Automobile 16.20 per cent and 4.99 per cent respectively,

Automobile Industry

India is one of the largest Automobile Industry in
the world. The automobile industry accounts for about 7.1 per cent of the Gross
Domestic Product (GDP). The Two Wheelers segment has 80 per cent market share
is the leader of Automobile market owing to a middle class and young
population. The growing interest of the companies in exploring the rural
markets further led to the growth of the Automobile sector. The overall
Passenger Vehicle segment has about 14 per cent of market share.

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India is an auto exporter and has strong export
expected growth  for the near future. In
2017 exports of PV and Commercial Vehicles (CV) registered a growth of 16.20
per cent and 4.99 per cent respectively, over 2016.Several initiatives by the
Government of India in the Indian market are expected to make India a leader in
the 2Wheeler and Four Wheeler market in the world in future.

Market Size
and Characteristics

Production of passenger vehicles, commercial
vehicles, three wheelers and two wheelers grew at 5.48 % in 2017 to 25,316,044
vehicles from 24,016,599 vehicles in 2016.The sales of passenger vehicles,
commercial vehicles and two wheelers grew by 9.28 per cent, 4.20 per cent and 7
per cent during the period April-March 2017.

 

India’s electric vehicle sales increased 38 per
cent to 22,000 units during 2015-16 and expected to rise further on the back of
cheaper energy storage costs and the Government’s vision to see about six
million electric and hybrid vehicles in India by 2020.

Market Trends

In order to keep up with the growing market
demand, several auto makers have invested heavily in various segments during
the last few months. The industry has attracted Foreign Direct Investment worth
about US$ 17.40 billion during April 2000 to June 2017, this is according to
data released by Department of Industrial Policy and Promotion (DIPP).

Some major investments and developments in the
automobile sector in India are:

JSW Energy,
has signed a Memorandum of Understanding with the Gujarat government to
set an electric vehicle-manufacturing company costing around Rs 4,000
crore (US$ 613 million) which has the capacity to produce about 2,00,000
electric vehicles every year.
Tata
Motors would invest Rs 4,000 crore (US$ 612 million) in  2017 and a major portion will go to
passenger vehicles Rs 2,500 crores (US$ 375 million) and the remaining Rs
1,500 crore ($225 million) will be invested in the business over the next
about next five years.
Electric
car maker Tesla Inc. will introduce its products in India sometime in the summer
of 2018.
Kia
Motors is expected that it would sign a memorandum of understanding with
the Government of Andhra Pradesh (AP) to set up a factory in Anantapur
district and the company will invest around US$ 2 billion on the plant and
it will be manufacturing about 3 lakhs car per annum.
Several
automobile manufacturers, from global majors Audi to Indian manufacturers
such as Maruti Suzuki and Mahindra & Mahindra, are exploring the
possibilities to introduce driverless cars for India market segment.
BMW would
manufacture a local version of below-500 CC motorcycle, the G310R, in TVS
Motor’s plant in Tamil Nadu, for local roads.
Hero
MotoCorp Ltd seeks to enhance its participation in the Indian electric
vehicle market by pursuing its internal EV program by investing Rs 205
crore (US$ 30.75 million) to acquire around 26-30 per cent stake in
Bengaluru-based technology start-up.
Ford
Motor Co. plans to invest about Rs 1,300 crore (US$ 195 million) to help
build a global technology and business centre, which will be designed as a
hub for product development, mobility solutions and business services for
India local and other markets worldwide.

 

 

 

 

Government
Initiatives

The Government encourages foreign investment in
automobile sector and allows 100 per cent FDI under the automatic route in any
form which has led to immense growth the past year.

Some of the initiatives taken by the Government
are:

• Plan to introduce biofuel vehicles for road and
water transportation. Cut fossil fuel imports and look for alternative which
have low cost like methanol.

•India has extended support to the industry by increasing
custom duty on commercial vehicles from 10 per cent to 40 per cent and reducing
duty on chassis for ambulance manufacturing to 12.5 per cent.

•       The
Government plans to introduce a Green Urban Transport Scheme with a central
assistance of around Rs 25,000 crore, aimed at boosting the growth of urban
transport on low carbon for reduction in pollution, and providing a framework
for funding urban mobility projects at National and State level with minimum
recourse to budgetary support by using innovative financing methods of
automobile related projects.

•automobiles manufacturing will the positioned as
important under ‘Make in India’ initiative, as it passenger vehicles market is
expected to triple to 9.4 million units, as highlighted in the Auto Mission
Plan 2016-28.

•The government has a Scheme for Adoption and
Manufacturing of Electric Vehicles in India, Which comes under the National Mobility
Mission 2020 to encourage the progressive induction of reliable and efficient
electric vehicles in the country for constant growth.

