The Automobile Sector Essay Example for Free

The Automobile Sector Essay The automobiles sector is divided into four segments – two-wheelers (mopeds, scooters, motorcycles, electric two-wheelers), passenger vehicles (passenger cars, utility vehicles, multi-purpose vehicles), commercial vehicles (light and medium-heavy vehicles), and three wheelers (passenger carriers and good carriers). The industry is one of the key drivers of economic growth of the nation. Since the delicensing of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country. The world standings for the Indian automobile sector, as per the Confederation of Indian Industry, are as follows: * Largest three-wheeler market * Second largest two-wheeler market * Tenth largest passenger car market * Fourth largest tractor market * Fifth largest commercial vehicle market * Fifth largest bus and truck segment The auto sector reported a robust growth rate of 26 percent in the last two years (2010-2012). The BSE AUTO Index outperformed the benchmark Nifty by 79%, 12% and 19% in FY10, FY11 and FY12, respectively. However, the sector has shown a sluggish growth of 12 percent in 2012. The trend is likely to stay with a 10 percent growth outlined for 2013 citing high ownership costs (fuel costs, cost of registration, excise duty, road tax) and slow rural income growth. Solid but cautious growth is expected over the next few years. However, from a long-term perspective, rising incomes, improved affordability and untapped markets present promising opportunities for automobile manufactures in India. According to Macquaire equities research, sale of passenger vehicles is expected to double in the next four years and growth anticipated is higher than the 16 percent achieved in the past 10 years. Two-wheeler vehicle segment is expected to show slow growth of 10 percent CAGR over the period of 2012-2016, suggests the report. The Government recognizes the impact of the sector on the nation’s economy, and consequently, the Automotive Mission Plan 2016 launched by it seeks to grow the industry to a size of US $145bn by 2016 and make it contribute 10 percent to the nation’s GDP. The ICRA analysis of the Indian market projects heavy growth for competitively priced sports-utility-vehicles or SUVs and two wheelers. A number of major global brands like Honda, Suzuki, General Motors and Hyundai have launched their products in the SUV segment of the Indian automobile market. An average of 11. 5% growth in the two-wheelers sales in 2004-2007 has kept a number of global companies interested in this segment as well. The market has been moreover bolstered by a healthy rise in the sales of heavy commercial vehicles, and the presence of a strong auto component industry that now ranks 2nd in the world. One of the best things to happen for the Indian automobile market in the recent years was its telling improvement in the export sector. There was a 56% growth in exports from 2003 to 2004. Although economy cars continue to hold the lions share of the export market, vehicles worth more than USD 1 billion were also exported in 2004, for the first time in history. This increasing demand for Indian cars on the foreign shores has helped the countrys automobile industry in two significant ways. First, it has decidedly contributed to the economic growth of the industry. Secondly, it has helped to improve the image of the Indian manufacturing infrastructure at a global level. This increased confidence has resulted in more and more foreign brands opening manufacturing units in India, directly contributing to economy and employment. With a number of foreign brands joining ranks with the domestic manufacturers, the Indian consumer is now flooded with choice. An average Indian can now select from a wide range of Indian and foreign products. Some of the major Indian players are Maruti Udyog, Tata Motors, Mahindra, Ashok Leyland, Hero Honda and Bajaj. Toyota, GM Honda, Daimler Chrysler, Ford, Volvo and Hyundai Suzuki are the key international players in the Indian Automobile market. However, despite the presence of foreign brands, the domestic companies are still the biggest players. Maruti Udyog and Tata vehicles share the top honors for passenger and commercial vehicles respectively. The Indian automobile industry is now riding high on success, and the bright picture does tend to obscure the problems and challenges that lay on the track of its growth. Poor road conditions, heavy pollution and large scale traffic related accidents are serious impediments in the way of the industrys growth. However, steps are being initiated by the government to address these problems at various levels, and solutions are being worked out at a steady pace. Indian Automobile Industry SWOT Analysis Job opportunities in automobile sector The economy is booming and salaries are zooming. With an increase in purchasing power of people in our country, Indias automobile industry has become one of the fastest-growing in the world right now. With more disposable income and affordable cars like Nano hitting the road, car sales have touched new heights. To capitalise on this opportunity, many foreign companies are expanding their operations in India. It is for this reasons that there are plenty of job openings in automobile industry. For the right candidates, the salary is big. Jobs are available across almost all fields engineering, research and development, finance, human resources, and information technology. According to the Confederation of Indian Industry, auto sector currently employs 787, 7702 people, 58 percent of who are in the passenger car segment. However, there is an increasing demand for skilled professionals in the domain of effective service delivery, spares management and support functions. ITIs and Polytechnics provide 530,000 graduates every year, but there is an urgent need for updating courses to keep up with changing trends in technology, manufacturing, and processes. 2 most popular career options for MBA (at top level) in automobile industry-: Marketing Head: How is BMW different from Toyota? A marketing head is responsible for building the brand of the company. He has to position the companys brand, promote it at both domestic and international level, then see its performance in the market vis-a-vis other competitors. Qualifications: MBA with specialisation in Marketing and minimum work experience of 10 years. Expected Pay: Salaries range from Rs 800,000 rupees to Rs 5 million ($111,000). Some major multinational companies pay as much as 10 million rupees ($224,000). Financial Analyst: A financial analyst plays a key role in preparing the companys business plans, and is involved in the vehicles pricing and suggesting ways to reduce cost of production. He will also evaluate the progress of the product and reports its financial performance. He will also keep a check on the performance of competitors products. Qualifications: Companies typically look for candidates with a post-graduate degree in commerce, or masters in business administration with a major in finance. At least an experience of 15 years is required. Expected Pay: According to a report in Wall Street Journal, the salary of a financial analyst ranges from $67,000 to $156,000. Upcoming trends India is emerging as a strong automotive RD hub with foreign players like Hyundai, Suzuki, General Motors setting up base in India. This move is further enhanced by Government’s support towards setting up centres for development and innovation. Tata Nano’s successful entry in the Indian market has steamed up the opportunities of growth available in alternative segments like electric cars, vehicles run on natural gas, etc. Factors that will drive growth in the sector * Rising incomes among Indian population will lead to increased affordability, increasing domestic demand for vehicles, especially in the small car segment. * Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products. * Product innovation and market segmentation will channelize growth. Vehicles based on alternative fuels will be an area of interest for both consumers and auto makers. * Focus on establishing India as auto-manufacturing hub is reigning in policy support in form of Government’s technology modernisation fund. * Industry will seek to augment sales by tapping into rural markets, youth, women and luxury segments.