1) 2) 3) 4) 5) INTRODUCTION HISTORY OVERVIEW AUTOMOTIVE INDUSTRY ANALYSIS NEW CHALLENGES FACED BY INDIAN AUTOMOTIVE INDUSTRY IN THE NEW AGE 6) TOP AUTOMOBILE COMPANIES IN INDIA 7) SUPPLY CHAIN OF AUTOMOBILE INDUSTRY PERFORMANCE GROWTH POTENTIAL YEARLY SALES 8) INDIAN AUTOMOBILE EXPORT MARKET 9) THE COMPETATIVE NATURE OF AUTOMOBILE INDUSTRIES 10) GLOBAL PRODUCTION OF MOTOR VEHICLES BY COUNTRY BY MANUFACTURER 11) TOP VEHICLE MANUGACTURING GROUP 12) SALES AND DISTRIBUTION NETWORK 13) PRODUCT AND SERVICE SEGMENTATION 14) MARKET CHARACTERISTICS 15) COMPANY RELATIONSHIPS 16) HONDA CURRENT MARKET POSITION MARKETING PROMOTION STRATEGY SWOT ANALYSIS ELECTRIC AND ALTERNATIVE FUEL VEHICLES 17) CONCLUSION
The automobile industry in India—the tenth largest in the world with an annual production of approximately 2 million units —is expected to become one of the major global automotive industries in the coming years. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. The monthly sales of passenger cars in India exceed 100,000 units. The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.
An automobile, auto car, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor. Most definitions of the term specify that automobiles are designed to run primarily on roads, to have seating for one to eight people, to typically have four wheels, and to be constructed principally for the transport of people rather than goods. The term motorcar has also been used in the context of electrified rail systems to denote a car which functions as a small locomotive but also provides space for passengers and baggage. These locomotive cars were often used on suburban routes by both interurban and intercity railroad systems. There are approximately 600 million passenger cars worldwide (roughly one car per eleven people). Around the world, there were about 806 million cars and light trucks on the road in 2007; the engines of these burns over a billion cubic meters (260 billion US gallons) of petrol/gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India. The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India" with the India operations of Ford, Hyundai,
Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports. Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again with General Motors, Aurangabad with Audi, Skoda and Volkswagen, Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country
In 1953, the government of India and the Indian private sector initiated manufacturing processes to help develop the automobile industry, which had emerged by the 1940s in a nascent form. Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow at a slow pace due to the many government restrictions. The Indian auto industry is changing rapidly. During the last decade, many international auto manufacturers, either by themselves or in partnership with Indian companies, have started manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of production in small- and medium-scale industries has improved to such an extent that they started exporting products to international manufacturers. These developments in the auto sector have given new confidence to everyone related to the auto industry and specifically to the government which resulted in the announcement of the Auto Policy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every year two to three million people are expected to purchase new vehicles. Several million vehicles and components are expected to be exported to both developed and developing nations. To achieve these goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to remain at the same level for the next 8-10 years. The government is also giving some concessions to the auto industry. To realize the above growth predictions, it is important to overcome
various challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of fuel and the paucity of highly skilled manpower. With a scintillating 2.3 million units produced in 2008 the Indian automobile industry bagged the position of being the ninth largest in the world. Following economic liberalization, Indian domestic automobile companies like Tata Motors Maruti Suzuki and Mahindra and Mahindra expanded their production and export operations in and across the country and since then the industry has only shown signs of growth. The automobile industry comprises of heavy vehicles (trucks, buses, tempos, and tractors), passenger cars, and two-wheelers. The Indian automobile industry seems to come a long way since the first car that was manufactured in Mumbai in 1898. The automobile sector today is one of the key sectors of the country contributing majorly to the economy of India. It directly and indirectly provides employment to over 10 million people in the country. The Indian automobile industry has a well established name globally being the second largest two wheeler market in the world, fourth largest commercial vehicle market in the world, and eleventh largest passenger car market in the world and expected to become the third largest automobile market in the world only behind USA. A recent research conducted by the global consultancy firm Deloitte says that at least one Indian automobile company will feature among the top six automobile companies that will dominate the car market by 2020. The Indian automobile industry proved to be in good shape last year even after the economic downturn. This was majorly due to the fact of renewed interest shown by global automobile players like Nissan Motors which consider India to be a potential market. As far as authorized dealer networks and service stations are concerned Maruti Suzuki is the most widespread. The other automobile companies are also showing rapid progression in this field. In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three-wheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S.
A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of non-rechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances.
Charles Kettering's invention of the electric starter in 1912 turned the process of starting automobiles faster and easier at the same time, doing away with the hand tools. Crude oil being discovered in Texas, the automobiles driven by engines that ran on gasoline became even more affordable, as the prices of gasoline reduced. The prices of electric automobiles were going through a constant rise, in spite of the fact that these were less efficient than the gasoline automobiles. Jean Joseph Etienne Lenoir was the first to invent an internal combustion engine that ran on petroleum and attached it to a three-wheeled carriage, and successfully traversed a distance of fifty miles in 1863. Karl Benz manufactured the first automobile (a three-wheeled car) that was affordable and compatible for travelling over long distances for its internal combustion engine that ran on gas, in 1886.Later in 1887, Gottlieb Daimler was the first to invent the predecessor of the modern automobile with an engine that had a vertical cylinder in addition to a gasoline driven carburetor. First building a two-wheeled automobile (―Reitwagen‖), Daimler was again the first to build a four-wheeled automobile in 1886. The engines manufactured by Daimler were improved upon and these portable and fast engines made automobiles the way we see them today. The advanced engines turned the slow, expensive automobiles of the yesteryears, a thing of the past, and cars became more affordable as both the prices of gasoline and petroleum as well as the manufacturing costs reduced through their mass manufacture at the assembly lines of factories. Penhard and Levassor in 1889, and Peugeot in 1991 became the earliest mass manufacturers of the modern automobiles.
The automobile history dates back to the late 18th century. Nicolas Joseph Cugnot, a French engineer is credited with inventing the first self-propelled automobile. Cugnot's vehicle used steam power for locomotion. The vehicle found military application in the French army. Cugnot's automobile was never commercially sold. In the beginning automobile industry was dominated by steam-powered vehicles. The vehicles were expensive and difficult to maintain. The incidence of frequent boiler explosions also kept potential purchasers away. Commercial history of automobiles started with the invention of gasoline powered internal combustion engines. The German inventor, Karl Benz constructed his first gasoline powered vehicle in 1885 at Mannheim, Germany. Commercial production of Benz cars started in 1888. Panhard ET Levassor of France was the first company to exclusively build and sell motor cars from 1889. The early 1900s saw many automobile manufacturing companies coming into existence in a number of European countries and the United States. The first mass produced automobile in the United States was the curved-dash Oldsmobile. It was a three-horsepower machine and sold 5,000 units by 1904. The economics of the US car market was disrupted by the arrival of Henry Ford and his Model T car. The Model T was the world's first mass produced vehicle- a million units were sold by 1920- a space of 10 years.
Benz "Velo" model (1894) Classification Industry Application Fuel Source Powered Vehicle Various Conveyance Gasoline, Diesel, Electric Yes
Self-Propelled Wheels Axles Inventor
Yes 3–4 0–2 Ferdinand Verbiest
Passenger cars in 2000. World map of passenger cars per 1000 people. An automobile, auto car, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor. Most definitions of the term specify that automobiles are designed to run primarily on roads, to have seating for one to eight people, to typically have four wheels, and to be constructed principally for the transport of people rather than goods. The term motorcar has also been used in the context of electrified rail systems to denote a car which functions as a small locomotive but also provides space for passengers and baggage. These locomotive cars were often used on suburban routes by both interurban and intercity railroad systems. There are approximately 600 million passenger cars worldwide (roughly one car per eleven people). Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over a billion cubic meters (260 billion US gallons) of petrol/gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India.
Karl Benz, the inventor of the modern automobile Although several other German engineers (including Gottlieb Daimler, Wilhelm Maybach, and Siegfried Marcus) were working on the problem at about the same time, Karl Benz generally is acknowledged as the inventor of the modern automobile. An automobile powered by his own four-stroke cycle gasoline engine was built in Mannheim, Germany by Karl Benz in 1885, and granted a patent in January of the following year under the auspices of his major company, Benz & Cie., which was founded in 1883. It was an integral design, without the adaptation of other existing components, and included several new technological elements to create a new concept. He began to sell his production vehicles in 1888.
A photograph of the original Benz Patent-Motorwagen, first built in 1885 and awarded the patent for the concept
In 1879, Benz was granted a patent for his first engine, which had been designed in 1878. Many of his other inventions made the use of the internal combustion engine feasible for powering a vehicle. His first Motorwagen was built in 1885, and he was awarded the patent for its invention as of his application on January 29, 1886. Benz began promotion of the vehicle on July 3, 1886, and about 25 Benz vehicles were sold between 1888 and 1893, when his first four-wheeler was introduced along with a model intended for affordability. They also were powered with four-stroke engines of his own design. Emile Roger of France, already producing Benz engines under license, now added the Benz automobile to his line of products. Because France was more open to the early automobiles, initially more were built and sold in France through Roger than Benz sold in Germany.
