231122-ROHIT P L

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COMPARITIVE ANALYSIS OF TOP 5 COMPANIES IN AUTOMOBILE SECTOR SUBMITTED TO PROF Y N KAUSHAL LONG REPORT 2015 ROHIT P L 231122 2/15/2015

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  • COMPARITIVE ANALYSIS OF TOP 5 COMPANIES IN AUTOMOBILE SECTOR SUBMITTED TO PROF Y N KAUSHALLONG REPORT

    2015

    ROHIT P L231122

    2/15/2015

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    EXECUTIVE SUMMARYThe automobile industry, one of the core sectors, has undergone metamorphosis with the advent of

    new business and manufacturing practices in the light of liberalization and globalization. The sector

    seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge

    in demand. The Indian automobile market is gearing towards international standards to meet the needs

    of the global automobile giants and become a global hub.

    A detailed analysis of Automobile industry has been covered in respect of past growth and

    performance. Under this project to better understand the Industry we have used Fundamental and

    Technical tools to make it more authentic n meaningful.

    The Industry Analysis has been done with the help of five forces model, PEST,SWOT

    analysis, industry life cycle and the industry specific index. Based on the market share top 5 players

    are identified i.e. Maruti Suzuki, Mahindra, Hero Motocorp, TATA motors, Hyundai India Ltd.

    The automobile industry in India is expected to be the world's third largest by 2016, with the country

    currently the world's second largest two-wheeler manufacturer. Two-wheeler sales is projected to rise

    from 15.9 million in FY13 to 34 million by FY20. The segment registered a growth of 7.31 per cent in

    FY14. Furthermore, passenger vehicle sales is expected to increase to 8.6 million in FY21 from 3.2

    million in FY13. Strong growth in demand due to rising income, growing middle class, and a young

    population is likely to propel India among the world's top five auto manufacturers by 2015.

    Automobile export volumes increased at a compound annual growth rate (CAGR) of 19.1 per cent

    during FY05-13, out of which two-wheelers accounted for the largest share in exports at 67 per cent

    in FY13.

    The government aims to develop India as a global manufacturing as well as a research and

    development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project

    (NATRiP) centres as well as a National Automotive Board to act as facilitator between the

    government and the industry. Some other government initiatives, including Auto Policy 2002,

    Automotive Mission Plan 2006-2016 and funds allocated in the Union Budget 2014-15 could go a

    long way in ensuring the growth of this sector.

    Alternative fuel has the potential to provide for the country's energy demand in the auto sector as the

    CNG distribution network in India is expected to rise to 250 cities in 2018. Also, the luxury car

    market could register high growth and is expected to reach 150,000 units by 2020.

    At the end conclusion and recommendations have been specified so as to make the research work

    more meaningful and purposeful.

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    Table of Contents

    AUTHORIZATION................................................................................................................................5

    GLOSSARY ...........................................................................................................................................6

    INTRODUCTION ..................................................................................................................................7

    BACKGROUND ....................................................................................................................................8

    Market Size .........................................................................................................................................8

    Investments .........................................................................................................................................9

    Government Initiatives......................................................................................................................10

    Road Ahead.......................................................................................................................................10

    Factors determining the growth of the industry ............................................................................12

    Employment Opportunities...........................................................................................................13

    Employment Trends......................................................................................................................13

    Future Trends in the Automobile Industry........................................................................................13

    PROBLEM............................................................................................................................................14

    SCOPE..................................................................................................................................................14

    PURPOSE.............................................................................................................................................14

    METHODOLOGY ...............................................................................................................................15

    INDUSTRY ANALYSIS......................................................................................................................15

    PEST ANALYSIS ................................................................................................................................16

    1. Political Environment ...........................................................................................................16

    2. Economic environment: ........................................................................................................16

    3. Social Environment:..............................................................................................................17

    4. Technology: ..........................................................................................................................17

    5. Other Factors:........................................................................................................................17

    Porter's five forces ............................................................................................................................18

    MAJOR PLAYERS ..............................................................................................................................20

    PASSENGER CARS SEGMENT ........................................................................................................21

    ANALYSIS OF TOP FIVE PASSENGER CAR PLAYERS...............................................................22

    MARUTI SUZUKI ...............................................................................................................................22

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    SALES NETWORK .........................................................................................................................23

    PERFORMANCE.............................................................................................................................24

    DOMESTIC SALES:....................................................................................................................24

    EXPORT:......................................................................................................................................26

    SWOT ANALYSIS ......................................................................................................................28

    HYUNDAI MOTORS INDIA LTD .....................................................................................................30

    PERFORMANCE EVALUATION OF HYUNDAI MOTOR INDIA LIMITED ...........................30

    DOMESTIC SALES.....................................................................................................................30

    EXPORT.......................................................................................................................................32

    PRODUCTION:............................................................................................................................33

    SWOT ANALYSIS ......................................................................................................................34

    TATA MOTORS ..................................................................................................................................36

    Passenger Vehicles: ......................................................................................................................36

    SWOT ANALYSIS ..........................................................................................................................42

    MAHINDRA AND MAHINDRA........................................................................................................43

    SWOT ...............................................................................................................................................44

    HERO MOTOCORP ............................................................................................................................45

    SWOT ANALYSIS ..........................................................................................................................47

    Financial Year '14 .................................................................................................................................48

    TRENDS IN AUTOMOTIVE INDUSTRY.........................................................................................49

    Connected Cars .................................................................................................................................50

    Intelligent Public Transportation ......................................................................................................50

    Going Green......................................................................................................................................50

    Cloud and Big Data...........................................................................................................................51

    Prospects ...........................................................................................................................................51

    Attractiveness of the Automobile Industry for Investment purpose .....................................................52

    Production.........................................................................................................................................54

    CONCLUSION.....................................................................................................................................55

    RECOMMENDATIONS......................................................................................................................56

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    LIMITATIONS.....................................................................................................................................57

    SOURCES ............................................................................................................................................58

    INDEX..................................................................................................................................................59

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    AUTHORIZATIONI, Rohit P L hereby authorize the concerned investor/owner of the document to access this report for

    his/her review and analysis purpose and also for his/her research purpose. Publishing of the project

    facts and details about the analysis is strictly prohibited.

    Rohit P L

    New Delhi.

    15/02/2015

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    GLOSSARY AUTOMOTIVE INDUSTRY: Industry dealing with the automobiles is called automotive

    industry.

    CAGR: Cumulative Annual Growth Rate

    ACCIF: Andhra Chamber of Commerce and Industry Federation

    ACMA: Automotive Components Manufacturers Association of India

    GDP : Gross Domestic Product

    PEST: political, environmental, socio economical, technology

    SWOT: strengths, weakness, opportunities, threats

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    INTRODUCTIONThe automotive industry in India is one of the largest automotive markets in the world. It was

    previously one of the fastest growing markets globally, but is currently experiencing flat or negative

    growth rates. India's passenger car and commercial vehicle manufacturing industry is the sixth largest

    in the world, with an annual production of more than 3.9 million units in 2011. According to recent

    reports, India overtook Brazil to become the sixth largest passenger vehicle producer in the world

    (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia,

    Spain, France, Brazil). From 2011 to 2012, the industry grew 16-18%, selling around three million

    units. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South

    Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of passenger

    cars.

    As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive

    vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after

    China) fastest growing automobile market in the world the same year. According to the Society of

    Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015,

    not 5 million as previously projected.

    The majority of India's car manufacturing industry is based around three clusters in the south, west

    and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share.

    The western hub near Mumbai and Pune contributes up to 33% of the market and the northern cluster

    around the National Capital Region contributes 32%. Chennai, houses the India operations of Ford,

    Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, Mini, and Datsun.

    Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana

    form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The

    Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors,

    Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars,

    Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra and

    Mahindra with a SUV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and

    Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat

    with manufacturing facility of General Motors in Halol and further planned for Tata Nano at their

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    plant in Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat.

    Kolkata with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other

    automotive manufacturing regions around the country.

    In 2011, there were 3,695 factories producing automotive parts in all of India. The average firm made

    US$6 million in annual revenue with profits close to US$400 thousand.

    BACKGROUNDWith the increasing growth in demand on back of rising income, expanding middle class and young

    population base, in addition to a large pool of skilled manpower and growing technology, will propel

    India to be among the world's top five auto-producers by 2015.

