Indian Automobile Sector Analysis

Indian Automobile Sector AnalysisAboli Joshi 12224Aditya Amist 12201

AgendaOverviewGlobal ScenarioIndian ScenarioIndustry analysisPorter 5 forcesSWOT Analysis/ TOWSRegulatory Framework

Company AnalysisTata MotorsMahindraMaruti SuzukiCompetitionFuture of Automotive SectorOverviewMarket Size: 2011- 3,287,737 units2012- 3,576,756 unitsProduction drop of 8.7% from 2011 to 2012 (2,029,589 units).

Source: OICA (Org for Motor Vehicles, Paris)

Competition

Global Scenario

Indian scenarioIndian automobile sector stands as a largest three-wheeler market, second largest two-wheeler market, tenth largest passenger car market and the fifth largest bus and truck market.However, the sector has suffered a slowdown in the fiscal year 2012. High ownership costs like fuel costs, the cost of registration, excise duty, road tax and slow rural income growth have affected the industry growth to an extent.However, in the long run, rising incomes, improved affordability and untapped markets demonstrate promising opportunities for automobile manufactures in India.RanksCountryAmount of FDI Inflows% of FDI InflowsRupees in croresIn US million1Japan6238.921359.6923.692USA3842.17838.714.613Netherlands3236.15722.2512.584Italy2715.71634.0411.055Mauritius2231.16495.328.63Total18.261.11405070.56Investment of Top Five Countries in Automobile Industries in IndiaSub Sectors of FDI inflowsAmount of FDI inflowRs in croresUS $ in million%age with total FDI inflowsAutomobile industry6,830.351,479.201.16Passenger cars13,516.253,008.042.37Auto ancillary/ parts2,857.06635.440.5Other (transport)2,768.93617.470.49Total25,972.595,740.164.52Sub Sectors of FDI Equity Inflows in Automobile Industries

Porters Forces ModelSWOT AnalysisStrengthsLarge domestic marketSustainable labour cost advantageGovernment incentives for manufacturing plantsStrong engineering skills in design Able to achieve significant gains in productivityWeaknessesLow labour productivityHigh interest costs and high overheadsRising cost of productionLow investment in Research and Development

OpportunitiesCommercial vehiclesHeavy thrust on mining and construction activityIncrease in the income levelCut in excise dutiesRising rural demand

ThreatsRising interest rates and other derived financial policies.Cut throat competitionLack of technology for Indian Companies

Regulatory frameworkGoverned by :Motor vehicles act, 1988Central motor vehicles rules, 1989Ministry of shipping, road transport and highways (MoSRT&H) nodal agencyMinistry of heavy industry and public enterprisesBureau of indian standards (BIS)Automotive research association of India (ARAI)Society of Indian automobile manufacturers (SIAM)Automotive component manufacturers association (ACMA)

CMVR TSCProvide technical clarificationPreparation of new standardsReview amendmentsRecommend commissioning of testing facilities and provide funding for the sameStanding committeeDiscuss future emission normsRecommend norms for in-use vehiclesFinalise test proceduresFINANCIAL ANALYSISComparative study of Maruti SuzukiTata MotorsMaruti Suzuki owns the largest market share in the 4-wheeler market in India. Sales and PAT performanceGross profit marginsNet profit marginCurrent ratio and quick ratioROCE and ROEFinancial Risk analysisFuture prospectsIndia seventh largest in sector by 2016 and third largest by 2030Extremely low current levels of vehicle penetrationProjected high rate of GDP growthHuge government investments in infrastructureUpwardly mobile middle class populationQuestions.??Thank You