The first car ran on India's roads in 1897.

Until the 1930s, cars were imported

directly, but in very small numbers.

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.
Total restrictions for import of vehicles was set and after 1970 the automotive

industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters.
Since the de-licensing of the sector in 1991 and the subsequent opening up of 100

percent FDI through automatic route, Indian automobile sector has come a long way.

The automobile industry in the country is one of the key sectors of economy in terms of employment opportunities. It directly and indirectly employees around 10million people. The market value of automobile industry is more than US $8billion and contribution in Indian GDP is near about 5% and it will be doubled by 2016. The world standings for the Indian automobile sector, as per the Confederation of Indian Industry, are as follows: Largest three-wheeler market Second largest two-wheeler market Tenth largest passenger car market Fourth largest tractor market Fifth largest commercial vehicle market Fifth largest bus and truck segment

Global automobile industry is growing at the rate of 2% per annum. But in recent year growth is dropped due to increase in saturation in the larger car market of the world. Mostly all players in car market are redesignining there pricing strategies. Mergers will help to achieve operational efficiencies.

There was rapid growth in automobile industry till 2010. 23.75% decline in sales from 2010 to 2011. Increase in demand of diesel cars. Companys focused on cost effective strategy to increase the sales.

In order to examine the level of concentration of sales in Indian auto industry, the Herschman-Herfindahls Index (HHI) was used.
The figure shows that market concentration has been lower in the two/three-wheelers sector than in the other automobile sectors. While it has declined in the mid-1990s in the latter, it clearly emerges from this figure that there is an increasing trend of market concentration from 2000-01 in Indian automobile sector. Even in Indian auto-component sector, market concentration has been rising since 2003-04, has now attained the high levels of 1990-91, showing that some companies are scaling up

In 2002, the Indian government formulated an auto policy that aimed at promoting integrated, phased, enduring and self-sustained growth of the Indian automotive industry Allows automatic approval for foreign equity investment up to 100% in the automotive sector and does not lay down any minimum investment criteria. Formulation of an appropriate auto fuel policy to ensure availability of adequate amount of appropriate fuel to meet emission norms Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and two wheelers. Lying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150% for in house research and R&D activities.

Govt. has granted concessions, such as reduced interest rates for export financing. The Indian economy has grown at 8.5% per annum. The manufacturing sector has grown at 8-10 % per annum in the last few years. Several Indian firms have partnered with global players. While some have formed joint ventures with equity participation, other also has entered into technology tie-ups. Establishment of India as a manufacturing hub, for mini, compact cars, OEMs and for auto components

Since changed lifestyle of people, leads to increased purchase of automobiles, so automobile sector have a large customer base to serve. The average family size is 4, which makes it favorable to buy a four wheeler. 85% of cars are financed in India. Car priced below USD 12000 accounts for nearly 80% of the market. Indian customers are highly discerning, educated and well informed. They are price sensitive and put a lot of emphasis on value for money Preference for fuel efficient cars with low running costs.

More and more emphasis is being laid on R & D activities carried out by companies in India Customized solutions (designer cars, etc) can be provided with the proliferation of technology Internet makes it easy to collect and analyse customer feedback With the entry of global companies into the Indian market, advanced technologies, both in product and production process have developed. With the development or evolution of alternate fuels, hybrid cars have made entry into the market.

Legal provision relating to environmental population by automobiles. Legal provisions relating to safety measures. Confirms the governments intention on harmonizing the regulatory standards with the rest of the world Indian government auto policy aimed at promoting an integrated, phased and conductive growth of the Indian automobile industry. Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and two wheelers. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.

Physical infrastructure such as roads and bridges affect the use of automobiles. If there is good availability of roads or the roads are smooth then it will affect the use of automobiles. Physical conditions like environmental situation affect the use of automobiles. If the environment is pleasant then it will lead to more use of vehicles.

P O R T E

Threat of New Entrants

R
S 5 F O R C E S

A N A L Y S I S

Bargaining Power of Customers

Rivalry Among Firms

Bargaining Power of Suppliers

Threat of Substitute Products

High In most markets, the capital and expertise needed to setup an auto or parts manufacturing facility, would be a great enough barrier to entry to prevent many new entrants from setting up. However, given India's incredible growth forecasts, infrastructure progress (especially new and better roads), and ever-expanding financing options to rural residents, the market is attractive. As such, we expect the threat of new entrants to be high.
Although the barriers to new companies are substantial, establishing companies are entering the new markets through strategic partnerships or through buying out or merging with other companies. However, a domestic company, with local knowledge and expertise, has the potential to compete its home market against the global firms who are not well established there.

High
Buyers in India have a wide variety of choice. There are more than 20 foreign manufacturers selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). Of course there are also a plethora of incredibly cheap choices, like the famous Tata Nano. In the relationship between the industry and its ultimate consumers, the power axis is tipped in the consumers favor. This is due to the fairly standardized nature and the low switching costs associated with selecting from among competing brands.