Road Ahead

The
automobile industry is supported by highly skilled labour and innovation research
and development market which has led to further growth in the employment market
leading to job creation for both skill and unskilled workers.

The
Indian automotive aftermarket is estimated to grow at around 12-15 per cent to
reach US$ 17 billion by 2021 from around US$ 8 billion in 2017. It has the
potential to generate up to US$ 300 billion annual revenue by 2030, create
about 65 million jobs and contribute over 12 per cent to India’s GDP.

The
eminent components in which the automobile industry is trying to work upon:

CAPACITY
ADDITION:

1.    
Considering
low cost of production, prominent auto companies are increasing their
production capacity in order to capture a dominant share in Indian automobile
industry.

2.    
Most of the
automobile companies are eyeing India as an outsourcing hub.

3.    
With the total
investment of around US$ 163.7 million, Honda Motorcycle & Scooter India
expanded its production of Activa in three variants at Ahmedabad plant.

4.    
Volvo has
started local assembly of its cars in India from October 2017.

5.    
A new engine
assembly line is being set up by the Volkswagen group in Aurangabad

 

CATERING
INDIAN NEEDS:

1.    
Most of the
firms including Ford & Volkswagen have adapted themselves to cater to the
large Indian middle class by dropping their traditional structure and designs.

2.    
This allows
them to compete directly with domestic firms making the sector highly
competitive.

LAUNCH
OF NEW MODELS:

1.    
Honda is
planning to launch three new car models in India by 2020 and will localise the engines
to keep the prices low.

2.    
Fiat Chrysler
Automobiles India, launched its new Jeep brand Compass in February 2017, which
is going to be produced indigenously in Ranjangaon,, Maharashtra. India will
probably be the 4th manufacturing hub, globally, for the brand in next five
years.

3.    
In March 2017,
Tata Motors’ new sports car was unveiled, under its new sub brand – TAMO, at
the Geneva International Motor Show. The show will displayed niche segment
models with advanced technologies.

4.    
In May 2017,
Pune based Kinetic Green Energy and Power Solutions Ltd. has launched its 1st
electric 3- wheeler “Kinetic Safar”, This 3-wheeler is equipped with an
advanced lithium-ion battery.

 

GROWTH DRIVERS

1.    
Rising income
and a large young population.

2.    
 Greater availability of credit and financing
options.

3.    
Demand for
commercial vehicles increasing due to high level of activity in infrastructure
sector.

4.    
Clear vision
of Indian government to make India an auto manufacturing hub.

5.    
Initiatives
like ‘Make in India’, ‘Automotive Mission Plan 2026’, and NEMMP 2020 to give a
huge boost to the sector.

6.    
Improving road
infrastructure.

7.    
 Established auto ancillary industry giving the
required support to boost growth.

8.    
5 per cent of
total FDI inflows to India went into the automobiles sector.

 

Market Structure

Automobile
Industry mainly deals with farm equipment, utility vehicles and commercial
vehicles it holds different competitor segments for different vehicle segments.

For
example – For 2-Wheeler market Honda and Suzuki is the main competitor but when
it comes to trucks and busses Daimler and Eicher motors stand as the chief
competitors.

Competitors
of automobile industry across Geography

 

Chief
competitors of Automobile industries:-

Hindustan
motors
Toyota
Tata
Motors
Honda
Hyundai
Maruti-Suzuki
Ashok
Leyland

 

Comparison with Market Leader:

 

 

 

 

Major competitors of across various
Segments:-

 

 

 

Market share of each participant:

The
market share of Automobile Industry when the commercial vehicles category is
concerned has not changed much when compared to 2016 –

Market
share of  2 wheelers is:

 

Characteristics of Competitors
and behavioral trait

TATA MOTORS

1.    
It is a market
leader in the commercial vehicle segment in India with a 42 per cent market
share in FY17 and also a key player in the passenger vehicle segment.

2.    
The company
has been at the forefront of technology and innovation and launched the
cheapest car in the world.

3.    
Tata Motors
posted consolidated revenues of US$ 9.10 billion in Q1 FY18 and US$ 10.91
billion in Q2 FY18.

4.    
Tata Motors
are always on top when their Ethics and the corporate governance is considered.
Hence, they concentrate more on innovation and domination to acquire more and
more market share.

5.    
Therefore, other
Automobile industry compete on the grounds of  innovation.

Maruti-Suzuki

 

1.    
Maruti Suzuki
is a majority owned subsidiary of Japanese conglomerate Suzuki.

2.    
It is now the
undisputed market leader in the passenger vehicles segment in India with a
market share of 47 per cent in FY17.

3.    
The company
has made the most affordable cars for the Indian middle class for more than
three decades.

4.    
New models are
being launched each year to hold the position of the leader in its home market.

5.    
The company
mainly works on the pricing strategy hence it is the price competitor with
other automobile company’s.