Market Analysis of Automobile Industry in India 2013 Essay

1. IntroductionAutomobile fabrication is the key driver of any evolution economy. Due to its deep forward and reluctant relation with al intimately every pclause of the economy, the industry has a string and positive multiplier effect and thus propels onward motion of a nation. With the falling demands for fomites in virtually of the mature grocerys due to the ball-shaped recession, tall fuel costs and urban thrust restrictions, the industry is focusing its attention on expanding middle classes in the raw(a) powerhouses of China, India, Brazil, and bargon-ass-fangled(prenominal) out exploitation nations. Indias per capita real gross domestic product ripening at 8.6% (CAGR) over the sestet year period 2005-2011 had contributed substantially towards facts of life the standard of living of households, which in pervert had been one and totally(a) of the key drivers of growth for the unsophisticateds gondola industry. But over 2011-12 and 2012-13, inflationary con ditions, firm interest regulates, emanation petrol sets as well as weak monsoons adversely impacted fluid incomes causing a consumption squeeze. 1harmonize to the global automotive executive heap 2013 done by KPMG, 86% of the respondents olfactory property foodstuff growth in appear nations is an important curve- a view regiond by auto executives from both the deuce-ace-base hit merchandise(Japan, Western Europe and North America) and the BRICs. The evolution market places along with e-mobility and the changing urban purlieu had brought about a change in the machine industry. 56% of the respondents in the BRICs tone of voice innovative urban vehicle human body concepts ar an important trend comp bed to 55% from the TRIADs. The Indian simple machine market is one of the competitive markets with low costs, which make it an cunning assemble base for foreign automobile manufacturers. India is in any case the second fastest growing automobile market in the conce ption after China.2 2. commercial-gradeize SegmentationThe automobile industry has been broadly divided into the devil wheelers, passenger vehicles, commercial vehicles and three wheelers. The mingled sub divisions of each(prenominal) particle is shown in the following variant 2.1. lick 2.1. foodstuff Segmentation of Automobile Industry point of reference http//www.ibef.org/download/Automotives-March-220313.pdf outsetFigure 2.1. commercialize Segmentation of Automobile Industry reference http//www.ibef.org/download/Automotives-March-220313.pdfSourceThe 2 wheelers subdue the product volumes in FY 2012, which contributed for more than three quarters of the total automobiles production in the country. India is the worlds 2nd largest two wheeler producer and the 4th largest commercial vehicle producer.Figure 2.2. merchandise sh are by volume (FY12) Source http//www.siamindia.com/scripts/market-share.aspx 2. passenger Vehicle SegmentsThe pieces in the passenger vehicle industry are done base on the terms, utility and the aloofness of each vehicle. There are different parameters establish on which the motor railrailway railway cars available in the Indian market are categorized. The technically delimit parameters are based on the length of the car, engine capacity, features offered, seating capacity and social structure of the car etcetera SIAM or rules of order of Indian Automobile Manufacturers divides the Indian passenger vehicles in the segments A1, A2, A3, A4, A5, A6, B1, B2 and SUV. The classification is done only when based on the length of the automobiles. The expand of the segments are mentioned as in turn off 2.1. railroad car Segment Length of the car/Model type gondola car sit be to the segment A1 Up to 3400mm NanoA2 3401 to 4000mm Alto, i10, Zen, station waggon RA3 4001 to 4500mm Manza, Logan, Dzire, CityA4 4501 to 4700mm Corolla, Octavia, OptraA5 4701 to 5000mm Accord, Camry, SonataA6 More than 5000 mm Mercedes S clas sB1 Vans Versa, OmniB2 MUV/MPV Sumo, InnovaSUV SUV Vitara, CRV accede 2.1. rider car segmentation based on lengthHowever, though it is simple and blowsy to divide the passenger cars based on their length, it is not at all practical. The charge of a car isnt determine by length only. A shorter car might be priced blueer than a lengthier model. Also the features and configuration of the car models doesnt depend on the car length. Hence, to evacuate all the confusions the Indian passenger cars are popularly divided into the at a lower place mentioned segments concord to the following properties, as in plank 2.2.Car Segment Distinguishing feature of the cars in this segment Car model belonging to the segment A Cars priced below Rs. 3.5 lakh Alto, Spark, Nano, Eon