The Automobile Industry Characteristics In The Automobile Industry

Name Roll No

Kirti Kulkarni 113

Pavan Kumar 120

Rajarshi Mukherjee 131

Vishakha Vartak 154

Vivek Mohandas 158 AUTOMOBILE INDUSTRY DYNAMICS

The Automobile Industry plays a very important role in the manufacturing scenario of India accounting for 22% of the country’s manufacturing GDP3. The automobile sector is widely perceived to be a good indicator of the Indian Economy. Today, India has become the outsourcing hub for many of the global automobile manufacturers. The Auto industry compromises of four segments1: passenger vehicles(15%), commercial vehicles(4%), three wheelers(4%) and two wheelers(77%). The sale in terms of volumes has seen a considerable increase over the years(exhibit 1), characterized by timely intervention by Government

This is further aggravated by the rise in discounts offered to customers to gain an edge over competition. This explains the price increase by the Original Equipment Manufacturers to protect their top-line and bottom-line profits.

Maruti Suzuki continues to be the market leader followed by Hyundai, Mahindra & Mahindra, Tata Motors, Honda, Toyota and Ford (Exhibit 2 for Market Shares2). India is expected to be the world’s third largest market for automobiles by 2019.

The success factors in the automobile industry are: localized competitive positioning, customized products/ services, competitive pricing, brand equity, brand adaptability, distribution and customer access, Government relationship, after-sale service, IP protection and supply chain4.

The threats in the automobile industry are: local competition, foreign competition, corruption and improper policy framework, dependence on macro-economic factors, political risks, infrastructure and technology access4.

TATA MOTORS – COMPANY

The recent launch of Prima Trucks and Tata Ultra in the commercial segment is creating further inroads for the company in terms of market share. With several launches in the passenger vehicles segment such as Bolt(premium hatchback) and Zest(compact sedan), the company intends to take on the likes of Hyundai, Maruti and Honda. The company operates in 175 markets with over 6600 sales and service points5. They have manufacturing facilities in 7 countries: South Africa, Morocco, UK, Spain, India, Thailand and South Korea. Their R&D facilities are located at UK, Italy, Spain, India and South Korea. Profits and volume sales have seen a decline in the year 2014(exhibit 3)5. Further details on the distribution of revenues are given in Exhibit 45. On the positive side, Tata Motors could leverage on the conglomerate advantage being a part of the diversified Tata Group.

WHICH STRATEGY TO FOLLOW?

Tata motors since its inception has been keen to have a broad product line – passenger cars, utility vehicles and also commercial vehicles. The automobile market is India is one where there are many buyers and many sellers and hence in such a market place no single player dominates. So Tata Motors had the option to choose from two different strategies – Cost leadership or Product leadership. Tata motors adopted a cost leadership strategy with focus on the right product at the right time. And where it lacked the technology to differentiate