Ind u s t r y

Automobile

“ hailed as the industry of

industries ”
- PETER
Key facts
11th largest passenger car market in the

world and is expected to become the 7th

largest by 2016
4th largest car market in Asia

The first automobile in India was rolled in

1897 in Bombay.
First Indian to own a car in India was

Jamshedji Tata
 First woman to drive a car in India was
History
 Craft production (1890s) to mass production (1910s) to lean

production techniques (1970s).

 1940 - Automotive industry emerged in India

 1953 to 1970 - Growth was relatively slow in the due to

nationalization and the License Raj

 1970 - Tractors, CV and scooters.

 1980’s Major JV’s happened

 Weakening of the license raj, a number of Indian and multi-

national car companies launched operations.

Growth & Performance
Pre 1983 1983-1993 1993-2008
• De licencing of the
• Closed Market • Suzuki, Japan and
sector in 1993.
• Growth Limited by GOI JV to form
• OEMs in India.
supply Maruthi Udyog • Imports allowed

• Outdated models • Easy auto finances

• Implementation of
VAT
• Maruthi Udyog
• Hindustan Motors • Entry of Global
• Hindustan Motors
• Premier • Premier players
• Telco
Total Auto Industry
Automobile Industry and
Economics

FDI Inflows

2007-08 2008-09

Rs 2462 Cr Rs 5212 Cr

 47.25% increase compare to

2007-08
5% - Auto Industry
Foreign Exchange
Exports
BSE Auto Index
PLC

P V -
o w t h
 Gr
12% r a t e
r o w th
G
G D P
>
Demand Drivers
 r ce s Threat of

5 F o Substitutes
Mild

Degree of
Rivalry Low
Buyers’
CR, Supplier’s
Power
Foreign power
Consumers players, Industry favor
favor Technical
Collaboration

Barriers to
entry
Substantial
SWOT Weakness
Low labor
Strength productivity
Large domestic High interest costs
market and high
Sustainable labor overheads make
cost advantage the production
Competitive auto uncompetitive
component Various forms of
vendor base taxes push up the
Government cost of production
incentives for Low investment in
manufacturing Research and
plants Development
Strong Infrastructure
Opportunity
Threat
Commercial
• Rising input costs
vehicles: SC ban
• Rising interest
on overloading
rates
Heavy thrust on
• Cut throat
mining and
construction competition

activity
Increase in the

income level
Key Players
tes
tr ibu
C on
n ies l
m pa loba
o G
8 C % of n,
o
60 ducti 5 %
Pro ia – 2
Ind
Market Share
Auto Policies
In 2002, the Indian government formulated an auto

policy
Automatic approval for foreign equity investment up

to 100%
Weighted tax deduction of up to 150% for in-house

research and R & D activities.

JVs (major share) – Invest $50 million

Budget 2009- Excise duty reduction

Alternative fuels – Tax free

Big ‘3’ Impact
8.2
Dow
% Sa
n
les

12.5 % to
9% growth
rate
Layoff
Future
GM expansion plan at talegaon - $210

million .
Ford - $500 million ( 1500 jobs )

Volkswagen -- 135 million Euros ( 1500

jobs )
 Honda and Toyota will be investing 3000

crores over the next decade for India . 

With the development or evolution of

alternate fuels, hybrid cars have made

Conclusion
Automobile Industry experts predict that by
2050 every 6th car in the world will be for
Indians.

By 2010 India will take over Germany in

sales volumes and Japan by2012.

By 2010, India is expected to witness over

Rs 30000 crore of investment.
 an k
Th
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