Bertha Benz, the first long distance automobile driver in the world In August 1888 Bertha Benz, the wife of Karl Benz, undertook the first road trip by car, to prove the road-worthiness of her husband's invention. In 1896, Benz designed and patented the first internal-combustion flat engine, called boxermotor. During the last years of the nineteenth century, Benz was the largest automobile company in the world with 572 units produced in 1899 and, because of its size, Benz & Cie., became a joint-stock company. Daimler and Maybach founded Daimler Motoren Gesellschaft (DMG) in Cannstatt in 1890, and sold their first automobile in 1892 under the brand name, Daimler. It was a horse-drawn stagecoach built by another manufacturer that they retrofitted with an engine of their design. By 1895 about 30 vehicles had been built by Daimler and Maybach, either at the Daimler works or in the Hotel Hermann, where they set up shop after disputes with their backers. Benz, Maybach and the Daimler team seem to have been unaware of each others' early work. They never worked together; by the time of the merger of the two companies, Daimler and Maybach were no longer part of DMG. Daimler died in 1900 and later that year, Maybach designed an engine named Daimler-Mercedes, that was placed in a specially ordered model built to specifications set by Emil Jellinek. This was a production of a small number of
vehicles for Jellinek to race and market in his country. Two years later, in 1902, a new model DMG automobile was produced and the model was named Mercedes after the Maybach engine which generated 35 hp. Maybach quit DMG shortly thereafter and opened a business of his own. Rights to the Daimler brand name were sold to other manufacturers. Karl Benz proposed co-operation between DMG and Benz & Cie. when economic conditions began to deteriorate in Germany following the First World War, but the directors of DMG refused to consider it initially. Negotiations between the two companies resumed several years later when these conditions worsened and, in 1924 they signed an Agreement of Mutual Interest, valid until the year 2000. Both enterprises standardized design, production, purchasing, and sales and they advertised or marketed their automobile models jointly, although keeping their respective brands. On June 28, 1926, Benz & Cie. and DMG finally emerged as the Daimler-Benz company, baptizing all of its automobiles Mercedes Benz, as a brand honoring the most important model of the DMG automobiles, the Maybach design later referred to as the 1902 Mercedes-35 hp, along with the Benz name. Karl Benz remained a member of the board of directors of Daimler-Benz until his death in 1929, and at times, his two sons participated in the management of the company as well. In 1890, Émile Levassor and Armand Peugeot of France began producing vehicles with Daimler engines, and so laid the foundation of the automobile industry in France. The first design for an American automobile with a gasoline internal combustion engine was made in 1877 by George Selden of Rochester, New York. Selden applied for a patent for an automobile in 1879, but the patent application expired because the vehicle was never built. After a delay of sixteen years and a series of attachments to his application, on November 5, 1895, Selden was granted a United States patent (U.S. Patent 549,160) for a two-stroke automobile engine, which hindered, more than encouraged, development of automobiles in the United States. His patent was challenged by Henry Ford and others, and overturned in 1911. In 1893, the first running, gasoline-powered American car was built and roadtested by the Duryea brothers of Springfield, Massachusetts. The first public run of the Duryea Motor Wagon took place on September 21, 1893, on Taylor Street in Metro Center Springfield. To construct the Duryea Motor Wagon, the brothers had purchased a used horse-drawn buggy for $70 and then installed a 4 HP, single
cylinder gasoline engine. The car had a friction transmission, spray carburetor, and low tension ignition. It was road-tested again on November 10, when the The Springfield Republican newspaper made the announcement. This particular car was put into storage in 1894 and stayed there until 1920 when it was rescued by Inglis M. Uppercu and presented to the United States National Museum. In Britain, there had been several attempts to build steam cars with varying degrees of success, with Thomas Rickett even attempting a production run in 1860. Santler from Malvern is recognized by the Veteran Car Club of Great Britain as having made the first petrol-powered car in the country in 1894 followed by Frederick William Lanchester in 1895, but these were both one-offs.
The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year. The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The order of the industry arises from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channeled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like
affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%. The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, India‘s increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market.
Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure
improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. The ninth largest automobile industry in the world, the Indian automobile industry made a yearly production of more than 2.3million in the year 2008. The previous year saw the Indian automobile industry to become the fourth largest automobiles exporter in Asia. With over 2 million new automobiles being manufactured by the automobile giants in India, the automobile industry in India has become the fastest expanding industries throughout the world. India has the biggest market for three wheelers in the world. Over the years, the automobile sale and purchase in India has grown in many folds.
Automobile Sale and Purchase in India in 2009 In November, last year, the automobile industry in India made a record of 63% increase in the sales of automobiles by the automobile giants in India. One of the major automobile in India, Maruti Suzuki, made a sale of 87,807 in 2009 November, which is 66.57% more than November 2008 sale. November 2008 had seen sale of 47,704 units. The Indian automobile industry, the seventh largest in the world, has demonstrated a phenomenal growth. The industry has grown significantly over the last ten years, during which industry volumes have increased by 3.2 times, from a level of 4.7 million numbers to 14.9 million numbers, according to Vishnu Mathur, Director General, and Society of Indian Automobile Manufacturers (SIAM).
The industry, by virtue of its deep connects with several key segments of the economy, occupies a prominent place in the country‘s growth canvas. It exhibits a strong multiplier effect and has the ability to be the key driver of economic growth. A robust transportation system plays a key role in a country's rapid economic and industrial development, and the well-developed Indian automotive industry justifies this catalytic role by producing a wide variety of vehicles, which include passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.
Automotive Industry Analysis
Overview of Automotive Industry Analysis The development of the automobile came from many different people from different countries. The development stated in 1769 in France, with the invention of a three-wheeler that was powered by steam (Gale, 2003). Then in 1800's the first internal combustion engine was created in Belgian and the first gasoline powered vehicle was constructed in 1885 in Germany (Gale, 2003). Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the industry with the invention of the assembly line. The assembly line allowed him to mass produce the cars making them more affordable to the consumers. Political Laws and government regulations have affected this industry since the 1960's. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safer automobiles. The first safety act passed by Congress was in 1966 and was called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced manufacturers to improve the safety for the passengers, the driver visibility, and the braking of the car. It also stated that manufacturers had to inform the public when it had a recall on the cars. The motivation for the passing of this safety act was Ralph Nadar's 1965 novel Unsafe at Any Speed: The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety concerns were not the only concerns during this period. There was
also growing concern for the environment even before the oil crisis. According to the article "Motor Vehicles and Passenger Car Bodies", Congress passed acts in 1965 and in the 1970's. The Vehicle Air Pollution and Control Act were passed in 1965. This was the first act to set standards for automobile pollution. Then in the 1970's, Congress passed the Clean Air Act that demanded a 90% decrease in automobile emission within the next six years (Gale, 2004). In the 1970's the oil crisis caused another act to be passed. The Energy Policy and Conservation Act of 1975 stated that all automobiles must meet a certain mileage per gallon. The act demanded that all automobiles had to meet a standard of 20mpg by the 1980 model and then 27.5 mpg for the 1985 model. Then in 1992, the Intermodal Surface Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger Car Bodies, 2004) Demographics For many years now, the baby boomers generation has been the main target market for just about every product. As their generation is getting ready to retire and spend less money, the automakers are looking at the younger generations. Right now, the focus is starting to turn towards the baby boomers children (Generation X) who are in their mid 20's and 30's and Generation Y (winter, 2002). GenYer's are now hitting the age where they are able to buy cars. According to Drew Winter, "Analysts say that five years from now Gen X and Gen Y combined will account for at least 40% of vehicle sales." Americans today are choosing to purchase larger vehicles over passenger size vehicles. Today's generations are still buying the trucks, minivan and especially the SUV's, even with the ridiculous gas prices. It is not only the younger generations either; the boomers who are all reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001). There activities after retirement are way more active than their parents. They are not just sitting around and playing golf or going on vacations. They are still working in some ways and being more active in their grandchildren's lives. Since the boomers are still active, they want to drive the same vehicles that their children drive in order to make life that much easier. Studies show that trucks, minivans and SUV's report increased sales nearly every year (Fetto, 2001). The manufactures target the sales of their cars to certain people and their geographic location. Convertibles are not marketed toward people who live in parts of the world that are cold all year round. A good example of targeting markets is in Paris. A new is trying to be passed that SUVs are not allowed inside the city. They
are taking up to much room and the vehicles use a lot of fuel. If this law is passed then SUV's will not be marketed toward people who live in Paris. Another example is that minivans are mainly marketed toward "soccer moms". They are marketed toward the moms because they are perceived, as needed a lot of room to haul kids around and the easy access the minivans provide. Economic The automobile industry has a huge impact on the U.S. economy. The University of Michigan and the Center for Automotive Research stated that this industry is the major user of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. (Gale, 2004) The study also showed that for every autoworker there are seven other jobs created in other industries (Gale, 2004). These industries include anything from the aluminums to lead to vinyl. In 2001, the total sales of automobiles were 3.7% of the nation's gross domestic product. This percentage works out to be $375 billion dollars in sales. Technology The internet has affected just about every industry in the world and has also had a huge impact on the automobile industry. A study was conducted by J.D. Power and Associates in 2002 and involved more 27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before making their purchases and out of that 60%, 88% went to the auto websites before going and taking a test drive. Business-to-business marketplaces have given the industry many opportunities because of the internet, such as more efficiency and lower cost. Ford, GM, and Daimler Chrysler announced in 2000 their plans to create a global online exchange for suppliers and the original equipment manufacturers. The exchange was originally called New Co, and then it was changed to Convisint. According to Motor Vehicles and Passenger Car bodies, "In August 2002 General Motors announced it was about to begin sending requests for quotes to suppliers through Covisint using a tool called Quote Manager." Concerns for the economy and global warming have caused the automobile industry to develop alternate fuel vehicles. In the beginning, automakers did not want to look into the development because of the high cost and the many risks involved. Because of new legislation, they had no choice but to come up with the technology to make the fuel-efficient cars. The automakers decided that electric cars would be the best way to meet the legislation demands. "Early models were unpopular because of slow cruising speeds and lack of performance, but by the end of the century, electric car production began to be practical."(Motor Vehicles) At
the end of the 1990's manufacturers was coming up with the technology to produce internal combustion engine with an electric motor. Toyota and Honda were both selling the hybrid vehicles at retail value in 2001. Global General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda, and Nissan Motor Company come together to create a new trade association created the Alliance of Automobile Manufacturers (Gale, 2004). The organization was to replace the American Automobile Manufacturers Association that only consisted of American manufacturers, the goals of the associations "were to work together on public policy matters of common interest to provide credible industry information and data, and seek consistent global regulatory standards (Gale, 2004). The manufacturers also started merging in the late 1990's. American companies started buying foreign manufacturers created some of the largest foreign takeovers. In 19998 Daimler-Benz A.G. merged with Chrysler Cooperation to form DaimlerChryler A.G (Gale, 2004). Some other big mergers were Ford with Volvo, and General Motors and Saab (Gale, 2004). Sociocultural Today's society judge‘s people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. For example, anyone who drives a minivan is perceived as a soccer mom. This is because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of what other people will think of him or her. Consumers also just feel better when they are driving a nice or new car, if makes them feel better about themselves. Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient vehicles. Many environmentalists are worried about the impact that the gas cars have on the environment. There is even legislation that requires cars to average a certain miles per gallon.
