Pestel Analysis Of The Auto Ancillary Industry Economics Essay

Pestel Analysis Of The elevator car Ancillary persistence Economics EssayAuto ancillary industry is an important segment of the sparing in either country. The Indian railway car industry has the potential to emerge as one of the largest in the world. Presently, India isThe largest two wheel horse manufacturer in the world.The largest three wheeler grocery store place in the world.Second largest two wheeler trade in the world.The fourth largest commercial vehicle trade in the world.Auto ancillary company comprises ofOEM (original equipment manufacturers). replacing Market.The automotive sector in India contributes to 5% of the nations GDP. This envisages theAuto ancillary sector output reaching a level of $145 billion accounting for more than 10% of the GDP by 2016.PESTEL ANALYSIS in that location argon galore(postnominal) factors Consists of internal environment and foreign environment ordain affect the decisions of the managers of any organisation. This outline is essen tial for all organization before beginning its marketing process.3Investments in Industry conflicting InvestmentsIndia enjoys a appeal advantage with respect to casting and forging as manufacturing costs in India atomic number 18 25 to 30 per penny raze than their western counterparts. Seeing the growing popularity of India in the automotive helping sector, the Investment Commission has set a target of attracting foreign investment worth US$ 5 billion for the next seven years to ontogeny Indias share in the global auto components market from the existing 0.9 per cent to 2.5 per cent by 2015. French tyre major, Michelin, has gained clearance from the Foreign Investment procession Board (FIPB) for its US$2.26 billion Foreign direct investment (FDI) proposal to set up a manufacturing facility in Tamil Nadu. Ford motor car is investing about 500$ billion (Rs. 2,445 cores) to double capacity at its India plant, which willBecome a strategic global production hub. Bosch will continu e to maintain its focus in India in spite of global recession as it is training to set up manufacturing units for electronic control units (ECU) by investing US$ 26.76 zillion. Renault in association with Nissan is to base USD 440 million worth of auto components from India in the overture years. Italian car manufacturer Fiat is supply to increase sourcing to USD 330 million by 2010 and make India its global sourcing centre. Volks meshn has set target to capture 8-10 percent of market share in the passenger car segment in India by 2014 with a series of launches and by doubling the descend of dealers.Domestic InvestmentsThe market is so large and diverse that a large number of players can be absorbed to accommodate buyer needs. TheSector non only has global players feel to invest and expand but leading domestic component companies are also pumping in extensive sums into expanding operations. Indian tyre makers are rolling out investment plans worth US$ 1.24 billion, due to t he go up popularity of radial tyres in the commercial vehicles segment.Some other investments include Hero Motors will invest US$ 19.84 million in association with Austrian firm BRP Power train for manufacturingAutomotive transmissions in India. Indian arm of Swedish automotive component maker SKF is investing US$ 30 million in new ball bearingsmanufacturing plant at Haridwar. Mahindra Mahindra will invest approx US$ 400 million for backcloth up an integrated auto facility inTiruvannamalai(Chennai). an auto park is coming up beneficial Hyderabad with investments worth over US$ 409.30 million from around 34automotive ancillary units.A let down labour cost gives Indian auto ancillary companies an absolute cost advantage. ACMA numbers suggest that wage cost accounts for 3% to 15% of revenues for Indian manufacturers as compared to 20% to 40% for US players. Historically,Indias strength in exports lies in forgings, castings and plastics. But this is changing with more component man ufactures investing in up gradation of applied science in recent years.DEMAND SUPPLY SCENARIODemand supply scenarioDemand is generated from two segments namely OEMs and substitute markets.The volume of demand varies by product segments.The second-stringer market has 45 percent of its sales coming from unorganized players. at that place are no regulatory standards prevailing in the market.The level of technology is not sophisticated in the replacement market.The replacement market is a safe bet even when the economy faces a slowdown. Hence, it looked as an area of focus by major players of the auto component industry.The margins in the replacement market are generally higher because of low cost operations and counterfeit sales.Success in the organized market depends on the presence of an established brand name and a wide