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Driving the most luxurious car has been made possible by the stiff
competition in the automobile industry in India, with overseas players
gathering the same momentum as the domestic participants.
Every other day, we have been hearing about some new launches, some low
cost cars – all customized in a manner such that the common man is not left
behind. In 2009, the automobile industry is expected to see a growth rate of
around 9%, with the disclaimer that the auto industry in India has been hit
badly by the ongoing global financial crisis.
The automobile industry in India happens to be the ninth largest in the world.
Following Japan, South Korea and Thailand, in 2009, India emerged as the
fourth largest exporter of automobiles. Several Indian automobile
manufacturers have spread their operations globally as well, asking for more
investments in the Indian automobile sector by the MNCs.
Starting its journey from the day when the first car rolled on the streets of
Mumbai in 1898, the Indian automobile industry has demonstrated a
phenomenal growth to this day. Today, the Indian automobile industry
presents a galaxy of varieties and models meeting all possible expectations
and globally established industry standards. Some of the leading names
echoing in the Indian automobile industry include Maruti Suzuki, Tata Motors,
Mahindra and Mahindra, Hyundai Motors, Hero Honda and Hindustan Motors
in addition to a number of others.
The economic liberalization that dawned in India in the year 1991 has
succeeded in bringing about a sustained growth in the automotive
production sector triggered by enhanced competitiveness and relaxed
restrictions prevailing in the Indian soil. A number of Indian automobile
manufacturers including Tata Motors, Maruti Suzuki and Mahindra and
Mahindra, have dramatically expanded both their domestic and international
operations. The country’s active economic growth has paved a solid road to
the further expansion of its domestic automobile market. This segment has
in fact invited a huge amount of India-specific investment by a number of
multinational automobile manufacturers. As a significant milestone in its
progress, the monthly sales of passenger cars in India exceeded 100,000
units in February 2009.
Experts have an opinion that during the early stages the policies and the
treatment by the Indian government were not favorable to the development
of the automobile industry. However, the liberalization policy and various tax
reliefs announced by the Indian government over the recent past have
pronounced a significantly encouraging impact on this industry segment.
Estimates reveal that owing to several boosting factors, Indian automobile
industry has been growing at a pace of about 18% per year. Therefore,
global automobile giants like Volvo, General Motors and Ford have started
looking at India as a prospective hot destination to establish and expand
their operations.
Like many other nations India’s highly developed transportation system has
played a very important role in the development of the country’s economy
over the past to this day. One can say that the automobile industry in the
country has occupied a solid space in the platform of Indian economy.
Empowered by its present growth, today the automobile industry in the
country can produce a diverse range of vehicles under three broad
categories namely cars, two-wheelers and heavy vehicles.
Today, India is among the world’s largest producers of small cars. The New
York Times has rated India as a very strong engineering base with an
incomparable expertise in the arena of manufacturing a number of low-cost,
fuel-efficient cars has encouraged the expansion plans of the manufacturing
facilities of a number of automobile leaders like Hyundai Motors, Nissan,
Toyota, Volkswagen and Suzuki.
On 22 February 2010, Hyundai motors exported its 10,00,000th car, the feat
which was achieved by the firm in just over 10 years. Hyundai Motors is the
largest passenger car exporter and the second largest car manufacturer in
the country. In the similar lines, General Motors has announced its plans to
export not less than 50,000 cars made in India by the year 2011. In yet
another proposal, Ford Motors is to setup a manufacturing facility costing
about US$500 million in India with an annual capacity of 250,000 cars. The
firm has stated that the facility will play a major part in its strategic plan to
make India a hub for its global production business. In yet another significant
move, Fiat motors has stated that it will source a big volume of auto
components from India worth about US$1 billion. In the year 2009, India
overtook China by emerging as the fourth largest exporter of cars in Asia.
Tata Motors is the leader in the Indian commercial vehicles market while it
holds more than 60% share. Tata Motors also enjoys the credit of being the
world’s fifth largest manufacturer of medium and heavy commercial
vehicles.
Automobile Dealers Network in India
In terms of Car dealer networks and authorized service stations, Maruti leads
the pack with Dealer networks and workshops across the country. The other
leading automobile manufactures are also trying to cope up and are opening
their service stations and dealer workshops in all the metros and major cities
of the country. Dealers offer varying kind of discount of finances who in tern
pass it on to the customers in the form of reduced interest rates.
4. Eicher Motors
5. Bajaj Auto
6. Daewoo Motors India
7. Hero Motors
8. Hindustan Motors
11. Telco
13. DC Designs
Points to remember:
Segments Companies
Cars/ SUVs Daimler-Chrysler M&M
Daewoo Motors Mahindra &
Fiat Mahindra
Ford Maruti Udyog Ltd
GM Mitsubishi
Honda Skoda
Hindustan Motors Suzuki
Hyundai Tata
Toyota
Two- Bajaj Auto LML
wheelers Hero Honda Royal Enfield Motors
Hero Motors Ltd.
Honda Suzuki
Kinetic TVS
Yamaha
CVs Ashok Leyland Swaraj Mazda
Eicher Tata
Mahindra & Tatra
Mahindra Volvo
Mitsubishi
Tractors Eicher Mahindra &
Escorts Limited Mahindra
ITL-Renault New Holland
John-Deere Punjab Tractors
L&T Steyr
M&M Tata
Company Particulars
Hyundai Export Base for Small Cars.
Skoda Hub for exports of cars to neighbouring countries.