New Challenges faced by Indian Automotive Industry in the new age
The Indian automotive industry has been facing new challenges due to the rapid changes taking place during the last decade. This article discusses those challenges and initiatives taken by the government to overcome them. The Indian auto industry is changing rapidly. During the last decade, many international auto manufacturers, either by themselves or in partnership with Indian companies, have started manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of production in small- and medium-scale industries has improved to such an extent that they started exporting products to international manufacturers. The major breakthrough of recent years is the unveiling of "Nano" by Tata Motors during the auto expo 2007. This has received worldwide attention and proved that India can not only design an automobile of international standards but also execute the project at a much lower cost through innovative choice of components, materials, engine design etc. These developments in the auto sector have given new confidence to everyone related to the auto industry and specifically to the government which resulted in the announcement of the Auto Policy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every year two to three million people are expected to purchase new vehicles. Several million vehicles and components are expected to be exported to both developed and developing nations. To achieve these goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to remain at the same level
for the next 8-10 years. The government is also giving some concessions to the auto industry. To realize the above growth predictions, it is important to overcome various challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of fuel and the paucity of highly skilled manpower.
Top Automobile Companies in India
Tata Motors: Tata Motors is the largest automobile manufacturing companies in India. Established way back in 1945 Tata Motors is a multinational automobile company with its headquarters in Mumbai. Previously known as Telco TATA Engineering and Locomotive Company Tata Motors belongs to Tata Group. This company manufactures compact medium sized utility vehicles. Over the last few decades it has stood as the undisputed leader in the commercial vehicles segment. It is also the third largest producer of passenger cars in India. This automobile company in India is listed on both the Bombay Stock Exchange and the New York Stock Exchange. The revenues earned by Tata Motors in 2010 accounted to $20.572 billion. Some of the well known cars manufactured by Tata Motors are: Tata Indigo, Tata Indica, Tata Sumo Tata Indigo Marina and Tata safari.
Hindustan Motors Limited: Hindustan Motors Limited was founded in the year 1942 by B.M Birla. It is an operative subsidy of the Birla Technical Services group. This company held the title of the biggest manufacturer of cars in India before Maruti Udyog. Hindustan Motors was the pioneer in manufacturing automobiles in India. The company accounted for a sales turnover of Rs 150.66 crore in 2010. Some of the important cars and multi utility vehicles manufactured by Hindustan Motors Limited include; Mitsubishi Lancer, Trekker, Contessa, Ambassador, Porter, Pushpak and the Mitsubishi.
Ashok Leyland: Ashok Leyland is a leading commercial vehicle manufacturer in India. It was established in 1948. The company over the years has become synonymous with the production of trucks, passenger buses and emergency military vehicles. It happens to be the second largest commercial vehicle producer in India holding a market share of almost 30 percent. The company holds a record for selling almost 60, 000 vehicles and almost 7000 engines per years. Ashok Leyland accounted for consolidated revenues of US$ 1.4 billion in 2009. Some of the popular products by this company are; Panther BS-II Muti-axle Vehicles, Cheetah Bus-III, Tractors and Ecomet, Lynx BS-II, Diesel and Natural Gas gensets from 15KVA to 250KVA.
Maruti Suzuki India Limited: Maruti Suzuki India Limited was established in 1981. A part of this company is owned by Suzuki Motor Corporation of Japan. It is the country's largest passenger car manufacturing company. Credited for having brought in the automobile revolution in the country Maruti Suzuki India Limited was known as Maruti Udyog Limited till 2007. With its headquarters in Delhi this automobile company
in India happens to be the largest producer and market share holder of cars. The company accounted for consolidated revenues of US$4.8 billion in 2010. Maruti Suzuki India Limited is credited for manufactures a variety of passenger cars SUVs, and Sedans. Some of Maruti's most popular cars are: Alto, Gypsy, Omni, Wagon R, Maruti 800, Versa, Zen, Esteem, Baleno and Swift.
Hyundai Motor India Limited: Hyundai Motor India Limited (HMIL) is owned entirely by Hyundai Motors of South Korea. Hyundai Motors happens to be the largest car manufacturer in South Korea and the sixth largest in the world. This automobile company in India is also the largest passenger cars exporter in India. Established on May 6 1996 this company in a short span of time has taken the Indian automobile industry by storm. Some of the popular cars manufactured by this company are; Santro, Getz Prime, Hyundai i10, Hyundai i20 Accent and the Verna and Sonata
Bajaj Auto: Bajaj Auto is another important automobile manufacturing company in India. It is one of the India's most trusted car manufacturers. It is an operative subsidy of the Bajaj Group. Bajaj Auto happens to be the largest two and three wheeler manufacturer in India and also ranks in this field across the globe. This automobile company was established on 2 November 1945. The company was then known as M/s Bachraj Trading Corporation Private Limited. The company made a modest beginning by importing and then selling two and three wheelers in India. Today Bajaj Auto has become synonymous with two and three wheelers in the country. Some of its popular two wheelers are; Pulsar 220DTS and Kawasaki Ninja 250R.
Tata Motors One of the leading automobile manufacturing giant in India, Tata Motors, made a sale of 29,408 units of commeruicial vehicles in the Indian market, thereby, making a 81% increase in comparison to sales made in November 2008. On the other hand, the passenger vehicles sale in the domestic market was 22,671 units in 2009 November, making it the highest in the financial year of 2009. Tata Motors have sold around 3,406 units of Nano cars in 2009 November. In addition, the exports of Tata Motors amounted at 3,994 units, which is an increase of 37% in comparison to November 2008.
Mahindra & Mahindra Automobile manufacturing giant Mahindra & Mahindra made a sale of 15,193 units of both SUV and MUV vehicles. In the three-wheeler sales, the number stood at 5,137 in November 2009. In addition, the company sold 778 units of LCV last year in November.
Fiat Automobiles Fiat Automobiles in India earlier this year, has witnessed a growth in sales by 78%, majority of sales came from Fiat Punto and Fiat Linea. In addition, the export of the Fiat cars amounted to 2235 units in February 2010. General Motors General Motors, which is one of the leading automobile manufacturing industries in India, witnessed a sales growth at 48.51% with the sale of 7,654 units in comparison to September 2008. The sale of the company in September 2009 recorded at 1,329 units of MUV, 123 numbers of Chevrolet Captiva, 753 units of the hatchback Aveo U-Va, 319 units of the luxury sedan Chevrolet Optra and 424 units of the sedan Chevrolet Aveo.
Hero Honda In the sector of two-wheelers, the major two-wheeler manufacturer of India, Hero Honda, sold 3, 53,342 in March 2009, thereby, registered a growth of 10% in the sale. The company is reported to have sold 37.22 lakh two-wheelers in 2009 in comparison to 33.37 lakh units in 2008 in the fiscal year of 2009.
Supply Chain of Automobile Industry
The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The order of the industry arises from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channeled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminum to the second tier suppliers. Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order
to provide ―black-box‖ solutions for the requirements of their customers. Black box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-tier suppliers. Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers‘ wants and needs, automakers begin designing models which are tailored to consumers‘ demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies. Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorized dealers of the companies. The dealers then sell the vehicles to the end customers. Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers. The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The order of the industry arises from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channeled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminum to the second tier suppliers.
Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order to provide ―black-box‖ solutions for the requirements of their customers. Black box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-tier suppliers. Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers‘ wants and needs, automakers begin designing models which are tailored to consumers‘ demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies. Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorized dealers of the companies. The dealers then sell the vehicles to the end customers. Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers.
Performance Unfortunately, during the global meltdown in 2008, auto companies suffered a double whammy with rapidly rising oil prices and escalating raw material costs coupled with a drastic drop in demand of their fuel guzzling SUVs due to changes in consumer buying habits. As consumers tightened their purse strings, many looked for more fuel efficient, smaller cars while others re-evaluated their private vehicle usage, deciding to switch to public transport and delaying their auto purchases. As a result, many leading manufacturers, including the American ‗Big Three‘ (Chrysler, Ford and General Motors) and Japan‘s Toyota suffered major losses and were forced to seek government assistance, shut down manufacturing plants, retrench large numbers of workers, re-organize their line-ups and offer substantial discounts across their existing ranges. Leveraging its burgeoning demand and domestic low cost production, China was one of few countries to experience significant growth in 2009, becoming both the largest automobile producer and market in the world. The Indian domestic market too, managed to escape the downturn relatively unscathed, due primarily to the relatively inelastic demand for compact vehicles and 2 wheelers, the launch of new variants by all major players and reduced excise duty in the 2008-09 Budget. The largest automotive companies in India are Maruti Suzuki, Hyundai Motor India, Tata Motors and Mahindra & Mahindra. The Indian automobile industry gathered momentum rapidly, with Indian Automotive citing April 2009's overall vehicle sales rising by 9.83 percent year-on-year. According to figures released by the Society of Indian Automobile Manufacturers, the domestic passenger car sales managed a growth of 17.15 percent.