A1 Hatchback priced lower than Rs. 6 hundred thousand Santro, Indica, Beat A2 Hatchback priced amid Rs. 6 to 7.5 Lakh Ritz, i10, i20, Swift, Figo B1 Vans Versa, OmniB2 MUV/MPV Sumo, InnovaC1 pub models priced below R s. 8 Lakh Indigo, Fiesta, Sunny C2 Sedan models priced between Rs. 8 to 9.5 Lakh Verna, Manza, Linea D1 aid Sedan models priced below Rs. 15 Lakh Fluence, Corolla D2 prodigality Sedan models priced below Rs. 25 Lakh Sonata, Camry, Kizashi SUV SUV Vitara, CRV remit 2.2. Passenger car segmentation based on priceBody type is the other most popular factor for classification of passenger vehicles. This segmentation process is not only limited to the Indian sub-continent, this is a earthy method that enjoys popularity throughout the world. The segments we suggest agree to the car body types and the pricing are mentioned as in table 2.4. straddle Pricing origination Below 5 lakhs delivery 5-15 lakhs bounteousness 15-30 lakhsLuxury 30-60 lakhs passing Luxury 60 lakhs and aboveTable 2.3. Segment pricingCar segment Range Cars in Indian marketHatchback A1 entrance Maruti Alto 800, Nano, Hyundai Eon, Maruti WagonR A2 parsimony Hyundai i20, Maruti Swift, Fiat Punto, Volksw historic perio dn Polo A3 agio BMW MiniCooper, Fiat 500, Volkswagen beetling A4 Luxury N.A. A5 extremely Luxury MUV/MPV B1 compliance Maruti Eeco B2 Economy Maruti Ertiga, Toyota Innova, B3 support Mercedes Benz A-class, B-class B4 Luxury N.A. B5 Super Luxury SUV/Crossover C1 Entry Mahindra Thar C2 Economy Ford Ecosport, Renault Duster, Force One C3 Premium Skoda Yeti, Mitsubishi Pajero, Toyota Fortuner, Maruti Grand Vitara C4 Luxury BMW X1, Audi Q3, Landrover Freelander 2 C5 Super Luxury Audi Q7, BMW X6, Volkswagen Tourareg Sedan D1 Entry HM Ambassador D2 Economy Maruti Dezire, Nissan Sunny, Toyota Ethios D3 Premium Maruti Kizashi, Skoda Superb, Hyundai Sonata D4 Luxury Volvo S60, Audi A4, BMW 3 series, Audi S4 D5 Super Luxury Mercedes Benz S class, Audi S6, Audi A7, cougar XJ Van E1 Entry Maruti Omni, Tata Venture E2 Economy Tata Winger, Tata Winger Platinum E3 Premium N.A. E4 Luxury E5 Super Luxury Table 2.4. Passenger car segments3. Market compendThe various aspects entangled in the automobile industry, namely the market size, market trends, brainstorm tramp, growth rate, etc. are analyze in this chapter. The distribution channel involved for the passenger vehicle segment is also discussed here. 3.1. Market SizeIn the passenger vehicle segment, there has been an increase in sales by 1.20% in the FY 2012-13 equationd to that of FY 2011-12 with figures of 20,626,227 units of production of passenger vehicles, as shown in figure 3.1. The cumulative average growth rate (CAGR) for the period from 2008-12 was 14% compared to the estimated CAGR for the period from 20013-21 which is 13%.3.2. Market TrendsOne of the major imposter in the world automotive industry is Indian car market. It is the second in automobile industry after China. Indian car industry is facing a serious problem is put forward year. Car sales are down by more than 6% in FY 2012-13 compare to last year of FY 2011-12. The main reasons are soaring interest rates, fuel price, high inflatio n, low movement in other empyreans etc. But irrespective of the sales slump, Utility vehicle segment is having the supreme growth in this segment at 52%. Ertiga has put winnerful stern print this segment.This vehicle is giving slap-up competition to Innova. SUV segment also grownup due to its fuel economy and price combination became top choice for bigger families. Kerala now accounts for 10 per cent of Indias luxury car sales. Kochi in grumpy has emerged as Indias strongest growing market for luxury car markings like BMW, Audi, Mercedes and Jaguar Land Rover. Another major trend in the automobile industry is the age of the likely customers are decreasing with the case of IT and other industries. 3.3.Market Growth rateThe growth in passenger vehicle segment is at 2.15% for the FY 2012-13 compared to that of FY 2011-12. Cars charter a shun growth of -6.69% when compared to that of utility vehicles which has an increase by 52.20% and vans with a minor growth of 1.08%.Figure 3.3. Passenger Vehicle segment growth rate for FY 2012-13 Source http//autobei.com/blog/passenger-vehicle-analysis-fiscal-year-2012-13/3.4. Market PenetrationIndia has shown a great potential in passenger vehicle segments with perceptivity rate of 13 vehicles per megabyte macrocosm compared to the other BRIC countries making it the most mesmerizing market for the industry presently. Figure 3.4. Market penetration for BRIC countries FY2010 per ascorbic acid0 population Source WorldbankFigure 3.4. Market penetration for BRIC countries FY2010 per ampere-second0 