Automobile Industry Analysis

Automobile Industry: India

The automobile industry is growing at the rate of around 9% The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand India emerged as the fourth largest exporter of automobiles

Turnover of Automobile Manufacturers (In USD Million) YEAR 2002-03 2003-04 2004-05 2005-06 2006-07 IN USD MILLION 14,880 16,544 20,896 27,011 34,285

Domestic Market Share

Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers 15.96% 3.95% 3.6% 76.49%

The 5 Force Model

Bargaining Power of Customer

Increased awareness among consumers has increased expectations. Thus the ability to innovate is critical. Product differentiation via new features, improved performance and after-sales support is critical. Increased competitive intensity has limited the pricing power of manufacturers.

Bargaining Power of Suppliers

A large number of automotive components suppliers. Automotive players are rationalizing their vendor base to achieve consistency in quality.

Threat of New Entrants

Most of the major global players are present in the Indian market; few more are expected to enter. Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital. Access to distribution network is important. Lower tariffs in post WTO may expose Indian companies to threat of imports.

Threat of Substitutes
Mini cars are being replaced by compact or mid sized cars Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities Though the ratio of sales to capacity have improved, it is still low Competition is likely to intensify in the SUV segment in India following the launch of new models at competitive prices.

Competitive Rivalry within Industry

There is keen competition in select segments (compact and mid size segments). New multinational players may enter the market.

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Presented byAKSHAY GARG MBA 2nd sem