Automobile Industry presentation

Industry analysis and discussion about top 5 companies in Automobile industry, Its 5 years CAGR, Discussion about porters 5 force analysis, Industry growth, and its future prospects.

1. Industry Analysis and porter’s five force analysis of “Automobile Industry” Presented by:- Shubham Chugh

2. Automobile Industry, definition…! The automotive industry comprises a wide range of companies and organizations which are involved in designing, Development, Manufacturing, Marketing, and selling of motor vehicles. It is one of the world's largest economic sectors by revenue. The automotive industry does not include industries dedicated to the maintenance of automobiles following delivery to the end user such as:- 1. Automobile Repair Shop 2. Motor fuel filling station

3. Automobile Industry, Products and Services…! Services being offered: The auto servicing market is expected to grow by over 65 per cent over the next few years. The auto servicing market, currently pegged at Rs. 20,000 crore, is expected to be worth Rs. 33,000-34,000 crore by 2020. The car servicing market can be classified into 3 categories:- organized single brand segment organized multi-brand workshops unorganized multi brand (local garages)

4. Domestic automobile sales witnessing a growth of 7.01% CAGR between 2013 and 2018 owing to 24.97 million vehicles being sold in 2018. Between April 2018 and January 2019, domestic sales across all categories was the highest in commercial vehicles at 22.79%, followed by 14.79% year-on-year growth in three-wheeler sales. Domestic automobile production was hiked up by 7.08% CAGR from 2013 to 2018 owing to the production of 29.07 million vehicles in 2018. From April 2018 to January 2019, production growth increased by 9.84% year-on-year and touched 26.26 million vehicle units. The global Automotive market is expected to reach USD 83 billion by the end of 2022 with 27% CAGR during forecast period 2019-2022 With premium motorcycle sales in India crossed one million units in 2018, BMW recorded a growth of 11% year-on-year in its sales in India having reached 7,915 units sold. Electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017. India’s automobile exports have grown by 15.54% between April 2018 and February 2019. This figure is likely to grow at a CAGR of 3.05% from 2016 to 2026. And with several auto- focussed government initiatives Automobile Industry, Market size and cagr…! Past year - CAGR future year – CAGR Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18 and close to 285,000 buyers of electric and hybrid vehicles have benefitted from the subsidies provided under the FAME-India program

5. Automobile Industry, Government initiatives…! The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route. Some of the recent initiatives taken by the Government of India are - Under Union Budget 2019-20, Govt. is providing additional income tax deduction of Rs 1.5 lakh (US$ 2,146) on the interest paid on the loans taken to purchase EVs. The government aims to develop India as a global manufacturing centre and an R&D hub. Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$ 388.5 million to enable the industry to be on par with global standards. The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for introduction of electric vehicles (EVs) in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The government will also set up incubation centre for start-ups working in electric vehicles space. In February 2019, the Government of India approved the FAME-II scheme with a fund requirement of Rs 10,000 crore (US$ 1.39 billion) for FY20-22.

6. Bharat Stage-IV emission standards-compliant vehicles purchased till March 2020 will remain operational for the entire period of its registration. Bharat Stage-VI will be introduced with an immediate effect from April, 2020 Revision of one-time registration fee to be deferred till June 2020. Ban on purchase of new vehicles by government departments lifted. Increase in depreciation on vehicles to 30 percent from 15 percent Automobile Industry, …! Policies Announcement Predictive Automobile Technology. ... Automatic High-Beam control. ... Backup Cameras. ... Smart Home Integration. ... Autonomous Vehicles. ... GPS Vehicle Tracking. ... Vehicle-to-Vehicle Communication. ... Cars-as-a-Service. Recent developments

