Report_on_Ashok_Leyland

EXECUTIVE SUMMARY This industry project mainly focuses about the Indian automobile industry, automobile majors in India as “India lives in its rural villages” and is inherently interesting as it is massive and competitive. Here point of concentration is followed by having detail information on “Ashok Leyland” (2nd largest commercial vehicle manufacturer in India) Company History, Ashok Leyland's Philosophy, Products of Ashok Leyland, and Competitors of Ashok Leyland. Focusing on Market penetration of Ashok Leyland in rural market to acquire new consumer base by making the products available to every interior of the country and increase its sales, to sustain growth by keeping some issues behind to get facts and figures of this report study. At the end conclusion and recommendations have been specified so as to make the research work more meaningful and purposeful. History of Automobile Industry The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers. Embryonic automotive industry emerged in India in the 1940s. Mahindra and Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from Willys The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies. In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands. roads, more than market demand, will likely be the limiting factor. Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000 units and have since grown rapidly to a record monthly high of 182,992 units in October 2009. From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example) this progression is unlikely to stop in the coming decade. Congestion of Indian [pic] Current Position of Indian Automobile Industry One of the major industrial sectors in India is the automobile sector. Subsequent to the liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian economy as this sector has witnessed tremendous growth. The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by MNCs. Potential of the Automobile industry in 2008; Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological up gradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. The cumulative production of automobile for April-December 2011 registered a growth of 14.94 per cent over same period in 2010. Production in December 2011 increased by 10.91 percent year-on-year. Automotive Industry comprises of automobile and auto component sectors and is one of the key drivers of the national economy as it provides large-scale employment, having a strong multiplier effect. Being one of the largest industries in India, this industry has been witnessing impressive growth during the last two decades. It has been able to restructure itself, absorb newer technology, align itself to the global developments and realize its potential. This has significantly increased automotive industry's contribution to overall industrial growth in the country. [pic] Segment wise market share in 2010-2011 Passenger vehicles-15.96% Commercial vehicle-3.96% Three wheelers-3.60% Two wheelers-76.49% The turnover of the auto component industry stood at Rs. 1821.27 billion (USD 39.9 billion) for the period April 2010 to March 2011, registering a growth of 34 per cent (in rupee terms) over the previous year. [pic] India's growing Automobile sales and the production has reached to 17,916,035 (Number of vehicles) in 2010-2011 compared to 14,057,064(2009-2010) Future trends of automobile company Driving the future As per industry forecasts, by 2016 India is expected to be the world’s seventh-largest automobile market and third-largest by 2030. This growth, however, is not without challenges – commodity price increase, emission norm change, regulatory reforms, research & capability building – are some of the impediments to growth. • The Passenger Vehicle market of India will even cross Japan by selling about 5 million Vehicles by 2017-18. • The Indian auto exports will be upto $5.62 billion in the year ending March 2011 and the same will grow to $17.64 billion in 2015-16. • India’s share in global auto exports may also triple by 2016. • India’s passenger vehicle production projections : In 2010 – 2.6 million Vehicles By 2015 – 5.1 million Vehicles By 2020 – 9.7 million Vehicles Following are some very diverse trends seen in the market, which also need to be tracked in the future. Alternate Fuel: Currently, the use of CNG and LPG is legitimate on all vehicles. The transport vehicles are first ones to adapt to these cheaper fuels. The usage of these fuelsis not considered very safe by individuals. But as the equipment starts becoming safer and the distribution of the fuel improves, individuals would start graduating towards them. It is strongly recommended that any new engine should be compatible to these fuels. Electric Car: Reva has met a limited success in the cities. With technological advancements electrical car may emerge as a preferred option as a second car. This trend needs to be studied for its implications. Advent of Internet: Indian customer is known for his propensity towards “touch-feel” factor before making a buying decision. But the new generation, which is growing with the Internet, may defy this logic. Internet would assume much larger role than just information dissemination. In the new market scenario, Internet would actually drive the value chain. The customer would use the Internet to place the customised order and expect the manufacturer to fulfil it in the minimum time. Integrating internal systems and the value chain to Internet since inception is advisableThe concentration should be to build a value chain that is flexible and lean to adapt to any change in demand pattern. This strategy would attract significant investments in IT infrastructure Government – The Enabler In contrast over the past, Indian Government has switched over its role from controller to enabler. The focus is on providing better infrastructure, growth oriented economic policies and right environment to attract investments. ➢ An ambitious project of interstate highway network, called golden quadrangle, is in its advanced stages of implementation. ➢ Pollution control has become another priority area. There is a proposal to ban all the vehicles older than 10~15 years, which is likely to boost the demand of modern automobile. ➢ The import duties on the CBU and Used vehicles are designed to protect the interestsof the automobile manufacturers in India, an incentive to attract foreign investment. ➢ Government has also cut the excise duty to boost the demand. Although, it has met with a limited success in past, with a favourable economic environment, Government may take these proactive steps again. ➢ The oil companies are about to be privatised which is likely to make them flexible and customer friendly. To sum up, Indian Automobile Market is at a stage of take-off. The business and economic environment is favourable for any company planning to set up a manufacturing base in India and manufacture products suited for Indian market. The market is dynamic and is becoming more and more customer-centric. The customer is open to novel products, services and concepts. Apart from plant and machinery, the new entrant should invest a significant effort and resources for understanding the customer and building the brand [pic] INTRODUCTION Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. Founded in 1948, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market share of 28% (2007–08). With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment.The company claims to carry over 60 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons. The joint venture announced with Nissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (