+ All Categories
Home > Automotive > Competitiveness of Indian Automobile companies

Competitiveness of Indian Automobile companies

Date post: 11-Sep-2014
Category:
View: 1,885 times
Download: 0 times
Share this document with a friend
Description:
 
Popular Tags:
26
Why and How are Indian automobile companies capitalizing on Indian advantages for expanding internationally Group 6 Alok|Anirban|Gautam|Sanjay|Shifaz|Sudeep| Suruchi
Transcript
Page 1: Competitiveness of Indian Automobile companies

Why and How are Indian automobile companies capitalizing on Indian

advantages for expanding internationally

Group 6

Alok|Anirban|Gautam|Sanjay|Shifaz|Sudeep|Suruchi

Page 2: Competitiveness of Indian Automobile companies

August 16, 2002

M&M to export Scorpio to Russia, Indonesia

Feb 03, 2011Bajaj Exports touch magical 1

million mark

June 08, 2011

Tata Motors begins export of its new

range of Prima World Trucks to South

Africa and Middle East

Jan 02, 2010

Ashok Leyland forms JV with Nissan to

manufacture LCVs

Feb 28, 2008Maruti Suzuki becomes the first Indian

car company to export half a million cars

 

SM II - Group Project, Group 6, Section C

Page 3: Competitiveness of Indian Automobile companies

Export Orientation of the Indian Automobile Sector

CAGR growth of 31% between 2001-02 and 2007-08

66%

05%

11%

18%

SM II - Group Project, Group 6, Section C

Page 4: Competitiveness of Indian Automobile companies

Production, Domestic Sales and Export of CV’s in India

Production, Domestic Sales and Export of PV’s in India

SM II - Group Project, Group 6, Section C

Page 5: Competitiveness of Indian Automobile companies

Exploit Indian competitiveness as a Global Automotive production hub

Low production cost & efficient supply chain management

Technological capabilities in a particular class of vehicles

Automotive hub

SM II - Group Project, Group 6, Section C

Page 6: Competitiveness of Indian Automobile companies

Growing demand

Rising incomes, young population

Greater availability of credit and 

financing options

Strong growth in exports as well

Policy sops, FDI encouragement

R&D Focus; GOI has set up technology modernization fund

Goal of establishing India as an Auto-manufacturing hub

Strong projected demand making returns attractive

Greater innovation in products; market segmentation

Rising investments from domestic and foreign players

Policy Support Increasing investments

Inviting Resulting inGrowing demand

SM II - Group Project, Group 6, Section C

Page 7: Competitiveness of Indian Automobile companies

o Automatic approval for foreign equity investment up to 100 per cent; no minimum investment criteria 

o Encourages R&D by offering rebates on the R&D expenditure spent by the companies 

Auto Policy 2002

Automotive Mission Plan 2006–2016

Dept of Heavy Industries & Public

o Setting up of a technology modernization fund focused on SMEs o Automotives training institutes

oWorked towards reduction of excise duty on small cars and the increase of budgetary allocation for R&D 

oWeighted increase in R&D expenditure to: 200 per cent from 150 per cent (in-house); 175 per cent from 125 per cent (outsourced) 

Favourable government policies

SM II - Group Project, Group 6, Section C

Page 8: Competitiveness of Indian Automobile companies

Union Budget FY11

o Surcharge on domestic companies reduced to 5 per cent from 7.5 per cent o Reduce excise duty on development & manufacturing of hybrid vehicle kits to 5 per cent from the existing 10 per cent 

o Set up at total cost of USD 388.5 million to enable the industry to implement global standards 

o R&D centers of excellence with focus on low-cost manufacturing and product development solutions 

NATRiPs

SM II - Group Project, Group 6, Section C

Page 9: Competitiveness of Indian Automobile companies

Competitive advantage of India over its peers

SM II - Group Project, Group 6, Section C

Page 10: Competitiveness of Indian Automobile companies

With most global players targeting the most competitive, small car segment, increasing localization remains critical for OEMs to establish profitable business given the competitive intensity in the small car segment .

Global demand shifting to smaller cars

India has built up the scale and significant competencies and cost advantages in the production of small cars. 

It benefits from lower development and labour costs, and improving auto component manufacturing base.

General Motors, Nissan, Toyota have announced plans to make India their hub for new global small car platforms 

Light vehicle sales in India are estimated to cross the 3 million mark by 2012 

Strong export potential in ultra low cost cars segment (to developing and emerging markets) 

SM II - Group Project, Group 6, Section C

Page 11: Competitiveness of Indian Automobile companies

Emergence of large automotive clusters

Jamshedpur, Hooghly

Pithampur, Nagpur

Gurgaon, Manesar, Uttarkhand, Faridabad

Pune, Nasik, Sanand, Satara, Ahmednagar

Hosur, Mysore

SM II - Group Project, Group 6, Section C

Page 12: Competitiveness of Indian Automobile companies

Witnessed a considerable drop in exports of 6.3% in FY11 because of the European market remaining challenging on account of withdrawal of scrappage incentives

42% of the sales came from the European markets.

SM II - Group Project, Group 6, Section C

Page 13: Competitiveness of Indian Automobile companies

• Exported entry-level models across the globe to over 120 countries. 

• The A-Star  (sold  in Europe as  the  ‘Alto’,  in  some as  ‘Celerio’) has been  the star performer  abroad  and  has  been  named  as  the  5th  World  Strategic  model  by Suzuki.  Other  successful  exported  cars  are  the Alto K10 (fuel  efficient),  Estillo, Ritz and Zen. The company also entered  into an agreement with Nissan, under which the latter sells the same car in Europe as the ‘Pixo'.

• To handle the higher volumes, the company tied up with the Adani group for a dedicated  car  terminal  at  Mundra  port,  Gujarat  where  they  invested  Rs  100 crores.

• Invested  heavily  in  R  &  D  activities  in  Japan  to  come  up  with  technological innovations like K-Series of engines and i-GPI technology.

It then started exploring alternate markets such as :Thailand, Hungary, Malaysia, Laos, Lebanon,   Algeria, Chile, Netherlands, Indonesia and Sri Lanka.

Reasons for expansion:

o Intensifying domestic expansiono Decrease dependency on the static domestic market

SM II - Group Project, Group 6, Section C

Page 14: Competitiveness of Indian Automobile companies

Exports accounted for 28.5% of the company’s total net salesDistribution network covers 50 countries

SM II - Group Project, Group 6, Section C

Page 15: Competitiveness of Indian Automobile companies

Presence abroad:

Bajaj Auto International Holdings BV (BAIH BV)-  a 100% Netherlands based subsidiary of Bajaj Auto -  formed to focus on international ventures, including possible acquisitions

PT Bajaj Indonesia (PT BAI)-  Majority owned subsidiary of BAL-  focuses on network development, sales and after sales services and brand building

The company is currently on the look out for sites for assembly plants as it cuts the import duties (Import duty is higher on a CBU compared to a SKD and CKD.

AIM to export 2 million units in the coming 2 to 3 years

SM II - Group Project, Group 6, Section C

Page 16: Competitiveness of Indian Automobile companies

DOMESTIC TOTAL 35488 29944 286713 358021         M&M EXPORTS 2034 1754 10567 17138Logan Exports     1000 1904SECTOR TOTAL 37522 31698 298280 377063

March 2011 March 2010 YTD March F10 YTD March F11

Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/120

500

1000

1500

2000

2500

3000

3500

4000

EXPORTS VOLUME

EXPORTS VOLUME

SM II - Group Project, Group 6, Section C

Page 17: Competitiveness of Indian Automobile companies

M&M is has entered several markets in developing economies such as South  America, South East Asia and Africa.

M&M leverages its Indian cost advantage to grow in the international market.

Cheap Labor and Cost of Production allows M&M to export CKDs to international markets and sell them at much lower price tag.

M&M is manufacturing world-class products at a competitive prices which allows the firm to fulfill its global ambitions and compete in overseas markets.

Basically M&M is entering those markets where the requirements, both in terms of Quality and Price, are similar to those in India. 

M&M Ties-up with local manufacturers to leverage their capabilities in local markets. 

M&M has recently acquired Ssangyong Motor Company[SYMC]  in Korea M&M has collaborated with Eljuri Group in Ecuador in November 2011XUV 500 [SUV] and Genio [Pick-up trucks] were launched recently for Indian as well as International markets in September 2011Earlier M&M had entered the Nigerian market with its 3-wheelers Alfa Passenger and Alfa Load

SM II - Group Project, Group 6, Section C

Page 18: Competitiveness of Indian Automobile companies

In 2010-11, exports contributed to 6.51% of total revenue

Total export 58089 vehicles, a growth of 70% 

CV’s 50,244, a growth of 80.2% PV’s 7,845, a growth of 25.9%

Extended presence in the European market

o 21% stake in Hispano Corrocerao MoU with Fiat in 2005o Acquired a 94.3% stake in INCAT International for R&D support and IT capabilities

SM II - Group Project, Group 6, Section C

Joint Venture with Marcopolo o 51:49 joint venture company with Brazil's Marcopolo to manufacture and assemble fully-built buses and coaches in India

o To be marketed not only in India but also in all Tata Motors focused markets

Page 19: Competitiveness of Indian Automobile companies

Acquisition worth $ 2.3billion from Ford Motors in 2008TML felt that acquiring JLR would help them acquire a global  footprintIt would help them enter high-end premier segment of the global automobile marketProvide access to the latest technology which would also help them improve their core Indian productsExpected decrease in dependence on Indian market

Tata Motors and MG Rover inked this deal in December,2002City Rovers manufactured in Tata Motors Pune plant were marketed               by MG Rover in the UK and US marketsWhy did Tata Motors go for this deal:

 -  to enhance the volume throughput of the Indica’s Pune plant -  was seen as an endorsement by a major international company  of Tata Engineering’s capabilities in general, and the world-class acceptability of the Indica in particular

SM II - Group Project, Group 6, Section C

Page 20: Competitiveness of Indian Automobile companies

Exports to Over 115 countries

Fastest to the 1 million mark

66% of total passenger car

exportSantro, i10, i20

and Accent

SM II - Group Project, Group 6, Section C

Page 21: Competitiveness of Indian Automobile companies

Hyundai’s 50:50 rule

The company usually relies on export markets for 50% of its sales and on the domestic market for the balance 50%. For instance, in calendar 2008, HMIL's total sales was 4.89 lakh units. Of this, 2.43 lakh units were exported. In 2009 calendar year, the company targeted a sale of 5.52 lakh vehicles, of which 2.75 lakh units are for export markets. 

"We are in the process of changing this 50:50 business mix. In 2010, we plan to sell 55% of our total vehicles in the domestic market and export the balance.”

 - Arvind Saxena, director (marketing and sales), HMIL

Europe accounts for nearly 60-70 % of HMIL's total exports.

Most recent destination to be added: Australia with offering of i20 

SM II - Group Project, Group 6, Section C

Page 22: Competitiveness of Indian Automobile companies

Pursue aggressive volume growth to be among the top 10 global players in trucks and top 5 in buses

The CIS countries and particularly, Ukraine value highly the hallmarks of Ashok Leyland vehicles, reliability and ruggedness.

The Asian, African and LatAm countries have grown at the rate of 8% even as the global economy grew at only 5%.

SM II - Group Project, Group 6, Section C

Last years’ results boosted by a buoyant Sri Lankan economy and improved performance in SAARC countries

Page 23: Competitiveness of Indian Automobile companies

Participants in the Bus Rapid Transport(BRT) system in Laos, Nigeria

Has set up manufacturing facilities in Letnany Czech Republic for producing its Avia Line of trucks with the latest technology and 

compliant with stringent emission norms

Has a 28% equity stake in the Lanka Ashok Leyland company, a venture with the Sri Lankan Govt. to supply CBU and CKD units 

Acquired a 26% stake in Optare Plc., UK , a reputed bus manufacturer with experience in Hybrid and Electric Vehicles  

State of the art bus manufacturing facility at UAE, a JV between Ras Al Khaimah Investent Authority and Ashok Leyland

SM II - Group Project, Group 6, Section C

Page 24: Competitiveness of Indian Automobile companies

Tata Motors in June 2011 exported its new range of Prima World Trucks to South Africa and Middle East on a trial basis. The company expects to increase its export sales in the segment in the current fiscal.

Initiatives by Indian CV manufacturers to increase exports

M&M in its joint venture with Navistar plans to exports busses (7.5-25 GVW) which will built at the company's Chakan plant and trucks to right-hand drive markets such as South Africa.

M&M is likely to launched the electric version of its mini truck Maxximo in October 2011. The two-cylinder diesel mini truck Maxximo has a payload capacity of 850 kilograms, although its electric variant has lesser capacity of around 600 kilograms. M&M is looking to export its Maxximo electric to Europe and the US.

Ashok Leyland has formed a JV with Nissan to manufacture LCVs and plans to start production from the second half of 2011. The JV will launch a LCV which has a payload capacity of 1.5 tonne and a gross vehicle weight of 3 tonnes. The JV plans to export around 30 per cent of its production to Asian markets.

SM II - Group Project, Group 6, Section C

Page 25: Competitiveness of Indian Automobile companies

Challenges to India’s export competitiveness

Growth in input costs

Slowdown in external demand in Europe and USA

Production cuts in lieu of slowdown

Growing competition from Chinese manufacturers

Changing consumer preferences

Infrastructure constraints

Human resource challenges

SM II - Group Project, Group 6, Section C

Page 26: Competitiveness of Indian Automobile companies

Recommended