A presentation covering the Indian Automobile Sector

1. COUNTRY ANALYSIS- India With special reference to the Automobile Industry KhageshAgarwal (05/09) SaurabhAgarwal (33/09) Anubha Jain (111/09) Sulabh Jain (147/09) DeepeshBansal (153/09)

2. Country Analysis To anticipate and foster changes in the business environment is a prerequisite to success Building a holistic picture that integrates:

3. Strategy National strategy is reflected in the goals and policies of the decision maker It can be deduced from the govt. actions and statements

4. Policies: govt. actions aimed towards achievement of national goals influence resource mobilization and allocation the form of the market country‘s external orientation (inward or outward)

6. remuneration

7. elasticity of demand/supplyof the resources

8. Players in the game: Bring about transformation of resources Firms, government organizations, NGO’s and social groups

9. Rules of the game: Understanding the code of conduct Defining what is right/wrong Can be both formal and informal International Dimension: Resolving conflicts arising of cross-cultural dimensions Knowledge of policies towards outside world Outside of forces that influence our policies

10. Policy evaluation Examining inter-relationships between components Benchmarking performance against standards Evaluate relationships between policies and national development The effect of policy on resource mobilization resource allocation across competing sectors efficiency of resource mobilization

11. INDIACountry analysis

12. Source: http://www.livemint.com

16. [Auto Industry Analysis]

18. Largest tractor and three wheeler manufacturers in the world

19. Fourth largest Commercial vehicle market in the world

22. Output of commercial vehicles has grown 2.8 times compared to the 2.2 times increase in passenger cars

24. Automotive Companies in India Major Indian Companies Major Multi-national companies

25. The Key PlayerS Passenger vehicle Twowheeler

26. Booming Indian Economy

27. Key Growth Drivers

28. Auto Industry Numbers Overall Market Over all Production increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09 Passenger vehicles increased marginally from 1.77 million to 1.83 million Two-wheelers increased from 8.02 million to 8.41 million Domestic Market Vehicles sold including PV,CV 2W and 3W in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08. Exports Sales increased from 1.23mn units in 2007-08 to 1.53 million units in 2008-09 As per the Automotive Mission Plan (AMP) 2006-2016 total turnover of the automotive industry in India would be in the order of US$ 122 billion-159 billion in 2016

29. Category wise numbers Two Wheeler Dominated by Motorcycles 80% , Scooters 14% Mopeds 6% Domestic - 7.25mn units . Hero Honda 42% & Bajaj 27% share CAGR – 9.5% Exports 819000 units (07-08) . Bajaj Auto 59% TVS 17% share CAGR – 41% Passenger Vehicles Dominated by Cars 78% , MUV/SUV 22% Domestic – 1.5mn units Maruti-46% Tata-15% Hyundai 14% CAGR -14.8% Exports - 217000 units (07-08) Maruti 66% Hyundai 24% CAGR – 26% Dominated by M&HCV – Goods 48% Passenger 38% , Rest by LCV-4% Domestic – 487 thousand units , Tata-62% Ashok Leyland -15% CAGR- 22% Exports – 59 thousand units, Tata 67% Ashok Leyland 12% CAGR -30.6% Commercial Vehicles Three Wheeler Dominated by Passenger Carriers with 64% share , Goods Carrier -36% Domestic – 365 thousand units , Bajaj -42% Piaggio-41% CAGR-10.5% Export – 141 thousand units , Bajaj -97% CAGR -44.5%

30. The Indian Auto Components Market Original Equipment Manufacturers (OEMs) Replacement Parts Production and Distribution : e.g. Air filters, oil filers and replacement lights Rubber Fabrication : tyres, hoses, belts etc. Estimated component market size is US$ 6.7 bn The exports of auto components industry has grown at a rate of nearly 30 per cent CAGR over the last four years.

32. Abolition of FBT, Reduction of excise duty on big cars.

34. Customs duty for imported cars including hybrid cars.

35. Excise duty cut only for petrol driven trucks

37. Not implementing country wide VAT

40. Maintain a three tier tariff structure for raw materials, intermediate goods, finished goods.

41. Revamp WTO compatible export promotional schemes like DEPB, EOU and EPCG schemes

43. Investment in Infrastructure spending can boost the commercial vehicles segment.

44. Growing working population (441 million people in 2015/16)

45. Upward migration of household income levels (600 million people have annual income of more than $10,200)

46. Middle class expanding by 30 - 40 million every yearCan propel growth

48. Non- availability of supplier base with demanded capability (Quality and Quantity).

49. Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day)

50. Increase in crude oil price($ 35/barrel to $ 70/ barrel in 14 months).

51. Non-availability of Key raw material (like Steel) at cheap price.

52. Possible increase of interest rates (by 2-2.5% BPLR) because of planned government borrowing.Can Stunt Growth

53. Social Factors Rapid Urbanization of semi urban regions Rising aspirational levels. Improvement in living standards of middle class Increased spending on Fashion & lifestyle comforts. Seeking “Value for money”- consumer behavior Increasing customer emphasis on aesthetics and comfort. A perfect marriage of rise in disposable income and demographic dividend (From US$ 556 per annum US$ 1150 by 2015)

54. Technological Factors

55. India as a Testing Hub : NATRIP

57. Compact car sales increasing at about 20% each year

58. Excise duty on small cars slashed from 24% to 12% in last three years

60. Nissan-Renault :

61. 50:50 JV, to make 400,000 cars a year with an investment of over US $ 1 billion.

62. Coming up with the $2500 car to compete with Tata Nano in 2011

66. Export of automotive components to ASEAN,BRIC,EU and USA for OEMs as well as Aftermarket

67. Booming Automobiles (Particularly cars) second sales and remodeling

69. Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisition services

71. Improving income curve

72. Reducing interest rates

73. Cost Pressure

74. High Expectations

76. Vendor base (quality of vendors, skill levels , size etc.)

77. Manufacturing capability( quality levels, productivity & skill levels, technology )

78. Service levels

79. Supply chain

80. Labor law

82. Importtariff

83. Incentivesfor Research and Development (R&D)

84. EnvironmentalAspects

86. THANK YOU