Indian Automobile sector tells how it transformed from oligopoly to monopolistic competition over the years

1. PRESENTED BY:
Shashank Kapoor
Nidhi Aggarwal
Amandeep Badwal
Narayan

2. INTRODUCTION
The Automotive Industry in India is one of the larger markets in the
world and had previously been one of the fastest growing
globally, but is now seeing flat growth rates.
However production of passenger vehicles in India was recorded at
3.23 million in 2012-13 and is expected to grow at a compound
annual growth rate (CAGR) of 13 per cent during 2012-2021
AUTOMOBILE
2 WHEELERS
3 WHEELERS
PASSENGER
VEHICLES
COMMERCIA
L VEHICLES

3. The growth journey
Early to mid 90s
Initial Years
Manufacturing was licensed
•Seller’s market and long
•High Customs duty on import
waiting periods.
•Steep excise duties &
sales tax
•Delicensing in 1993.
•2 Major players:
Premier Automobiles Ltd.
& Hindustan Motors
•Decrease in customs &
excise duty.
1980s
•Entry of Maruti Udyog Ltd.
•Auto finance boom- more
•Better product,
players (foreign banks &
with government support.
non banking companies,
•Seller’s Market.
better schemes).
•Long Waiting Periods.
Mid 90s – Early 2000s
•Buyers market.
•Easy Auto finance.
•Manufactures
diversifying into related
activities: finance lease,
insurance and used car
market.

4. Automotive Companies in India
Major Indian Companies
Major Multi-National Companies

5. Key Growth Drivers

6. Market shares
Passenger Vehicles
Market Share
Commercial Vehicles
Market Share
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)

7. Sales
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)

8. example

9. exports
Sources:
For automobile sales and export data: Society of Indian Automobile Manufacturers (SIAM)For auto component
revenue and export data: The Automotive Component Manufacturers Association of India (ACMA)

10. Transformation from
Oligopoly to
Monopolistic Market

11. What is Oligopoly market?
• Market structure is featured by a few firms.
• Strategic Interaction - Reaction to competitor’s pricing and
marketing strategies.
• Product can be homogenous or differentiated.
• Considerable barrier to entry for new firms.
• Possibility of Collusion, leading to
illegal price setting.
• On the other hand, if no collusion,
possibility of fierce competition
among the few firms.

12. What is Monopolistic market?
• Market structure characterized by many
firms.
• Product differentiation allows a Range
of prices.
• Monopoly over a small range of price.
• Barriers to entry and exit very minor.
• Branding, advertising and personal
selling to differentiate the product.

13. The Causes of Transformation – The First Big Step
• Sanjay Gandhi owned Maruti Technical Services Limited
which was liquidated.
• After his death, Indira Gandhi government collaborated with
Suzuki Motors, a Japanese firm, for collaboration –
Formation of Maruti Udyog Limited and renamed later
Maruti Suzuki in 2007.
+
=

14. The Causes of Transformation
• Policy changes introduced in 2 doses:
1. Partial
de-regulation
in
1985
–
Eased
licensing
requirements, allowed selective capacity-expansion, partial
relaxation of controls with regard to foreign collaboration, imports.
However, trade and investment regulations continued,
constraining growth of big business houses.
2. 1991 policy changes – Dispensed with bulk controls and
regulations
• Partial de-regulation allowed technology inflow into India.
• New Industrial Policy in July 1991 by Congress Government led by
Mr. Narsimha Rao:
 It introduced Liberalization policies .
• April 1993 – Government removed motor cars from list of industries
reserved for compulsory licensing.

15. Effects of the Transformation
• New firms, including foreign players, entered with modern
engineering, efficient processes and modern shop-floor layouts.
• Indian automobile industry grew at 14.31% per annum in post-1991
era compared to 8.56% per annum during 1985-91.
• Delicencing of sector attracted many major Global OEMs
(GM, Ford, Honda, Hyundai etc.) to start assembly in India.
• Demand for small and compact cars by highly educated, wellinformed Indian customers.
• Easy Auto Finances attracted the buyers leading to sharp rise in the
demand.

16. Indian Automobile Industry – The Monopolistic Market

17. Current Trends in the Current
Monopolistic Automobile Market
• Considering huge market potential, production of passenger cars is
projected to grow at CAGR of 11% between 2010-11 and 2013-14.
Comparison:
• 1982
Number of manufacturers: 3
Vehicle sales: 20000
Number of models: 3
• 2011:
Number of manufacturers: 20
Vehicle sales: 23,80,000 approx.
Number of models: 78

18. KEY Competitors
Source: http://www.imaginmor.com/automobileindustryindia.html

19. example

20. KEY Competitors Contd…
Source: http://www.imaginmor.com/automobileindustryindia.html

21. KEY Competitors Contd…
Source: http://www.imaginmor.com/automobileindustryindia.html

22. KEY Competitors Contd…
Source: http://www.imaginmor.com/automobileindustryindia.html

23. Sources of data
 www.wikipedia.org
 www.automobileindia.com
 www.investropedia.com
 For automobile sales and export data: Society of Indian Automobile
Manufacturers (SIAM) and for auto component revenue and export
data: The Automotive Component Manufacturers Association of
India (ACMA)
 Economic Times
 http://www.imaginmor.com/automobileindustryindia.html