automotives-1

8/17/2019 Automotives-1

1/23

The Indian Automotive Industry

A Perspective

1New Delhi Insitute Of Management


2/23

State of the Global AutomotiveIndustry

Intense Product & Price Competition

Stagnant Sales except in Asia

Industry Margins Under Pressure

Over Capacity in most Regions

Most of Industry EA negative

!lo"al #ocus to Asia for gro$t%


3/23

In many ways, the Indian

Automotive Market is uniquearsher operatin! conditions pose unique challen!es forproduct conceptuali"ation, desi!n and development# $oad inadequacy and quality i!h Tra%c density Poor &uel quality ' variety (Gasoline, )iesel, *+G ' PG-

Manufacturin! comple.ity hi!her despite lower volumescompared to !lobal standardsar!e product portfolios

Product obsolescence policies not articulated andenforced, entailin! lon!er product life/

&irms able to maintain pro0tability even at low volumes/


4/23

India is e.pected to achieve massmotori"ation status in 1234

e%icle ensity vs' !P(capitae%icle ensity vs' !P(capita

)ote* +%e a"ove includes "ot% Passenger e%icles and Commercial e%iclesSources* ,ard-s Auto .ear"oo/ 01102 EIU2 !oldman Sac%s 3RICs report2 RI 01102 A'+' 4earney analysis

I n h a b i t a n t s / V e h i c l e

10

Per Capita Income 5US6 1117

50

100

Mature MaretsMature MaretsDe!eloping MaretsDe!eloping Marets

"#$Italy

3ra8il

Mexico

Sout% 4orea

C8ec%

Repu"lic

Spain

China in %01%

In&ia in %01'

U4 Australia S$eden

(erman)

*apan

3elgium

#rance

AustriaCanada

Poland

In&ia in%01%

Argentina

% %0 %5 +0 +515

,1-000

0 '0

China in %01'

Inhabitants/Vehicle

.1%

In&ia 100

China %


5/23

5ey *hallen!es facin! the industry

Increasin!ly Strin!ent 6mission' Safety $e!ulations Technolo!ical capability *ost

Increase in input prices &errous ' +on7&errous Metals

*rude oil ' derivatives +atural rubber

$isin! *ustomer 6.pectations Product features 8uality ' reliability

Inte!ration with Global Markets owerin! product life cycles $educin! time7to7market for

new products Threat of new competition

$2 #afet) 2egulation

Metro Cities 2est of Countr)

0111 3S 0 5Euro II7 3S 9 5Euro I7Under"ody Protection evices Advance ,arning +riangles

011: 3S ; 5Euro III7 3S 0 5Euro II7Spray Suppression2 )oise)orms2 5Euro I7 3S ; 5Euro III7 A3S2 Pedestrian Protection

5Expected7

3ransition of mission 4 #afet) 2egulations for Vehicles

In&ia

mission 2egulation


6/23

Indian 179heeler Market*ompetitive Scenario

Motorcycle 50% 30% 13% 4% 1% 2%


7/23

3he In&ian %8heeler In&ustr)

? 9asic transportation necessit) as against fun 4 fashionorientation of the 8estern Marets: ;Primar) transportation!ehicle for entire families<

? Pro&uct &esign 4 e=ecution &ri!en b) econom) ratherperformance an& power

? Presence of strong homegrown pla)ers competing against(lobal ma>ors:

Dissimilarit) with (lobal

In&ustr)

? ?arge !ariet) of pro&ucts 4 choice for the customer

;@ manufacturers- A0B Mo&els<

#imilarit) with (lobal In&ustr)

CharacteristicsIn&ian %wheeler In&ustr)

ANew Delhi Insitute Of Management


8/23

5ey Market)rivers

Increasin! disposable incomes

ow operatin! cost i!her fuel e%ciency of +ew7

!eneration motorcycles

Greater reliability resultin! inlow maintenance cost

ow interest rates translatin! tolow 0nancin! and acquisitioncosts hence !reater a:ordability/

Inadequate urban ' rural publictransportation infrastructure

6ase of use in con!ested citycentres

4ey +rends

Eclipse of scooter segment

Emergence of ne$ motorcycle su"@

segments

Economy

Executive

Performance

S%rin/ing product life@cycles


9/23

Indian ;79heeler MarketSub7se!ments and *ompetitive Scenario

68% 24% 2% 1% 3% 3%

23% 40% 12% 13% 7% 6%

In&ia is the largest threewheeler maret in the worl&

Passenger

(oo&s

#cootersIn&ia

70

'0

#ub#egments

6igures &enote Mt #hare as on +1 March-%01+

@New Delhi Insitute Of Management


10/23

3he In&ian +8heeler In&ustr)

