2. AUTOMOBILE SECTOR
Automobile sector is one of the worst hit sector
due to the present recession. Across the world
the it is looking for bailout packages. In this
situation, we are trying to find out which is the
best country to operate in this sector.
Future growth will be driven by developing
markets (Source: BCG Report).
It needs proximity to suppliers and customers.
We have taken an hypothetical auto
manufacturer catering to B and C segment
cars
8. MARKET POTENTIAL LNDIA
Year Cars % change
2001 654,557 -
2002 703,948 7.54%
2003 907,968 28.98%
2004 1,178,354 29.77%
2005 1,264,000 7.26%
2006 1,473,000 16.53%
2007 1,707,839 15.94%
Source: OICA
• By 2015 developing markets will contribute to 30% of new car sales (BCG).
• India (72% of total sales is small cars and mid size)
10. POLITICAL SCENARIO
China Brazil
– Stable Govt. – Relatively stable
– Autocracy – But, Highly publicized
– Policies Implemented scandals
quickly – Reforms are slow
• No time for
companies to adjust
11. Thailand India
• A new constitution was • Either congress or BJP
drafted and promulgated coalition govt.
in late 2007 • Both support
• Political turmoil in 2008 development of
• PPP government facing economy
pressure to step down • Power will receive
amid mounting civil encouragement
disobedience and unrest • Stable policy
lead by the PAD
12. INFRASTRUCTURE BRAZIL
Sector Sub Projects Total
Sector Investment
Energy Electricity 130 63,590
Natural
15 6,624
Gas
Total
145 70,214
Energy
Transport Railroads 16 8,572
Roads 39 12,121
Seaports 37 2,768
Total
92 23,461
Transport
Per capita investment in transport= $122.2
Source: World bank group
Per capita investment in energy = $365.8
13. INFRASTRUCTURE CHINA
Sector Sub Projects Total
Sector Investment
Energy Electricity 157 31,416
Natural
177 4,135
Gas
Total
334 35,551
Energy
Transport Airports 17 2,766
Railroads 7 5,314
Roads 130 21,941
Seaports 55 12,426
Total
209 42,447
Transport
Per capita investment in transport= $31.9 Source: World bank group
Per capita investment in energy = $26.7
14. INFRASTRUCTURE INDIA
Sector Sub Projects Total
Sector Investment
Energy Electricity 93 33,133
Natural
4 776
Gas
Total
97 33,909
Energy
Transport Airports 6 4,514
Railroads 3 218
Roads 133 9,862
Seaports 24 4,327
Total
166 18,922
Transport
Source: World bank group
Per capita investment in transport= $16.4
Per capita investment in energy = $29.5
15. INFRASTRUCTURE THAILAND
Sector Sub Projects Total
Sector Investment
Energy Electricity 52 10,894
Natural
3 1,350
Gas
Total
55 12,244
Energy
Transport Airports 2 455
Railroads 3 2,772
Roads 2 782
Seaports 11 199
Total
18 4,208
Transport
Source: World bank group
Per capita investment in transport= $ 67.4
Per capita investment in energy = $196.3
22. AVAILABILITY OF SKILLED LABOR
Thailand India
Shortage of skilled labor deterring Skilled labor shortage
new FDI Problem is not quantity but quality
Now companies reevaluating High turnover rates and steep wage
Thailand’s attractiveness. inflation have eroded the
Shortfall of 580000 by 2010. competitiveness.
China Brazil
Rising wages and turnover. Dearth of highly skilled labor.
Only a small portion of the total labor Average level of education is very low
force qualified to work in a foreign Foreign skilled labor also limited
company. because of the language barrier.
24. RAW MATERIAL (STEEL)
AVAILABILITY AND COST
India China
Good availability of iron ore. Steel industry under the
Companies investing in more control of Govt. Consolidation
efficient production methods. going on in the domestic steel
Currently Per capita industry.
consumption low Shortage of iron ore might
increase domestic prices in
H.R Coil
Year Price the long run.
