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of Business Environment

The document discusses the automobile industry. It provides background on the origins and size of the industry. It then analyzes the industry using a PESTEL framework, identifying factors such as the government's promotion of the industry through policies supporting investment and research. It also discusses social trends like urbanization and preferences for affordable, fuel-efficient vehicles. The analysis concludes that while the Indian automobile industry is growing rapidly, competition is intense and local firms must develop capabilities to remain profitable and export globally.

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Husen Ali
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209 views11 pages

of Business Environment

The document discusses the automobile industry. It provides background on the origins and size of the industry. It then analyzes the industry using a PESTEL framework, identifying factors such as the government's promotion of the industry through policies supporting investment and research. It also discusses social trends like urbanization and preferences for affordable, fuel-efficient vehicles. The analysis concludes that while the Indian automobile industry is growing rapidly, competition is intense and local firms must develop capabilities to remain profitable and export globally.

Uploaded by

Husen Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Topic: Automobile

Submitted to: Submitted by:


Mr. Akashdeep Joshi
Neha Singh(11910511)
(Assistant professor of Mittal School of Business) Swastika (11910517)
Amit Kumar(11910555)
Aman Kumar(11910610)
Ritik(11910614)
Naseem Anwar(11910737)
Introduction
 The word automotive comes from greek autos (self), and latin motives (of
motion), referring to any form of self-powered vehicle.
 The automobile industry comprises a wide range of companies and
organizations involved in the design, development, manufacturing,
marketing, and selling of motor vehicles.
 The automobile industry began in 1860.
 It is one of the world’s largest economic sectors by revenue.
 In the early 1980's, the indian government made limited attempts at
reforming the automotive industry, and entered into a joint venture with
suzuki of japan.
 Maruti's vehicles are estimated to account for as much as 70 per cent of
india's car population.
PESTEL Analysis

Political Factors:
In 2002 the Indian government formulated an auto policy that aimed at promoting in integrated, phased
enduring and self-sustained growth of the Indian automotive industry.
Allows automatic approval for foreign equity investment up to 100% in the automotive sector.
Ensure balanced transactions to open trade at minimum risk to Indian economy and local industry.
Allows automatic approval for foreign equity investment up to 100% in the automotive sector and does not
lay down any minimum investment criteria.
Promoting multi-model transportation and the implementation of mass rapid transport system.
Economical factors:

 The level of inflation Employment level per capita is right.


 Government has granted concessions, such as reducing interest rates for export financing.
 Indian economy has grown at 8.5% per annum.
 More than 90% of the Commercial vehicles purchased is on credit.
 Weighted tax deduction of up to 150% for in-house research and R & D activities.
Social Factors:

 The average family size is 4 which makes it favorable to buy a 4 wheeler.


Car priced below USD 12000 accounts for nearly 80% of the market.
 Vehicles priced between USD 7000-12000 for the largest passenger segment in the car market.
 Preference for fuel efficient cars with low running cost.
 Growth in urbanization, 4th largest economy by ppp index.
 Car priced below USD 12000 accounts for nearly 80% of the market.
Technological Factors:

 The government of India is promoting National Automotive Testing and R&D infrastructure project
(NATRIP) to support the growth of auto industry in India.
 Technological solutions help in integrating the supply chain, hence reduce losses and increase
profitability.
 With the development of evolution of alternate fuels, hybrid Cars has made entry into the market
 With the entry of global companies into the Indian market, advanced technologies, both in product and
production process have developed.
 Major global players like Audi, BMW, Hyundai etc. have setup their manufacturing units in India.

 
Environmental Factors:

 Physical infrastructure such as roads and bridges effect the use of automobile if there is good availability of
roads or the roads are smooth then it will effect the use of automobile.

 With the entry of global companies into the Indian market, advanced technologies, both in product and
production process have developed.

 With the development or evolution of alternate fuels, hybrid cars have made entry into the market.
Legal Factors:

 Legal provision relating to environmental population by automobiles


 Legal provision relating to safety measures.
 Confirms the government’s intention on harmonizing the regulatory standards with the rest of the world.
 Establish an international hub for manufacturing small, affordable passenger cars as well as tractor and
two wheelers.
 Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.
Step taken by Maruti Suzuki to change its
business scenario:

 Number one Indian automotive assembler commanding more than a 70% share of the Indian passenger vehicle
market.
 It is also a reasonably profitable venture with after tax loss of about $25 million (50 % decrease over the
previous year).
 Due to competition between various company car ,Maruti Suzuki is selling its products by giving Rs.50000 in
every product.
 Trying to hedge its risk by diversification.
 Trying to convince people regarding Electric car which might be coming by 2022.
conclusion

 The Indian automobile industry, although growing rapidly, is in a state of flux.


 Multi-national firms decide to use India as a production base from which vehicles are exported to the rest of the
world, more than half a dozen firms may be able to remain profitable in India.
 Indian assemblers have a tight hold over the small-car market due to their low cost supplier base and the tariffs
levied on import components.
 For Indian component makers and assemblers, product development capability is key, in order to rejuvenate
their product lines, enhance their reputation, and export their products to the markets in developed countries.

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