SYNOPSIS

For submission of research report

For final semester in MBA degree
For “MARKETING” Specialization

Under the Guidance of

Mr. Sharat Sharma
(Faculty Management Studies, SRM
University)

Submitted by,
KAMAL KISHORE
Reg No-: 35084047

A
 Research
Report
on
The Automobile Industry

For Partial fulfillment of the requirement

of award of
MASTER OF BUSINESS ADMINISTRATION
Batch: 2008-10

Under the Guidance of

Mr. Sharat Sharma

(Faculty Management Studies, SRM
University)

Submitted by,
KAMAL KISHORE
Reg No-: 35084047

SRM UNIVERSITY
NCR CAMPUS, MODINAGAR
DEPARTMENT OF MANAGEMENT
(Master of Business Administration)
 PREFACE

I KAMAL KISHORE is pursuing MBA course. And towards the

partial fulfillment of it, I have undergone a Research project & I
am pleased to present my Research Report on “The
Automobile Industry”.
I have put my endeavor to make the objective accomplished in
the stipulated time. Despite all the limitations, obstacles, and
hurdles we have toiled my hand to achieve the goal desired.
Being a neophyte in the highly competitive world of business
and in cooperate world, I have come across difficulties to make
the objective a reality. Anyhow with the kind help and genuine
interest formally supported by extreme support of my guide
and college authorities, we are presenting this hand carved
efforts.

The purpose of this project is to test the level of competency of

an employee based on the above aspects. Competencies
comprise the knowledge, skills, values, and attributes
demonstrated through behavior that results in competent and
superior performance. Competency describes what superior
performance actually does on a job that produces superior
results.
Guidance, cooperation, and inspiration are the important
factors in the accomplishment of an assigned task. I am most
indebted to those mentioned below for their moral and active
support.

Firstly, I would like to express our deepest sense of gratitude to

my parents for rendering their moral support.
I acknowledge our heartiest thanks to Mr. Sharat Sharma for
his support and esteemed suggestions during the making of
this project.

DECLARATION

I KAMAL KISHORE hereby declare that the research project

“The Automobile Industry” is an original work carried by me
for the partial fulfillment of the requirement of course
curriculum of Master of Business Administration(MBA) with
specialization “Marketing” under the guidance of Mr. Sharat
Sharma
(Faculty Management Studies, SRM University)

I have followed all the guidance and instruction issued by the

institute time to time for the preparation of this project. The
completion of all the information and data are accurate if it is
found that anything is wrong or false the institute can take any
action against me. It is further submitted that this project is the
property of our college.

Date:
Signature

CONTENT
Page No.
1. Executive Summary 6
2. Global Auto Industry Overview
2.1.1. Automotive Industry 7
2.1.2. History of Industry in country wise 8
2.1.3. Company Relationships 9
2.1.4. World Vehicle production trend 10
3. Overview of Indian Economy
3.1.1. Demography Trend 11
3.1.2. Uniqueness India’s Market 12
3.1.3. GDP Analysis 13
3.1.4. Challenges facing India 14
4. Analysis
4.1.1. Porter’s Five Forces Analysis 15
4.1.2. DaimlerChrysler 17
4.1.3. Ford 17
4.1.4. General Motors 18
4.1.5. Honda 19
4.1.6. Hyundai 19
4.1.7. Maruti Udyog 20
4.1.8. Nissan 21
4.1.9. Shanghai AIC 21
4.1.10. Toyota 22
4.1.11. Volkswagen 23
5. Conclusions
5.1.1. Attributes of Successful Companies 25
5.1.2. General Trends in Direction and Evolution 27
6. Recommendations 28
7. References 30
 Executive Summary
Chosen industry:
This analysis focuses on the automotive industry, specifically, large-scale
manufacturers of automobiles.
The automotive industry is inherently interesting: it is massive, it is competitive,
and it is expected to
undergo major restructuring in the near future due to globalization and
decreasing oil reserves. The
analysis team members (we) feel qualified to perform this investigation due to
our familiarity with the industry and our education—several of us have studied
and worked on problems associated with
automobile manufacturing and we are all mechanical engineering graduate
students.

