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Facts

Second Largest two wheeler manufacturer in the world

Largest tractor and three wheeler manufacturers in the world

Fourth largest Commercial vehicle market in the world

Eleventh largest passenger car market in the world

Trends Growth of exports of 32.8 % FY 2008-09.

Output of commercial vehicles has grown

2.8 times compared to the 2.2 times

increase in passenger cars

For every passenger car turned out, there

are almost 7 two-wheelers produced

Growth PotentialCan become Worlds third largest automobile

market in 2030.

By 2016, Automotive sector can DOUBLE itspercentage contribution to GDP from currentlevels of 5% (US$50 billion) to 10% ($180billion).

INDIAN AUTO INDUSTRY

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THE GROWTH JOURNEY

Pre 1983 1983-1993 1993-2007

Era of globalisation

and

evolution of India

as a global

manufacturing hub

Closed market

Growth ofmarket

limited by supply

Outdated models

Players

Hindustan Motors

Premier

Telco Ashok Leyland

Mahindra & Mahindra

Japanisation - GOI- Suzuki

joint venture toform Maruti

Udyog Joint ventureswith

companiesincommercial

vehicles and components

Players

Maruti Udyog

Hindustan Motors

Premier

Telco

Ashok Leyland

Mahindra & Mahindra

Delicensingofsectorin

1993

Global major OEMsstart assembly in India

(Toyota, GM, Ford,

Honda, Hyundai)

Imports allowed from

April 2001; alignment of

duty oncomponents

and parts to ASEANlevels

Implementationof

VAT

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GLOBAL SCENARIO

The car industry generates large amount of

employment opportunities in the economy. For

example in the US, every sixth worker is involved

in the making of an automobile.

The global automotive car market is growing at a

rate of only 2 percent per annum and is not

expected to pick up in the near term. Worldwide the trend is towards ensuring that

one's products are superior in terms of quality.

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INDIAN SCENARIO

Automobile exports crossed $1 billion in 2004-

05

$2.28 billion- 2005-06 Sustaining the growth rate becomes crucial

7 CARS PER 1000 PERSONS

Passenger car market 1 million in 2003; willcross 3 million in 2015

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PEST ANALYSIS

Political

Environmental regulations andprotection

Govt. policies relating to theindustry

International regulations andrestrictions

Political stability

Social

Income distribution Population growth rate

Market movement from petrolto diesel

Manufacturing to a consumerdictated market

Economical

Overcapacity

Shortage of capital

Industry at the whim of thebusiness cycle

Difficulty in sustainingcompetitive ads.

Exchange rates and inflation rate

Technological

Industry focus ontechnological effort

Rising costs of developments

New model development is

cautious

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Porter 5 Forces Analysis

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COMPARING WITH GLOBAL PLAYERS

Low cost advantage primarily on account of vast availabilityof low cost-high skilled manpower.

Design, development, and production costs in India arelower than the developed markets.

The country is also building a reputation in frugalengineering, or building low-cost products under tightbudgets.

Indian Auto Companies have achieved a High level ofProductivity by embracing Japanese Concepts and Best

Practices Indian Auto Companies have proven capability to supply on

JIT basis out of Warehouses situated near the Customers.

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FUTURE OUTLOOK

The size of the Indian automotive industry is expected to grow at 13

per cent per annum over the next decade to reach around US$ 130-

159 billion by 2016

Even after the spectacular growth in recent years, the Indian

automobile market still has considerable room to grow.

Despite domestic sales of over 10 million units annually, even two-

wheeler ownership is below 100 per 1,000 of the population.

It is likely that the continued rise in average income levels will

sustain demand for personal vehicles while overall economic growth will support the demand for

commercial vehicles.

Besides the domestic prospects, India also has the opportunity to

emerge as a global manufacturing base for select product

segments.

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FUTURE CHALLENGES

Since the demand surge for automobiles in recent

years is directly linked to overall economic growth

and rising personal incomes, industry growth will

slow if the economy weakens.

It is possible that the government will favour

mass transport systems for the large cities, which

may restrict the demand for personal vehicles. It is also likely that intense competition will erode

the profitability of manufacturers.

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