    The automobile industry accounts for 22 per cent of the country's manufacturing gross domestic

    product (GDP). The auto sector is one of the biggest job creators, both directly and indirectly. It is

    estimated that every job created in an auto company leads to three to five indirect ancillary jobs.

    India is expected to become a major automobile manufacturing hub and the third largest market for

    automobiles by 2020, according to a report published by Deloitte.

    India is currently the seventh-largest automobiles producer in the world with an average annual

    production of 17.5 million vehicles, and is on way to become the fourth largest automotive market by

    volume, by 2015.

    Market Size

    The growth story for the Indian automobile industry in 2014 rode on the two-wheeler segment. The

    segment has clocked positive growth at 12.9 percent year-on-year to reach sales of nearly 13.5 million

    units by October 2014.

    India's automobile sector has also picked up pace, with eight of the country's leading manufacturers'

    reporting combined passenger vehicle sales of 198,427 in November 2014, a 10 per cent annual rise.

    The rise in sales in November 2014 was led by Maruti Suzuki, whose sales increased 17 per cent to

    100,024 units in the domestic market.

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    The commercial vehicles (CV) industry in India has registered an increase of 8.59 per cent in

    September 2014, as fleet owners have started to buy trucks in the anticipation of an improved

    economic activity.

    The automobile sector in Andhra Pradesh has a potential for US$ 1 billion investment and US$ 1.50

    billion output, according to a recent analysis by Automotive Components Manufacturers Association

    of India (ACMA) and city-based Andhra Chamber of Commerce and Industry Federation (ACCIF).

    Investments

    To match production with demand, many auto makers have started to invest heavily in various

    segments in the industry in the last few months. The industry has attracted FDI worth US$ 11,351.26

    million during the period April 2000 to November 2014, according to the data released by Department

    of Industrial Policy and Promotion (DIPP).

    Some of the major investments and developments in the automobile sector in India are as follows:

    Snapdeal.com has entered into a partnership with Hero MotoCorp Ltd to sell two-wheelers

    and expect its online automobile sales to generate Rs 1,000 crore (US$ 162.33 million) of

    business in next six to 10 months.

    Automotive supplier Uno Minda and Japans Toyoda Gosei Co Ltd have announced a joint

    venture (JV) partnership to manufacture and sell rubber hoses to automobile makers in

    India. The JV will be set up with a total investment of Rs 85.3 crore (US$ 13.84 million) in

    a phased manner.

    Tafe Motors and Tractors Ltd (TAFE) has invested around US$ 140 million by way of

    equity in the US-based AGCO Corporation, a worldwide manufacturer and distributor of

    agricultural equipment.

    Flipkart founders Mr Sachin Bansal and Mr Binny Bansal have led a US$ 1 million

    investment in Ather, an electric vehicle start-up focused on designing high-speed electric

    two-wheelers.

    Harley Davidson Motor Co. has expanded their line up in India as it has launched three

    new models the Breakout, Street Glide and CVO limited edition.

    Hero Electric is looking for merger and acquisition (M&A) options or technology tie-ups to

    encourage its next generation electric vehicle technology.

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    Government Initiatives

    The Government of India encourages foreign investment in the automobile sector and allows 100 per

    cent FDI under the automatic route. To boost manufacturing, the government had lowered excise duty

    on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent, on

    sports utility vehicles to 24 per cent from 30 per cent, on mid-segment cars to 20 per cent from 24 per

    cent and on large-segment cars to 24 per cent from 27 per cent.

    Some of the major initiatives taken by the Government of India are:

    The governments decision to resolve VAT disputes has resulted in the top Indian auto

    makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors

    announcing an investment of around Rs 11,500 crore (US$ 1.86 billion) in Maharashtra.

    The Automobile Mission Plan for the period 20062016, designed by the government is

    aimed at accelerating and sustaining growth in this sector. Also, the well-established

    Regulatory Framework under the Ministry of Shipping, Road Transport and Highways,

    plays a part in providing a boost to this sector.

    The Government of India-appointed SIAM and Automotive Components Manufacturers

    Association (ACMA) are responsible in working for the development of the Indian

    automobile industry.

    The government plans to come out with policies to introduce clean fuels such as biodiesel,

    bioethanol and electricity for public transport vehicles and school buses in big cities to

    tackle air pollution.

    The Lok Sabha passed the Motor Vehicles Amendment Bill, 2014, paving the way for

    regularisation of e-rickshaws.

    The government has set up National Automotive Testing and R&D Infrastructure Project

    (NATRiP) at a total cost of US$ 388.5 million to enable the industry to be on par with

    global standards.

    Road Ahead

    India is probably the most competitive country in the world for the automotive industry. It does not

    cover 100 per cent of technology or components required to make a car but it is giving a good 97 per

    cent, highlighted Mr Vicent Cobee, Corporate Vice-President, Nissan Motors Datsun.

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    The vision of AMP 2006-2016 sees India, to emerge as the destination of choice in the world for

    design and manufacture of automobiles and auto components with output reaching a level of US$ 145

    billion; accounting for more than 10 per cent of the GDP and providing additional employment to 25

    million people by 2016.

    The automobiles sector is compartmentalized in four different sectors which are as follows:

    Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-wheelers

    Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose

    vehicles

    Commercial Vehicles that are light and medium-heavy vehicles

    Three Wheelers that are passenger carriers and goods carriers.

    The automobile industry is one of the key drivers that boosts the economic growth of the country.

    Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI

    through automatic route, Indian automobile sector has come a long way. Today, almost every global

    auto major has set up facilities in the country.

    Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the

    US and Mahindra & Mahindra have set up manufacturing bases in India. Furthermore, according to

    internal projections by Mercedes Benz Cars, India is set to become Mercedes Benzs fastest-growing

    market worldwide ahead of China, the US and Europe.

    As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of

    Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry

    during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the

    total FDI inflows in terms of US $. The production of compact superbikes is also expected to take

    place in India. The country has a mass production base of 16 million two-wheelers and the several

    global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out

    sports bikes in the 250 cc capacity.

    The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is

    as follows:

    Largest three-wheeler market

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    Second largest two-wheeler market

    Tenth largest passenger car market

    Fourth largest tractor market

    Fifth largest commercial vehicle market

    Fifth largest bus and truck segment

    However, the year 2013-2014 has seen a decline in the industrys otherwise smooth-running growth.

    High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with

    economic slowdown are the major reason for the downturn of the industry.

    Except for the two-wheelers, all other segments in the industry have been weakening. There is a

    negative impact on the automakers and dealers who offered high discounts in order to push sales. To

    match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which

    capacity utilization for most automakers remains at a dismal level.

    Despite the comprehensive market being under extreme burden, the luxury car market has observed a

    robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at

    compelling lower price points. Further, with the measured increases in the price of diesel, the overall

    market continues to shift towards petrol-fuelled cars. This has lead to the growth in sales of the 'Mini'

    segment of the PV market by of 5.5%.

    Factors determining the growth of the industry

    Fuel economy and demand for greater fuel efficiency is a major factor that affects

    consumer purchase decision that will bring leading companies across two-wheeler and

    four-wheeler segment to focus on delivering performance-oriented products.

    Sturdy legal and banking infrastructure

    Increased affordability, heightened demand in the small car segment and the surging

    income of the Indian population

    India is the third largest investor base in the world

    The Government technology modernization fund is concentrating on establishing India as

    an auto-manufacturing hub.

    Availability of inexpensive skilled workers

    Industry is perusing to elevate sales by knocking on doors of women, youth, rural and

    luxury segments

    Market segmentation and product innovation

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    Employment Opportunities

    There are a wide range of jobs available in the automobile industry. With the number of vehicles

    available on the road today, the need and requirement for people who can fix these machines is fast

    increasing. Careers like automobile technician, car or bike mechanics are a great option. Becoming a

    diesel mechanic is also a significant alternative. Diesel mechanics are responsible for repairing and

    servicing diesel engines. As they are also required to repair engines of trucks and buses, other than

    cars, they are provided with hefty wages.

    If communication with people instead of repairing cars is what interests you, then you have the

    opportunity of becoming a salesperson or sales manager in an automobile company. Career

    opportunities in automobile design, paint specialists, job on the assembly line and insurance of

    vehicles is also available.

