Indian Automobile Industry S.docx

Indian Automobile Industry S.docx - Indian Automobile...

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Indian Automobile Industry S.W.O.T. Analysis SWOT analysis is a tool of strategic planning which is used to evaluate the strength, weakness, opportunities, and threats involved in a business venture. It involves identifying the external and internal factors which are either favourable or unfavourable for the company or industry. The two main categories in a SWOT analysis are; internal and external factors. The internal factors comprise of strength and weakness, and the external factors include opportunities and threats. Strengths Investment by Foreign Car Manufacturers: India has seen significant amount of FDI from the foreign origin car manufacturers over the last decade. In all, the automobile sector has seen a cumulative Foreign Direct Investment (FDI) equity inflows of US$ 8.217 Billion (38, 571 Crore) in this sector during the period of 2000 to 2013 which is nearly 4.32 per cent of the total FDI inflows in the country and the portion of Passenger Vehicle segment accounts to more than 50 per cent of the total inflows in Automobile Industry Sector (Department of Industrial Policy and Promotion Statistics, 2013). Increase in Passenger Vehicle Exports: The economy is adversely affected due to a falling rupee but it is proving beneficial as far as the exports are concerned. This is being attributed as one of the reasons for growing exports in the sector. The exports of passenger vehicles from India has grown with a CAGR of more than 20 per cent over the last five years and despite the slowdown in the economy during the last one year the exports have still managed a growth of 9 per cent in 2013 with the manufacturers realizing the slowdown in European markets and consequently developing the new ones (ICRA, 2011; and SIAM, 2013c). In recent years India has become the export hub for several global automobile manufacturers. Several large automotive players in India are investing substantially in capacity expansion, establishing partnerships in India and abroad, positioning India as an export centre for vehicles and corporate intelligence, and setting up R&D facilities and design capabilities (Ernst and Young, 2012). Low Cost and Cheap Labour: Cost competitiveness remains one of the key characteristic of India with the availability of low cost labour and inexpensive manufacturing capabilities it is a key attraction for the businesses. In particular, India’s attractive labour costs can explain the phenomenal growth of
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its rapidly growing manufacturing sector including the automobile. Although India has witnessed some increases in its labour cost, but it remains a highly attractive destination for investors who struggle to find the same mixture of low cost and high quality (Ernst and Young, 2012). Rising Middle Class and Disposable Income Levels: Rising disposable income over the last decade have led to increased discretionary spending which in turn have driven car sales during that period. In 2002, the per capita disposable income was $399 (nominal)/$1,381 (PPP), when the sales started picking up. The car sales have mostly followed the trends in per capita disposable income. Post 2002, the per capita disposable
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