Small Car Big Profit

INTRODUCTION TO AUTOMOBILE
SECTOR
 The automotive sector is one of the key segments of
the economy having extensive forward and backward
linkages with other key segments of the economy.
 It contributes about 4 per cent in India's Gross

Domestic Product (GDP) and 5 per cent in India's
industrial production.
 This sector has generated about 4.5 lakh of direct

employment and about one crore of indirect
employment.
India holds huge potential in the automobile
sector including the automobile component
sector owing to its technological, cost and
manpower advantage.
Indiahas a well developed, globally competitive

Auto Ancillary Industry and established
automobile testing and R&D centers.
Indiaenjoys natural advantage and is among the

lowest cost producers of steel in the world.
Small Car Segment in India
 The fast growing auto market of India may soon become

the small car hub of the world. India is likely to soon
dethrone Japan from its no. 1 position.
 India became the world's second biggest market of small

cars by leaving behind Brazil in 2009.
 Japan had produced 3.4 million compact cars between

January and December in 2009 , compared to India's
1.48 million units in the same period. India's top car
makers have collectively sold 720 , 000 units of compact
cars during the first six months of this year. It is a growth
of 32% compared to the same period last year.
Why Small Car?
 A large pie of the automobile market belongs to the small cars. Some of the
major factors influencing the hike in the sales of small autos are as follows:
 Price: The price of the new small cars is much less than the price of the new
luxury cars. This difference in price makes it more salable and affordable.
When the price of the new small car is less the loan requirement is also less.
The car loan if small can be paid back faster.
 Fuel consumption: One of the major concerns of the car buyers is the
consumption of fuel. The price of the fuel is rising. When the car buyers
seek the new car quotes they look for the fuel consumption in the technical
specifications. If the average is not good it can prove to be an elephant for
the owner.
 Maintenance: The maintenance of the auto is very easy and comparatively

cheaper than that required for luxury cars.

 Spare parts: The spare parts of small cars are easily available and cheap too.
 Insurance: At time and especially the luxury cars, the insurance can prove to
be too costly. If you buy the car you can be assured of low cost auto
insurance because the price of the small is comparatively quite less.
 Handling: The center of gravity in case of small vehicles is lower in

comparison to other cars. This makes the car easy to handle and maneuver
sharp turns without flipping. This reduces the chances of accidents too.
 Eco-friendly: The traffic rules especially those pertaining to emission and

pollution are becoming stricter day after day. The emission of the new small
cars is usually within the limits specified by the traffic department.
 Comparison: The manufacturers have understood the market trend and have
started manufacturing small cars in bulk. The buyer can request for the online
car quotes, compare the response and conclude about the cheapest new cars.
 Size: The size of the small car is small enough to be driven easily in crowded
places. The parking space required by that is also comparatively very less
Market Overview- Key Players in Small Car
Segment
Others, 5.73
Honda, 5.33
Tata Motors,
17.19
Maruti, 50.37
Hyundai, 19.17
Maruti Suzuki
 India's largest car maker Maruti Suzuki has registered
28% sales growth in November this year. The company
has sold 112 , 554 units in the month compared to sales
of 87 , 807 units in the same period last year.
 The company has exported 10 , 051 units in the month

also. The company has also crossed sales of 1 lakh units
in the second consecutive month.
 Maruti has reported sales increase of 32.2 percent in its

A2 segment , comprising Alto , Wagon-R , Zen , Swift ,
Ritz and A-Star at 74 , 063 units.
Tata Motor Group
 Tata Motors Group , including Jaguar Land Rover , has
posted sales growth of 6% in November 2010.
 Nano sales have not been very impressive. It was
reported that the company has reported one per cent
increase in its sales at 54,622 units sold during
November compared to 54,108 units sold in the year-
ago
 It was reported that the company's latest offering Nano's
sales during the month stood at 509 units, which was
down by 85 per cent over November last year.
 Indica range reported sales of 5,716 units, down by 37
per cent from November 2009.
Hyundai Motor India
Hyundai Motor India has posted domestic sales
growth of 12% in November 2010. The
company has sold 31 , 540 units in the domestic
market in the month compared to 28 , 162 units
sold in November 2009.
A2 segment (Santro, i10, i20) 40,347 units;

General Motor India
General Motors (GM) India has recorded sales
growth of 17.67% in November 2010. The
company has sold 8 , 376 units of its products in
the month. It had sold 7 , 118 units in the same
month last year.
The company has sold 2 , 786 units of Spark ,

617 units of Cruze and and 2 , 547 units of new
small car Beat in November 2010
Future prospect of Small car segment
 Nissan Motors plans to export 250,000 vehicles manufactured in its
India plant by 2011.
 General Motors announced its plans to export about 50,000 cars
manufactured in India by 2011. By 2010, India is expected to
witness over Rs 30,000 crore of investment.
 Maruti Udyog has set up the second car with an investment of Rs
6,500 crore.
 Hyundai will bring in more than Rs 3,800 crore to India.
 Tata Motors will be investing Rs 2,000 crore in its small car project.
 General Motors will be investing Rs 100 crore and Ford about Rs
350 crore.
 Ashok Leyland and Tata Motors have each announced over Rs
1,000 crore of investment.
SWOT Analysis
Strengths
 Automobile industry is an established and an evergreen

industry.
 India is the strongest player in the small car segment of

the global automobile market
 Indian companies are the best cost innovators
 The automotive industry has long been known for its

development and promulgation of the assembly-line.
Weakness
Indian is lacking in proper infrastructure.
This is slowing the pace of growth of auto

industry
Companies are not improving after sale services

Opportunities
 The automotive ecosystem is in the midst of significant change, with
increasing challenges in consumer demands, technology development,
and globalization.
 While demand for incumbent technologies will remain strong, alternative

power trains could capture more than 20 percent of the global market by
2020, depending upon boundary conditions such as fuel taxation and
emissions regulation set by governments as well as oil price development.
 storage is in the heart of the next generation of efforts for fuel economy.
 More realistic scenario will emerge for technologies using Hydrogen as

automotive fuel.
 Intelligent use of NCES (Non conventional energy sources) for powering

Public Transport.
Threats
 Global Crisis
 Companies not focusing on R & D are under great

risk
 High competition from foreign players
 Lack of technology for Indian companies

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INTRODUCTION TO AUTOMOBILE

 It contributes about 4 per cent in India's Gross

 This sector has generated about 4.5 lakh of direct

Indiahas a well developed, globally competitive

Indiaenjoys natural advantage and is among the

 The fast growing auto market of India may soon become

 India became the world's second biggest market of small

 Japan had produced 3.4 million compact cars between

 Maintenance: The maintenance of the auto is very easy and comparatively

 Handling: The center of gravity in case of small vehicles is lower in

 Eco-friendly: The traffic rules especially those pertaining to emission and

 The company has exported 10 , 051 units in the month

 Maruti has reported sales increase of 32.2 percent in its

A2 segment (Santro, i10, i20) 40,347 units;

The company has sold 2 , 786 units of Spark ,

 Automobile industry is an established and an evergreen

 India is the strongest player in the small car segment of

 Indian companies are the best cost innovators

 The automotive industry has long been known for its

Indian is lacking in proper infrastructure.

This is slowing the pace of growth of auto

Companies are not improving after sale services

 While demand for incumbent technologies will remain strong, alternative

 More realistic scenario will emerge for technologies using Hydrogen as

 Intelligent use of NCES (Non conventional energy sources) for powering

 Companies not focusing on R & D are under great

 High competition from foreign players

 Lack of technology for Indian companies

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