? Pro&uct uniue to emerging marets in #outh / #outhast$sia 4 parts of $frica

? Pro&uct &esign 4 e=ecution focus on technological

simplicit) an& ease of use:

? ?esser competiti!e intensit) as compare& to other segments:

Dissimilarit) with (lobal

In&ustr)

? None:#imilarit) with (lobal In&ustr)

CharacteristicsIn&ian +wheeler In&ustr)

10New Delhi Insitute Of Management


11/23

5ey Market

)rivers


12/23

Indian Passen!er >ehicle Market ? *ompetitive Scenario

Passenger

Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% -


13/23

3he In&ian Passenger !ehicle In&ustr)

? Maret &ominate& b) Mini Cars 4 Eatchbacs ;F0<

? Eigh inci&ence of ta=es in Car Prices:

;%' =cise Dut)- 1%:5 V$3- ?ocal 3a=es as applicable<

? Customer preference &ri!en b) !alue for mone) an& cost of

ownership consi&erations rather than image- performance an&

power:

;0 of cars sol& are price& below "#D 1%000<

? ?arge proportion of chauffer &ri!en cars: 2ear Passenger comfortis a critical influence in purchasing &ecisions:

? mergence of strong &omestic pla)ers ;3$3$- Mahin&ra


14/23

Passen!er *ar Penetration is low in India

3he low penetrationpresents an opportunit)

for in&ustr) pla)ers tooffer an affor&able fourwheele& alternati!e tothe mass of %wheeler

customers

C a r s p e r t h o u s

a n & p o p u l a t i o n

1'New Delhi Insitute Of Management


15/23

5ey Market)rivers Increasin! disposable

incomes

$isin! aspirational levels

ow interest rates/

9ide variety and easyavailability of &inancin!options/

i!h sensitivity to &uelprices

ack of urban ' rural publictransportation infrastructure

&lourishin! Service Sector

4ey +rends Mar/et evolution from Mini

cars to


16/23

Indian *ommercial >ehicle Market ? *ompetitive Scenario

Medium &


17/23

3he In&ian CV In&ustr)

? #ecular long term growth tren&

? ?ower Power to 8eight 2atios

? arl) stage of roa& &e!elopment

? ?ess &egree of pro&uctsophistication:

? #trong price entr) barriers create&b) &omestic pla)ers

Dissimilar to(lobal CV In&ustr)

? C)clical#imilar with (lobalCV In&ustr)

CharacteristicsIn&ian CVIn&ustr)

1ANew Delhi Insitute Of Management


18/23

5ey Market)rivers

Growth in 6conomic Activity

$oad +etwork )evelopment

ow interest rates/

9ide variety and easy availability of &inancin!

options/

i!h sensitivity to &uel prices


19/23

4ey +rends

Migration from erst$%ile 3asic

MC ,or/%orseD to


20/23

5ey Market)rivers inked to !rowth of @6M

Industry

i!hly sensitive to input costescalation/

*ompetitiveness driven by Manpower ? ar!e pool of

quali0ed en!ineers ' skilledtechnicians at lower cost

ower investment cost ? Throu!h appropriate, low cost

automation/

4ey +rends In&iaGs emergence as low cost

global sourcing &estination:

In&ian ancillar) manufacturers are

shifting focus from global after

maret to global OM supplies:

6irms focus on operational

e=cellence to impro!e ualit) 4

reliabilit) of pro&ucts:

; Deming $war& winners<

Increasing rele!ance of (lobal 3ier

1 suppliers ;9osch- Denso- Visteon-

Delphi<


21/23

2otating $utolectricals

3)res 4 3ubes

Eea!) 6orgings

8heel 2ims

#mall Castings 46orgings

Plastic Components

Ean& 3ools

Metal bon&e& 4Moul&e& 2ubber Parts

$ftermaret

Customer comple=it)

3ier %n supplier 3ier 1 supplier

? o w

M e & i u m

E i g h

P r o & u c t C o m p l e

= i t )

+ r a n s i t i o

n P a t %

3he In&ian $uto component in&ustr) is now transitioning frombeing a supplier for the global aftermaret to becoming a full

scale global 3ier 1 supplier

%1New Delhi Insitute Of Management


22/23

Opportunities for the industry are emerging both in the areas ofAutomotive Manufacturing and Engineering Services

Manufacturing*

Emerging ,orld %u"* Small Cars 5Su8u/i2


23/23

Thank ou

%+New Delhi Insitute Of Management

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