A Case Study Of The Automobile Industry In India

Submitted by: Parvati Rajpal

Roll No: 1421049

Company Name: Tata Motors

The automobile industry in India aims to be the third largest automobile industry by 2016. Also, by 2020, India plans to increase its share in global passenger manufacturer to 8% from 4% in 2011. An increase in passenger vehicle production from 3.1 million in 2014 to 10 million by 2021. Indian automobile industry has a market share of USD 67.7 million.

India has been seeing an economic growth, which has brought in new employment opportunities and thus, the purchasing power of the people. This factor favours the growth is automobile sector in India. Moreover, in order to promote spending and economic activity, the interest rates have also been cut. This is another factor

In spite of lack of strict government regulations relating to entry into this market, the market leaders enjoy brand presence which makes it difficult for new players to survive, thus, having less threat from new entrants. Moreover, the alternative medium of transportation is not developed completely in India. This reduces the threat from substitutes and thereby make the industry more attractive. Since the number of players are low and the suppliers are high, the players enjoy the upper hand over suppliers. Whereas, with close competition among players, the customers get an advantage and therefore the customers enjoy the power. Since automobile industry is an oligopoly market, they have cut throat competition. If one competitor reduces prices, the rest soon follow even at the cost of their

With launching of its two new cars in Sri Lanka, Sedan and Zest, Tata Motors is making an attempt to make its presence felt. Not only that, Fiat Automobile India Private Limited invested USD 280 million in Pune plant of Tata Motors so as to manufacture jeeps in India. With the growth in rural places in India and construction of road ways coupled with better financing facilities, Tata Motors is also banking on high demand from rural places to boost their sales.

In another attempt to increase its global presence Tata Motors might be coming up with a European plant. The probable sites could be in Poland and Slovakia and an investment of 1.9 billion. It is likely to start manufacturing by 2019 with a capacity of 350000 units per annum. Currently, the sixth round of negotiations are going on and in case Poland grabs this opportunity, it will be the biggest investment in car manufacturing industry in Poland.

Tata Motors have not targeted the usual customer base like every other company, but have lured them through innovation. Tata plans on capturing the rural population with the help of Nano as it is the most affordable car. Moreover, through expansion, they are not only trying to increase their production, but also create a brand name for