Indian Automobile Industry Case Study

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Introduction The automobile industry contributes 22 per cent to India’s manufacturing gross domestic product (GDP). It comprises passenger cars, two-wheelers, three-wheelers and commercial vehicles and is presently the seventh largest across the globe with an average annual production of 17.5 million vehicles, of which 2.3 million are exported. The Indian auto market has the capability to dominate the global auto industry, provided a conducive environment is created for potential innovators to come up with new pilot projects. Maruti has been leading the pack with more than 40 percent market share with Hyundai following it. The world got a glimpse of the Indian frugal engineering with the Tata Nano and the first completely indigenously manufactured car, Indica. The next few years are projected to show solid but cautious growth due to increased affordability, rising incomes and untapped markets. All these open up an opportunity for automobile manufactures in India. In addition, with the government's backing and a special focus on exports of small cars, multi-utility vehicles (MUVs), two and three-wheelers and auto components, the automotive sector's contribution to the GDP is expected to double, reaching a turnover of US$ 145 billion in…show more content…
The industry is modular in nature with various activities in the value chain outsourced to specialised vendors. There is often little to distinguish between suppliers, with raw materials offering low differentiation. This reduces supplier power to some extent. Despite this, the high importance of the quality of raw materials and components to the car manufacturers (particularly when critical to safety) can enhance supplier power. Global macro factors and fluctuation takes a huge toll on the auto industry which is cyclic in nature. There are few large vendors but the auto component industry is largely fragmented. Overall, supplier power is

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