INDUSTRY PROFILE

The Indian automobile sector can be divided into several segments: 2 & 3
wheelers, Passenger cars, Commercial vehicles (Heavy CVs/ Medium
CVs/Light CVs), Utility vehicles (UVs) and Tractors.

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.

The industry is characterized by a very high percentage (75%) of

production in the 2/3 wheelers sector. India ranks as the largest manufacturer of
motorcycles and second largest in manufacturing of scooters as well as tractors
in the world. The industry has intense forward and backward integration. The
joint venture list indicates a wide variation ranging from 10% to 100%.

The equity participation is not regulated by Government but is market

driven. It depends upon the market perceptions of the joint venture partners and
their business perceptions primarily in terms of technological, financial and
market strengths of the partners.

The setting up of joint ventures has also led to enhanced capacity creation
in the vehicle sector, particularly in the passenger car sector and the additional
capacity is expected to mount by one million passenger cars in the next 4-5
years.

The large volumes of investment including foreign direct investment in

the automobile manufacturing ventures and technical collaboration are
propelling a quantum jump in up gradation of technology. Domestic demand for
passenger cars and multi utility vehicles is projected at 800,000 cars by 2004
A.D.

With increased production and capacity creation in the passenger car

sector, foreign countries may use India as an export hub. This tremendous
growth is likewise triggering growth of the auto-component segment.

In India, the vehicle population, currently at sixty million, is growing at a

rate of more than 9% per annum. Of this, 63 % are two/three wheelers. Growth
rate has been very high for passenger cars and 2/3 wheeler vehicles.
 The automotive industry in India is one of the largest in the world with an
annual production of 23.96 million vehicles in FY (fiscal year) 201516,
following a growth of 2.57 per cent over the last year. The automobile industry
accounts for 7.1 per cent of the country's gross domestic product (GDP). The
Two Wheelers segment, with 81 per cent market share, is the leader of the
Indian Automobile market, owing to a growing middle class and a young
population. Moreover, the growing interest of companies in exploring the rural
markets further aided the growth of the sector. The overall Passenger Vehicle
(PV) segment has 13 per cent market share.

India is also a prominent auto exporter and has strong export growth
expectations for the near future. In FY 201415, automobile exports grew by 15
per cent over the last year. In addition, several initiatives by the Government of
India and the major automobile players in the Indian market are expected to
make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in
the world by 2020.

MARKET SIZE:

The industry produced a total 14.25 million vehicles including PVs,

commercial vehicles (CVs), three wheelers (3W) and 2W in AprilOctober
2015, as against 13.83 in AprilOctober 2014, registering a marginal growth of
3.07 per cent, year-to-year.

The sales of PVs grew by 8.51 per cent in AprilOctober 2015 over the
same period in the previous year. The overall CVs segment registered a growth
of 8.02 per cent in AprilOctober 2015 as compared to same period last year.
 Medium and Heavy Commercial Vehicles (M&HCVs) registered very
strong growth of 32.3 per cent while sales of Light Commercial Vehicles
(LCVs) declined by 5.24 per cent during AprilOctober 2015, year-to-year.

In AprilOctober 2015, overall automobile exports grew by 5.78 per cent.

PVs, CVs, 3Ws and 2Ws registered growth of 6.34 per cent, 17.95 per cent,
18.59 per cent and 3.22 per cent, respectively, in AprilOctober 2015 over
AprilOctober 2014.

INVESTMENTS:

In order to keep up with the growing demand, several auto makers have
started investing heavily in various segments of the industry during the last few
months. The industry has attracted foreign direct investment (FDI) worth
US$13.48 billion during the period April 2000 to June 2015, according to data
released by Department of Industrial Policy and Promotion (DIPP)

Top automobile Companies in India:

Tata Motors
Mahindra & Mahindra Ltd
Maruti Suzuki
Hero MotoCorp Ltd
Bajaj Auto Limited
Ashok Leyland
Hyundai
TVS Motor Company
Eicher Motors
Force Motors ltd
Some of the major investments and developments in the automobile sector
in India are as follows:

Global auto maker Ford plans to manufacture in India two families

of engines by 2017, a 2.2 litre diesel engine code-named Panther,
and a 1.2 litre petrol engine code-named Dragon, which are
expected to power 270,000 Ford vehicles globally.

The world's largest air bag suppliers Autoliv Inc, Takata Corp,
TRW Automotive Inc and Toyoda Gosei Co are setting up plants
and increasing capacity in India.

General Motors plans to invest US$1 billion in India by 2020,

mainly to increase the capacity at the Talegaon plant in
Maharashtra from 130,000 units a year to 220,000 by 2025.

US-based car maker Chrysler has planned to invest Rs 3,500 crore

(US$525 million) in Maharashtra, to manufacture Jeep Grand
Cherokee model.

Mercedes Benz has decided to manufacture the GLA entry SUV in

India. The company has doubled its India assembly capacity to
20,000 units per annum.

Germany-based luxury car maker Bayerische Motoren Werke AG's

(BMW) local unit has announced to procure components from
seven India-based auto parts makers.
 Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent
shares in France-based Peugeot Motorcycles (PMTC).

GOVERNMENT INITIATIVES:

The Government of India encourages foreign investment in the

automobile sector and allows 100 per cent FDI under the automatic route.

Some of the major initiatives taken by the Government of India are:

The Government of India aims to make automobile manufacturing

the main driver of "Make in India" initiative, as it expects the
passenger vehicles market to triple to 9.4 million units by 2026, as
highlighted in the Auto Mission Plan (AMP) 2016-26.

In the Union budget of 2015-16, the Government has announced

plans to provide credit of Rs 850,000 crore (US$127.5 billion) to
farmers, which is expected to boost sales in the tractors segment.

The government plans to promote eco-friendly cars in the country

i.e. CNG-based vehicles, hybrid vehicles, and electric vehicles
and also to make mandatory 5 per cent ethanol blending in petrol.

The government has formulated a Scheme for Faster Adoption and

Manufacturing of Electric and Hybrid Vehicles in India, under the
National Electric Mobility Mission 2020, to encourage the
progressive introduction of reliable, affordable, and efficient
electric and hybrid vehicles into the country.

The Automobile Mission Plan (AMP) for the period 20062016,

designed by the government is aimed at accelerating and sustaining
growth in this sector. Also, the well-established Regulatory
 Framework under the Ministry of Shipping, Road Transport and
Highways, plays a part in providing a boost to this sector.

Fig 1: Top 20 motor vehicle producing countries 2015

SWOT ANALSIS
 Market expansion
Threats Changing lifestyle & customer groups
Strategic Alliances
Intense Competition Introducing fuel-efficient vehicles
Volatility in the fuel Prices
Sluggish Economy Opportunities
High fixed cost and investment in R & D
T
SWO
Bargaining power of consumers Strength
Cars recalled
Evolving industry
Continuous product innovation
Technological advancement
Weakness Increase in demand of luxury commercial
vehicles