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Group 2

AUTOMOBILE INDUSTRY

TEAM MEMBERS:
Adhithiyan (ABM 14001)
Ayush (PGP33003)
Harsh (PGP33015)
Heena (PGP33016)
Sai (PGP33001)
Vivek P (PGP33050)
Company

• Maruti Suzuki is 56.21% owned subsidiary of Suzuki and motorcycle manufacturer Suzuki motor
corporation.
• Market Share: 51% of Indian passenger car market (Jan,2017)
• Famous Cars: Ciaz, Ertiga,Wagon R, Alto, Swift etc.
Automobile Industry and Macro Economic Factors
Sales (Unit) vs Inflation (%) Sales(Units) vs GDP (YoY)
3500000 16 3500000 12

3000000 14 3000000 10
12
2500000 2500000
8
10
2000000 2000000
8 6
1500000 1500000
6
4
1000000 1000000
4
500000 500000 2
2
0 0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017

Vehicle sold in Units in India Inflation (%) Vehicle sold in Units in India GDP (YoY %)

Sales (Unit) vs Reserve Ratio (%) Sales (Unit) vs Energy Prices


3500000 0.14 3500000 80

3000000 0.12 3000000 70


60
2500000 0.1 2500000
50
2000000 0.08 2000000
40
1500000 0.06 1500000
30
1000000 0.04 1000000
20
500000 0.02 500000 10
0 0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017

Vehicle sold in Units in India Reserve Ratio (%) Vehicle sold in Units in India Energy Prices
Automobile Industry and Macro Economic Factors

Sales (Unit) vs GDP per Capita (USD) Sales (Unit) vs Gross domestic Income (RS)
3500000 2000 3500000 1.4E+14

1800
3000000 3000000 1.2E+14
1600
2500000 1400 2500000 1E+14

1200
2000000 2000000 8E+13
1000
1500000 1500000 6E+13
800

1000000 600 1000000 4E+13


400
500000 500000 2E+13
200

0 0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017

Vehicle sold in Units in India GDP Per capita (USD) Vehicle sold in Units in India Disposable income
REGRESSION ANALYSIS
Variable Correlation coefficient Interpretation Variable Description Sources
GDP (YoY %) Yearly GDP growth is taken Bloomberg
GDP (YoY %) 0.309 High Correlation
for calculating correlation
Reserve Ratio (%) -0.0426 High Correlation
Reserve Ratio (%) Cash Reserve Ratio (Yearly Bloomberg
Energy Prices (Rs) 0.535 High Correlation Average) is taken as a proxy
variable
Inflation (%) -0.397 No Correlation Energy Prices (Rs) Gasoline Retail prices is Bloomberg
taken for 4 cities Delhi,
GDP per capita (USD) 0.402 High Correlation Mumbai, Kolkata and
Chennai
Gross Domestic 0.8476 Very High correlation
Income Inflation (%) CPI is taken as a proxy Bloomberg
variable
Rank Variable GDP per capita (USD) Annual Bloomberg

1 Gross Domestic Income


Gross Domestic Income Gross domestic income is derived as https://data.wor
the sum of GDP and the terms of trade ldbank.org/coun
2 Energy Prices
adjustment. Data are in constant local
currency. try/india
3 GDP per capita
Total vehicle Sales No of units sold in Indian Bloomberg
4 GDP (YoY%) Market

5 Inflation

6 Reserve Ratio
Key Success Factors

Analysis is stretched to the company’s market share in


different segments, manufacturers, types of products and
Market Position
brands: Brand Strategy, Product Mix Strategy, pricing
strategy reliability, after sales services
Operating Utilisation of factory capacity to measure degree of
Business Risk Assessment Management efficiency and cost reduction. Analysis of Working capital
management and inventory management
Product Range Follow customer’s changing preferences. Increase in budget
and development of Research and development.
Marketing and Extensive distribution network to offer better geographic
distribution diversity. Heavy expenditure on customer awareness

Examination of financial targets, hedging and other policy to


Financial Policy
reduce overall financial risk
Financial Risk Assessment
Financial Analysis covers company’s financial health and options
Flexibility under stress and flexibility to deal with adverse scenario
Opportunity and Threat Analysis

OPPORTUNITY THREAT
• Improving economic scenario in the market. • The increasing petroleum product prices is a great
threat as it increases the apprehensions of people
• The improvement in the job market has increased the
to buy cars.
disposable income of the general public which in turn
would increase the car sales. • The demonetization has lead to decreased
spending capacity of the people which would
• The improving infrastructure facilities in the country has
decrease the car sales.
enabled better road connectivity between cities which in
turn has improved the road traffic substantially, thus help • Increasing popularity of taxi services like OLA and
in increasing the car sales. UBER has decreased the need of the people to own
a vehicle.
• NEXA models has already come up with smart hybrid
engines. More R&D in the electric car models would open • Make in India initiative has opened the doors for
up another big market in India. the foreign players to come and setup the
manufacturing plants like Nissan, Renault, etc.,
• The export capacity may open the doors to foreign
which would impact the sales of Maruti Suzuki.
markets including US and UK markets for Maruti Suzuki.
• The advanced technology of the foreign enables
• As a result of demonetization, the liquid cash of all the
them to manufacture products at competitive
citizens are made to be deposited in their bank accounts
prices which affects sales of Maruti Suzuki.
and in turn, the interest rates went down. This may boost
the car loans, thus increasing the car sales.
Passenger Vehicle Industry-Structural factors

Porter's five forces Metric 1 Metric 2 Conclusion

No of diferent
components required for No of available suppliers
Bargaining power of suppliers each vehicle-30+ for each component-4+ Low
No of available players- No of models available-
Bargaining power of buyers 8+ 100+ Very high
Degree of Globalisation-
Threat of new entrants Fixed costs-Very high Very high Moderate
Availability of substitutes-
Threat of substitutes Switching costs-Low Very Low Low
High
competition/oligop
Competition HHI=2765 Concetration ratio=70 oly
STRATEGIC GROUPS
Low High

HIGH BMW,
Tata [Jaguar, Mercedes,
Land Rover] Ferrari
PRICE

Toyota, Ford, Maruti Suzuki, Tata [Indigo,


LOW General Motors Hyundai Nano]

HIGH LOW
PRODUCT PORTFOLIO

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