Analysis of Macro-Strategy Dynamics: Automotive Industry

Topics: Automotive industry, Automotive industry by country, Volkswagen Group Pages: 9 (3029 words) Published: June 9, 2013
Analysis of Macro-Strategy Dynamics: Automotive Industry

1.1 1.2 Background and scope
India is one of the largest markets and one of the fastest growing markets in the world for an automotive industry. By 2015 the annual vehicle sales are projected to increase by 4 million units per year. In the year 2010 India was crowned as the second fastest growing automobile market in the world after china, and is a home to 40 million cars in which 37 million are produced in the country. India has emerged as fourth largest exporter of cars in the year 2009. Automobile industry of India can be broadly classified under passenger vehicles, commercial vehicles, three wheelers and two wheelers, with two wheelers having a maximum market share of more than 75%. Automobile companies of India, Korea, Europe and Japan have a significant hold on the Indian market share. Tata Motors produces maximum numbers of mid and large size commercial vehicles, holding more that 60% of the market share. Motorcycles top the charts of two wheelers with Hero Honda being the key player. Bajaj by far is the number one manufacturer of three wheelers in India. The car manufacturers capturing over 82% of the total market share majorly rule passenger vehicle section. Maruti since long has been the biggest car manufacturer holds more that 50% of the entire market. The Indian automotive industry is dominated by around 500 players, which account for more than 85% of the production. The turnover of this industry has been growing at a mammoth 28.05% per annum from 2002-03 onwards, which clarifies its emergence as one of India's fastest growing manufacturing sectors. During 1990s, the auto components market in India used to be dominated by supplies to the aftermarket with only 35% exports sourced by global Tier 1 OEMs (Original equipment Manufacturers) The industry made a sustained shift to the global Tier 1 market and today, the component manufacturers supply 75% of their exports to global Tier 1 OEMs and the remaining to the aftermarket. This is largely due to the growing capability of the Indian component suppliers in understanding technical drawings, conversance with global automotive standards, economically attractive costs (manufacturing costs are 25%-30% lower than its western counterparts), flexibility in small batch production and growing information technology application for design, development and simulation. Besides the burgeoning demand of auto components from global majors, the domestic automobile industry has been showing a sparkling growth caused by increasing customer base and affordable loans. Based on this, the turnover of the Indian auto component industry is expected to touch US$ 18.7 billion by 2009 and estimated to reach US$ 40 billion by 2014.

1.2 Pestel Analysis
Pestel analysis gives information about the macro-environmental influences that might affect organizations. Which categorizes into six main types: political, Economic, Social, Technological, Environmental and Legal. Although there will be many changes occurring in the macro-analysis it allows the organization to have the in depth study of all strength and weakness in the market and helps to manage the obstacle which are in the way of the growth of the company. 1.2.1 Political Factors

India is the third largest democratic countries in the world, with a stable government after independence for more than 60 years. Surviving without political turbulence properly governed by law. The four pillars of democracy is well established in the country and the people are willing to go with the democracy. There are two major political parties in the central government namely Indian National Congress and Bharathiya Janatha Party both these parties follow the same political and economic polices where there are no complications in the structure. Indian Government has changed its role from controller to facilitator with prime focus...
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