The year passed by has proved to be a tremendous year for Automobile companies. They have registered record number of sale on their vehicles. Not only this, the industry continues to tread on a high growth path for the current fiscal year. We’ll have a look at the automobile industry as a whole, Including the current fiscal year & announcements made by companies.
INDUSTRY AS A WHOLE:
The Indian automobile industry is the seventh largest in the world with annual production of 2.6 million units in 2009. In the same year, it emerged as a 4th largest exporter of Automobiles behind Japan, South Korea and Thailand. The Gross turnover of the industry was around 40 million in yr 2008 and with the momentum it is growing, the automotive mission of 2006-16 to have an output capacity of $145bilion doesn’t seems like impossible. If we have a look at the domestic market share and the production trends, 80% of it is from 2 & 3 wheelers whereas rest 20% is of commercial and passenger vehicles. Similar is the case of domestic sales and exports of automobiles which can be explained through the graphs below.
In the two-wheeler industry Hero Honda, Bajaj & TVS have attained exceptional growth rate as a whole and have already started the current fiscal year with tremendous sales in Q1. TVS is aiming to increase their market share to 20% from current 15% by increasing the sales of Wego and by exporting 50,000 three-wheelers this year. This segment of the industry is going to face enormous competition not only among the top 3 market leaders but also from the companies like Kinetic, Suzuki, Yamaha etc who have started the year 2010 with great plans and announcements. Yamaha is going to increase its investment from 600 to 800 cr so as to produce vehicles for exports. The company is eyeing to increase its market share to 10% this year from current 7. 75%. It is going to launch 3 new models ranging from 47,000 INR to 53,000INR. New entrants like Mahindra entering the motorcycle segment this year can also come as a surprise for the 2 wheeler manufacturers.
Similarly there is an intense rivalry in commercial vehicle segment too. Big foreign brands are coming in and setting up their manufacturing plants in India to meet country’s demand and later to export from here. Almost all foreign brands have already launched their vehicles for every segment of the market and have started giving tough competition to leaders like Maruti & Hyundai. Maruti is looking at gaining 50 % market share where as AUDI has expanded their dealership network in India and aimed to have 25% market share by 2010. Companies like Honda, Toyota are making huge investments in Rajasthan and Karnataka respectively to produce variants serving all the segments. Not only this, companies are also planning to launch new models with CNG & LPG Variants. Government policies are also favoring the Manufacturer in producing new innovative and quality product at reasonable prices. The Govt. of India has given deductions for in-house R&D from 150% to 200% where as for outsourced R&D from 100% to 125%, thus encouraging the producers to work towards innovation. With change in demographic profiles and steady increase in per capita income of people in rural areas, it has become a potential market for the products from various segments. Companies have already started targeting such kind of untapped markets. Big companies like Mercedes have announced that they are going to target tier II cities in Gujarat and Kerala. Old giants like Ambessador and Premier automobiles are also set to join the race. Not only OEM’s but the tier 1 & tier 2 suppliers are also growing. They are also investing into new plants and thus increasing their production to meet the required demand without compromising on quality. For e.g. Alf engineering which is into manufacturing of chassis is coming up with their plants in Hosur and chakkan.
We can all imagine the kind of growth the industry is going to have and the competition that companies are going to face. Marketers are going to face the pressure and new challenges. They need to come up with stand alone strategies to take their respective companies to new heights. Thus the 4A’s of rural marketing has now become equally important as 4P’s of marketing.
At last, since contribution of agriculture to Indian GDP is declining, it is the manufacturing industry which is going to contribute the most, thus providing enormous job opportunities.