Analysis Methodology:
The report begins with a historical overview of the automotive industry. This is
followed by an analysis of the industry’s structural characteristics using Porter’s
5 Forces Model as a framework, which provides an understanding of the
automotive industry as a whole in its current state. Next, ten representative
companies of varying sizes are analyzed and compared; the chosen companies
and selection criteria follow. General Motors, Ford, and Toyota were chosen
because they are the current market leaders. DaimlerChrysler, Nissan,
Volkswagen, and Honda were chosen because of their status as stable
international companies who have been in the automobile business for many
years. Hyundai, Maruti Udyog, and Shanghai Automotive Industry Corp., based in
Korea, India, and China, respectively, were chosen based on their growth
potential and their status as relatively new to the industry.
These ten companies are analyzed in terms of their market position, their
financial situation, and their management strategy. Where useful, specific
statistics have been incorporated into the analysis including: market share,
return on equity, return on sales, revenues, net expenses, net income, market
value added, number of brands, number of models, debt rating, and debt ratio.
The examination of the industry as a whole and of some of the major players in
the industry provides a good framework within which insightful conclusions can
be derived about the current state and future of the automotive industry.

Major Findings and Conclusions:

In the conclusions section, we identify and describe attributes of successful
companies including:
production efficiency, well-planned cost structures, manageable size, distributed
management of brands, attention to underserved markets, focused strategy, and
well-respected brands and products. We then move from specific company
attributes to identifying key trends in the automotive industry as a whole
including: international expansion, conglomeration in mature markets,
distributed competition in new markets, increased environmental regulation,
increased energy constraints, and increased operational efficiency. Using these
trends, we predict where the industry is headed and how it will evolve to meet
new challenges.

The report concludes with the recommendation section, which provides a

prediction of the near-future success of each of the analyzed companies. The
outlook is not great for any of the four well-established, Euro-American
companies considered in this report: DaimlerChrysler, Ford, General Motors, and
Volkswagen. Of these companies, we conclude that DaimlerChrysler seems to be
holding up the best.
The future looks much more promising for the four Asian companies with
international market reach that were studied: Honda, Hyundai, Nissan, and
Toyota. Toyota stands out as being best positioned for success in the near
future, while Honda will most likely continue to be successful on a smaller scale.
And although currently successful, it is much more difficult to predict the future
success of Maruti Udyog and Shanghai Automotive Industrial Company. Both
companies remain mainly focused on the Indian and Chinese markets,
respectively, and thus lack the geographical diversity that smoothes the market
performance of some of their larger competitors.
GLOBAL AUTO INDUSTRY OVERVIEW

Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells the world's
motor
vehicles. In 2008, more than 70 million motor vehicles, including cars and commercial
vehicles were
produced worldwide. In 2007, a total of 71.9 million new automobiles were sold worldwide:
22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4
million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The
markets in North America and Japan were stagnant, while those in South America and other
parts of Asia grew strongly. Of the major markets, Russia, Brazil, India and China saw the
most rapid growth. About 250 million vehicles are in use in the United States. Around the
world, there were about 806 million cars and light trucks on the road in 2007; they burn over
260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly,
especially in China and India. In the opinion of some, urban transport systems based around
the car have proved unsustainable, consuming excessive energy, affecting the health of
populations, and delivering a declining level of service despite increasing

Investments. Many of these negative impacts fall disproportionately on those social groups
who are also least likely to own and drive cars. The sustainable transport movement focuses
on solutions to these problems. In 2008, with rapidly rising oil prices, industries such as the
automotive industry are experiencing a combination of pricing pressures from raw material
costs and changes in consumer buying habits. The industry is also facing increasing external
competition from the public transport sector, as consumers reevaluate their private vehicle
usage. Roughly half of the US's fifty one light vehicle plants are projected to permanently
close in the coming years with the loss of another 200,000 jobs in the sector, on top of the
560,000 jobs lost this decade. As a result, in 2009, China became the largest automobile
market in the world.
 HISTORY
Australia
Australia first began to produce cars in 1897 with cars made by Tarrant Motor & Engineering Co. The
first major Australian carmaker was the Ford Motor Company of Australia, followed by Holden.

Brazil
The Brazilian automotive industry produced almost 3 million vehicles in 2007. Most of large global
companies are present in Brazil, such as Fiat, Volkswagen, Ford, GM, Nissan, Toyota, Mitsubishi,
Mercedes-Benz, Renault etc, and also the emerging national companies such as Troller, Marco polo
S.A., Agrale, Randon among others. The Brazilian industry in regulated by the Associação Nacional
dos Fabricants de Vacuoles Automotives (Anfavea), created in 1956, which includes Auto makers
(automobiles, light vehicles, trucks and buses)and Agriculture machines with factories in Brazil.
Anfavea is part of the Organization International des Constructers’ Automobiles (OICA), based in
Paris.

