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8/17/2019 Automotives-1
1/23
The Indian Automotive Industry
A Perspective
1New Delhi Insitute Of Management
8/17/2019 Automotives-1
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%
8/17/2019 Automotives-1
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In many ways, the Indian
Automotive Market is uniquearsher operatin! conditions pose unique challen!es forproduct conceptuali"ation, desi!n and development# $oad inadequacy and quality i!h Tra%c density Poor &uel quality ' variety (Gasoline, )iesel, *+G ' PG-
Manufacturin! comple.ity hi!her despite lower volumescompared to !lobal standardsar!e product portfolios
Product obsolescence policies not articulated andenforced, entailin! lon!er product life/
&irms able to maintain pro0tability even at low volumes/
8/17/2019 Automotives-1
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India is e.pected to achieve massmotori"ation status in 1234
e%icle ensity vs' !P(capitae%icle ensity vs' !P(capita
)ote* +%e a"ove includes "ot% Passenger e%icles and Commercial e%iclesSources* ,ard-s Auto .ear"oo/ 01102 EIU2 !oldman Sac%s 3RICs report2 RI 01102 A'+' 4earney analysis
I n h a b i t a n t s / V e h i c l e
10
Per Capita Income 5US6 1117
50
100
Mature MaretsMature MaretsDe!eloping MaretsDe!eloping Marets
"#$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 %
8/17/2019 Automotives-1
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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
$2 #afet) 2egulation
Metro Cities 2est of Countr)
0111 3S 0 5Euro II7 3S 9 5Euro I7Under"ody Protection evices Advance ,arning +riangles
011: 3S ; 5Euro III7 3S 0 5Euro II7Spray Suppression2 )oise)orms2 5Euro I7 3S ; 5Euro III7 A3S2 Pedestrian Protection
5Expected7
3ransition of mission 4 #afet) 2egulations for Vehicles
In&ia
mission 2egulation
8/17/2019 Automotives-1
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Indian 179heeler Market*ompetitive Scenario
Motorcycle 50% 30% 13% 4% 1% 2%
8/17/2019 Automotives-1
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3he In&ian %8heeler In&ustr)
? 9asic transportation necessit) as against fun 4 fashionorientation of the 8estern Marets: ;Primar) transportation!ehicle for entire families<
? Pro&uct &esign 4 e=ecution &ri!en b) econom) ratherperformance an& power
? Presence of strong homegrown pla)ers competing against(lobal ma>ors:
Dissimilarit) with (lobal
In&ustr)
? ?arge !ariet) of pro&ucts 4 choice for the customer
;@ manufacturers- A0B Mo&els<
#imilarit) with (lobal In&ustr)
CharacteristicsIn&ian %wheeler In&ustr)
ANew Delhi Insitute Of Management
8/17/2019 Automotives-1
8/23
5ey Market)rivers
Increasin! disposable incomes
ow operatin! cost i!her fuel e%ciency of +ew7
!eneration motorcycles
Greater reliability resultin! inlow maintenance cost
ow interest rates translatin! tolow 0nancin! and acquisitioncosts hence !reater a:ordability/
Inadequate urban ' rural publictransportation infrastructure
6ase of use in con!ested citycentres
4ey +rends
Eclipse of scooter segment
Emergence of ne$ motorcycle su"@
segments
Economy
Executive
Performance
S%rin/ing product life@cycles
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
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
8/17/2019 Automotives-1
11/23
5ey Market
)rivers
8/17/2019 Automotives-1
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Indian Passen!er >ehicle Market ? *ompetitive Scenario
Passenger
Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% -
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
16/23
Indian *ommercial >ehicle Market ? *ompetitive Scenario
Medium &
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
18/23
5ey Market)rivers
Growth in 6conomic Activity
$oad +etwork )evelopment
ow interest rates/
9ide variety and easy availability of &inancin!
options/
i!h sensitivity to &uel prices
8/17/2019 Automotives-1
19/23
4ey +rends
Migration from erst$%ile 3asic
MC ,or/%orseD to
8/17/2019 Automotives-1
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<
8/17/2019 Automotives-1
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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
8/17/2019 Automotives-1
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Opportunities for the industry are emerging both in the areas ofAutomotive Manufacturing and Engineering Services
Manufacturing*
Emerging ,orld %u"* Small Cars 5Su8u/i2
8/17/2019 Automotives-1
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Thank ou
%+New Delhi Insitute Of Management