    Employment Trends

    The Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a global

    automative hub. The idea is to make India as the destination choice for design and manufacture of

    automobiles and auto components, with outputs soaring to reach US$ 145 billion which is basically

    accounting for more than 10% of the GDP. This would also provide further employment to over 25

    million people by 2016 making the automobile the sunrise sector of the economy.

    According to the Confederation of Indian Industry, the automobile sector currently employs over 80

    lac people. An extension in production in the automobile industry is forecasted, it is likely to rise to

    Rs. 600000 crore by 2016.

    Future Trends in the Automobile Industry

    As the auto-shows began in January 2014, the industry promised a blend of technology and

    automotives. With the recession trend breaking its leashes form the past two years, 2014 is

    expected to get back on track with the sales of automobiles in the country.

    Almost Self-governing cars are predicted to be on the streets by 2020

    More than half the cars on the streets are going to be powered by diesel by 2020

    Industry watcher Gartner indicates that 30 percent of motorists want parking info. The facility

    is likely to come up after glitches in the infrastructure catch up.

    High Performance Hybrid cars are likely to gain greater popularity among consumers.

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    The Indian automobile industry has a prominent future in India. Apart from meeting the advancing

    domestic demands, it is penetrating the international market too. Favoured with various benefits such

    as globally competitive auto-ancillary industry; production of steel at lowest cost; inexpensive and

    high skill manpower; entrenched testing and R & D centres etc., the industry provide immense

    investment and employment opportunities.

    PROBLEMTo identify the investment opportunities in the automobile sector from a long time perspective and to

    narrow down to the most profitable option available.

    SCOPEDifferent investment opportunities with respect to the automobile sector have been identified. The

    future growth based on the various literatures has been analysed and various emerging technology has

    also been identified.

    The Indian automobile industry is going through a phase of rapid change and high growth. With new

    projects coming up on a regular

    basis, the industry is undergoing technological change. The major players are expanding their plants

    and focusing on mass customization, mass production, etc.

    Nearly every automobile company is investing at a higher rate than ever before to achieve a high

    growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected

    that by the end of 2016 Indian automobile sector will be investing a huge amount as Rs. 30,000

    crores.

    For example, Maruti Udyog has plans of investing Rs. 6,500 crores; the Tata Motors is coming up

    with more investment of Rs. 2,000 crores in its compact car project. Not only the Indian companies

    but also foreign players like Hyundai are coming up with the investment of more than Rs. 3,800

    crores in India.

    PURPOSEThe purpose of this report is to scan the environment of the automobile industry of India and look into

    the various opportunities available. The opportunities is to be closely evaluated and the best option is

    to be recommended for investment which would give better returns to the investor in the long run.

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    METHODOLOGYThe methodology behind the analysis and consolidation of the facts into this particular report is as

    follows:

    Scanning the external environment of the industry by using tools like PEST and Porters Five

    Forces.

    Examining the market and listing out the top 10 players in the sector.

    Considering the top 5 players and analysing their performance based on their past sales and

    performing SWOT on each of the shortlisted companies.

    The present and future trends of the sector are also examined to help the investor take a

    lucrative decision.

    INDUSTRY ANALYSISThe Indian automotive industry has flourished like never before in the recent years. This extraordinary

    growth that the Indian automotive industry has witnessed, is a result of a two major factors namely,

    the improvement in the living standards of the middle class, and an increase in their disposable

    incomes. Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity

    regulations, reduction of tariffs on imports, and refining the banking policies, initiated by the Government of India, have played an equally important role in bringing the Indian Automotive

    industry to great heights.

    It is estimated that the sale of passenger cars have tripled compared to their sale in the last five years.

    Thus, the sale of cars has reached a figure of 1 million users and is expected to increase further. Its

    also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have

    shot up, largely due to increase in the consumers buying capacity. The increased demand for Indian

    automobiles has resulted in a large number of multi-national auto companies, especially from Japan,

    U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian firms.

    Also, the institutionalization of automobile finance has further paved the way to sustain a long-term

    high growth for the industry.

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    PEST ANALYSIS

    PEST analysis is concerned with the environmental influences on a business. The acronym stands for

    the Political, Economic, Social and Technological issues that could affect the strategic development of a business Identifying PEST influences is a useful way of summarizing the external environment in

    which a business operates. However, it must be followed up by consideration of how a business

    should respond to these influences.

    1. Political Environment

    Indian Government has changed its role from controller to facilitator with prime focus on

    providing better infrastructure, growth oriented economic policies and right environment to

    attract investments.This has made giant auto manufacturers enter into India and affect the competitive environment.

    The liberalization steps, such as, relaxation of the foreign exchange and equity regulations,

    reduction of tariffs on imports, and refining the banking policies, have played an equally important role in bringing the Indian Automotive industry to great heights.

    Institutionalization of automobile finance has further paved the way to sustain a long-term

    high growth for the industry.

    2. Economic environment:

    Rising GDP consecutively for the last 5 years has led to increased purchasing power and

    hence the automobiles.

    Per capita Income is rising , which is affecting the segments of automobiles being ventured into.

    There is cut Throat competition among many players in market.

    Increasing urbanization of rural India also has given rise to increase in sales.

    The concept of service in auto industry has changed into customer care now , thus

    encompassing the greater value into it.

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    3. Social Environment:

    Indian families are becoming increasingly nuclear

    Increasing Propensity to spend

    Increasing distances between work-place and residence

    Increase in percentage of working women has increased number of earning members in a

    family.

    4. Technology:

    Alternate Fuel: increasing use Use of CNG and LPG instead of conventional fuel has made

    the entry of new kinds of vehicles in the market.

    Advent of Internet: The customer can now use the Internet to place the order and expect the

    manufacturer to fulfill his customized demand in the minimum time.

    Electric Car: With technological advancements electrical car may emerge as a preferred

    option.

    5. Other Factors:

    Institutionalization of automobile finance has become important factor for sustainable growth.

    Car industry is gaining exports orientation due to foreign investment and DE licensing.

    Increase in money supply would ensure a reasonable demand for cars.

    Car industry is a growth industry which is sustainable.

    The changing lifestyles indicate an increase in demand for cars in the all the segments and

    especially mid price segment

    The changing buying behavior shows preference for styling, comfort, fuel efficiency and conformance to environmental standards

    Technologically the industry is experiencing major changes like alternative fuels ,

    customization etc.

    Intense competition is indicated in the coming years due to increase in market players.

    The concept of value has been widened up to include customer care.

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    Porter's five forces

    The auto manufacturing industry is considered to be highlycapital and labor intensive. The major

    costs for producing and selling automobiles include:

    Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still

    substantial labor costs in designing and engineering automobiles.

    Advertising Each year automakers spend billions on print and broadcast advertising, furthermore,

    they spent large amounts of money on market research to anticipate consumer trends and preferences.

    The auto market is thought to be made primarily of automakers, but auto parts makes up another

    lucrative sector of the market. The major areas of auto parts manufacturing are:

    Original Equipment Manufacturers (OEMs) - The big auto manufacturers do produce some of

    their own parts, but they can't produce every part and component that goes into a new vehicle.

    Companies in this industry manufacture everything from door handles to seats.

    Replacement Parts Production and Distribution - These are the parts that are replaced after the

    purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this

    area of the sector.

    Rubber Fabrication - This includes everything from tires, hoses, belts, etc.

    In auto industry, a large proportion of revenue comes from selling automobiles. The parts market is

    even more lucrative. For example, a new car might cost $18,000 to buy, but if you bought, from the

    automaker, all the parts needed to construct that car, it would cost 300-400% more.

    A significant portion of an automaker's revenue comes from the services itoffers with the new vehicle.

    Offering lower financial rates than financial institutions, the car company makes a profit on financing.

    Extended warranties also factor into the bottom line.

    Greater emphasis on leasing has also helped increase revenues. The advantage of leasing is that it

    eases consumer fears about resale value, and it makes the car sound more affordable. From a maker's

    perspective, leasing is a great way to hide the true price of the vehicle through financing costs. Car

    companies, then, are able to push more cars through. Unfortunately, profiting on leasing is not as easy

    as it sounds. Leasing requires the automakers to accurately judge the value of their vehicles at the end

    of the lease, otherwise they may actually lose money.

