Pritesh Parikh Pritesh Parikh

 

GOVERNMENT INITIATIVES 

 

Government’s special focus on exports of small cars, MUVs, two and three-wheelers and auto components will result in rise in share of GDP. Deregulation of FDI in this sector has helped in increasing large investments in India. The GOI’s Automotive Mission Plan (AMP) 2016–2026 promises creation of an additional 50 Mn jobs along with increasing the value of the output of the sector to up to US$ 282.65 billion.

 

 

MAJOR MARKET PLAYERS IN THE AUTOMOBILE SECTOR

 

The automobile industry is divided into four segments, namely:

•               Two-wheelers

•               Passenger vehicles

•               Commercial vehicles

•               Three-wheelers

Each of the above specified segments consists of multiple sub-segments. And these sub-segments are given in the figure given below.

 

  

 

Major Market Players in Passenger vehicles:

 

Passenger cars:

•               Maruti Suzuki (Market leader)

•               Hyundai

•               Honda

•               Tata Motors

 

Utility Vehicles:

•               Mahindra & Mahindra (Market Leader)

•               Maruti Suzuki

•               Toyota

•               Hyundai

 

Vans:

•               Maruti Suzuki (Market Leader)

•               Tata Motors

•               Mahindra & Mahindra

 

Major Market Players in Commercial vehicles:

 

Medium and Heavy Commercial Vehicles (M&HCV)

•               Tata Motors (Market Leader)

•               Ashok Leyland

•               VE Commercial Vehicles

 

Light Commercial Vehicles (LCV)

•               Mahindra & Mahindra (Market Leader)

•               Tata Motors

•               Ashok Leyland

 

Major Market Players in Two Wheelers:

 

Motorcycles

•               Hero (Market Leader)

•               Honda

•               Bajaj Auto

•               TVS

 

Scooters

•               Honda (Market Leader)

•               Hero

•               TVS

•               Mahindra Two Wheelers

•               Piaggio

 

Mopeds

•               TVS

 

Electric Two Wheelers

•               Hero

 

Major Market Players in Three Wheelers:

 

Passenger Carrier

•               Bajaj Auto (Market Leader)

•               Piaggio

•               Mahindra & Mahindra

•               Atul Auto

 

Load Carrier

•               Piaggio (Market Leader)

•               Mahindra & Maindra  Atul Auto

•               Scooters India Ltd.

 

 

INDIAN TWO-WHEELER MARKET

 

Indian Two-Wheeler Market is noticing a continuous upsurge in demand owes a lot to the launching of new attractive models at affordable prices, design innovations made from youths’ perspective and latest technology utilized in the manufacturing of vehicles. The sales volumes in the two-wheeler sector shot up from 15 percent to 24 percent between 2008-09 and 2013-14. At the end of 2014, the global business involving two-wheeler designing, manufacturing, engineering and selling was at an average of US$ 3.5 billion per manufacturer. However, India's Hero MotoCorp - the world's largest two-wheeler manufacturer and seller clocked an average of US$ 15 billion on the same lines. The domestic motorcycle sales volume moved up to 10 percent, whereas the scooter segment recorded a growth of 30.7 percent in sales volume. The motorcycle segment lags behind due to the fact that the recently launched gearless scooters cater to the needs of both men and women, while motorbikes are a segment preferred by men only.

The following defines the growth of two-wheeler sector industry in India:

Relatively Low Cost of Two-Wheelers in India.

Steep Fall in Fuel (especially petrol) Prices.

Reduced Excise Duty.

High Interest Rates on Passenger Cars and LCVs.


Though, further growth in Indian Two-Wheeler Industry will depend heavily on people’s personal disposable incomes that rely on India's economic growth in days to come.

Indian Two-Wheeler Industry is the largest in the world as far as the volume of production and sales are concerned. India is the biggest two-wheeler market on this planet, registering an overall growth rate of 9.5% between 2006 and 2014. The volume growth recorded in the 2014-15 fiscal year stood at a commendable 14.8 %. The 'Make in India' campaign of the Government of India is also going to attract more foreign investment into Indian Two-Wheeler Industry creating further growth opportunities in the coming years.

 

 

MARKET SIZE OF AUTOMOTIVE INDUSTRY IN INDIA

 

According to the Society of Indian Automotive Manufacturers (SIAM), Indian automotive sector today is a $74 billion industry and by 2026, the industry is expected to achieve a turnover of $300 billion- clocking a CAGR of 15 percent. The Automotive Mission Plan (AMP) was drafted in 2006 to map the aspirations of the auto and auto component industry, to promote India as a preferred global manufacturing destination and introduced intervention and prescription mechanisms for promoting the industry.