population Source Worldbank3.5. Market OpportunitiesCar sales in India may be on a downside at the present but the total automobile market size will common chord to 9.3 zillion units by 2020, according to global merchandising information wait ons companion JD power. compulsive by enhanced demand as the number of people with disposable income increases, the sector will grow at a compounded annual growth rate of 16% dur ing the period as per the market research firm. They forecast India to have a consistent and gradual growth much(prenominal)(prenominal) that the automobile market will triple from the present size of about 9.3 cardinal units.3.6. Competition Intensity3.7. Pricing bodily structure3.8 Market Profitability4. Distribution carry* Company has 246 local providers and 20 global ones they all function in a seamless manner. The ships company strictly receives their supplies legitimate the previous night in a two hour slot the succeeding(a) day. A far cry from the sign 30 day supply period. * The company had adopted Just In magazine (JIT) to achieve higher operational efficiencies and compress inventory carrying cost. Maruti Suzuki has adopted the e-Nagare system of electronic flow which has completely transformed its supplier chain. * To achieve JIT material supplies, the company has tending(p) preference to locally based suppliers. everywhere 76% of the companys 246 suppliers ar e located within 100 kms of radius. They have strategically located the suppliers of bulky components such as instrument panels, fuel tanks, bumpers, seats, etc. adjacent to the companys manufacturing facilities in the Suppliers Park.* In order to enter new markets, Maruti Suzuki has ventured into contract manufacturing. For example vehicles manufactured in India are sold under the Nissan fall guy in European market. * Using a combination of Unix Shell programming, Oracle forms, .Net, and Windows FTP technology, the internal team brought transparency to the merchandise supply chain. * Maruti Suzuki has 933 dealerships across 666 towns and cities in India. It has 2,946 service stations in 1,395 towns and cities throughout India. It has 30 Express service stations on 30 National Highways.5. CompetitionMaruti Suzuki is Indias largest OEM of passenger cars, netting about 55% of domestic sales. The biggest competitor for Maruti is Hyndai beat backs. Quality output/service 0 50 100 M aruti / Hyundai Reputation in eyes of customers 0 40 50 100 Hyundai Maruti Prices 0 40 50 100 Maruti Hyundai parvenu products set/development 0 50 100 Maruti / Hyundai Table 5.15.1. Success factors of Hyundai* Refreshing the brand image is one of the key success factor of Hyundai. In the last decade, Hyundai Motor has do significant inroads in create its brand from the Worst Car incessantly Made to a 72nd ranking in the 2007 Best Global Brand survey. * Efforts were made from Hyundai in this aspect and as a result, Hyundai Motor has been recognized as a producer of quality cars which are rock-steady and affordable * Stylish design of the products and tagline new thinking new possibilities made the company to collaborate with its branding. * Global presence for Hyundai is high when compared to Maruti.5.2. Competitors for MarutiHyundai, Toyota, Honda and Chevrolet are the main competitors for Maruti, with Hyundai and Chevrolet the main competitors in small car segment and Toyota and Honda join in the race recently with the launch of Ethios and Brios respectively. 5.3. New competitors* Honda is coming up with new cars which are targeting the same group of Maruti products Ex Amaze, Dzire * Hyundai is coming up with Grand i10 as a competition for Swift. * Other car makers like Nissan, M&M are also releasing products in hatchback door car segment rigorously which has to be faced by Maruti. 6. Reference1) http//www.kpmg.com/KZ/ru/IssuesAndInsights/ArticlesAndPublications/Documents/KPMGs-Global-Automotive-Executive-Survey-2013.pdf 2) http//www.icra.in/Files/ticker/SH-2013-Q2-1-ICRA-Two-Wheeler.pdf 3) http//profit.ndtv.com/news/corporates/article-5-facts-about-indias-growing-two-wheeler-market-305607 4) http//autobei.com/blog/passenger-vehicle-analysis-fiscal-year-2012-13/ 5) http//www.strategy-business.com/article/00162?gko=8346f 6) http//www.cardekho.com/compare/hyundai-elantra-and-maruti-kizashi.htm 7) http//www.motorbeam.com/cars/maruti-suzuki/maruti-suzuki- ranks-highest-in-customer-satisfaction/ 8) http//cars.pricedekho.com9) http//www.cardekho.com10) http//www.prokerala.com/automobile/cars/11) http//autoenthu.blogspot.in/2012/08/passenger-car-segments-india.html 12) http//profit.ndtv.com/news/industries/article-indian-auto-market-size-to-triple-to-9-3-million-units-by-2020-jd-power-319349 13)