1. Excess Capacity.
Harmonizing to CSM Worldwide. an automotive research house. in 2004 the estimated automotive industry planetary production capacity for light vehicles ( about 74 million units ) significantly exceeded planetary production of autos and trucks ( about 60 million units ) . In North America and Europe. the two parts where the bulk of gross and net incomes are earned in the industry. extra capacity was an estimated 17 % and 13 % . severally. CSM Worldwide undertakings that excess capacity conditions could go on for several more old ages.
2. Pricing Pressure.
Excess capacity. coupled with a proliferation of new merchandises being introduced in cardinal sections by the industry. will maintain force per unit area on manufacturers’ ability to increase monetary values on their merchandises. In add-on. the incremental new capacity in the United States by foreign makers ( alleged “transplants” ) in recent old ages has contributed. and is likely to go on to lend. to the terrible pricing force per unit area in that market. In the United States. the decrease of existent
3. Financing Options
Car industry perceivers cite auto loans as the biggest drive factor for the enlargement of the Compact Car section. At nowadays. about 85 per cent of all new auto gross revenues are backed by car finance. compared to 65 per cent five old ages ago. Interest rates on auto loans have come down drastically in the past four or five old ages. which helps prospective purchasers take the dip. The growing of the CC-segment in the past few old ages can be chiefly credited to factors such as rise in income degrees taking to increased affordability and coincident decrease in involvement rates taking to take down EMIs. The bead in involvement rates normally helps really few people to likely switch from the base theoretical account to a gilded theoretical account. A larger displacement happens if people are willing to take
long-run loans. like five old ages alternatively of the earlier three-year loans. 2.
4. Ad and Selling
Due to the advertisement techniques adopted by all the makers in the CC-Segment the gross revenues have risen drastically. It is all due to because the companies now a twenty-four hours are utilizing even aggressive merchandising techniques for which they are even get bying with the Film famous persons and Cricket stars. like Maruti has contracted Irfan Pathan as the trade name embassador of Zen and for Santro Hyundai has contracted for Shah Rukh Khan. And the companies are even seeking to near to the client as to there demand for a vehicle at particular involvement loans. etc. They are utilizing informations harmonizing to the customersreturn and earning capacity for pulling the clients for there vehicles.
5. Income of Consumer / Buyer
The income of the consumer or purchaser of the auto is a really of import factor of demand. In recent clip we have seen that due to increase in the Income of the general populace. there has been a displacement from the Lower CC-segment autos to the Upper CC-segmentcars. 2Due to the recent addition in the figure of multinationals in India. the income degree of the employees have risen drastically and has made CC-segment autos an entry degree auto for a batch of people. The mean age of a CC-segment auto proprietor has besides dropped from 35 old ages to 31 old ages in India.
6. Addition In Affordability
The demand for rider autos is driven chiefly by greater affordability. which in bend increases the aspiration degree of the clients. Today with high sum of disposable income in the manus of Indian young person. who forms major part of the population. PV market has larger addressable market.
7. Demographic Drivers
Cars being inspirational merchandises. purchase determinations are influenced by the overall economic environment. Increase in per capita income increases the ingestion inclination of the client. Growth in per capita income and lifting aspirations and altering life style is taking to increased penchant for autos over two-wheelers. which is besides holding a positive hang-up off on auto demand.
The portion of exports from domestic production is presently at 12-13 % . which is much lower than current export hubs. Presently. India’s portion of planetary rider autos export volume stands at less than 1 % . But India is fast emerging as a fabrication hub for taking planetary auto shapers. and several makers have already firmed up programs for puting up fabricating bases in India. which will besides be used for exports.
9. Presence Across Sections
Manufacturers with presence across assorted merchandise sections can guarantee higher volume and better capacity use by utilizing the common fabrication capacity. Typically a client upgrades from one section to higher section and the presenceacross assorted sections ensures that the company retains its bing clients.
10. Efficient Operationss
Competition in PV section is really intense and this requires the bing player’s to originate stairss to cut down their cost of production. Effective and successful operation methods like platform commonalty. decrease in seller base and work force rationalisation can assist a company vastly.
11. Wide Dealer Network and Availability of Finance
A broad trader web helps the company service clients over broad geographical country. For e. g. Maruti has used its available broad service web as point of difference over rivals. The companies are binding up with the fiscal establishments holding rural presence to supply extra funding options to clients in such countries.
12. Entree to Latest Technologies
Indian PV section is extremely competitory with every bit many as 14 participants runing in it and more than 80 theoretical accounts on the offering. But still any new theoretical account launch meets with addition in gross revenues volume for the company. Furthermore in a clip when a significant part of Indian client is looking to upgrade in higher section. companies with latest engineerings and latest theoretical accounts will catch more attendings.
13. Factors of Production
There are some factors of production which influence the supply of a auto like Cost of Raw Material Labour Cost Machinery Input Cost These factors influence the supply of a auto mostly. If the cost of the natural stuff ( Steel. Spare Parts. Rubber ) increases there will be an addition in the cost of production taking to diminish in net income borders. Costss like labor costs. machinery and input costs besides influence the supply with the addition or lessening in these costs. 7.