(Rs/kg)
Year Production Current lack of demand has
2002 18.50
2003 23.57 resulted in low prices of steel.
2004 32.41
1990 17MT H.R Coil
2005 33.87
Year Price (RMB/
2006 33.65 kg)
2003 36MT
2007 38.09
2008 43.42 2006 4.3
2011 66MT 2007 4.7
2009 36.20
2008 4.8
2009 4.1
Source: Indiastat * Source: chinaesteel.com
25. RAW MATERIAL (STEEL)
AVAILABILITY AND COST
Thailand o Brazil
There is a domestic shortfall • Abundance of iron ore, coke.
in steel production. • Availability of cheap labour
Country dependant on steel • Availability of modern
imports. (40% of total production techniques.
consumption) • Steel industry is mainly
export dependant
H.R Coil Price H.R Coil Price
Year Year
(THB/kg) (USD/kg)
2004 18.5 2004 0.78
2007 18 2007 0.71
2008 38 2008 1.2
2009 28 2009 0.933
* Source: steelguru.com * Source: steelguru.com, financial express
26. VENDOR AVAILABILITY
India China
Has got a good vendor Good vendor base low
base for automobile technology intensive
sector. components
The vendor bases are
Have a good base for
developed by existing
companies like Maruti, forging and casting
Tata etc. products.
Estimated Rs 26,000 Cr Have a good supplier
to be pumped into auto base auto electronic
vendors by 2010. components future
Country has developed trend
as a supplier base for
auto vendors for Global
Auto Majors
27. VENDOR AVAILABILITY
Thailand Brazil
Competitive vendor base New vendors developed by
for manufacturing casting European car manufacturers
& forging parts, stamping after 2000.
body parts, rubber and
glass. Good supplier base available
for exhaust control
Cost competitive suppliers components – future demand.
for auto electronic
components. These Steel components are
components are exported to available at a cheaper price.
Japan.
Supplier base developed
due to assembling plants of
major automobile MNCs
like Ford, GM, Chrysler,
Mitsubishi, Honda, Toyota
etc.
30. SOCIO ECONOMIC & POLITICAL
RISKS
INDIA
• Uncertainties surrounding in the coming general
election.
• Rising communal violence and terrorism incidents
• slowdown in government decisions due to political
instability
• Labour unrest and industrial action
• Corruption and bureaucratic inefficiency
• Unexpected delays and costoverruns due to
• Overlapping governmental jurisdiction
• Fluctuation in interest, inflation and currency rates
31. SOCIO ECONOMIC & POLITICAL
RISKS
CHINA
• The environment could see conservatives increase in influence in
the government.
• security threats along the border as a major vulnerability.
• Public demonstrations and protests
• Unemployment
• Three Disparities (gaps between rich and poor, east and west,
and rural and urban)
• Public security & safety.
• Excessive discretionary authority of the customs administrative
systems.
• Inadequate patent policy and poor supervision of counterfeit
goods have prevented many brand from entering the Chinese
market
32. SOCIO ECONOMIC & POLITICAL
RISKS
THAILAND
• Political fighting is aggravating social unrest, driving
a wedge between urban inhabitants and rural farmers.
• Political turmoil is seriously hurting key national
institutions.
• Political chaos damaged its image as a stable place to
do business.
• Terrorist activities
• Accelerating inflation due to commodity prices will be
a key economic negative factor.
• Domestic demand declined
33. SOCIO ECONOMIC & POLITICAL
RISKS
BRAZIL
• Corruption scandal weakening Lula and his
government
• Policy paralysis of Administration on the defensive and
fighting off corruption allegations
• The public debt burden is very heavy with maturities
too short.
• The external debt level is unsustainable over the long
haul.
• External financing needs are too great in comparison to
currency earnings due to the debt amortization burden.
• The low level of savings which government financing
needs essentially gobble up has been impeding private
•
