Group 6Sameep Kunja 2011SMN6501Rajesh Sinha 2011SMN6502Anita Singh 2011SMN6504S Gayathri 2011SMN6509

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Objectives & Methodology

Growth of auto sector with special reference to India

Study Major M & As in the auto sector

Analyze growth of auto sector and identify current and emerging issues in strategic management

Analyze major M & As, their outcomes and lessons learned

IntroductionAuto industry one of the largest industries & key sectors of any economy

Growth registering a 30 % increase over the past decade

Sector consists of commercial vehicles, multi utility vehicles, passenger cars, two-wheelers, three-wheelers, tractors and related auto components

In the initial years, US dominated the automobile markets around the globe with no notable competitors.

However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum

International Production

(Source: http://oica.net)

International Sales

Data Source: http://www.siamindia.com

Top 10 Companies

ToyotaGeneral MotorsVolkswagenRenault-NissanHyundai-KiaFordHondaPeugeot-CitroënSuzuki-MarutiFIAT

INDIAN PERSPECTIVE

Indian Auto Sector - Sales

Data Source: http://www.siamindia.com

Indian Auto Sector - Sales

Data Source: http://www.siamindia.com

Indian Auto Sector - Production

Data Source: http://www.siamindia.com

Indian Auto Sector - Exports

Data Source: http://www.siamindia.com

Current Trends

Globalization is pushing auto majors To consolidateUpgrade technologyEnlarge product rangeAccess new markets Cut costs

Resorted to Common platformsModular assemblies Systems integration of component suppliers Ecommerce

Emerging & Future Trends

Reasons for M & As

Achieving Cost EfficienciesEngage new markets by global alliancesIndustry ConsolidationBolstering Core CompetenciesGeographic outlookDivesting non-core assetsNew Technologies

Automobile M&A trends

Automobile M&A trends

M & A Cases

Mazda in financial difficulties and beginning with 7 % in 1979 Ford acquires controlling interests with 33.4 % in 1997Joint projects save Mazda $90m/yearSince 2008, Ford has gradually reduced stake to 3%Remain strategic partners through JV and exchange technological information

M & A Cases

Alliance due to financial problems of Renault and losing market share & under utilization of capacity of NissanPresent production – 4th in the worldJV Initiatives

Common platform for small carsReturn to Mexican marketExpansion in Europe & growth in Asia

M & A Cases

Tata acquired Jaguar and Land-Rover from Ford in 2008 for $2.3bWide spread skepticism about Tata managing luxury brands & paying high priceTata gets JLRs manufacturing plants, advanced design centres & IPRTata gets recognition & credibility across the world

CONCLUSIONCorporate acquisitions effective means to grow larger & competitive

Requires exacting strategic management & integration strategies & involves some risk

Suppliers using M&A to adjust to changing regulations in world market

Globalization has caused international active auto component manufacturers to shrink from 32 in 1980 to just 14 in 2007

Shifting customer behaviour calls for radical new approaches to future mobility

Issues becoming universal & are expected to converge by 2025

CONCLUSIONProcurement, investment & personnel policy aligned with global benchmarks & list pruned to select few suppliers

Suppliers expected to deliver ever-more-complex systems at sites spread across the world

Major reasons for failure of M&As is lack of due diligence, clash of cultures & failure to integrate

Too many brands and capacity in Chinese auto market & could result in increased M&A activity in China. Chinese companies looking to acquisitions for new technologies and consumer markets

Companies seeking partners to spread costs and risks for developing next generation environment friendly cars

References1.Ernst & Young Website, http://www.ey.com/GL/en/Industries/Automotive2. KPMG Website, http://www.qfinance.com/sector-profiles/automobiles3. PWC Website , http://www.pwc.com/gx/en/automotive/industry-publications-

andthought- leadership.html4. S. Ray, Assessing Corporate Financial Distress in Automobile Industry of India: An

Application of Altman’s Model, Research Journal of Finance and Accounting ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol 2, No 3, 2011 155

5. S. Ray, Economic performance of Indian automobile industry: an econometric appraisal, Business Intelligence Journal January 2012

6. J. Begley & T. Donnelly , The DaimlerChrysler Mitsubishi merger: a study in failure , Int. J. Automotive Technology and Management, Vol. 11, No. 1, 2011

7. T.J. Sturgeon, Global value chains in the automotive industry: an enhanced role for developing countries?, Int. J. Technological Learning, Innovation and Development, Vol. 4, Nos. 1/2/3, 2011 181

8. Kang, N. and S. Johansson (2000), “Cross-Border Mergers and Acquisitions: Their Role in Industrial Globalisation”, OECD Science, Technology and Industry Working Papers, 2000/01, OECD Publishing

References9. F.Becker-Ritterspach, GertBruche, Capability creation and

internationalization with business group embedded ness – the case of Tata Motors in passenger cars, European Management Journal (2012) 30, 232– 247

10. Development of the automotive sector in selected countries of the ESCAP REGION, Proceedings and country papers presented at the Regional Consultative Meeting on Promotion of Intraregional Trade and Economic Cooperation in the Automotive Sector.

11. N.H. Kang, S. Johansson, Technology and Industry Working Papers 2000/01, Cross-Border Mergers and Acquisitions: THEIR ROLE IN INDUSTRIAL GLOBALISATION, , OECD Science

12. http://www.oica.net13.http://www.automotiveworld.com/news/oems-and-markets/79140-

auto-industry mergers- bigger-is-not-always-better14.http://www.reportsure.com/automotive-reports/automotive-mergers

acquisitions. aspx15. http://www.qfinance.com/sector-profiles/automobiles