27-02-2013, 04:38 PM
PROJECT REPORT ON ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY
INDIAN AUTOMOBILE.pdf (Size: 1.13 MB / Downloads: 195)
EXECUTIVE SUMMARY
The automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new
business and manufacturing practices in the light of liberalization and globalization. The sector seems to
be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand.
The Indian automobile market is gearing towards international standards to meet the needs of the global
automobile giants and become a global hub.
A detailed analysis of Automobile industry has been covered in respect of past growth and performance.
Under this project to better understand the Industry we have used Fundamental and Technical tools to
make it more authentic n meaningful. An E.I.C approach has been followed under Fundamental Analysis
which covered effect of Recession, the impact of inflation, FDI’s, Export, GDP etc. on Automobile
Industry. The Industry Analysis has been done with the help of five forces model, BCG Matrix, SWOT
analysis, industry life cycle and the industry specific index. For Company Analysis as a part of
Fundamental tool we have undergone with the comparative analysis of TATA Motors as our leading
company with Maruti Suzuki India’s largest Car manufacturer. The fundamental aspect consists financial
and Non-Financial analysis of both the company. In the Technical aspect we have considered Share price
analysis, moving average, moving average crossover, Bollinger bands and M.A.C.D. of both the
company by keeping TATA Motors as our leading company.
At the end conclusion and recommendations have been specified so as to make the research work more
meaningful and purposeful.
ANALYSIS OF AUTOMOBILE INDUSTRY
Over a period of more than two decades the Indian Automobile industry has been driving its own growth
through phases. With comparatively higher rate of economic growth rate index against that of great
global powers, India has become a hub of domestic and exports business. The automobile sector has been
contributing its share to the shining economic performance of India in the recent years.
To understand this industry for the purpose of investment we need to analyze it by following two
approaches:
1). Fundamental Analysis (E.I.C Approach)
a. Economy
b. Industry
c. Company
2).Technical Analysis
1) FUNDAMENTAL ANALYSIS
a). ECONOMY
Economic analysis is the analysis of forces operating the overall economy a country. Economic analysis
is a process whereby strengths and weaknesses of an economy are analyzed. Economic analysis is
important in order to understand exact condition of an economy.
GDP and Automobile Industry
In absolute terms, India is 16th in the world in terms
of nominal factory output. The service sector is
growing rapidly in the past few years. This is the pie- chart
showing contributions of different sectors in Indian economy.
The per capita Income is near about Rs38,000 reflecting
improvement in the living standards of an average Indian.
Today, automobile sector in India is one of the key sectors of the economy in terms of the employment.
Directly and indirectly it employs more than 10 million people and if we add the number of people
employed in the auto-component and auto ancillary industry then the number goes even higher.
Current Scenario of Automobile Industry in Economy
With the latest available data Indian Automobile Industry is expected to grow at 9%-10% in near future,
Two wheeler segment sales grew up by 12.8% with the modest 2.6% growth rate, under this segment the
market leader Hero Honda registered growth of 12% in its domestic sales where as Bajaj Auto
disappointed as sales plunging by 23%, on the other hand car sales has been grew up by a healthy 22.7%
in last February and Commercial Vehicles reported slower sales. It is assumed that in coming festive
season to meet demand, carmakers going to produce 70000units/month more over the average
1.3lac/month with help of 5000 new hands.
BCG Matrix
In an economy, different industries are present and different industries have different growth rate as
compared to the growth of the economy. In an economy, there are a number of major industries and
they all occupy different positions in the BCG matrix according to their growth and contribution
towards the economy. In the Indian economy, some of the major sectors are FMCG, automobiles,
banking and insurance, steel, telecom, software.
Industrial Life Cycle
The industrial life cycle is a term used for classifying industry vitality over time. Industry life cycle
classification generally groups industries into one of four stages: pioneer, growth, maturity and decline.
In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are
developing, and there is high risk of failure. However, successful companies can grow at extraordinary
rates. The Indian automobile sector has passed this stage quite successfully.
In the growth phase, the product market has been established and there is at least some historical guide to
ground demand estimates. The industry is growing rapidly, often at an accelerating rate of sales and
earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually.
The cumulative growth of the Passenger Vehicles segment during April 2007 – March 2008 was 12.17
percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose
Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07
percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial
Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales of
Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent
during April- March 2008 compared to the last year. Two Wheelers registered a negative growth rate of
7.92 % during this period, with motorcycles and
electric two wheelers segments declining by 11.90
percent and 44.93% respect. However, Scooters and
Mopeds segment grew by 11.64% and 16.63% respect.
The growth rate of the automobile industry in India is
greater than the GDP growth rate of the economy, so
the automobile sector can be very well be said to be in
the growth phase.