Canada
Canada is currently the 9th largest auto producer in the world, down from 7th a few years ago. Brazil
and Spain recently surpassed Canadian production for the first time ever. Canada's highest ranking
ever was 2nd largest producer in the world between 1918 and 1923. The Canadian auto industry traces
its roots to the very beginning of the automobile. The first large-scale production of automobiles in
Canada took place in Walkersville, near Windsor, Ontario in 1904. In the first year of operations,
Gordon McGregor and Wallace Campbell, along with a handful of workmen produced 117 Model "C"
Ford vehicles at the Walkersville Wagon Works factory. Through marquees such as Brooks Steam,
Red path, Tudhope, McKay, Galt Gas-Electric, Gray-Dort, Brockville Atlas, C.C.M., and
McLaughlin, Canada had many domestic auto brands. In 1918 McLaughlin was bought by an
American firm, General Motors, and was re-branded as General Motors of Canada. Driven by the
demands of World War I, Canada's automotive industry had grown, by 1923, into the second-largest
in the world, although it was still comprised of relatively inefficient plants producing many models
behind a high tariff wall. High consumer prices and production inefficiencies characterized the
Canadian auto industry prior to the signing of the 1965 Automotive Products Trade Agreement with
the United States. The 1964 Automotive Products Trade Agreement or “Auto Pact” represents the
single most important factor in making the Canadian automotive industry what it is today: a strong,
successful industry that has a significant positive impact on the Canadian economy. Key features of
the Auto Pact were the 1:1 production to sales ratio and Canadian Value Added requirements. Magna
International is Canada's biggest domestic firm in the sector, and is the world's third-largest auto parts
firm, producing entire vehicles at its Magna Steyr plant in Austria.

China
China's automobile industry is in rapid development since the year 2000. In 2008, 9.345 million motor
vehicles were manufactured in China, surpassing United States as the second largest automobile
maker, after Japan. Moreover, due to the current financial crisis, China was the largest automobile
market in the world for the first nine months of year 2009, with total sale of 9.663 million vehicles.
China may surpass United States and become the largest car market for the whole year of 2009. The
top 8 car sellers for the first nine months of 2009 are General Motors, Volkswagen, Hyundai, Chama,
Nissan, Cherry, BYD and Toyota.

India
An embryonic automotive industry started in India in the 1940s. However, for the next 50 years, the
growth of the industry was hobbled by the Socialist policies and the bureaucratic hurdles of the
license raj. Following the economic liberalization in India from 1991, and the gradual easing of
restrictions on industry, India has seen a dynamic 17% annual growth in automobile production and
30% annual growth in exports of automotive components and automobiles. India produces around 2
Million automobiles currently. Largest company in India is TATA & Mahindra and Mahindra. Total
turnover of the Indian automobile industry is expected to grow from USD 34 Billion in 2006 to USD
122 Billion in 2016.Tata Motors has just launched Tata Nano, the cheapest car in the world at USD
2200. Recently India has overtaken China in global auto exports of compact car this year . Suzuki
Motor Corp, Hyundai Motor Co, and Nissan Motor Co are making India a manufacturing hub of
minicabs

Japan
Japan, with its large population squeezed into very high density cities with good public transit, has
limited roadways that carry very heavy traffic. Hence, most automobiles are small in terms of size and
weight. From a humble beginning, Japan is now the biggest auto manufacturing country in the world.
Nissan began making trucks in 1914, and sold cars under the Dotson brand until it switched to Nissan
in the 1980s. It opened its first U.S. plant in Tennessee in the early 1980s and a U.K. plant in 1986. Its
luxury models carry the brand Infiniti. Honda, which began with motorcycles, emerged after World
War II. Its luxury vehicles are sold under the Acura brand. Toyota began making cars in the 1930s
and is now the world's largest producer. The Toyota Corolla is the world's best selling nameplate. Its
luxury models carry the Lexus brand. Toyota is famous for its innovative, quality-conscious
management style, and its hybrid gas-electric vehicles, especially the Prius, which was launched in
1997. Other major companies include Subaru, Mitsubishi, Mazda, Daihatsu, Suzuki, and Isuzu.
Japan's production of cars increased from 3.179 million to 7.038 million between 1970 and 1980,
while demand for larger American cars was disastrously falling. Japanese cars are often credited with
superior dependability, efficiency and advanced technology.

United Kingdom
The British motor industry has always been export oriented. Today it employs about 850,000 people
and produces about 1.5 million cars and 216,000 commercial vehicles per year, 75% of which are
exported. The top five UK car producers are Nissan, Toyota, Honda, MINI and Land Rover.
However, international competitiveness of UK cars has declined consistently since the 1990s and the
country became unable to sustain production on par with Germany or France. Since 2000, motor
vehicle production fell from 1,813,894 to 1,750,253. The country was overtaken by fast
industrializing economies such as Brazil, India and Mexico. The UK is the 12th largest automobile