Moderate
India is famous for its two-wheelers (bikes and mopeds) and threewheelers. These are very real and obvious threats to auto manufacturers.

The threat of substitutes to the automotive industry is fairly mild. Numerous other forms of transportation are available, but none offer the utility, convenience, independence and value offered by automobiles. The switching cost associated with using a different mode of transportation, may be high in terms of personal time, convenience and utility.

Moderate
India is famous for its two-wheelers (bikes and mopeds) and threewheelers. These are very real and obvious threats to auto manufacturers.

The threat of substitutes to the automotive industry is fairly mild. Numerous other forms of transportation are available, but none offer the utility, convenience, independence and value offered by automobiles. The switching cost associated with using a different mode of transportation, may be high in terms of personal time, convenience and utility.

High
The industry is not yet in its shake-out phase and is still struggling to find the up-and-coming stars and possibly topple the leaders.

Despite the high concentration ratio seen in the automotive sector, rivalry in the Indian auto sector is intense due to the entry of foreign companies in the market. The industry rivalry is extremely high with any being product being matched in a few months by the competitors. This instinct of the industry is primarily driven by technical capabilities acquired over years of gestation under the technical collaboration with international players.

The research and development (R&D) team of Fiat India will assist Chrysler to design and develop the smallest Jeep, to be launched globally by mid-2014. The Italian company has also commissioned an R&D set-up, Chrysler India Automotive Pvt Ltd, in Chennai

Volvo Group plans to invest Rs 3,800 crore (US$ 710.28 million) in India over the next few years. Honda Car India plans to set up a greenfield diesel engine factory at its second industrial location in Rajasthan. Tata Motors has started assembling the Jaguar XF at its new facility in Chakan near Pune, Maharashtra. Hero MotoCorp has started construction of its fourth manufacturing plant and a new Global Parts Centre (GPC) at Neemrana, Rajasthan. Luxury carmakers like BMW, Audi are planning more 'Made in India' products to increase the number of offerings in the sub Rs 2.5 million (US$ 46,729) category to expand market. The Automotive Mission Plan (AMP) 2006-2016 .

Production
4% 4% 15% Two Wheelers Passenger Vehicles Three Wheelers Commercial Vehicles 76%

Total Production : 20,366,432

Automobile Production Trends

18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

Passenger Vehicles Three Wheelers

Commercial Vehicles Two Wheelers

Automobile Domestic Sales Trends

16,000,000
14,000,000 12,000,000 10,000,000 8,000,000

6,000,000
4,000,000 2,000,000 0

Passenger Vehicles Three Wheelers

Commercial Vehicles Two Wheelers

Total Exports : 2,910,055

14.15% 27.20%

25.15%

Passenger Vehicles Commercial Vehicles Three Wheelers

Two Wheelers

34.40%

Automobile Exports Trends

2,500,000 2,000,000
1,500,000 1,000,000 500,000 0

Passenger Vehicles Three Wheelers

Commercial Vehicles Two Wheelers

Environment Safety - Idle Emission Norms -1984 - Mass Emission norms in 1991 and 1992. - Current Standards Employment Generated - The auto industry currently employs more than 12.5 million people both directly and indirectly and generates employment of 13 persons for each truck, 6 persons for each car and four persons for each three wheeler and one person for two-wheelers.

China is the largest motor vehicle producing country . Produced 18,418,876 vehicles in 2011 as compared to Indias 3,936,448 and the United States 8,398,654. Growth in production : - China +0.8% -USA +11.5% -India +10.4.% 33% of the world demand in the automobile industry will be from the BRIC market. China will remain by far the largest of the four auto markets, expanding its share of total BRIC sales from 53 percent in 2008 to 61 percent in 2014. Brazil is the most mature and stable of the BRIC markets and is likely to remain the secondlargest of the four through 2014. India will grow rapidly and remain the thirdlargest BRIC market through 2013. In 2014, the Russian markets strong post crisis recovery is likely to propel it into third place, nudging India down to fourth place.

10-11% yoy volume growth likely in CV in 2013 driven by the sales of LCV . Segment volume growth in 2013 lower than 2012. 16% revenue growth this year. In domestic market. As the major autoOEMs have low financial leverage, their credit profiles are unlikely to be considerably impacted from a further slight weakening in credit metrics in the year. 14.7% of growth is expected to come from India and 8.3% from China by the end of2013.

http://www.siamindia.com/scripts/IndustryStatistics.a spx http://www.ibef.org/industry/india-automobiles.aspx http://oica.net/wp-content/uploads/lcv-2011november-2012.pdf http://timesofindia.indiatimes.com/business/indiabusiness/Outlook-for-auto-industry-stable-in-2013Fitch-group/articleshow/17939058.cms http://www.indiainfoline.com/Markets/News/Automo bile-Sector-Outlook-2013-Dun-andBradstreet/5572570465 http://finance.yahoo.com/news/auto-industryoutlook-review-feb-211459510.html