PEST Analysis: Case Study Of Indian Automobile Industry

MERCEDES BENZ CASE STUDY

Indian Automobile Industry & ‘PEST’ Analysis

Any vehicle having a gasoline or diesel internal-combustion engine and designed to run on roads is called an automobile.

• Automobile sector includes passenger cars, trucks, tractors, scooters, motorbikes, scooty, jeeps and three wheelers.

• Turnover of automobile industry is $ 48.86 billion.

• Employment generated by automobile industry is 13.1 million.

• Expected growth rate for the financial year 2011-2012 is 15%-16%.

• Government has prepared 10 years of automotive mission plan (AMP) for robust auto growth. The plan focuses on building required infrastructure, power generation and tax reduction.

• India is the 11th largest producer

The A Class, however, will be one of the most expensive compact cars in India — next only to the Fiat 500 and the Volkswagen Beetle.

Experts say going down the price ladder is a move that Mercedes should have taken long ago. For proof, consider the success of Audi Q3, which is an entry-level crossover. The car got 500 bookings within just five days of its launch, prompting Audi to open the next round of bookings. So gung-ho is Audi that it is already talking in terms of the No 1 slot in India.

BMW, in fact, had extended its lead over Mercedes only after it launched a compact SUV, X1, which is also one of the two cheapest models offered by the company. As per BMW data, the five-seater urban SUV X1, priced at Rs 24.5 lakh (ex-showroom), is the third largest selling model in its line-up, accounting for more than a fourth of its total sales in the country after the 5-series and the 3-series

Mercedes, however, doesn’t want to read too much into the pricing and market share game and accuses its competitors of offering huge discounts to shore up volumes and gain market

But this is just one per cent of the total Indian car market, way less than the ratio in its home country, Germany, at 15 per cent and China at 4 per cent. But the potential for growth is something that gives Mercedes hope. “When the Indian car market doubles in the next five to six years to five million units and even if the share of luxury cars stays the same, we are expecting doubling of volumes from here”, says Mitra.

Apart from newer and cheaper models, Mercedes is also exploring markets beyond the four metros to the towns that would be the “growth engines of the future”. That explains its frequent roadshows in places such as Nellore, Jabalpur, Raipur and Karnal to gauge customer response. If it finds the demand robust, the company sets up full-fledged dealerships. Several of its new sales outlets have come up in Tier II areas following greater demand.

The great Indian luxury car race is, thus, going to be tougher for players like Mercedes.

Future