7. Automobile Industry, major players…! MARUTI SUZUKI Maruti Suzuki which commands a majority of the market share in the Indian auto industry is said to have lost out a certain percentage in the first quarter of FY2019-20 (April - June). In this period, market shares of Maruti Suzuki have declined by 1.40 per cent from 52.54% to 51%. The company managed to sell 3.63 lakh units of vehicles in the first quarter of FY2019; a drop of almost 95,000 units during the same period last year. The sales of even some of their popular models such as the Baleno, Swift, Dzire, Ignis, Ertiga and Wagon R seem to have slowed down considerably in the past few months. HYUNDAI MOTORS Hyundai — the second-highest market share holder in the country. Although Hyundai did witness a drop in sales during Q1 of FY2019, its cumulative sales have helped it gain 2 per cent market share in India from 15.75% to 17.70%. The increase in market share for Hyundai is mainly due to its UV segment, consisting of the Creta and the newly-launched Venue SUVs. The two models in the lineup together brought in over 43,687 units of sales in Q1 2019; a growth of a healthy 38.66 per cent. This helped Hyundai overcome its slump from the hatchback and compact-sedan segments, which put together recorded a decline of around 6 per cent during the same period MAHINDRA AND MAHINDRA 1. Mahindra & Mahindra, is another brand in the country which has managed to improve its market share in these tough times. The Indian brand has recorded a growth in market share from 6.93% to 8.34% in Q1 2019; an improvement of 1.40 per cent. gain, similar to Hyundai, most of Mahindra's growth has come from the compact-SUV segment offerings. This is mainly due to the success of the recently-launched XUV300 which leads the way in bringing sales for the company. HONDA Honda Cars India Ltd is the Indian subsidiary of Japan’s automobile giant, Honda Motor Co Ltd. It entered the Indian automobile market in 1995. Honda Cars India’s most popular models include Honda City, Honda Accord, Honda Jazz, Honda CR-V and Honda Brio, among others. This large Japanese car manufacturer’s Indian operations accounted for some 178,755 automobiles made in India during the financial year 2017-2018. The company’s automobiles are also exported to nearby countries. Market share of Honda ltd. Is about 5.4% of total market share. Toyota Kirloskar Motor Pvt. Ltd A joint venture between Japan’s Toyota Motors and India’s Kirloskar Group, this company manufactures the world-renowned Toyota cars in this country. The company was established in 1997 The maker of premium utility vehicles like Innova and Fortuner recorded a market share of 4.86 per cent in the first half of the fiscal year 2019 (April to September period). It witnessed an increase of 23 basis points when compared to 4.63 per cent market share in the same period last fiscal year. Toyota Kirloskar made 139,566 automobiles in India during the financial year 2017-2018. Their cars and other automobiles are popular in India and exported to foreign markets too. 2019, Tata Motors dominated the domestic commercial vehicle market across India with a share of about 44 percent. In July that year, the company had a sales volume of around 22 thousand units.

8. Automobile Industry, porter five force analysis…! Threat of new entrants: Low Bargaining power of suppliers: Low Bargaining power of buyers: Moderately high Threat of substitute products: Low Competitive rivalry among existing players: High 1. Threats of new entrants: It is difficult for new brands to enter the automobile industry which is because of the large investment required for establishing a car brand. At the initial stage, a huge investment  will be required to set up the manufacturing facilities, distribution network and for hiring skilled staff.   Another major barrier is the level of competition from the existing brands. Unless a new brand brings an innovative and differentiated product to the market, chances to gain a  significant market share are low. With the coming of Great Wall Motors, threat to car market in EV’s have increased as GWM has made an initial investment of 7000 crore in Indian Economy. 2. Bargaining Power of suppliers: The bargaining power of suppliers in the automotive industry is weak for most of them are small players. Only few of them are significant in size. The threat of forward integration is minimum from the suppliers for the reasons discussed in the first category. These suppliers have to play according to the rules set by the car brands. The vehicle brands like BMW, Ford, Toyota and VW hold immense clout because the raw material is always available in plenty and switching from one supplier to another is not difficult for them. 3. Bargaining powers of buyers A large part of the buyers are the small individual buyers that buy single vehicles. However, there are corporations and government agencies that buy fleets of vehicles. Such buyers are in a  position to bargain for lower prices. Whether small or large buyers can easily switch to a new brand. There are no big costs involved in switching to another brand or  to an alternative mode of transportation. The buyers are price sensitive mostly and would switch to another brand that  offers a better product at lower price. However, none of the buyers  whether big corporations or individual small buyers poses a threat of backward integration. Based upon the overall picture their bargaining power is moderately strong.  4. Threat of Substitute products There are several substitutes and alternative modes of transportation including taxis, buses, trains and planes. However, none of them can provide the kind of accessibility and convenience that owning an automobile does. Your own car will serve you round the clock but if you missed a train or bus you have to wait for another. However, in case of the alternative modes you do not need to worry for maintenance. Still, owning a car is both a matter of convenience and prestige for most 5. Competitive rivalry The number of recognized and influential brands is low and the exit barriers very high. Any brand trying to exit would have to bear large losses. The level of customer loyalty is high and while the industry is large, it has matured. This intensifies the competition for market share. However, different brands target different market segments but yet they overlap. Brands compete on the basis of price, design, quality, technology,  customer safety and several other points. Overall, competition in the auto industry is rather very strong.

9. India is expected to emerge as the world’s third-largest passenger-vehicle market by 2021.It took India around seven years to increase annual production to four million vehicles from three million. However, the next milestone—five million—is expected in less than five years. Hitting that mark will depend on today’s rapid economic development continuing, with a projected annual GDP growth rate of 7 percent through 2020, ongoing urbanization, a burgeoning consuming class, and supportive regulations and policies. Automotive industry is growing rapidly. Despite the uncertainties over Brexit and the Trump – China trade war, the car industry is expanding at a fast rate. Global sales are growing at around 2.8% worldwide per year. If predictions are correct, this his will result in over a 100 million automobiles sold by 2020. 1. Continued government focus on supporting the industry 2. Favorable macroeconomic and demographic trends 3. The development of India as a manufacturing hub The potential for global disruptions are: 1. Electrification 2. Shared mobility 3. Connected vehicles. 4. Autonomous vehicles. Automobile Industry, porter five force analysis…!