Growth Potential The automotive industry remains one of the highest revenue-earning industries in India and contributed over 5% to India‘s GDP in 2009, providing direct and indirect employment to more than 13 million people. The market outlook for the industry remains promising, especially in the small car segment. The Indian automobile market is currently dominated by the two-wheeler segment but with an expanding middle class population, growing earning power and industrial
development, the demand for passenger cars and commercial vehicles will increase exponentially. Also, the low vehicle presence (with passenger car stock of only around 11 per 1,000 populations in 2008) indicates a very low base with significant growth potential. As per ‗Just-Auto‘ analyst reports, sales of passenger cars in 2008-2016 are expected to grow at a CAGR of around 10%. In addition to increased domestic demand, there is also likely to be increased investment by global auto manufacturers to India due to its strong technological capability and availability of trained manpower at competitive prices. Currently, the foreign auto companies with assembly plants in India include, General Motors, Ford, Hyundai, Honda, Suzuki, Nissan Motors, Toyota, Volkswagen, Audi, Skoda, BMW, Fiat and Mercedes Benz. With the introduction of the Tata Nano, the cheapest car in the world at USD 2200, and FDI from Suzuki Motor Corp, Hyundai Motor Co, and Nissan Motor Co to make India their manufacturing hub for small cars, India has made huge inroads in the compact car segment. In fact, in 2009, India overtook China in the global auto exports of compact cars for the first time. Future Prospects All in all, this bodes very well for the industry outlook over the forthcoming years. As a result, the job opportunities in this sector are going to remain huge, especially for trained professionals involved in key production areas. Foreign firms looking to capitalize on the local talent are likely to offer attractive remuneration and provide accelerated growth prospects for ambitious individuals, and local firms hoping to grow their footprints are also likely to step-up their hiring and upward movement of staff.
Indian automobile industry's sales grew by 31 percent in 2010 (calendar year), an industry chamber said Tuesday, adding the government should maintain the current exercise duty structure on small cars to boost demand in the current year. Releasing the robust sales growth data of 14.82 million units as against 11.32 million units registered in 2009, the Society of Indian Automobile Manufacturers (SIAM) said that the growth was due to increasing dispensable incomes, low interest rates and increase in sales base at par with the pre-recession era. "Sales of passenger vehicles segment grew by 31.34 percent, commercial vehicles segment by 45.24 percent, three-wheelers by 22.03 percent and two-wheelers by 30.51 percent," said SIAM. Passenger vehicle sales grew by 31.34 percent and stood at 2.38 million, including 1.87 million passenger cars, 312,953 multi-utility vehicles (MUVs) and 202,834 multi-purpose vehicles (MPVs). According to SIAM, other segments like two-wheelers and three-wheelers too showed impressive sales growth of 22.03 percent and 30.51 percent, respectively. In terms of exports, the industry clocked sales of 2.21 million with 34.02 percent growth for last year as compared to 1.65 million in 2009. SIAM president Pawan Goenka asked the government not to increase the current duty structure of 10 percent on small and compact cars, as the cost increase will ultimately be passed on to consumer, thus effecting sales in 2011. "Change in excise will be passed on to the consumers. Let it remain at 10 percent and not increased to 12 percent," Goenka said. According to him, the auto-industry contributed 86 percent more excise duty than last year, while overall; the sector contributed 26 percent of the total duty earned by the government. During the downturn of 2008-09, the government provided stimulus package to the industry where excise duty on small and compact cars was reduced to 8 percent from 12 percent. Later the duty was increased to 10 percent in 2010-11 budgets. A hike in exercise rates would increase the prices of automobiles furthers, as most car makers are already on the verge of passing on rising input costs to the consumers.
Recently some auto-companies like Volkswagen and General Motors raised prices on their products, while other auto-companies have also indicated to do the same due to inflationary pressures on input cost. Sales numbers for the current fiscal year in the period of April-December also reported good growth of 28.68 percent - 11.35 million units as against 8.82 million units in the corresponding period of 2009.Meanwhile AprilDecember sales for passenger vehicle segment grew by 31.38 percent and stood at 1.80 million as compared to 1.36 million units in the same period of 2009. "Passenger cars grew by 32 percent (1.41 million units), while utility vehicle grew by 20.82 percent (233,350 units) and multi-purpose vehicles by 50.58 percent (156,525 units)," SIAM said. SIAM added that the April-December period also witnessed a 28.21 percent increase in the sales of two-wheeler segment with the sales of 8.69 million units as against 6.77 million in the same period of 2009. Earlier, the auto industry clocked 10 million passenger vehicles sales in the period between April-November as against 7.8 million in the same period of 2009. Analysts predict the sales momentum to continue in 2011, with some expecting growth of 20-25 percent in the passenger vehicle segment alone. "I expect a fast growth pattern in the Indian auto-sector with passenger car segment growing at 20-25 percent, two-wheeler segment growing at 12-15 percent and truck segment at 15 percent for 2011," Amol Bhutada, automobile sector analyst for Elara Securities, told IANS. The sales number may favour the auto-industry in 2011; the auto companies will face a major challenge in the form of rising input costs, shortages of components and will have to walk a tight rope between protecting margins and hiking prices of vehicles.
Indian Automobile Export Market
India is a very favorable market for small cars are it production, sales or export. Since the Indian automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan Motors export about 2, 40,000 and 2, 50,000 annually. India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows: Two Wheelers- 32.31 percent, Commercial Vehicle - 19.10 percent and Passenger Cars grew by 19.10%.
Maruti Udyog General Motors Ford India Limited Eicher Motors Bajaj Auto Daewoo Motors India Hero Motors Hindustan Motors Hyundai Motors India Limited Royal Enfield Motors Telco TVS Motors DC Designs Swaraj Mazda Limited
In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three-wheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S. A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of non-rechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances. The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and it first begun
in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses. According the History of Automobile Industry 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 and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets.
Mahindra Scorpio Jeep in service with the Italy's CNSAS. India's automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India's largest export market followed by Italy, Germany, Netherlands and South Africa. India's automobile exports are expected to cross $12 billion by 2014. According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.
In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011. In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export. The company said that the plant was a part of its plan to make India the hub for its global production business. Fiat Motors also announced that it would source more than US$1 billion worth auto components from India. In July 2010, The Economic Times reported that PSA Peugeot Citroën was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation. PSA's intention to utilize this production facility for export purposes however remains unclear as of December 2010.
A Tata Safari on display in Poznan, Poland. In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign carmakers 100% ownership of factories in India, which China does not allow. In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch
electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens. Automobile Exports
Type of Vehicle Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Total 2004-2005 166,402 29,940 66,795 366,407 629,544 2005-2006 175,572 40,600 76,881 513,169 806,222 2006-2007 198,452 49,537 143,896 619,644 1,011,529 2007-2008 218,401 58,994 141,225 819,713 1,238,333 2008-2009 335,739 42,673 148,074 1,004,174 1,530,660
The competitive nature of the automobile industry
The competitive nature of the automobile industry has prompted the companies to take up new and innovative marketing strategies to thwart the competition. The B segment of cars is the segment which sees maximum competition as the consumer has a number of models to choose from and it's the volumes which drive the margins. All the companies as a part of their marketing strategy offers a range of vehicles in all the segment to make sure that the customer is driving one of their vehicles only. Advertisements on the Audio visual medium are a rage as it gives the car makers an opportunity to flaunt their cars. Flashy cars can be demonstrated on television but when it comes to the finger prints of the cars, print and online media comes to the rescue.
The online medium offers a greater flexibility to the car companies since they come with a lot of interactive features like demonstrating the interiors of the car with its salient features. The print medium on the other hand provides an opportunity to the car makers to explain the function of a car in detail. Celebrity endorsements and testimonial advertisements have come a long way and they are also doing their bit to sell the cars. Super star Shahrukh Khan has been associated with Hyundai Motor Company for a long time and he comes regularly on television to promote the Santro car. Similarly Ford has roped in Junior Bachan for the promotion of the latest offering from the company Ford Fiesta. On a similar note Saif Ali Khan and Rani Mukherjee is shown chasing each other with a Chevrolet aveo. Aamir Khan who is considered to be one of the most talented actors in the industry is frequently seen changing roles on screen to promote the Toyota Innova, a car which is generations ahead of its predecessor Toyota Qualis. Cricketers haven't been left behind in the race of promoting cars; Fiat Palio had received a great thrust when the promotion of the car was taken up by the batting maestro Sachin Tendulkar.In addition to the publicity and advertisement which is done by the companies there are certain innovative strategies which are taken up by the companies to beat the competition from time to time.