14. Government Policies and Taxes
If there is a alteration in the authorities policies sing the addition in the route revenue enhancement charged or the revenue enhancement which is to be paid per unit sold. the supply of a auto will fluctuate with the nature of the alteration. Recently the authorities has reduced the usage responsibility on inputs and natural stuff from 20 % to 15 % which has increased the supply
Factors impacting capital market in India: –
The capital market is affected by a scope of factors. Some of the factors which influence capital market are as follows: –
A ) Performance of domestic companies: –
The public presentation of the companies’ or instead corporate net incomes is one of the factors which has direct impact or consequence on capital market in a state. Weak corporate net incomes indicate that the demand for goods and services in the economic system is less due to decelerate growing in per capita income of people. Because of slow growing in demand there is slow growing in employment which means slow growing in demand in the close hereafter. Therefore weak corporate net incomes indicate norm or non so good chances for the economic system as a whole in the close term. In such a scenario the investors ( both domestic every bit good as foreign ) would be wary to put in the capital market and therefore there is bear market like state of affairs. The opposite instance of it would be robust corporate net incomes and its positive impact on the capital market.
Bacillus ) Environmental Factors: –
Environmental Factor in India’s context chiefly means- Monsoon. In India around 60 % of agricultural production is dependent on monsoon. Therefore there is heavy dependance on monsoon. The major ball of agricultural production comes from the provinces of Punjab. Haryana & A ; Uttar Pradesh. Thus deficient or delayed monsoon in this portion of the state would straight impact the agricultural end product in the state. Apart from monsoon other natural catastrophes like Floods. tsunami. drouth. temblor. etc. besides have an impact on the capital market of a state. The Indian Met Department ( IMD ) on 24th June stated that India would have merely 93 % rainfall of Long Period norm ( LPA ) .
This piece of intelligence straight had an impact on Indian capital market with BSE Sensex falling by 0. 5 % on the 25th June. The major also-rans were car manufacturers and consumer goods houses since the below normal monsoon prognosis triggered concerns that demand in the important rural heartland would take a hit. This is because a deficient monsoon could earnestly squash rural incomes. cut down the demand for everything from minibikes to soaps and decline a decelerating economic system.
C ) Macro Economic Numbers: –
The macroeconomic Numberss besides influence the capital market. It includes Index of Industrial Production ( IIP ) which is released every month. one-year Inflation figure indicated by Wholesale Price Index ( WPI ) which is released every hebdomad. Export – Import Numberss which are declared every month. Core Industries growing rate. This macro –economic indexs indicate the province of the economic system and the way in which the economic system is headed and hence impacts the capital market in India.
D ) Global Cues: –
In this universe of globalisation assorted economic systems are mutualist and interrelated. An event in one portion of the universe is bound to impact other parts of the universe. nevertheless the magnitude and strength of impact would change. Thus capital market in India is besides affected by developments in other parts of the universe i. e. U. S. . Europe. Japan. etc. Global cues includes corporate net incomes of MNC’s. consumer assurance index in developed states. idle claims in developed states. planetary growing mentality given by assorted bureaus like IMF. economic growing of major economic systems. monetary value of petroleum –oil. recognition evaluation of assorted economic systems given by Moody’s. S & A ; P. etc. An obvious illustration at this point in clip would be that of subprime crisis & A ; recession. Recession started in U. S. and some parts of the Europe in early 2008. Since so it has impacted all the states of the world- developed. developing. less- developed and even emerging economic systems.
Tocopherol ) Political stableness and authorities policies: –
For any economic system to accomplish and prolong growing it has to hold political stableness and pro- growing authorities policies. This is because when there is political stableness there is stableness and consistence in government’s attitude which is communicated through assorted authorities policies. The vice- versa is the instance when there is no political stableness. So capital market besides reacts to the nature of authorities. attitude of authorities. and assorted policies of the authorities.
F ) Growth prospectus of an economic system: –
When the national income of the state additions and per capita income of people additions it is said that the economic system is turning. Higher income besides means higher outgo and higher nest eggs. This augurs good for the economic system as higher outgo means higher demand and higher nest eggs means higher investing. Therefore when an economic system is turning at a good gait capital market of the state attracts more money from investors. both from within and outside the state and frailty -versa. So we can state that growing chances of an economic system do hold an impact on capital markets.
G ) Investor Sentiment and hazard appetency: –
Another factor which influences capital market is investor sentiment and their hazard appetency. Even if the investors have the money to put but if they are non confident about the returns from their investing. they may remain off from investing for some clip. At the same clip if the investors have low hazard appetency. which they were holding in planetary and Indian capital market some four to five months back due to planetary fiscal meltdown and recessive state of affairs in U. S. & A ; some parts of Europe. they may remain off from investing and delay for the right clip to come.
Hazard involved in this sector.
• Labour unrest and industrial action.
• Unexpected holds and cost overproductions due to.
• Overlaping authorities legal power.
• Corruptions and bureaucratic inefficiency.
• Slow down in authorities determination due to political instability.
• Raw stuff monetary value.
• Restructuring of Automobile company
• Financial – Allocation and hard currency flow
• Supply Chain
• Operational Efficiency
• Raw Material monetary values
• Fuel Efficien
• section Competitiveness
• Fuel Monetary values
• Emerging markets