Ford Exporting CKDs of Ikon to South Africa & other countries.
Mitsubishi & Hub for 125 cc Motorcycles.
Yamaha
Maruti Suzuki Exports cars to EU.
Honda Hub for two-wheelers exports.
Company Particulars
Toyota Motor Global Hub for Transmission
Daimier
Sourcing more than 70 million Euro
Chrysler
Ford Full Fledged Component Sourcing Team
Fiat Sourcing Components.
MRF Ltd. Export Tyres To The US
(Numbe
r
Automobile Domestic Sales Trends of
Vehicles
)
Category 2003- 2004- 2005- 2006-07 2007- 2008- 2009-10
04 05 06 08 09
Passenge 902,0 1,061, 1,143, 1,379,9 1,549, 1,552, 1,949,77
r Vehicles 96 572 076 79 882 703 6
Commerc 260,1 318,43 351,04 467,765 490,49 384,19 531,395
ial 14 0 1 4 4
Vehicles
Three 284,0 307,86 359,92 403,910 364,78 349,72 440,368
Wheelers 78 2 0 1 7
Two 5,364 6,209, 7,052, 7,872,3 7,249, 7,437, 9,371,23
Wheelers ,249 765 391 34 278 619 1
Grand 6,810 7,897, 8,906, 10,123, 9,654, 9,724, 12,292,7
Total ,537 629 428 988 435 243 70
For forty years since India's independence from the British in 1947, the
Indian car market was dominated by two localized versions of ancient
European designs - the Morris Oxford, known as the Ambassador, and a old
Fiat. This lack of product activity in the Indian market was mainly due to the
Indian government's complex regulatory system that effectively banned
foreign-owned operations. Within this system (referred to informally as the
"license raj"), any Indian firm that wanted to import technology or products
needed a license/permit from the government. The difficulty of getting these
licenses stifled automobile and component imports, creating a low volume
high cost car industry that was inefficient, unprofitable, and technologically
obsolete. The two dominant products Ambassador and Fiat, although
customized to the poor road conditions in India, were based on a stale design
concept (with outdated features), and were also fuel inefficient.
Then came the abolition os license raj, In 1993, the government followed up
its liberalization measures with significant reductions in the import duty on
automobile components. These measures have spurred the growth of the
Indian economy in general, and the automotive industry in particular. Since
1993, the automotive industry has been experiencing growth rates of above
25%.
In the past two years, more than a dozen multi-national firms have
announced plans to enter the Indian market. Most of them have formed joint
ventures with Indian firms, while there are exceptions such as Hyundai which
plan to form fully-owned units. Despite the large growth potential of the
Indian market (analysts expect the growth to triple in the next five years), no
one expects the industry to sustain the fragmentation caused by more than
a dozen suppliers. Many of these new firms will not enjoy the scale
economies and relationships with suppliers that Maruti does, so they have
decided not to challenge Maruti at its price of $5,500 in the smaller car
segment.
Amongst the many issues facing the Indian automotive industry, the biggest
by far is the poor road infrastructure. India's road network, comprising of a
modest national highway system (that is only 2% or less of the total roadway
length) is woefully inadequate and dilapidated, and can barely keep pace
with the auto industry's rapid growth. Most roads are single-lane roads built
in the 1950's and 60's, and are crowded with two-wheelers, bullock carts,
and even pedestrian humans and cows. Traffic laws are not well enforced
leading to one of the highest per-capita accident rates in the world. It is to be
expected that the introduction of bigger and more powerful vehicles will only
worsen the situation. Upgrading the existing highway system is itself
expected to cost $30 billion or more, and resource and land constraints
prevent the building of new highways. The Indian government's approach to
solving this problem is to privatize the road infrastructure, by having private
firms build and operate tollways. However, it is unclear if this alone will be
able to solve this infrastructure problem of enormous proportions, which can
severely bottleneck future growth.
To analyze the strengths and weaknesses of the various players in the Indian
automotive industry, it is useful to classify them into the following four
categories: (1) Indian Assemblers, (2) Multinational Assemblers (3) Indian
Component Makers, and (4) Multi-national Component Makers.
(1) Indian Assemblers
[a]Strengths:
[b]Weaknesses
[a]Strengths:
[b]Weaknesses
[a]Strengths:
[a]Strengths:
[b]Weaknesses
Nissan Motors has revealed its prospective plans to export 250,000 vehicles
produced in its India plant by the year 2011. General Motors has also come
up with similar plans.
During the current fiscal year, the Indian automobile industry rode high on
the resurgence of consumer demand in the country as a result of the
Government’s fiscal stimulus and attractively low interest rates. As a result
the total turnover of the domestic automobile industry increased by about 27
per cent.
A reply produced in the Lok Sabha recently has quoted data from the Society
of Indian Automobile Manufacturers and has revealed that the total turnover
of the Indian automobile Industry in April-February 2009-10 was 1,62,708.77
crores.
Predictions made by Ernst and Young have estimated that the Indian
passenger car market will have a growth rate of about 12 percent per annum
over the next five years to reach the production of 3.75 million units by the
year 2014. The analysts have further stated that the industry’s turnover will
touch $155 billion by 2016. This achievement will succeed in consolidating
India’s position as the seventh largest automobiles manufacturer on the
globe, eventually surging forth to become the third largest by the year 2030
behind China and the US.
Further, industry experts believe that the nation will soon establish its stand
as an automobile hub exporting about 2.75 million units and selling about a
million units to be operated on the domestic roads.