Global production of motor vehicles
(Cars and commercial vehicles)
By country Motor vehicle production (units) 14,000, 00015, 13, 000,00 Co 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 10,0 11,0 12,0 000 0 unt 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 00,0 00,0 00,0 ,00 16,000, ry 0 0 0 0 0 0 0 0 0 00 00 00 0 000 17,000, 000
18,000, 000 19,000, 000 Ch 18,264,667 ina Ja 9,625,940 pan Un ite d 7,761,443 Sta tes Ge rm 5,905,985 any So uth 4,271,941 Ko rea Br 3,648,358 azil In 3,536,783 dia Sp 2,387,900 ain M exi 2,345,124 co Fr 2,227,742 anc
e Ca 2,071,02 nad 6 a Th 1,64 aila 4,51 nd 3 1,59 Ira 9,45 n 4 Ru 1,40 ssi 3,24 a 4 1,39 U 3,46 K 3 Tu 1,09 rke 7,55 y 4 Cz 1,0 ech 76, Re 385 p. Po 869 lan ,73 d 6 857 Ita ,35 ly 9 Ar 71 gen 6,5 tin 40 a
Total motor vehicle production Group 6,000,0007,000,00 1,000,00 2,000,00 3,000,00 4,000,00 5,000,00 0 8,000,000 0 0 0 0 0 9,000,000 10,000,000 Heavy Light Commercial Commercial Cars Vehicles VehiclesHeavy Buses 8,557,351 8,476,192 7,341,065 5,764,918 4,988,031 3,982,16 2 3,643,057 3,605,524 2,892,945 2,716,286 2,410,021 1,940,465 1,578,488 Cars Cars: 60,343,756 Heavy Light Commercial Commercial Vehicles Vehicles Heavy Buses LCV: 13,370,432 HCV:
Key Toyota GM Volkswage n Hyundai Motor Ford Nissan Honda PSA Suzuki Renault Fiat Daimler AG Chrysler Key Total:
3,510,681Heavy Bus: 518,993
Top vehicle manufacturing groups (by volume)
The table below shows the world's largest motor vehicle manufacturing groups, along with the marques produced by each one. The table is ranked by 2010 end of year production figures from the International Organization of Motor Vehicle Manufacturers (OICA) for the parent group, and then alphabetically by marque. Joint ventures are not reflected in this table. Production figures of joint ventures are typically included in OICA rankings, which can become a source of controversy. Country of Ownership Markets origin 1. Toyota Motor Corporation ( Japan) Global, except North America Daihatsu Subsidiary and Australia Asia Pacific, North America Hino Subsidiary and South America Lexus Division Global Scion Division North America Toyota Division Global 2. General Motors Company ( United States) North America, China, Israel, Buick Division Taiwan North America, Europe, Asia, Cadillac Division Middle East, Africa Global, except Australia, New Chevrolet Division Zealand GMC Division North America, Middle East Holden Subsidiary Australia, New Zealand Marque
Opel Vauxhall 3. Volkswagen Group AG ( Audi Bentley Bugatti Lamborghini Scania SEAT Skoda
Volkswagen Volkswagen Subsidiary Global Commercial Vehicles 4. Hyundai Kia Automotive Group ( South Korea) Hyundai Division Global Kia Division Global, except Mexico 5. Ford Motor Company ( United States) Ford Division Global North America, Middle East, Lincoln Division Japan, South Korea 6. Nissan ( Japan) Global, except Japan, South Infiniti Division America and Africa Nissan Division Global 7. Honda Motor Company ( Japan) Acura Division North America, China Honda Division Global 8. PSA Peugeot Citroën S.A. ( France) Global, except North Citroën Subsidiary America, South Asia
Global, except North Subsidiary America, United Kingdom, Australasia Subsidiary United Kingdom Germany) Subsidiary Global Subsidiary Global Subsidiary Global Subsidiary Global Subsidiary Global Europe, South America, Subsidiary North Africa, Middle East Global, except North Subsidiary America, Japan and South Africa Subsidiary Global
Peugeot 9. Suzuki Motor Corporation ( Maruti Suzuki Suzuki 10. Renault ( Dacia Renault Renault Samsung 11. Fiat S.p.A. ( Abarth Alfa Romeo Ferrari Fiat Fiat Professional Lancia Maserati 12. Daimler AG ( Freightliner Master Maybach Mercedes-Benz Mitsubishi Fuso Orion Setra Smart Italy) France)
Subsidiary Japan) Subsidiary Division Subsidiary
Global, except America, South Asia
India, Middle East, South America Global
Europe, Latin America, Africa, Asia, except Japan Global, except North Division America, South Korea South America, Asia, except Subsidiary Japan and China Subsidiary Subsidiary Subsidiary Subsidiary Global, except North America Global Global Global Global, except North America Subsidiary and Japan Europe (except UK and Subsidiary Republic of Ireland) and Japan Subsidiary Global Germany) Division Subsidiary Division Division Subsidiary Subsidiary Subsidiary Division North America, South Africa, Australia, New Zealand Pakistan Global Global Global North America Europe North America, Europe, Japan, South East Asia, South
Thomas Built Western Star
13. Chrysler Group, LLC ( Chrysler Dodge Jeep Ram 14. BMW AG ( Germany) BMW Division Global MINI Division Global Rolls-Royce Subsidiary Global 15. Mazda Motor Corporation ( Japan) Mazda Division Global 16. Mitsubishi Motors Corporation ( Japan) Mitsubishi Division Global 17. Chana Automobile Company, Ltd ( People's Republic of China) Chana Division China, South Africa, Europe 18. Tata Motors, Ltd ( India) Hispano Subsidiary Europe Jaguar Subsidiary Global Land Rover Subsidiary Global Tata Division Global, except North America Tata Daewoo Subsidiary South Korea 19. First Automotive Group Corporation ( People's Republic of China) Besturn Division China Freewind Subsidiary China Haima Subsidiary China Hongqi Division China Jiaxing Subsidiary China Vita Subsidiary China Xiali Subsidiary China 20. Geely Automobile ( People's Republic of China)
Africa Subsidiary North America North America, Subsidiary New Zealand United States) Division Global Division Global Division Global Division North America
Geely Division China, Russia, North Africa Maple Division China Volvo (Cars) Subsidiary Global 21. Chery Automobile Company, Ltd ( People's Republic of China) China, Africa, South East Chery Division Asia, Russia Riich Division China Rely Division China 22. Fuji Heavy Industries, Ltd ( Japan) Subaru Division Global 23. Dongfeng Motor Corporation ( People's Republic of China) Dongfeng Division China 24. Beijing Automotive Industry Holding Corporation, Ltd ( People's Republic of China) BAW Division China Foton Subsidiary China 25. OAO AvtoVAZ ( Russia) Global, except North America Lada Division and Portugal VAZ Division Russia 26. BYD Auto ( People's Republic of China) BYD Division China, Russia 27. Isuzu Motors, Ltd ( Japan) Isuzu Division Global, except North America 28. Anhui Jianghuai Automobile Company, Ltd ( People's Republic of China) JAC Division China 29. Brilliance China Automotive Holding, Ltd ( People's Republic of China) Brilliance Division China, North Africa Jinbei Subsidiary China 30. Great Wall Motor Company, Ltd ( People's Republic of China) China, South Africa, Russia, Great Wall Division North Africa, Australia Litex Motors Subsidiary Europe
31. Shanghai Automotive Industry Corporation ( People's Republic of China) United Kingdom, Chile, MG Subsidiary Argentina, China Roewe Division China Soyat Division China Yuejin Division China 32. Mahindra & Mahindra, Ltd ( India) India, South East Asia, Mahindra Division Europe, North Africa, North America SsangYong** Subsidiary Global 33. Hafei Motor ( China) Hafei Subsidiary China 34. AB Volvo ( Sweden) Mack Subsidiary Global 35. Jiangxi Changhe Automobile ( China) Changhe Division China 36. Qingling Motors Company Ltd. ( China) Qingling Division China 37. Proton Holdings, Bhd ( Malaysia) Asia Pacific (except Japan and South Africa), Proton Division United Kingdom, Middle East Lotus Subsidiary Global 38. Hunan Jiangnan Automobile ( People's Republic of China) Jiangnan Division China 39. MAN SE ( Germany) MAN SE Division Europe 40. Chongqing Lifan Automobile Company, Ltd ( People's Republic of China) Lifan Division China 41. Fujian Motor Industry Group Company ( People's Republic of China) Soueast Division China 42. Kuozui Motors, Ltd ( Taiwan)
Kuozui Subsidiary Taiwan 43. Shandong Kaima ( China) Kaima Division China Jubao Division China Aofeng Division China 44. Porsche ( Germany) Porsche Subsidiary Global 45. Chenzhou Gonow Nanyan Chifeng Vehicle ( People's Republic of China) Gonow Division China 46. Ziyang Nanjun Automobile Co., Ltd. ( People's Republic of China) Nanjun Division China 47. Rongcheng Huatai Motor ( People's Republic of China) Huatai Division China
Sales and Distribution Network
Strong sales and distribution network: 94 facilities and in 57 cities and 51 Exclusive Dealership. HSCI dealerships are based on the ―3S Facility‖ (Sales, Service, Spares) format, offering complete range of services to its customers. Having established itself as a leading brand in the metros, the company is now focusing on increasing its presence in tier-II towns and cities and plans to increase its dealership network to more than 100 by the end of 2008-09 fiscal years. The company is targeting 100 dealer outlets across India by 2009, as per their expansion strategy which is based on the ‘1 dealer per 1000 cars‘ formula. Tokyo, Japan, Dec 14, 2005; The Auto Channel reported today that Honda Motor Co., Ltd. today announced plans to integrate the company's three existing domestic automobile sales channels - Primo, Clio and Verno - into one Honda channel in March 2006. This integration will enable Honda customers to purchase and service any Honda brand automobile at a single Honda dealer and to maintain a continuous
relationship with the same dealer for future sales and service needs as a means to achieve a high level of satisfaction. In addition, Honda announced plans to introduce its luxury brand, Acura, in Japan, by fall 2008. The Acura brand will offer distinctive products with a core focus on advanced, leading edge technologies that are always ahead of the times. The goals of the new sales channel strategy are to maintain Honda's ability to respond to changes in society and the automobile market and to continue to provide the diverse values desired by customers and meet increasingly sophisticated customer needs. In turn, this will enable Honda to maximize the joy and satisfaction of existing customers earned through the three channel structure (with the cumulative number of Honda vehicles in Japan now standing at approximately 9 million units). Further, Honda aims to restructure and strengthen its domestic automobile dealer network by creating new value for the customer through Acura brand products. Integration of Honda channels to maximize customer joy and satisfaction Honda established the current three-channel structure by creating Verno in 1978, Clio in 1984, and Primo in 1985, offering Honda products for customers with different lifestyles. Supported by growing automobile demand at that time, Honda continued to enhance its product line-up and increased sales and the number of dealers. At the same time, Honda began conducting the CSI (Customer Satisfaction Index) survey in 1984, and strengthened initiatives which always put customer satisfaction at the core. Through these efforts, Honda steadily increased the number of Honda customers and made significant progress in achieving the autonomy of its dealers. The Japanese automobile market has now entered a stage of increasing maturity, and the surrounding society and marketplace are in a transition stage as well. In this increasingly competitive environment, the most important factor is to always continue improving the lifetime satisfaction level for the customers who have already chosen the Honda brand. Based on this concept, Honda decided to integrate its existing channels into one Honda channel where customers will be able to purchase and service any Honda brand automobile and to continue receiving high quality sales and service from the same dealer for future needs whether that be replacing their current vehicle or adding another one. Honda also aims to build a dealer network that places the Honda brand at the forefront by maximizing use of existing facilities and manpower and by optimizing the location of sales facilities.
With this new sales channel strategy, Honda will accelerate its effort to maximize customer joy and satisfaction, and by challenging in this new area Honda will pursue the goal of consistently achieving annual sales of more than 800,000 units.
Sales and Share of Total Market by Manufacturer
SALES July 2011 General Motors Corp. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Ford Motor Company Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Chrysler LLC Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Toyota Motor Sales USA Inc. Total Cars Domestic Car Import Car Total Light Trucks YTD SALES July 2010 % Chg 2011 2010 % Chg % MARKET SHARE July July YTD YTD 2011 2010 2011 2010 20.3 19.0 20.0 19.2 7.6 7.2 0.3 7.1 6.7 0.4 8.3 8.0 0.3 7.5 7.1 0.4
Domestic Truck Import Truck American Honda Motor Co Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Nissan North America Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Hyundai Motor America Total Cars Total Light Trucks Mazda Motor of America Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Mitsubishi Motors N A, Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Kia Motors
America Inc. Total Cars Total Light Trucks Subaru of America Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck American Suzuki Motor Corp. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Mercedes-Benz Total Cars Total Light Trucks Domestic Truck Import Truck Saab Total Cars Total Light Trucks Domestic Truck Import Truck Volvo Total Cars Total Light Trucks Volkswagen of America Inc. Total Cars Domestic Car Import Car Total Light
Trucks Audi of America Inc. Total Cars Total Light Trucks BMW of North America Inc. Total Cars Domestic Car Import Car Total Light Trucks Domestic Truck Import Truck Porsche Cars NA Inc. Total Cars Total Light Trucks Isuzu Motors America, Inc. ** Domestic Truck Import Truck Jaguar * Land Rover ** Mini * Ferrari * Maserati * Bentley * Rolls Royce * Maybach * Total Car Domestic Car Import Car Total Truck Domestic Truck Import Truck TOTAL LIGHT VEHICLE SALES Selling Days
Product and service segmentation
The automotive industry of India is categorized into passenger cars, two wheelers, commercial vehicles and three wheelers, with two wheelers dominating the market. More than 75% of the vehicles sold are two wheelers. Nearly 59% of these two wheelers sold were motorcycles and about 12% were scooters. Mopeds occupy a small portion in the two wheeler market however; electric two wheelers are yet to penetrate. The passenger vehicles are further categorized into passenger cars, utility vehicles and multi-purpose vehicles. All sedan, hatchback, station wagon and sports cars fall under passenger cars. Tata Nano, is the world‘s cheapest passenger car, manufactured by Tata Motors - a leading automaker of India. Multi-purpose vehicles or people-carriers are similar in shape to a van and are taller than a sedan, hatchback or a station wagon, and are designed for maximum interior room. Utility vehicles are designed for specific tasks. The passenger vehicles manufacturing account for about 15% of the market in India. Commercial vehicles are categorized into heavy, medium and light. They account for about 5% of the market. Three wheelers are categorized into passenger carriers and goods carriers. Three wheelers account for about 4% of the market in India. Segment 200304 10.22 2.15 0.87 13.25 0.36 2.01 200405 10.39 2.23 0.82 13.44 0.32 2.19 2.51 0.25 1.27 200506 9.91 2.18 0.75 12.83 0.32 2.01 2.33 0.25 1.36 200607 10.65 2.18 0.82 13.65 0.28 2.44 2.73 0.24 1.67 200708 12.42 2.39 0.98 15.79 0.43 2.10 2.53 0.32 1.77
Passenger Car (%) Utility Vehicles (UVs) (%) Multi Purpose Vehicles (MPVs) (%) Total Passenger Vehicles (%) Passenger Carriers (%) Goods Carriers (%) Total Medium & Heavy Commercial 2.37 Vehicles (%) Passenger Carriers (%) 0.28 Goods Carriers (%) 1.17
Total Light Commercial Vehicles (%) Total Commercial Vehicles (%) Passenger Carriers (%) Goods Carriers (%) Total Three Wheelers (%) Scoters/Scooterettee (%) Motorcycles/Step-Throughs (%) Mopeds (%) Electric Two Wheelers (%) Total Two Wheelers (%) Grand Total (%)
Market Size The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USD 35.8 billion, (INR 165,000 crores) and an investment of USD 10.9 billion. The industry has provided direct and indirect employment to 13.1 million people. Automobile industry is currently contributing about 5% of the total GDP of India. India‘s current GDP is about $ 1.4 trillion and is expected to grow to
$ 3.75 trillion by 2020. The projected size in 2016 of the Indian automotive industry varies between $ 122 billion and $ 159 billion including USD 35 billion in exports. This translates into a contribution of 10% to 11% towards India‘s GDP by 2016, which is more than double the current contribution. Demand Determinants Determinants of demand for this industry include vehicle prices (which are determined largely by wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle (mainly determined by the price of petrol), income, interest rates, scrapping rates, and product innovation. Exchange Rate: Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption. Affordability: Movement in income and interest rates determine the affordability of new motor vehicles. Allowing unrestricted Foreign Direct Investment (FDI) led to increase in competition in the domestic market hence, making better vehicles available at affordable prices. Product Innovation is an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars. Demographics: It is evident that high population of India has been one of the major reasons for large size of automobile industry in India. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars. Also, increase in people with lesser dependency on traditional single family income structure is likely to add value to vehicle demand. Infrastructure: Longer-term determinants of demand include development in Indian‘s infrastructure. India‘s banking giant State Bank of India and Australia‘s Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair its infrastructure such as ports, roads, and power units. These investments are been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. (Source: Silicon India) Price of Petrol: Movement in oil prices also has an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and first –half of
2008, demand for large cars declined in favour of smaller, more fuel efficient vehicles. The changing patterns in customer preferences for smaller more fuel efficient vehicles led to the launch of Tata Motor‘s Nano – one of world‘s smallest and cheapest cars.
International Markets International Markets Exports The level of trade export is medium The level of trade export is increasing International Markets Imports The level of trade import is low The level of trade import is increasing
International Markets Analysis The Indian automotive industry embarked a new journey in 1991 with de-licensing of the sector and subsequent opening up for 100% foreign direct investment (FDI). Since then almost all global majors have set up their facilities in Indian taking the level of production from 2 million in 1991 to over 10 million in recent years. The exports in automotive sector have grown on an average compound annual growth rate of 30% per year for the last seven years. The export earnings from this sector are over USD 6 billion. Even with this rapid growth, the Indian automotive industry‘s contribution in global terms is very low. This is evident from the fact that even thought passenger and commercial vehicles have crossed the production figures of 2.3 million in the
year 2008, yet India‘s share is about 3.28% of world production of 70.53 million passenger and commercial vehicles. India‘s automot ive exports constitute only about 0.3% of global automotive trade.
Basis of Competition Competition in this industry is high. Competition in this industry is increasing. Automotive industry is a volume-driven industry, and certain critical mass is a prerequisite for attracting the much-needed investment in research and development and new product design and development. Research and development investment is needed for innovations which is the lifeline for achieving and retaining competitiveness in the industry. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. The most important indices of competitiveness are productivity of both labour and capital. The concept of attaining competitiveness on the basis of low cost and abundant labour, favourable exchange rates, low interest rates and concessional duty structure is becoming inadequate and therefore, not sustainable. A greater emphasis is required on the development of the factors like innovation which can ensure competitiveness on a long-term basis. India, with a rapidly growing middle class (450 million in 2007 as per NCAER Report), market oriented stable economy, availability of trained manpower at competitive cost, fairly well developed credit and financing facilities and local availability of almost all the raw materials at a competitive cost, has emerged as one of the favourite investment destinations for the automotive manufacturers. These advantages need to be leveraged in a manner to attain the twin objective of ensuring availability of best quality product at lower cost to the consumers on the one hand and developing and assimilating the latest technology in the industry on the other hand. As per Automotive Mission Plan 2006–2016 (2008), the Indian Government recognises its role as a catalyst and facilitator to encourage the companies to move to higher level of competitive performance. The Indian Government wants to create a policy environment to help companies gain competitive advantage. The government aims that with its policies its encourage growth, promote domestic competition and stimulate innovation.
Life Cycle The life cycle stage is growth Life Cycle Reasons The market for manufacturing motor vehicles is consistently increasing. The products manufactured by this industry are profitable. Companies have been consistently opening new plats and employing over the past five years. Japanese and European manufacturers of motor vehicles have entered the market. Industry value added has been rising, along with the rise in GDP. Life Cycle Analysis General improvement in availability of trained manpower and good infrastructure is required for sustainable growth of the industry. Keeping this in view, the Indian Government has launched a unique initiative of National Automotive Testing and R&D Infrastructure Project (NATRIP) to provide specialized facilities for Testing, Certification and Homologation to the industry. A similar initiative is required for creating specialized institutions in automotive sector for education, training and development. The auto industry has grown in the clusters of interconnected companies which are linked by commonalities and complementarities. The major clusters are in and around Manesar in North, Pune in West, Chennai in South, Jamshedpur-Kolkata in East and Indore in Central India. The Government is planning to create a National Level Specializes Education and Training Institute for Automotive Sector and to enhance the transportation, communication and export infrastructure facilities. The contribution of automotive sector in the GDP of India is expected to double by 2016 through major spotlight on export of small cars, Multi-Utility Vehicles, Two and Three wheelers.
It is common for automobile manufacturers to hold stakes in other automobile manufacturers. These ownerships can be explored under the detail for the individual companies. Notable current relationships include: Daimler AG holds a 20% stake in Eicher Motors, a 10.0% stake in KAMAZ, a 10% stake in Tesla Motors, a 6.75% stake in Tata Motors and a 3.1% in the Renault-Nissan Motors alliance. They are in the process of selling back their 40% stake (11% remaining) in McLaren Group. This process will be finalized in 2011.
Dongfeng Motor Corporation is involved in joint ventures with several companies around the world, including: Honda (Japan), Hyundai (South Korea), Nissan (Japan), Nissan Diesel (Sweden), and PSA Peugeot Citroen (France). Fiat holds a 90% stake in Ferrari and a 53.5% stake in Chrysler. Ford Motor Company holds a 3% stake in Mazda and an 8.3% share in Aston Martin. Geely Automobile holds a 23% stake in Manganese Bronze Holdings. General Motors and Shanghai Automotive Industry Corporation (SAIC) have two joint ventures in Shanghai General Motors and SAIC-GM-Wuling Automobile. Hyundai KIA Automotive Group holds a 38.67% stake in Kia Motors, down from the 51% that it acquired in 1998. MAN SE holds a 17.01% voting stake in Scania. Porsche Automobile Holding SE has a 50.74% stake in Volkswagen Group. Due to liquidity problems, Volkswagen Group is now in the process of acquiring Porsche. Renault and Nissan Motors have an alliance involving two global companies linked by cross-shareholding, with Renault holding 44.3% of Nissan shares, and Nissan holding 15% of (non-voting) Renault shares. The alliance holds a 3.1% share in Daimler AG.
Renault holds a 25% stake in AvtoVAZ and 20.5% of the voting stakes in Volvo Group. Toyota holds a 51% stake in Daihatsu, and 16.5% in Fuji Heavy Industries, parent company of Subaru. Volkswagen Group holds a 37.73% stake in Scania (68.6% voting rights), and a 53.7% stake in MAN SE (55.9% voting rights). Volkswagen is integrating Scania, MAN and its own truck division into one division. Volkswagen Group has a 49.9% stake in Porsche AG. Volkswagen is in the process of acquiring Porsche, which will be completed in late 2011. Volkswagen Group has a 19.9% stake in Suzuki, and Suzuki has a 5% stake in Volkswagen.
Honda Motor Company, Ltd. Honda Giken Kogyo Kabushiki-gaisha 本田技研工業株式会社
Public (TYO: 7267) (NYSE: HMC)
Industry Founded Founder(s) Headquarters
24 September 1948
Soichiro Honda Takeo Fujisawa
Minato, Tokyo, Japan
Area served Key people
Satoshi Aoki (Chairman) Takanobu Ito (CEO) Automobiles Motorcycles Scooters ATVs Electrical Generators Water pumps Lawn and Garden Equipments Tillers Outboard motors Robotics Jets Jet Engines Thin-film solar cells (FY
Honda Motor Company, Ltd. Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year. Honda surpassed Nissan in 2001 to become the second-largest Japanese automobile manufacturer. As of August 2008, Honda surpassed Chrysler as the fourth largest automobile manufacturer in the United States. Honda is the sixth largest automobile manufacturer in the world. Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand, Acura, in 1986. Aside from their core automobile and motorcycle businesses, Honda also manufactures garden equipment, marine engines, personal watercraft and power generators, amongst others. Since 1986, Honda has been involved with artificial intelligence/robotics research and released their ASIMO robot in 2000. They have also ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 Honda Jet, scheduled to be released in 2011. Honda spends about 5% of its revenues into R&D.
Current market position With high fuel prices and a weak U.S. economy in June 2008, Honda reported a 1% sales increase while its rivals, including the Detroit Big Three and Toyota, have reported double-digit losses. Honda's sales were up almost 20 percent from the same month last year. The Civic and the Accord were in the top five lists of
sales. Analysts have attributed this to two main factors. First, Honda's product lineup consists of mostly small to mid-size, highly fuel-efficient vehicles. Secondly, over the last ten years, Honda has designed its factories to be flexible, in that they can be easily retooled to produce any Honda model that may be indemand at the moment. Nonetheless, Honda, Nissan, and Toyota, were still not immune to the global financial crisis of 2008, as these companies reduced their profitability forecasts. The economic crisis has been spreading to other important players in the vehicle related industries as well. In November 2009 the Nihon Keizai Shinbun reported that Honda Motor exports have fallen 64.1%. At the 2008 Beijing Auto Show, Honda presented the Li Nian ("concept" or "idea") 5-door hatchback and announced that they were looking to develop an entry-level brand exclusively for the Chinese market similar to Toyota's Scion brand in the USA. The brand would be developed by a 50–50 joint-venture established in 2007 with Guangzhou Automobile Industry Group. Following the Japanese earthquake and tsunami in March 2011 Honda announced plans to halve production at its UK plants. The decision was made to put staff at the Swindon plant on a 2 day week until the end of May as the manufacturer struggled to source supplies from Japan. It's thought around 22,500 cars were produced during this period.
Marketing Honda's official slogan is "The Power of Dreams". They have never used this slogan to sell their products. Mr. Honda's belief is that well built products will sell themselves. In 2003, Honda released its Cog advertisement in the UK and on the Internet. To make the ad, the engineers at Honda constructed a Rube Goldberg Machine made entirely out of car parts from a Europe Domestic Market Honda Accord (upon which the USDM Acura TSX is based). To the chagrin of the engineers at Honda, all the parts were taken from two of only six hand-assembled pre-production models of the Accord. The advertisement depicted a single cog which sets off a chain of events that ends with the Honda Accord moving and Garrison Keillor speaking the tagline "Isn't it nice when things just... work?" It took 606 takes to get it perfect.
In 2004, they produced the Grrr advert, usually immediately followed by a shortened version of the 2005 Impossible Dream advert.
A post 2005 style Honda dealership in Moncton, Canada In December 2005, Honda released The Impossible Dream a two-minute panoramic advertisement filmed in New Zealand, Japan and Argentina which illustrates the founder's dream to build performance vehicles. While singing the song "Impossible Dream", a man reaches for his racing helmet, leaves his trailer on a minibike, then rides a succession of vintage Honda vehicles: a motorcycle, then a car, then a powerboat, then goes over a waterfall only to reappear piloting a hot air balloon, with Garrison Keillor saying "I couldn't have put it better myself" as the song ends. The song is from the 1960s musical Man of La Mancha, sung by Andy Williams. In 2006, Honda released its Choir advertisement, for the UK and the internet. This featured a 60-person choir who sang the car noises as film of the Honda Civic are shown. For the last several years in the United States, during model close-out sales for the current year before the start of the new model year, Honda's advertising has featured an animated character known simply as Mr. Opportunity, voiced by Rob Paulsen. The casual looking man talks about various deals offered by Honda and ends with the phrase "I'm Mr. Opportunity, and I'm knockin'", followed by him "knocking" on the television screen or "thumping" the speaker at the end of radio ads. Also, commercials for Honda's international hatchback, the Jazz, are parodies of well-known pop culture images such as Tetris and Thomas the Tank Engine. In late 2006, Honda released an ad with ASIMO exploring a museum, looking at the exhibits with almost child-like wonderment (spreading out its arms in the aerospace exhibit, waving hello to an astronaut suit that resembles him, etc.), while Garrison Keillor ruminates on progress. It concludes with the tagline: "More forwards please".
Honda also sponsored ITV's coverage of Formula One in the UK for 2007. However they had announced that they would not continue in 2008 due to the sponsorship price requested by ITV being too high. In May 2007, focuses on their strengths in racing and the use of the Red H badge – a symbol of what is termed as "Hondamentalism". The campaign highlights the lengths that Honda engineers go to in order to get the most out of an engine, whether it is for bikes, cars, and powerboats – even lawnmowers. Honda released its Hondamentalism campaign. In the TV spot, Garrison Keillor says, "An engineer once said to build something great is like swimming in honey", while Honda engineers in white suits walk and run towards a great light, battling strong winds and flying debris, holding on to anything that will keep them from being blown away. Finally one of the engineers walks towards a red light, his hand outstretched. A web address is shown for the Hondamentalism website. The digital campaign aims to show how visitors to the site share many of the Honda mentalist characteristics. At the beginning of 2008, Honda released – the Problem Playground. The advert outlines Honda's environmental responsibility, demonstrating a hybrid engine, more efficient solar panels and the FCX Clarity, a hydrogen powered car. The 90 second advert features large scale puzzles, involving Rubik's cubes, large shapes and a 3-dimensional puzzle. On 29 May 2008, Honda, in partnership with Channel 4, broadcast a live advertisement. It showed skydivers jumping from an aero plane over Spain and forming the letters H, O, N, D and An in mid-air. This live advertisement is generally agreed to be the first of its kind on British television. The advert lasted three minutes. The next flight of one of the two planes involved resulted in a fatal crash as the plane broke apart in mid-air. In 2009, American Honda released the Dream the Impossible documentary series, a collection of 5–8 minute web vignettes that focus on the core philosophies of Honda. Current short films include Failure: The Secret to Success, Kick out the Ladder and Mobility 2088. They feature Honda employees as well as Danica Patrick, Christopher Guest, Ben Bova, Chee Pearlman, Joe Johnston and Orson Scott Card. The film series plays at dreams.honda.com.