    1. Barriers to Entry - It's true that the average person can't come along and start manufacturing

    automobiles. The emergence of foreign competitors with the capital, required technologies

    and management skills began to undermine the market share of many automobile companies.

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    Globalization the tendency of world investment and businesses to move from national and

    domestic markets to a worldwide environment, is a huge factor affecting the auto market.

    More than ever, itis becoming easier for foreign automakers to enter the Domestic market

    .Automobiles depend heavily on consumer trends and tastes. While car companies do sell a

    large proportion of vehicles to businesses and car rental companies (fleet sales), consumer

    sales is the largest source of revenue. For this reason, taking consumer and business

    confidence into accountshould be ahigher priority than considering the regular factors like

    earnings growth anddebt load .

    2. Threat of Substitutes - Rather than looking at the threat of someone buying a different car,

    there is also need to also look at the likelihood of people taking the bus, train or airplane to

    their destination. The higher the cost of operating a vehicle, the more likely people will seek

    alternative transportation options. The price of gasoline has a large effect on consumers'

    decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but

    they also guzzle gas compared to smaller sedans and light trucks. When determining the

    availability of substitutes you should also consider time, money, personal preference and

    convenience in the auto travel industry. Then decide if one car maker poses a big threat as a

    substitute.

    3. Competitive Rivalry - Highly competitive industries generally earn low returns because the

    cost of competition is high. The auto industry is considered to be an oligopoly (A market

    condition in which sellers are so few that the actions of any one of them will materially affect

    price) which helps to minimize the effects of price-based competition. The automakers

    understand that price-based competition does not necessarily lead to increases in the size of

    the marketplace, historically they have tried to avoid price-based competition, but more

    recently the competition has intensified - rebates, preferred financing and long-term

    warranties have helped to lure in customers, but they also put pressure on the profit margins

    for vehicle sales. Every year, car companies update their cars. This is a part of normal

    operations, but there can be a problem when a company decides to significantly change the

    design of a car. These changes can cause massive delays and glitches, which result in

    increased costs and slower revenue growth. While a new design may pay off significantly in

    the long run, it's always a risky proposition.

    4. Bargaining Power of Suppliers - The automobile supply business is quite fragmented (there

    are many firms). Many suppliers rely on one or two automakers to buy a majority of their

    products. If an automaker decided to switch suppliers, it could be devastating to the previous

    supplier's business. As a result, suppliers are extremely susceptible to the demands and

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    requirements of the automobile manufacturer and hold very little power. For parts suppliers,

    the life span of an automobile is very important. The longer a car stays operational, thegreater

    theneed for replacement parts. On the other hand, new parts are lasting longer, which is great

    for consumers, but is not suchgood news for parts makers. When, for example, most car

    makers moved from using rolled steel to stainless steel, the change extended the life of parts

    by several years.

    5. Bargaining Power of Buyers -The bargaining power of automakers are unchallenged.

    Consumers may become dissatisfied with many of the products being offered by certain

    automakers and began looking for alternatives, namely foreign cars. On the other hand, while

    consumers are very price sensitive, they don't have much buying power as they never

    purchase huge volumes of cars.

    MAJOR PLAYERSAt present major Indian, European, Korean, Japanese automobile companies are holding significant

    market shares. In commercial vehicle, Tata Motors dominates over 60% of the Indian commercial

    vehicle market. Tata Motors is the largest medium and heavy commercial vehicle manufacturer. Car

    manufacturers in India dominate the passenger vehicle market by 79%. Maruti Suzuki is the largest

    car producer in India and has 37% share in passenger cars and is a complete monopoly in multi

    purpose vehicles. In utility vehicles Mahindra holds 42% share. Hyundai and Tata Motors is the

    second and third car producer in India

    The automobile Industry in India is now working in terms of the dynamics of an open market. Many

    joint ventures have been set up in India with foreign collaboration, both technical and financial with

    leading global manufacturers. Also a very large number of joint ventures have been set up in the auto-

    components sector and the pace is expected to pick up even further. The Government of India is keen

    to provide a suitable economic, and business environment conducive to the success of the established

    and prospective foreign partnership ventures. $5.7 billion is the investment envisaged in the new

    vehicles projects.

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    PASSENGER CARS SEGMENT

    Top 10 Automobiles (Passenger Vehicle) Companies in India by market share are as follows

    Maruti Suzuki ( 37% Market Share): Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog

    Limited) is a subsidiary of Suzuki Motor Corporation of Japan. Maruti Suzuki is a leading

    manufacturer of passenger vehicles in India. Lovingly referred to as the peoples car maker; over the

    past three decades Maruti Suzuki has changed the way people in India commute and travel.

    Hyundai Motors India Limited (14.4% Market Share): Hyundai Motor India Limited (HMIL) is a

    wholly owned subsidiary of Hyundai Motor Company (HMC). HMIL is the largest passenger car

    exporter and the second largest car manufacturer in India. It currently markets eight passenger car

    models across segments in the A2 segment it has the Eon, Santro, i10 and the i20, in the A3

    segment the Accent and the Verna, in the A5 segment Sonata and in the SUV segment the Santa Fe.

    Tata Motors(13.1% Market Share): Tata Motors Limited is Indias largest automobile company,

    with consolidated revenues of INR 1,65,654 crores (USD 32.5 billion) in 2011-12. It is the leader in

    commercial vehicles in each segment, and among the top three in passenger vehicles with winning

    products in the compact, midsize car and utility vehicle segments. It is the worlds fourth largest truck

    and bus manufacturer.

    Mahindra & Mahindra (11.4% Market Share): In 1947, Mahindra & Mahindra introduced

    India to the utility vehicle. More than 65 years later, It is still Indias premier utility vehicle (UV)

    company. In addition to making groundbreaking UVs like the Scorpio and Bolero, Mahindra offers

    cars, pickups, and commercial vehicles that are rugged, reliable, environmentally friendly, and fuel-

    efficient.

    Toyota (6.4% Market Share): Since its inception in India in 1997, Toyota Kirloskar Motor has

    witnessed a steady growth in the Indian automotive market and is today more than ready to seize the

    enormous opportunity India offers. Toyotas newly built second plant is a testimony to this

    commitment and also, the start of a new era for Toyota in India.

    General Motors (3.3% Market Share): General Motors India Private Limited is a 50:50

    partnership between General Motors and SAIC that is engaged in the automobile business in India. It

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    is the 6th largest automobile manufacturing company in India. General Motors India started its

    journey in 1996 and has completed 16 years of operation in India.

    Ford (3.2% Market Share): Established in 1995, Ford India is a wholly owned subsidiary of Ford

    Motor Company, a global automotive industry leader. Ford India manufactures and distributes

    automobiles and engines made at its modern integrated manufacturing facilities at Maraimalai Nagar,

    near Chennai. The companys models include the Endeavour, Fiesta and the Figo.

    Honda (2.9% Market Share): Honda Cars India Ltd., (HCIL) is a leading manufacturer of premium

    cars in India. The company was established in 1995 with a commitment to provide Hondas latest

    passenger car models and technologies, to the Indian customers. The company is a subsidiary of

    Honda Motor Co. Ltd., Japan.

    Volkswagen (2.4% Market Share): With its headquarters in Pune, Maharashtra (India), the

    Volkswagen Group is represented by three brands in India: Volkswagen, Audi and Skoda. The

    Volkswagen Group is completing 10 years of its India journey which began with the entry of the

    Skoda brand in 2001, Audi brand and Volkswagen brand in 2007. Each brand has its own character

    and operates as an independent entity in the market.

    Nissan ( 1.5% Market Share): Nissan Motor India Private Ltd. (NMIPL), a 100% subsidiary of

    Nissan Motor Co., Ltd., was incorporated in 2005 with a vision of Enriching Peoples Lives through

    latest Nissan Technology and products. In India, Nissan offers innovative and exciting products across

    hatchback, sports, SUV and sedan segments. Nissan has successful introduced two locally-produced

    models in India in less than two years Micra & Sunny.

    ANALYSIS OF TOP FIVE PASSENGER CAR

    PLAYERS

    MARUTI SUZUKI

    Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan & Indias leading

    passenger car manufacturer, accounting for nearly 49 percent of the total industry sales.Maruti Suzuki

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    offers 16 brands with near about 150 variants. Maruti offers various brands whichinclude Maruti 800,

    Alto 800, Alto K10, Estilo, WagonR, Omni, Eeco, AStar, Ritz, Gypsy, Swift, Swift Dzire, SX4,

    Ertiga,Kizashi and Grand Vitara. The company is engaged in the business of Purchase,

    Manufacturing, and Sales of vehicles & spare parts. Maruti Suzuki is also engaged in other activities

    like Pre owned car sales, Car financing & Fleet management. Maruti Suzuki got various awards and

    accolades in its profile. It has ranked no.1 in JD Power Asia Pacific Customer Satisfaction Index

    (CSI) survey 2009 for ten times in a row. Maruti Suzuki got CNBC TV18 award 2011 for

    manufacturer of the year.

    Maruti Suzuki is the only Indian company who has crossed the 10 million sales mark since its

    inception. The company has two manufacturing facilities in Manesar and Gurgaon, Haryani, India.

    The Gurgaon manufacturing plant has a manufacturing capacity of nine lakh units annually.

    According to Mr.R.C.Bhargava Chairman, Maruti Suzuki India Limited, Maruti Suzuki India Limited

    finalized Rs.1700 crore investment for doubling the diesel engine capacity at Gurgaon Manufacturing

    Facility to 6,00,000 units by 2014 . The Gurgaon plant also having K Series engine plant. Since

    inception of this plant, till date over 10 lakh K Series engine have been rolled out. Maruti Suzukis

    Manesar manufacturing facilities have two fully integrated plants having capacity of 5.5 lakh units

    annually.

    Maruti Suzuki is also ahead in Social activities. As a responsible corporate citizen Maruti Suzuki

    introduced world class driving training facilities to India by launching Institute of Driving & Traffic

    Research. These include a specially formulated multilingual theory curriculum, scientifically laid out

    driving tracks and advanced driving simulators that replicate Indian driving conditions.

    In 2008, Maruti Suzuki introduced National Road Safety Mission. Under this initiatives, the company

    took a commitment of training over 5,00,000 people in safe driving practice in a span of three years.

    Also with an objective to improve road safety and inculcate safe and systematic driving habits among

    people, Maruti Suzuki has opened Maruti Driving Training School (MDS). These driving schools are

    equipped with Practical Training and Attitude Training.

    SALES NETWORK

    Maruti Suzuki has the largest sales and service network amongst car manufacturers in India. It had

    802 sales outlets in 555 cities and 2740 service workshops in 1335 cities. The service network of the

    Maruti Suzuki includes Dealer workshops, Authorized service stations and Maruti service zones. The

    following pie chart clearly describes the sales network of Maruti Suzuki.

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    It is amply clear from the above pie chart that, Maruti Suzuki gradually increased its sales and service

    network. In year 2005 -06, the total sales network were 375 whereas in year 2006-07 the number of

    sales network reached to 491. In year 2009-10 the number of Sales network increased by 121 over

    2008-09 and reached to 802. In year 2011-12 the total number of Sales network was 1100 i.e a growth

    of 17.89 percent over 2010-11.

    PERFORMANCE

    DOMESTIC SALES:

    Maruti Suzuki is the only Indian company who has crossed the 10 million sales mark since its

    inception. The company has the largest sales and service network amongst car manufacturers in India.

    In the month of October 2012, Maruti Suzuki reported 85.46 percent increase in total sales at 1,03,108

    vehicles, in same month the company had recorded domestic sales of 96,002 vehicles compared to

    51,458 vehicles in 2011. In November 2012 the company sold total 1,03,200 vehicles and in the same

    month last year, the company sold 91,772 vehicles. We can see the performance of Maruti Suzuki

    with respect to Domestic Sales through following graph

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    From the above chart it is revealed that the domestic sales of Maruti Suzuki India Limited in year

    2009-10 was 8,70,790 vehicles i.e a growth of 20.58 percent than domestic sales of 2008-09. In year

    2011-12 Maruti Suzuki sold 1006316 vehicles i.e a negative growth of (-) 11.16 percent over

    2010-11. In year 2010-11, the company sold 1132739 vehicles.

    The following pie chart describes the net sales of Maruti Suzuki during 2004-05 to 2011-12.

    From the above pie chart it is revealed that Maruti Suzukis total Net Sales in year 2004-05 was

    109108 million whereas the net sales in year 2005-06 was 120,034 million. In year 2010-11,

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    Marutis total net sale was 361,282 million whereas the total net sale in year 2011-12 was 347,059

    million. In year 2011-12 Maruti Suzukis net sale was decreased by (-) 3.93 percent over 2010-11.

    EXPORT:

    Maruti Suzuki India Limited exporting to 98 countries in Europe, Asia, Latin America, Africa and

    Oceania. Some leading overseas markets of Maruti include Germany, Netherland, France & UK.

    Presently the company exports various models like A-Star, Ritz, Estilo and Maruti 800. In year 2009-

    10, Maruti Suzuki clocked export sales of 147,575 units its highest ever and in 201112, the company

    exported 1,27,300 units.

    The following are the top ten export destinations of Maruti Suzuki India Limited.

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    The following chart clearly focuses on Export of Maruti Suzuki during 2004-05 to 2011-12.

    It is revealed from the above chart that the export of Maruti Suzuki in year 2009-10 was 147,575

    vehicles whereas the company exported 138,266 vehicles in year 2010-11 i.e the year 2010-11 saw

    negative growth by (-) 6.30 percent over 2009-10. The year 2011-12 had also seen a negative growth

    by (-) 7.87 percent over 2010-11. The year 2009-10, recorded marvellous growth of 110.75 percent

    over 2008-09.

    The following graph stated the economic performance of Maruti Suzuki India Limited during 2004-05

    to 2011-12. The graph depicts the profit of company after tax.

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    It is amply clear from the above chart that Marutis profit after tax in year 2004-05 was 8536 million

    whereas after 2004-05, the profit of Maruti Suzuki gradually increased till 2007-08 as the year 2008-

    09 recorded less profit over 2007-08. Also from 2009-10, Maruti Suzuki recorded less profit. In year

    2009-10, Marutis profit after tax was 24,976 million whereas in year 2010-11 the companys profit

    reached to 22,886 million. In year 2011-12, Marutis profit after tax was not remarkable. In this year

    the company recorded 16,351 million profit.

    SWOT ANALYSIS

    Strengths

    Maruti Udyog limited (MUL) is in a leadership position in the market with a market share of

    48.74

    Major strength of MUL is having largest network of dealers and after sales service centers in

    the country.

    Good promotional strategy is adopted by MUL to transfer its thoughts to the people about its

    products.

    Maruti Suzuki recorded highest number of domestic sales with 9,66,447 units from 7,65,533

    units in the previous fiscal. It recently attained the 10million domestic sales mark.

    Strong Brand Value and Loyal Customer Base are big strengths for MUL

    There are around 15 vehicles in Maruti Product portfolio. Has good product lines with good

    fuel efficiency like Maruti Swift, Diesel, Alto etc

    Alto still beats the small car segment with highest number of sales

    MUL is the first automobile company to start second hand vehicle sales through its True-

    value entity.

    MUL has good market share and hence its after sales service is a major revenue contributor.

    Weaknesses

    Low interior quality inside the cars when compared to quality players like Hyundai and other

    new foreign players like Volkswagen,Nissan etc.

    Government intervention due to having share in MUL.

    Younger generations started getting a great affinity towards new foreign brands

    The management and the companys labor unions are not in good terms. The recent strikes of

    the employees have slowed down production and in turn affecting sales.

    Maruti hasnt proved itself in SUV segment like other players.

    Opportunities

    MUL has launched its LPG version of Wagon R and it was a good move simultaneously

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    MUL can start R&D on electric cars for a much better substitute of the fuel.

    Marutis cervo 600 has a huge potential in tapping the middle class segment and act as a

    strong threat to Nano

    New DZire from Maruti will capture the market share and expected to create the same magic

    as Maruti Esteem(currently not available)

    Export capacity of the company is giving new hopes in American and UK markets

    Economic growth of the country is constantly increasing and the government is working hard

    to increase the gdp to double digit.

    Threats

    MUL recently faced a decline in market share from its 50.09% to 48.09 % in the previous

    year(2011)

    Major players like Maruti Suzuki, Hyundai, Tata has lost its market share due to many small

    players like Volkswagen- polo. Ford has shown a considerable increase in market share due to

    its Figo.

    Tata Motors recent launches like Nano 2012, Indigo e-cs are imposing major threats to its

    respective competitors segment

    China may give a good competition as they are also planning to enter into Indian car segment

    Launch of Hyundais H800 may result in the decline of Alto sales

    The automobile industry is considered an engine for economic growth of the country. Maruti Suzuki

    has proven that it is always ahead than its competitors because of continuous innovations and

    technological up gradations. The company has set a benchmark of excellence because of Research &

    Development activity as Maruti Suzuli believes that this activity will enable the company to offer

    superior and environment friendly products to customer with complete satisfaction. Maruti Suzukis

    environmental performance is really uncountable. Considering the growing vehicle pollution, the

    company introduced advanced K-Series engine in its vehicles which resulted in reduction of CO, THC

    and NOx emissions by almost 50 percent. As far as economic performance is concerned, Maruti

    Suzukis last few years statistics of Domestic sales, Export, narrates that still Maruti Suzuki is the

    leader of Indian Automobile sector.

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    HYUNDAI MOTORS INDIA LTD

    Hyundai Motors India Limited is Indias second largest car manufacturer & largest passenger car

    exporter. Hyundais popular brands in A2 segment include Eon, Santro, i10 & i20 whereas the A3

    segment includes Accent & Verna. The A5 segment of Hyundai Motor consist Sonata &Santa Fe in

    sports utility vehicle segment. Hyundai Motors India Limiteds fully integrated state of the art

    manufacturing plant near Chennai boasts of the most advanced Production, Quality & Testing

    capabilities in the country. The company commissioned its second plant in February 2008 having an

    installed capacity of 3,30,000 units per annum. Hyundai Motors India Limited has two manufacturing

    plants in India located at Sriperumbudur of Tamil Nadu. Both plants of Hyundai Motors have a

    combined annual capacity of 6,00,000 units per annum. Presently the company has 346 dealers with

    805 service points across India. The company currently exports to more than 120 countries across

    Africa, Middle East, Latin America and the Asia Pacific. As far as export is concerned, Hyundai

    Motors touched 1.5 million vehicles in year 2012.

    With a view to focus on constant innovation & up gradation, vehicle test & evaluation, design

    engineering, Hyundai Motors has set up the research & development centre at Hyderabad. This is

    Hyundais fourth overseas R&D centre which is spread across 2,00,000 square foot facility with an

    investment of Rs.184 crore.

    Hyundai Motors bagged various awards and achievements in its profile. In year 2011, Santa Fe

    awarded SUV of the year by Car India awards 2011 & in year 2012, Hyundai Verna awarded as

    Sedan of the year 2011 Golden steering award. In the same year Eon awarded Entry Level

    Hatchback of the year at ET Zig wheels awards 2011.

    PERFORMANCE EVALUATION OF HYUNDAI MOTOR INDIA LIMITED

    DOMESTIC SALES

    In December 2011, Hyundai Motor India Limited reported 3.6 percent jump in total sales to 48,949

    units. In the domestic market, companys sales increased by 12.8 percent to 29,516 units from

    26,168 units in December 2010. In December 2011, the company sold 42,624 units in A2 segment

    while in A3 segment the company sold 6,247 units. In the same month the company sold 11 units of

    Sonata Transform model in A5 segment.

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    In the month of November 2012, Hyundai Motor India Limited reported 2.29 percent fall in total sales

    at 55,762 units while the company sold 57,071 units in same month last year. In the domestic market,

    Hyundai recorded a marginal decline in sales at 34,751 units compared to 35,000 units in November

    2011. The company sold 48,650 units in A2 segment while sales in the A3 segment stood at 6,526

    units. During November 2012, the company sold 53 units of Santa Fe and 20 units of luxury sedan

    Sonata.

    The following graph shows the sales of Hyundai Motors during 1997-2007.

    From the above pie chart it is revealed that the sales of Hyundai Motor India Limited in year March

    1999 was 509.73 crore whereas in year 2000, Hyundais total sales was 2333.86 crore. In 2002, the

    companys sale was 3,385 crore i.e in this year the company registered growth of 11.56 percent over

    2001. In year 2007, the company registered growth of 16.53 percent over 2006. In this year

    Hyundais sales was 10,353 crore whereas the sale in 2006 was 8,898 crore.

    The following pie chart describes the domestic sales of Hyundai Motors during 1998 to 2010.

  • 32 | P a g e

    From the above graph it is disclosed that since 1998 to 2010, Hyundai Motors domestic sales have

    been increased drastically. In year 2008, by selling 245,397 vehicles Hyundai recorded growth of

    22.44 percent over 2007 whereas in year 2009, the company recorded growth of 18.12 percent over

    2008. In 2010, the company sold 3,56,717 vehicles & recorded growth of 23.06 percent over 2009.

    EXPORT:

    Hyundai Motor India Limited is a leading exporter of passenger cars with a market share of 48

    percent of the total exports of passenger cars from India. In October 2005, the company exported its

    2,00,000th car followed by its 3,00,000th and 4,00,000th car in October 2006 and August 2007

    respectively. Currently, Hyundai Motor India is exporting six of its popular models namelySantro,

    i10, i20, Accent, Eon & Verna to 119 countries across East Europe, Africa, Middle East, Latin

    America & Asia Pacific. Hyundai Motor India Limited has been Indias number one exporter for

    seven years in a row.

    In September 2012, Hyundai Motors exports grew by 3.9 percent to 22,707 units whereas the

    company exported 21,849 vehicles in September 2011 whereas the company exported 23,007 vehicles

    in October 2012 & recorded growth of 50 percent over October 2011. In October 2011, the company

    had exported 15,321 vehicles.

    The following graph shows the performance of Hyundai Motors India Limited in Export during 1999-

    2012.

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    From the above chart it is amply clear that as far as export is concerned the year 2009 recorded

    growth of 10.72 percent over 2008. Hyundai Motors exported 247,102 vehicles in year 2010 i.e in this

    year; Hyundai saw a decrease in export of (-) 8.50 percent over 2009. The year 2011, also recorded a

    negative growth of (-) 1.93 percent by exporting 2,42,330 vehicles over 2010.

    The following graph focuses on Hyundai Motors Profit after tax during 1997-2007.

    It is amply clear from the above pie chart that Hyundai Motors profit after tax in year 2001 was

    171.96 crore whereas in 1997 and 1999 the profit after tax of company was negative as in initial years

    the company was newly entered in Indian automobile market. In year 2003, Hyundais profit after

    tax was 164.75 crore whereas in 2004, the companys profit after tax was 378.85 crore. In year 2006,

    Hyundais profit after tax was increased and reached to 525.1 crore.

    PRODUCTION:

    In year 1998, Hyundai Motors India Limited has started its production. Currently Hyundai Motor is

    known as Indias second largest passenger car manufacturer. On 14 January 2003, the company

    awarded Manufacturer of the year at the CNBC autocar India awards. Hyundai Motor touches

    milestone of 30 lakh car production on 4 August 2010 whereas on 30 November 2010, the company

    reaches milestone of 20 lakh domestic productions in a span of 12 years. On 30 December 2010,

    Hyundai Motor India Limited achieved a historic milestone by reaching the production of 6 lakh

    units, the highest since inception.