distribution network.Unorganized sector enjoys huge advantages over the organized players in terms of excise duty exemptions and lower overheads.The suppliers t o OEMs have to adhere to requirements of high quality, tight delivery schedules and lower margins.Duty structure Regulationspolitical science Policies diminution in excise duties in select segment of gos.Extension of tax holiday for 100 per cent export oriented units (EOU) until 2010-11 will benefit only players with established EOUs.Scheme to provide enhanced exporting Credit and Guarantee Corporation (ECGC) cover at 95 per cent has been extended up to action 2010. This scheme will assist players to mitigate risk of make upment defaults in the export market.Automatic panegyric for foreign equity investment up to 100 per cent of manufacture of automobiles and components is permitted.The automobile industry has been delicensed.There are no restraints on import of components.Free Trade AgreementsThe growing number of FTAs (Free Trade Agreements) that are being signed by India with countries like Thailand, Singapore, China etc is likely to hurt the domestic players as they pay a relatively higher duty of around 25% as compared to 1%-10% being paying(a) by its Asian counterparts.P- POLITICAL constituentPolitical factors the most important influence on the equity of any headache.How stable is the political environmentInfluence the Government Policy / Law on your originGovernments position on Marketing EthicsGovernments policy on the economyGovernments view on enculturation under religionPolitical System is responsible for Law Making.Immediate laws which affect any business in general are Central Excise, Sales Tax/ VAT, Corporate Income Tax, Personal Income Tax go TaxControls if any on Marketing StrategiesLike Marketing / Advertising of Cigarettes, Tobacco, Alcohol etc.Government Policies on the Economy contribution of Public SectorRole of Private SectorRole of vocalize SectorE- ECONOMIC FACTOR splashinessEmploymentDisposable incomeBusiness cyclesEnergy availability and costGovernment outlook towardsBank FinancingInterest RatesExchange Rate MechanismI ncentives for ExportsRestrictions for ImportsInflationLabour Policieslevel of Government SpendingAvenues for Capital CreationSize of the Capital MarketRole of the RegulatorType of the InstrumentsNature of the InvestorsBusiness CyclesMonsoonEnergy AvailabilityCost of EnergyS- SOCIO CULTURAL FACTORDemographicsDistribution of incomeSocial mobilityLifestyle changesConsumerismLevels of educationDemographics Distribution of IncomeDivision of population Male / Female eon Group of the PopulationDisposable Family IncomeDisposable Income in the hands of the different Age GroupsEducation Level of the Age GroupsLife Style Changes ConsumerismAttitude to livingDifferent Age GroupsIn tune with functional disposable incomeThrust on taking care of present needs by spending than deliver for the future.Joint living and nuclear familiesAvailability of various media toolsReach of the media to the populationT- TECHNOLOGICAL FACTORfresh discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetAdvantage of TechnologyIn terms of Economies of casingE- ENVIRONMENTALEnvironmental factors include the weather and climate change. Changes in temperature can touch on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is bonny a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is modify demand patterns and creating business opportunitiesL- LEGALDiscrimination lawConsumer lawAntitrust lawEmployment lawHealth and safety lawCONCLUSIONThe auto ancillary industry is in the growth phase. As, the auto sector grows, the auto ancillary sector also grows. The industry is graduating towards the world-class technology by implementing TQM, TPM and Six-Sigma. India is becoming the global manufacturing hub for the small cars. European companies are expressing interest in India for sourcing their needs. Many other companies are tone to consolidate their global operations India is now a supplier of high value and critical automobile components to global auto makers such as General Motors, Toyota, Ford and Volkswagen. India is expected to soon become a destination for sourcing the auto components. The Automotive Mission Plan 2016, states to increase the turnover to $145 billion and increase the export revenue to $35 million by 2016 and also to provide employment to 25 million people.With investments around US$ 15 billion slated for the sector over the next few years, the prospects for Indias auto market are bright. The results for the month of November and December2009 of the auto sector and the improved sentiments have already resulted in the BSE Auto Index outperforming the Sensex over the last one year. Therefore, the auto component industry is expected to grow in the near future.SUBMITTED BY PANKAJ KUMAR YADAV