U.S. Honda models Accord Civic Fit Cars Energy/Hybrid/Other Civic Hybrid FCX Clarity Insight CR-Z Pilot Element SUVs Ridgeline Trucks CR-V Crosstour Crossovers Odyssey Vans
Advertisement The Company tried to communicate the unique message in every advertisement that its products have a good quality to customer. For example, Honda Freed; it can carry many persons in its body, they will feel like family condition. So this product is appropriate to each quite big family. So the company used pull strategy in attracting customers because from the above advertisement the company showed the abilities of its product and also it meaned that how the company's products was different from others.
The company had cooperated with its representative seller under its three philosophies they are joy of buying, joy of selling and joy of creativity. This has an objective for making much satisfaction of customers as highly as the company can do. And also this is a good strategy of Honda in increasing its sale to be higher and higher in the future.
Every advertisement of Honda tried to make its picture in form of more good quality than others into customer's mind.
The Company gives a service after selling to customer. For example, Honda Freed the company had provided some gift for customer such as first class insurance, film lamina etc. So this is one means of pull strategy in attracting customer’s mind and makes them become the company's royal customers.
Honda is one of the best as well as a leading company in the market, which is producing well with the help of all the latest and innovative technologies. Apart from automobile, Honda is one of the best and the largest producer of engine. Honda was the one, which compete with Nissan and achieved the highest productivity. Honda was the first Japanese automobile-based manufacturer, which produced the luxury-based brand. This company is thus working well and generating effective outcomes. Apart from this, numerous threats as well as weaknesses are there which plays an important role in weakening this company. Therefore, in order to analyze the weak areas and to highlight the strong areas of a company, SWOT analysis is done which results in better and productive outcome. (Dyck & Neubert)
Swot analysis of Honda
Strengths • High and powerful research and development R&D • Innovation • Best market share leadership • Strong and powerful brand equity • Different and unique products • One major strength is the revolutionary engine technology with the help of which Honda is gaining success day by day • Popularity is termed as one of the best strength which results in betterment for the company
Weaknesses • Cost structure of Honda is high as compare to other automobile manufacturers • Apart from Nissan & Toyota, Honda requires privileged purchase deposit • Honda focus more on international deposits as compare to domestic deposits • Civic model is consider as one of the major weakness for Honda Company • Honda products are termed as inoffensive in terms of style and design • Prices for non-luxury vehicles are far high as compare to other manufacturers • In truck line, Honda Company is not offering strong products and proposals
Opportunities • Honda has the best opportunity to use its R&D in producing cars according to the needs and demands of their customer. This is only possible because of the increase in demand for less pollution cars. • Emerging market is one of the best opportunities for this company • Various models are there which caters the lower segment • Fuel efficiency is now a day’s termed as one of the best opportunity which can results in the best productivity for the company • Alliances are the best opportunities for Honda Company • Honda can increase its production by focusing on sales and research • They can gain more popularity by doing better research and development
Threats • One of the major threats is the economic slowdown • All the external changes for instance taxes, politics as well as government are the major threats for Honda Company • Another threat is the lower cost competitors • Price war is also consider as an important threat for this company • Oil prices are contributing a lot towards the loss of Honda Company • Second movers are the major threat for Honda Company • Substitute products are the major threats for the Honda Company
Electric and alternative fuel vehicles
Compressed natural gas The Honda Civic GX is the only purpose-built natural gas vehicle (NGV) commercially available in some parts of the U.S. The Honda Civic GX first appeared in 1998 as a factory-modified Civic LX that had been designed to run exclusively on compressed natural gas. The car looks and drives just like a contemporary Honda Civic LX, but do not run on gasoline. In 2001, the Civic GX was rated the cleanest-burning internal combustion engine in the world by the U.S. Environmental Protection Agency (EPA). First leased to the City of Los Angeles, in 2005, Honda started offering the GX directly to the public through factory trained dealers certified to service the GX. Before that, only fleets were eligible to purchase a new Civic GX. In 2006, the Civic GX was released in New York, making it the second state where the consumer is able to buy the car. Home refueling is available for the GX with the addition of the Phill Home Refueling Appliance.
Flexible-fuel Honda's Brazilian subsidiary launched flexible-fuel versions for the Honda Civic and Honda Fit in late 2006. As others Brazilian flex-fuel vehicles, these models run on any blend of hydrous ethanol (E100) and E20-E25 gasoline. Initially, and in order to test the market preferences, the carmaker decided to produce a limited share of the vehicles with flex-fuel engines, 33 percent of the Civic production and 28 percent of the Fit models. Also, the sale price for the flex-fuel version was higher than the respective gasoline versions, around US$1,000 premium for the Civic, and US$650 for the Fit, despite the fact that all other flex-fuel vehicles sold in Brazil had the same tag price as their gasoline versions. In July 2009, Honda launched in the Brazilian market its third flexible-fuel car, the Honda City. During the last two months of 2006, both flex-fuel models sold 2,427 cars against 8,546 gasoline-powered automobiles, jumping to 41,990 flex-fuel cars in 2007, and reaching 93,361 in 2008. Due to the success of the flex versions, by early 2009 a hundred percent of Honda's automobile production for the Brazilian market is now flexible-fuel, and only a small percentage of gasoline version is produced in Brazil for exports. In March 2009, Honda launched in the Brazilian market the first flex-fuel motorcycle in the world. Produced by its Brazilian subsidiary Moto Honda da Amazônia, the CG 150 Titan Mix is sold for around US$2,700. Hybrid electric In late 1999, Honda launched the first commercial hybrid electric car sold in the U.S. market, the Honda Insight, just one month before the introduction of the Toyota, and initially sold for US$20,000. The first-generation Insight was produced from 2000 to 2006 and had a fuel economy of 70 miles per US gallon (3.4 L/100 km; 84 mpg-imp) for the EPA's highway rating, the most fuel-efficient mass-produced car at the time. Total global sales for the Insight amounted to only around 18,000 vehicles. Honda introduced the second-generation Insight in its home nation of Japan in February 2009, and released it in other markets through 2009 and in the U.S. market in April 2009. At $19,800 as a five-door hatchback it will be the least expensive hybrid available in the U.S. Honda expects to sell 200,000 of the vehicles each year, with half of those sales in the United States.
Since 2002, Honda has also been selling the Honda Civic Hybrid (2003 model) in the U.S. market, It was followed by the Honda Accord Hybrid, offered in model years 2005 through 2007. Sales of the Honda CR-Z began in Japan in February 2010, becoming Honda's third hybrid electric car in the market. In an interview in early February 2011, a Honda executive disclosed that Honda produces around 200,000 hybrids a year in Japan.
Hydrogen fuel cell In Takanezawa, Japan, on 16 June 2008, Honda Motors produced the first assembly-line FCX Clarity, a hybrid hydrogen fuel cell vehicle. More efficient than a gas-electric hybrid vehicle, the FCX Clarity combines hydrogen and oxygen from ordinary air to generate electricity for an electric motor. The vehicle itself does not emit any pollutants and it‘s only by products are heat and water. The FCX Clarity also has an advantage over gas-electric hybrids in that it does not use an internal combustion engine to propel itself. Like a gas-electric hybrid, it uses a lithium ion battery to assist the fuel cell during acceleration and capture energy through regenerative braking, thus improving fuel efficiency. The lack of hydrogen filling stations throughout developed countries will keep production volumes low. Honda will release the vehicle in groups of 150. California is the only U.S. market with infrastructure for fueling such a vehicle, though the number of stations is still limited. Building more stations is expensive, as the California Air Resources Board (CARB) granted $6.8 million for four H2 fueling stations, costing $1.7 million USD each.
Automobile Industry experts predict that by 2050 every 6th car in the world will be for Indians. By 2010 India will take over Germany in sales volumes and Japan by2012. The Indian automobile component industry is estimated to triple from USD 63 billion to USD 190 billion within a span of four years by 2012. Estimated turnover USD12 billion, plus components revenue USD 3 billion, this is the vastness of Indian automobile industry. Industry analyst predicts this industry to touch 13000 billion marks by 2010, a cumulative growth of 9.5 percent annually. It is said that for every Re 1 spent, the auto sector returns Re 2.24 to the Indian economy. By 2010, India is expected to witness over Rs 30000 crore of investment. According to estimation the compound annual growth rate (CAGR) of Indian Automobile sales will grow at 9.5% and touch a mark of 13008 million by 2010. Automobile experts are inventing new technologies and new engines, so that it becomes flexible for people to buy a vehicle. Now a day’s experts are finding new inventions in fuels so that the demand for petrol and diesel becomes less, because petrol and diesel have become more costly. By this project I understood that automobile industry is necessary because it is luxury and helps people in transportation. People use vehicles so that they can reach faster and therefore it saves time. Now a day’s experts are making new techniques which will help people in future for transportation. So therefore I have learned from this project that it is very useful mode and the demand for the automobiles will increase in future and therefore utility will also increase with the demand of people. So the automobile industry must grow rapidly in India and worldwide.