    According to Mr.Park-Managing Director & Chief Executive Officer, Hyundai Motors India Limited

    plans to increase its production capacity from 6.3 lakh units a year to 6.7 units, in a year and ten new

    models will be launched by 2015 in the mid segment

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    SWOT ANALYSIS

    Strengths of HMIL

    Hyundai India has such a brand equity that it is almost assumed to be an Indian brand, with

    lot of good accolades for being Indias second most selling brand next to MUL in market

    share

    Hyundai Motor India limited is the largest car exporter from Asian Market which showed a

    10% growth compared to last FY

    The domestic sales is increasing at an average rate of 19.1%

    HMIL is known for its quality products which has better performance and it has constantly

    been ahead in the race with Maruti Udyog limited in many parameters

    The product length includes around 8 cars, starting from new Eon in small car segment to

    SUV segment Santa Fe

    Among the automobile players only HMIL is known for its CSR activities

    Hyundai products never fail to win laurels in each segment from various automobile ratings

    ever since its operations in India

    Hyundai , has the largest network of showrooms and service station next to Maruti in India

    An article in Economic times quoted that Hyundai Eon launched , treads on Alto territory

    indicated that Eon will act as a threat to reduction in Altos market share

    Weaknesses of HMIL

    HMIL took a long time to gain the market share as its not the first mover in India

    In terms of most reliable and trusted brand; Maruti is more strong in Indian subcontinent

    Spare parts of Hyundai vehicles are comparatively priced higher and spare parts do not have

    PAN India presence

    In SUV segment both Tucson and its next model Santa Fe didnt make a major impact

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    Increase in commodity prices such as steel, aluminium and ancillary parts has affected

    margins

    Since HMIL concentrates on both domestic and International sales there are higher risks of

    exchange rate fluctuations

    As Hyundai majorly concentrates on quality, most of its product are in premium category in

    each segment. Hyundai is still struggling to make a better impact in small car segment in

    terms of cost efficiency like other manufactures

    Hyundai doesnt have any product match to compete in Corporate orders like Tata Indica V2,

    Tata Sumo, Tata Indigo, Chevy Tavera, Ford Fiesta etc. These vehicles are most preferred in

    both cab segment and government booking for bulk orders

    Opportunities of HMIL

    SIAM Society of Indian automobile Manufacturers, have stated that there is steady increase

    in Car sales both Domestic and Indian contributing a valuable share in Indias Gdp

    The export markets growth rate is 22.30% compared to last fiscal year

    The saving consumption pattern of India is an added advantage for any segment doing

    business in India. This was one of the major reason for Indian market to survive amidst global

    recession

    There is more scope of HMIL to enter into small car segment as its has dedicated R&D plant

    in Hyderabad, India. Hyundai is one of the very few companies that has widest R&D network

    across the world located in Korea, Europe, India, US, Japan

    Hyundai has very good opportunity in entering into commercial vehicles and Recreational

    vehicles as they are already doing well outside India. Currently HMIL has its focus only on

    Passenger car segment.

    Threats of HMIL

    Though Hyundai claims itself to have no direct competitors other than MUL, there are Indian

    players like Tata, Mahindra imposing a strong threat for Hyundai Motors India to expand its

    product category

    Foreign Direct Investments flowing in Indian automobile space are not good signs for already

    existing Giants like MUL and Hyundai.

    Almost all major automobile players have started invading India to open up their market and

    their manufacturing plant in India.Chennai is referred to as the Detroit of Asia!

    Hyundai faced a slight decline in market share due to tough competition from Fords Figo and

    Volkswagen- Polo

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    Many manufacturers have started to concentrate on small car segment as an alternative to

    Nano. These will slowdown the expected sales of Eon.

    Today, despite tough competition, Hyundai Motor India Limited has created a different identity in

    Indian automobile market. Hyundais growth has been driven by volume oriented revenues coupled

    with technological soundness, constant innovations and superior designs. Currently, Hyundai have a

    complete line up of cars across all segments. Considering the changing needs of Indian customers, the

    company always fulfilled the expectations of customers by giving them technologically advanced cars

    with more features and more value for money. Evaluating the past performances of Hyundai Motor,

    no doubt that in coming future Hyundai Motor will be the leader in Indian Automobile industry.

    TATA MOTORSThe Indian automobile industry posted a decline of 9.3% in FY 2013-14, as compared to 1.1% growth

    in the last fiscal. The commercial vehicles declined by 22.4% (last year growth of 1.7%) and

    passenger vehicles declined by 4.7% (last year growth of 0.9%).

    Passenger Vehicles:

    The Passenger Vehicle Industry contracted for the first time in the last five years, in FY 2013-14 with decline of 4.7%. The last such instance was during the economic slowdown of FY 2008-09 when it remained close to flat at negative 0.5%. The decline in sales volumes is seen across segments, but sedans bore the biggest brunt. Hatchbacks and UV's continue to be the volume segments. The high growth in UV segment last year, with the onset of Soft Roaders could not be repeated this year. The premium and luxury vehicles segment however has seen a growth even in an otherwise declining year.

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    During the year, the Company recorded sales of 141,846 vehicles (including Jaguar Land Rover) in

    the domestic market; a decline of 38.1%. The domestic market share was 5.8% as compared to 9.0%

    last year.

    The Company introduced a host of new products including the E-max range of CNG vehicles, Vista

    tech, the refreshed and improved Sumo Gold.

    Nano Awesome Campaign was launched during the year, along with the launch of Nano Twist with

    electronic power steering, thereby continuing to take the Nano Brand closer to the youth.

    During the Delhi Auto Expo 2014, Tata Motors Flagship products, the Bolt hatchback and the Zest

    Sedan were unveiled, to much appreciation. The Company's Horizonext strategy was unveiled,

    showcasing the direction of Design, Performance & Connectivity that are going to be the brand pillars

    going ahead. The Expo also saw the Nexon Compact SUV concept and the connectivity concept for

    the Company's future cars being unveiled.

    The drive to improve sales experience for customer with a focus on dcor and ambience in

    showrooms across country continues. The dealership network is also being augmented to cater to the

    demand for Bolt and Zest launch.

    The Company sold 2,805 Jaguar and Land Rover vehicles through its exclusive dealerships in India

    registering an impressive growth of 12.5%. The globally popular Range Rover Sport and Jaguar XF

    3.0D was launched during the year. New brand touch points were created in social media for both

    Jaguar and Land Rover in a short span. Besides Land Rover Experience events were launched through

    which over 600 Dynamic Drive Off-road Experiences were delivered. 1st ever Land Rover Expedition

    was also launched in India that received a stupendous response. A new after-sales customer

    engagement initiative was introduced through Service Clinics in various dealer cities. Used Car

    program was introduced through 11 Outlets and achieved a 48% penetration in March 2014.

    Tata Motors Sales, Distribution and Support: The sales and distribution network in India as of

    March 31, 2014, comprised 2,420 sales contact points for the Passenger and Commercial Vehicle

    businesses. The Company has deployed a Customer Relations Management (CRM) system at all its

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    dealerships and offices across the country, largest such deployment in the automotive market. The

    combined online CRM / DMS system supports users both within the Company and among the

    distributors in India and abroad.

    The Company's 100% subsidiary, TML Distribution Company Ltd (TDCL), acts as a dedicated

    distribution and logistics management company to support the sales and distribution operations of

    vehicles in India. TDCL provides distribution and logistics support for vehicles manufactured at the

    Company's facilities. TDCL helps us improve planning, inventory management, transport

    management and timely delivery.

    The Company provides financing support through its wholly-owned subsidiary, Tata Motors Finance

    Ltd (TMFL). (Refer discussion on TMFL).

    In addition to dealer service workshops, the Company uses a network of service centers on highways

    and a toll-free customer assistance center to provide 24-hour on-road maintenance (including

    replacement of parts) to vehicle owners. The Company believes that the reach of the sales, service and

    maintenance network, provides us with a significant advantage over the competitors.

    Tata Motors Exports: The Company markets its commercial and passenger vehicles in several

    countries in Europe, Africa, the Middle East, South East Asia and South Asia. However, the

    Company's exports of vehicles manufactured in India decreased marginally by 2% in FY 2013-14 to

    49,922 units from 50,938 units in FY 2012-13. Commercial vehicles export sales of the Company

    shrunk by 2.3% to 43,083 units impacted by the external environment influencers in Europe, the

    Middle East, and South Asia and passenger vehicle sales remained flat 6,839 units.

    For FY 2013-14, the Company's top five export destinations accounted for approximately 73% and

    88% of the exports of commercial vehicles and passenger vehicle units, respectively. The Company

    continues to strengthen its position in the geographic areas it is currently operating in and exploring

    possibilities of entering new markets with market characteristics similar to the Indian market.

    The Company has set up a network of distributors in almost all countries where the vehicles are

    exported. The distribution network includes local dealers for sales and servicing products in the

    respective regions. The Company has also deputed its representatives overseas to support sales and

    services and to identify opportunities.

    Jaguar Land Rover business: JLR has significantly consolidated its position in the premium car

    segment. The strengths of JLR include iconic globally positioned brands, strong product portfolio of

    award-winning luxury and high performance cars and premium all-terrain vehicles, global distribution

    network, strong product development and engineering capabilities, and a strong management team.

