 (Uruguay) Population: 3.8 m
Bajaj can enter into the country in 2 segments Heavy 2-wheelers. Light 2-wheelers. Heavy 2-wheelers:
The major competitor in this segment are Harley Davidson, BMW, Yamaha etc

Light 2-wheelers:
The major competitors in this segments are Honda Motors, Kawasaki etc.

Environmental
Chile:

EPI (Environmental Performance Index):

The index, which uses 25 indicators to measure a countrys performance in six categories (environmental health, air pollution, water resources, biodiversity and habitat, productive natural resources, and climate change), placed Chile 16th out of 163 countries. The Climate Justice Alliance was formed in Chile by a coalition of 14 environmental and civic associations. These organizations merged with the hope of underscoring the importance of the climate in the public agenda. The members intend to raise awareness of climate change in the country.

The park houses numerous species of wild animals, including the puma, the grey fox, and the vizcacha. It attracts around 400,000 visitors every year due to its grand vistas, natural hot springs, and ski resorts. Based on above parameters, Bajaj Auto can go for rented bike services. Bajaj can exploit the travel n tour opportunity in renting the bikes.

Uruguay:

Uruguay's climate is relatively mild. Located entirely within the temperate zone Uruguay has a climate that is fairly uniform nationwide.

Seasonal variations are pronounced, but extremes in temperature are rare. As would be expected by its abundance of water, high humidity and fog are common. The absence of mountains, which act as weather barriers, makes all locations vulnerable to high winds and rapid changes in weather as fronts or storms sweep across the country. .

Legal & Political environment for Bajaj Auto in Chile & Uruguay

Uruguay- This country is known for its legal clarity. Rank of Uruguay & Chile for Corruption Perceptions index (Low to High) Chile & Uruguay- 1(Ranking) Institutional Development (Ranking) Chile- 35 Uruguay- 40

Goods imported from countries other than MERCOSUR (Southern Common Market) are subject to common external tariffs (CET) Custom tariffs- 0 to 2 % VAT- 22% Import Surcharges Transfer Pricing Regulations For import & export transaction of goods where prices can be determined through transparent markets, stock exchanges or similar.

Foreign investors may set up companies in Uruguay without prior additional formalities. Investment can be made in any currency. Shareholders, partners and managers of companies may be either locals or foreign national, and either residents or nonresidents in the country. Foreign investors may set up operations by adopting the structure of a local corporation or a branch of a foreign enterprise. Investment by locals & foreigners, both have access to same benefits.

There are no limits to hire foreign personnel. Fund transfer can be made in any currency in view of the free convertibility system in Uruguay.

Tax System Companies- 25% Non Resident- 12% Incentives for foreign investors 1. Investment law 2. Free Zone law

Investment law- If approved, tax benefit is given for a limited period Free Zone- users are exempt from all current and future national taxes, including those taxes for which a specific legal exemption is required, in connection with the activities performed within the Free Zone territory.

Thank you!