A presentation on

Automobile Industry

Presented By: Kanchan sahuCSREM,PARALAKHAMUNDI

AUTOMOBILE INDUSTRY

PESTEL ANALYSIS & POTER’S FIVE FORCE MODEL

Automobile? Motorized vehicle consisting of four wheels and

powered by an internal engine. Automobiles are used to transport people and items from one location to another location.

Automobile Industry The automobile industry is a term that covers a wide

range of companies and organizations involved in the design, development, manufacture, marketing and selling of motor vehicles, towed vehicles, motorcycles and mopeds. It is one of the world's most important economic sectors by revenue.

Introduction

By producing 18.4 million units , China in no.1 position.

U.S. in second place with 8.7 million units, while Japan in third place with 8.4 million

units. Ford, General Motors, and Chrysler are often

referred to as the "Big Three" or, more recently the "Detroit Three", being the largest automakers in the United States and Canada. 

International Automobile Industries

Market segment of Indian Automobile industry

The Indian automobile market can be divided into several segments viz. two-wheelers (motorcycles, geared and ungeared scooters and mopeds), three wheelers, commercial vehicles (light, medium and heavy), passenger cars.

• Two-wheelers (76%) • Three wheelers(3.39%)• Commercial vehicles(4.36%) • Passenger cars(16.25%)

Indian Automobile Industries

India became the sixth largest passenger vehicle producer in the world with an annual production of more than 3.9 million units in 2011.

In 2010, India beat Thailand to become Asia's third largest exporter of passenger cars.

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Top 3 Indian company Maruti suzuki

HyundaiTata motors

The production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by Automotive Component Manufacturers Association of India (ACMA).

Passenger car sales stood at 1.89 million units in 2012-1,as per Mr Boris Fitz, Director, Sales and Network Development, Mercedes-Benz India.

The industry produced 1.74 million vehicles in May 2013. The export of passenger vehicles and three- wheelers grew by 7.34 percent and 26.53 percent respectively during the April-May 2013,(SIAM).

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PESTEL ANALYSIS

In 2002, the Indian government formulated an auto policy that aimed at promoting integrated, phased, enduring and self-sustained growth of the Indian automotive industry

Approval for foreign equity investment up to 100% in the automotive sector .

Formulation of an appropriate auto fuel policy .

Allowing automatic approval for foreign equity investment up to 100% with no minimum investment criteria.

Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and two wheelers.

Lying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150% for in house research and R&D activities.

Plan to have a terminal life policy for CVs along with incentives for replacement for such vehicles.Promoting multi-model transportation and the implementation of mass rapid transport system

Political Factor

Economic pressures on the industry are causing automobile companies to reorganize the traditional sales process. 

Weighted tax deduction of up to 150% for in-house research and R & D activities.

Govt. has granted concessions, such as reduced interest rates for export financing.

The Indian economy has grown at 8.5% per annum.

The manufacturing sector has grown at 8-10 % per annum in the last few year.

Economical Factors

changed lifestyle of people. Growth in urbanization. 85% of cars are financed in India. Indian customers are highly discerning, educated

and well informed. They are price sensitive and put a lot of emphasis on

value for money. Preference for small and compact cars. They are

socially acceptable even amongst the well off. Preference for fuel efficient cars with low running

costs.

Social Factor

Internet has a great impact on automobile

industry • Technology relating to automobile designs• Technology of automobile manufacture• Technological developments that may

increase use of automobiles. • R&D

Technological Factor

Physical conditions effecting ability to use automobiles of different types. This will also include state infrastructure such as roads for driving vehicles.

Acquisition of land. Global warming Hybrid & electric car.

Environmental factor

Legal provision relating to environmental population by automobiles.

Legal provisions relating to safety measures.

Open trade with minimum risk. Govt. tax on import decrease by 60

LEGAL FACTOR

Porter’s Five force model

Large amount of capital required. Few legal barriers protect existing companies from

new entrants. All automotive companies have established brand

image and reputation Products are mainly differentiated by design and

engineering quality. A firm has to produce at least 5 million (by some

estimations) vehicles to be cost competitive, therefore it is very hard to achieve economies of scale

Governments often protect their home markets by introducing high import taxes

threat of new entrants(weak)

There are many buyers like corporate or governments usually buy large fleets and can bargain for lower prices

It doesn’t cost much for buyers to switch to another brand of vehicle or to start using other type of transportation

Buyers can easily choose alternative car brand.

power of buyers(strong)

Large number of suppliers Some suppliers are large but the most of

them are pretty small Companies use another type of material

(use one metal instead of another) but only to some extent (plastic instead of metal)

Materials widely accessible Suppliers do not pose any threat of forward

integration

power of suppliers (weak)

There are many alternative types of transportation, such as bicycles, motorcycles, trains, buses or planes

Substitutes can rarely offer the same convenience

Alternative types of transportation almost always cost less and sometimes are more environment friendly

threat of substitute (weak)

Moderate number of competitors If a firm would decide to leave an industry it

would incur huge losses, so most of the time it either bankrupts or stays in automotive industry for the lifetime.

Industry is very large but matured Size of competing firm’s vary but they usually

compete for different consumer segments Customers are loyal to their brands There is moderate threat of being acquired by a

competitor

the competitive rivalry(very strong)

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Thank you