The Indian automotive industry has bounced back very strongly after the recent economic crisis and has grown 25-30% across segments (passenger cars/ CVs/ two wheelers) in the last two years. Given, very low levels of vehicle penetration in the country, robust growth of 15–20% is expected to continue for next ~5 years. The challenges in India are also very different from the ones witnessed globally
Passenger cars: All major players are operating at full capacity due to which there is a growing need for expansion and operational efficiencies. Global players, haven't been able to break the stronghold of Indian incumbents and have continued to battle themselves
Commercial vehicles: Market, though dominated currently by Indian players may witness a shift towards modern technologies which is likely to benefit the global players.
Two wheelers: Next wave of growth is likely to come from rural customers, due to which distribution channels need to be strengthened
Companies need to ask some crucial questions to effectively ride the growth wave:
How to successfully ride the strong growth wave in the automobile industry?
How to leverage India as a global export hub?
How to capitalize on market trends—shift of customer preference towards modern trucks etc?
What should be the distribution strategy to maximize consumer reach?
How should foreign companies accelerate demand for their products against the Indian incumbent?
India is an important market for all the automobile majors of the world since it offers strong growth. Thus, in this competitive scenario, the companies who can address these crucial questions may emerge as a winner.
BCG has a long and proven track record of designing and executing growth strategies, operation-improvement programs, complex mergers, and turnarounds in the automotive industry.
Our expertise extends to every segment of the industry and every link in the value chain. BCG works with governmental authorities, industry associations (SIAM, CII) as well as automotive manufacturers, their suppliers, and their distribution partners.
We utilize our global expertise to manage rapid growth, define winning strategies and guarantee bottom-line impact.
Managing rapid growth: A major differentiating factor for companies who emerge winners is the way they managed growth and created long term sustainability of the business. We help define strategies which help companies maximize the benefits from the growth wave both from a short term as well as long term point of view.
Defining winning strategies: Succeeding in a large growing market with strong incumbent players having established reputation is critical yet challenging. We help define strategies around market developments, consumer behavior, product specification, value-chain partnerships, new distribution formats, and service offerings to achieve the objective.
Bottom-line impact: In a competitive market, bottom line should be improved through customized intervention rather than blanket cost reduction. We help achieve cost reduction by focusing R&D spending without endangering future success; aligning structural costs without across-the-board cuts; reducing product cost without risking customer acceptance; increasing capital productivity without “stripping” assets; and improving operational efficiency.
India business set-up: Setting up a business in India though attractive, is complex and requires substantial knowledge of local conditions and regulations. We help evaluate the right entry mode—organic route, Joint venture, acquisitions etc and put forward a comprehensive roadmap to execute the strategy effectively.