Indian Automobile Sector Analysis Aboli Joshi 12224 Aditya Amist 12201

Agenda Overview Company Analysis Industry analysis Competition Global Scenario Tata Motors Indian Scenario Mahindra Industry analysis Maruti Suzuki Competition Porter 5 forces SWOT Analysis/ TOWS Future of Automotive Sector Regulatory Framework

Overview Market Size: 2011- 3,287,737 units 2012- 3,576,756 units Production drop of 8.7% from 2011 to 2012 (2,029,589 units). Source: OICA (Org for Motor Vehicles, Paris)

Competition

Global Scenario

Indian scenario Indian 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.

Investment of Top Five Countries in Automobile Industries in India Ranks Country Amount of FDI Inflows % of FDI Inflows Rupees in crores In US million 1 Japan 6238.92 1359.69 23.69 2 USA 3842.17 838.7 14.61 3 Netherlands 3236.15 722.25 12.58 4 Italy 2715.71 634.04 11.05 5 Mauritius 2231.16 495.32 8.63 Total 18.261.11 4050 70.56

Sub Sectors of FDI inflows Sub Sectors of FDI Equity Inflows in Automobile Industries Sub Sectors of FDI inflows Amount of FDI inflow Rs in crores US $ in million %age with total FDI inflows Automobile industry 6,830.35 1,479.20 1.16 Passenger cars 13,516.25 3,008.04 2.37 Auto ancillary/ parts 2,857.06 635.44 0.5 Other (transport) 2,768.93 617.47 0.49 Total 25,972.59 5,740.16 4.52

Porters Forces Model Supplier Power New Entrant Substitution Competition Supplier Power New Entrant Substitution Buyer Power

SWOT Analysis Strengths Weaknesses Large domestic market Low labour productivity Sustainable labour cost advantage High interest costs and high overheads Government incentives for manufacturing plants Rising cost of production Low investment in Research and Development Strong engineering skills in design Able to achieve significant gains in productivity

Opportunities Threats Commercial vehicles Rising interest rates and other derived financial policies. Heavy thrust on mining and construction activity Cut throat competition Increase in the income level Lack of technology for Indian Companies Cut in excise duties Rising rural demand

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

CMVR – TSC Standing committee Provide technical clarification Preparation of new standards Review amendments Recommend commissioning of testing facilities and provide funding for the same Standing committee Discuss future emission norms Recommend norms for in-use vehicles Finalise test procedures

FINANCIAL ANALYSIS Comparative study of Maruti Suzuki Tata Motors Maruti Suzuki owns the largest market share in the 4-wheeler market in India.

Sales and PAT performance

Gross profit margins

Net profit margin

Current ratio and quick ratio

ROCE and ROE

Financial Risk analysis

Future prospects India – seventh largest in sector by 2016 and third largest by 2030 Extremely low current levels of vehicle penetration Projected high rate of GDP growth Huge government investments in infrastructure Upwardly mobile middle class population

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