Porter’sPorter’s Five of Indian

Five Forces
Forces of Indian
Automobile Industry
Automobile
Industry

Prepared by:-
Vibekananda Sethi
Prepared By:
Vibekananda Sethi
Introduction:

 The Porter’s five forces tool is a simple but powerful

tool for understanding where power lies in a business
situation.
 This is useful because it helps understanding both the
strength of the current competitive position and
factors affecting the strategy development.
 Threat of
New
Entrants

Bargainin Bargainin
g Power of g Power of
Suppliers Buyers

Threat of
Substitute
s
Threat of new entrants:
 In majority of markets, the expertise and capital required to setup
parts or auto manufacturing facilities would be a huge entry barrier
this means is that new entrants would have a hard time setting up.
 All these aspects make the industry attractive. This translates to:

. High capital requirement

. Requirement of advanced technologies
. Need to brand names that are strong
. Level of competition from the existing brands
Threat of substitutes:
 India is well known for 2-wheelers (scooter and bikes) and 3 wheelers
which are real and obvious threats to manufacturers of automobiles.
This means:

. There is a high threat in terms of making a switch to substitutes

. The substitutes are limited
 Bargaining power of buyers:
 When it comes to choice, buyers in India have numerous options to
choose from. There are over twenty foreign manufacturers in the
country and this includes high end manufacturers like Lamborghini
and Rolls-Royce. What is more, they also have a large number of
cheap options to choose from such as the well known Tata Nano.
Because of this:

. The buyer price sensitivity is low

. The number of customers is large

Bargaining power of suppliers:
 It is very likely that manufactures have high bargaining power. This
means they cannot be held at ransom by one manufacturer because
they can easily market their products in India. This translates to:

. High level of competition among suppliers

. Low suppliers concentration
Industry rivalry:
 The rivalry in India is high and yet, the industry has not yet reached
its phase of shake out and it is still making struggles to measure up
to leaders in the automobile industry. This is translated to:

. Product differentiation
. Large size industry
. Entry of few competitors
 The industry rivalry is very intense from competitors which are
company owned like Maruti , Hyundai, Tata Motors, Mahindra, TVS
having a good dominance in their service ability.
Thank You