Market Analysis of Automobile Industry in India 2013

Topics: Suzuki, Mercedes-Benz, Maruti Suzuki Pages: 8 (2316 words) Published: September 19, 2013
1. Introduction
Automobile industry is the key driver of any growing economy. Due to its deep forward and backward relation with almost every segment of the economy, the industry has a string and positive multiplier effect and thus propels progress of a nation. With the falling demands for vehicles in most of the mature markets due to the global recession, high fuel costs and urban driving restrictions, the industry is focusing its attention on expanding middle classes in the new powerhouses of China, India, Brazil, and other growing nations. India’s per capita real GDP growth at 8.6% (CAGR) over the six year period 2005-2011 had contributed substantially towards raising the standard of living of households, which in turn had been one of the key drivers of growth for the country’s automobile industry. But over 2011-12 and 2012-13, inflationary conditions, firm interest rates, rising petrol prices as well as weak monsoons adversely impacted disposable incomes causing a consumption squeeze. [1] According to the global automotive executive survey 2013 done by KPMG, 86% of the respondents feel market growth in emerging nations is an important trend- a view shared by auto executives from both the TRIAD market(Japan, Western Europe and North America) and the BRICs. The developing markets along with e-mobility and the changing urban environment had brought about a change in the automobile industry. 56% of the respondents in the BRICs feel innovative urban vehicle design concepts are an important trend compared to 55% from the TRIADs. The Indian automobile market is one of the competitive markets with low costs, which make it an attractive assemble base for foreign automobile manufacturers. India is also the second fastest growing automobile market in the world after China.[2] 2. Market Segmentation

The automobile industry has been broadly divided into the two wheelers, passenger vehicles, commercial vehicles and three wheelers. The various sub divisions of each segment is shown in the following figure 2.1. Figure 2.1. Market Segmentation of Automobile Industry

Source http://www.ibef.org/download/Automotives-March-220313.pdf

Source
Figure 2.1. Market Segmentation of Automobile Industry
Source http://www.ibef.org/download/Automotives-March-220313.pdf

Source

The two wheelers dominate the production volumes in FY 2012, which contributed for more than three quarters of the total automobiles production in the country. India is the world’s 2nd largest two wheeler producer and the 4th largest commercial vehicle producer.

Figure 2.2. Market share by volume (FY12) Source http://www.siamindia.com/scripts/market-share.aspx 2. Passenger Vehicle Segments

The segments in the passenger vehicle industry are done based on the price, utility and the length of each vehicle. There are different parameters based on which the cars available in the Indian market are categorized. The technically defining parameters are based on the length of the car, engine capacity, features offered, seating capacity and structure of the car etc. SIAM or Society of Indian Automobile Manufacturers divides the Indian passenger vehicles in the segments A1, A2, A3, A4, A5, A6, B1, B2 and SUV. The classification is done solely based on the length of the automobiles. The details of the segments are mentioned as in table 2.1. Car Segment| Length of the car/Model type| Car model belonging to the segment| A1| Up to 3400mm| Nano|

A2| 3401 to 4000mm| Alto, i10, Zen, Wagon R|
A3| 4001 to 4500mm| Manza, Logan, Dzire, City|
A4| 4501 to 4700mm| Corolla, Octavia, Optra|
A5| 4701 to 5000mm| Accord, Camry, Sonata|
A6| More than 5000 mm| Mercedes S class|
B1| Vans| Versa, Omni|
B2| MUV/MPV| Sumo, Innova|
SUV| SUV| Vitara, CRV|
Table 2.1. Passenger car segmentation based on length
However, though it is simple and easy to divide the passenger cars...
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