 

The first phase of the plan was called Automotive Mission Plan 2006-16 and focused broadly on five aspects: Economic growth, passenger comfort, sustainability, quality, and cost competitiveness. As per the ministry of heavy industries and public enterprises, for FY 2014, the automotive industry formed 7.1 percent of the GDP, 45 percent of the manufacturing GDP, contributed 4.3 percent to exports, and 13 percent of excise revenues. During 2006-16, the industry created 19 million additional jobs and saved 8.6 billion litres of fuel. 

 

TRENDS IN AUTOMOTIVE SECTOR  

Digitization, rise in automation, and new business models has revolutionized the automobile industry. Here are few disruptive technologies which are reasons for growth in automobile industry:

 §  Mobility services

The revenue pool of the industry is seeing rise in on-demand mobility services and data-driven services. This promises $1.5 Tn in additional revenue potential in 2030. This may lead to decline of private-vehicle sales, but this decline will be offset by rising sales in shared vehicles that need replacement more often due to higher usage and wear and tear.

 §  Autonomous Technology 

Advanced driver-assistance systems (ADAS) will play a crucial role in preparing regulators, consumers, and corporations for the medium-term reality of cars taking over control from drivers.  

§  Electrification

Stricter emission laws, lower battery costs, and increasing consumer acceptance will create strong momentum for penetration of hybrid, plug-in, battery electric, and fuel cell vehicles in the coming years. 

 §  Augmented Reality

Augmented reality will assist driver safety and impact areas from designing to repair. Augmented reality can help mechanics visualize what needs to be fixed before touching a wrench. This will lead to saving extensive time and money

§  3D Printing

3D printing makes it cost-effective to build things. For example, rebuilding cars after a crash may lead to the same car being rebuilt and recycled over its lifetime to serve different lifestyles.

§  Machine learning based cyber security

The cybersecurity systems are self-adapting and self-defending, creating ways to guard against new threats without any humans needing to program the system to identify specific incoming trouble

§  Predictive Analytics

Predictive analytics uses data mining, statistics, modelling, machine learning and AI to analyse current data and make future predictions. Such intelligent technology will be critical in dealing with volatility, cost pressures, market shifts and competition.

 

LATEST MERGERS AND ACQUISITIONS

 

§  Merger of Ashok Leyand and Hinduja Foundries

Ashok Leyland’s merger with the auto-component maker Hinduja Foundries is considered a very pragmatic decision by the Hinduja group. The board of both the companies approved this decision in September 2016. Hinduja foundries is a very critical supplier to Ashok Leyland and constitutes to one-third of its revenue.

 

§  Motherson Sumi acquires auto business unit of Abraham and Co

Hungary based Abraham and Co was acquired by auto component major Motherson Sumi Systems Ltd (MSSL) for about Rs.77 crore. MSSL through its 100% subsidiary would acquire the land, building and machinery of Abraham and Co Ltd for a purchase price consideration of EUR 10.4 million.

 

§  Mahindra & Mahindra’s acquisitions

The company acquired SsangYong, Pinninfarina and BSA in the past year aligning its business strategy by creating more lifestyle brands. 

 

§  Nissan acquires 34% stake in Mitsubishi Motors

Nissan acquired 34% equity stake in Mitsubishi Motors to become its largest shareholder. Going forward Mitsubishi Motors will become a part of the global alliance with Nissan and Renault.

 

§  Samsung buys Harman International for $8 billion

Samsung Electronics bought US auto parts maker Harman International industries for $8 billion. Also, this is company’s first venture to enter the growing market for automotive technology to manufacture connected cars. This deal has given the South Korean manufacturer an edge in the global market for online-connected auto parts. This deal is also considered to be the Samsung’s biggest deal in the firm’s history.

 

§  Ashok Leyland acquires LCV business from Nissan Motor Corporation

Ashok Leyland completed the acquisition of Nissan Motor’s stake in each of its three joint ventures formed between the two companies. Under the new deal Ashok Leyland will build vehicles which are based on Nissan’s technology and design under a licensing agreement.

 

§  Bharat Forge acquires Walker Forge Tennessee, PMT Holdings

Indian Auto component manufacturer completed the acquisition of Walker Forge Tennessee and PMT Holdings for around Rs. 95 crores. Walker Forge Tennessee is renamed as Bharat Forge Tennessee. The company is a supplier of complex and high alloy steel, engine and chassis components and has a diverse group of customers across automotive and industrial sector.

 

Pritesh Parikh

Pritesh Parikh Creator

PGDM student. finance, economy

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