    The brand-wise wholesale sales of JLR are set forth in the table below:-

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    During FY 2013-14, total sales increased to 429,861 units from 372,062 units in FY 2012-13; an

    increase of 15.5%. Jaguar volumes increased by 37.2% mainly contributed by the introduction of the

    Jaguar F-TYPE and the smaller powertrain derivative of XF and XJ and XF Sportbrake. Land Rover

    volumes increased by 11.6%, mainly contributed by the New Range Rover, New Range Rover Sport,

    and Range Rover Evoque sales. JLR exported 354,005 units in FY 2013-14 compared to 304,034

    units in FY 2012-13; an increase of 16.4%. JLR had a successful year of continued growth in all

    markets led by China up 34% from last year to record retail sales of 103,077. North America and Asia

    Pacific regions also performed strongly, up 20.2% and 27.7% to 75,671 and 22,795 respectively. The

    UK and Europe, partly reflecting the economic headwinds, showed more modest growth, up 6.2% and

    2.3% to 76,721 and 82,854 units respectively.

    Jaguar designs, develops and manufactures a range of premium cars and sports cars recognised for

    their design, performance and quality. Jaguar's range of products comprises the XF and XJ saloons,

    the F-TYPE two seater sports car and the XK coup and convertible.

    The XF, launched in 2008, is a premium executive car that merges sports car styling with the

    sophistication of a luxury saloon. The 2013 Model Year XF range also included for the first time an

    all-wheel drive version of the new V6 petrol engine for the US and European markets and a 2.0 litre

    petrol version for the US and Chinese markets which helped to grow the volumes for Jaguar in FY

    2013-14.

    The XJ is Jaguar's largest luxury saloon vehicle, powered by a range of supercharged and naturally

    aspirated 5.0-litre V8 petrol engine and a 3.0-litre diesel engine. Using Jaguar's aerospace inspired

    aluminium body architecture, the new XJ's lightweight aluminium body provides improved agility,

    and fuel and CO2 efficiency. The 2013 Model Year also included an all-wheel drive version and a 3.0

    litre V6 petrol version for the US and European markets excluding the United Kingdom and a 2.0 litre

    petrol version for the Chinese market.

    The F-TYPE, a two seat sports car, inspired by the 2001 C-X16 concept cars, with an all-aluminium

    structure and enhanced technology with the power of Jaguar's latest 3.0 litre V6 and 5.0 litre V8

    engines, was available for retail customers from April 2013 onwards and since then, has received

    numerous awards and appreciation by the auto media. In November 2013, Jaguar unveiled the F-

    TYPE Coup which went on sale in April 2014.

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    In March 2013, Jaguar unveiled two new additions to its R performance range, the XJR sedan and the

    XKR-S GT. The 550PS XJR - Jaguar's new flagship sports saloon - combines a supercar performance

    and assertive looks with the high level of luxury already associated with the XJ range. The XKR-S

    GT is the ultimate road-going but track-ready version of the XK coupe.

    At the Frankfurt Motor Show in September 2013, Jaguar revealed its first ever crossover concept

    vehicle, the Jaguar CX17, based on a new modular scalable advanced aluminum architecture. JLR has

    also announced the new Jaguar XE, a mid-sized sedan which will be built on this new modular

    architecture. This will allow Jaguar to grow its product portfolio and target high growth areas of the

    premium market.

    Land Rover designs, develops and manufactures premium all-terrain vehicles that aim to differentiate

    themselves from the competition by their capability, design, durability, versatility and refinement.

    Land Rover's range of products comprises the Defender, Discovery, Freelander, Range Rover

    (including the new Range Rover), Range Rover Evoque and Range Rover Sport (including the new

    Range Rover Sport).

    The Defender is one of Land Rover's most capable SUVs, and is recognised as an iconic vehicle in the

    segment targeting extreme all-terrain capabilities and payload/towing capability.

    The Freelander 2 is a versatile vehicle for active lifestyles, matching style with sophisticated

    technology and offroad capability. The Freelander 2, offering was significantly enhanced for the 2013

    Model Year with the introduction of a turbocharged 2.0-litre petrol engine, giving superior

    performance as compared to the 3.2-litre engine it replaces, while also reducing CO2 emissions.

    The Discovery 4 is a mid-size SUV that features genuine all-terrain capability and versatility,

    including full seven-seat capacity. Recent power train innovations have delivered an improvement in

    CO2 for the 3.0-litre LR-TDV6 engine.

    The Range Rover Evoque is the smallest, lightest and most fuel-efficient Range Rover to date,

    available in 5-door and coupe body styles and in both front-wheel drive and allwheel drive

    derivatives. Since its launch in September 2011, consumer interest and demand have been consistent

    across the globe and the car has been a major success for JLR.

    The Range Rover Sport combines the performance of a sports tourer with the versatility of a Land

    Rover. At the 2013 New York International Auto Show, Land Rover debuted the All New 2014 MY

    Range Rover Sport built on a weight saving aluminium architecture, to save upto 420kgs. The All

    New Range Rover Sport is the fastest, most agile and most responsive Land Rover ever, and has been

    a tremendous success since launch.

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    The Range Rover is the flagship product under the Land Rover brand with a unique blend of British

    luxury, classic design, high-quality interiors and outstanding all-terrain ability. The new all-

    aluminium version, was launched in the third quarter of FY 2012-13. The new Range Rover was

    declared the world's top SUV by The Sunday Times, won Top Gear magazine's ''Luxury Car of the

    Year'' and was recently awarded the maximum 5-star safety rating by Euro NCAP.

    New Product Launches: The new "Discovery Vision" Concept car was unveiled at New York

    International Auto Show in April 2014 to an enthusiastic response amongst auto media and

    journalists. Land Rover Discovery Sport (Freelander replacement) was announced as the first new

    member of Discovery family. It is expected to be available for retail sales in 2015.

    Jaguar Land Rover's performance in key geographical markets on retail basis

    United Kingdom: Against the backdrop of improved labour market conditions, rising consumer and

    business confidence and buoyed by cash compensation from the mis-selling of payment protection

    insurance, total vehicle sales jumped 12.5% compared to the previous year. Jaguar Land Rover sales

    climbed 6.2% on the year, supported by a strong performance from Jaguar (10.7% growth) and the

    launch of JLR F-TYPE convertible. 5% annual growth in Land Rover sales reflects JLR dominant

    market position in the UK for SUVs.

    United States and North America: In FY 2013-14, total passenger car sales expanded by 6.2%. The

    launch of the Jaguar F-TYPE and new Range Rover Sport helped Jaguar Land Rover beat the US

    market three times, growing sales by 19.2%. Alongside a strong expansion of business in Canada,

    total Jaguar Land Rover sales in North America grew 20.2%.

    Europe: In Germany, Jaguar Land Rover sales grew 6.5%, against a meagre 0.2% for total passenger

    cars. In Italy, Jaguar Land Rover sales edged up 1.1%, driven by Land Rover, against a total market

    contraction of 1.3%. Although in France sales fell across the board, the most surprising performance

    came from Spain where, after three years of double-digit contraction, the market rebounded by 11.7%

    and Jaguar Land Rover sales rose 14.7%.

    China: Passenger car sales reached a new peak of almost 18.4 million units in the year to March,

    growing faster than either of the previous two years. Total JLR sales in the China Region reached

    103,077 up from 77,075 in FY 2012-13. Jaguar volumes more than doubled to 19,891, while Land

    Rover sales reached 83,186.

    Although it is already the largest car market in the world, unlike the UK or US, China's car market

    remains immature, with low vehicle ownership rates and huge growth potential. A rapidly expanding

    middle class, fast rising incomes, and a strong preference for premium vehicles mean considerable

    opportunities exist for JLR to increase sales further.

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    SWOT ANALYSIS

    STRENGTHS

    One of the most established company in automobile sector

    Wide & extensive distribution and service network

    Good market penetration in the taxi & rental segment

    Expert service professionals available

    Many associations like Jaguar Land Rover, Hispanso, Macropolo etc which increases

    international presence

    Dedicated engineering and R&D department

    More than 60,000 employees

    Highly diversified product portfolio

    WEAKNESS

    Limited international presence

    Sometimes faces alleged quality and durability issues

    Not much customer