Sep 28, 1999|
SIAM revokes demand for restriction barriers
The Society of Indian Automobile Manufacturers (SIAM) has backtracked on its call to restrict the number of companies operating in the passenger car segment till the year 2010. This was reported by a leading financial newspaper.
The SIAM is pressing for a minimum investment of US$ 50 m (Rs 2.2 bn) by a new entrant in the car segment. This will separate the serious companies from the non-serious ones.
Even if SIAM's demand for an entry barrier is accepted, there can be no denying the fact that the Indian auto market is very crowded with too many companies vying for a very small market. Currently, there are eight car manufacturers, nine light commercial vehicle (LCV) assemblers, three bus and truck builders and three multi-utility vehicle manufacturers competing for a market of less than 1 m vehicles.
China with a market of less than 2 m vehicles has regulated the number of vehicle manufacturers to just two or three. Comparatively, India, which had only four-five manufacturers in the 1980s, now has 24 manufacturers.
A study conducted by the Association of Indian Automobile Manufacturers (AIAM) reveals that the passenger car segment is likely to be faced with excess capacity from FY2000. The study reveals that by that year, thirteen companies will be operating in the car segment at a combined capacity of 1.3 m cars. However, demand will be much lower at 500,000-700,000 m cars, implying that around half the capacity will be idle.
Earlier, many international companies set up operations in India due to lower labout costs. But this will count for nothing, as companies will have to post high sales volumes to make their operations viable. Eventually the competition may get too heated for some companies, and the auto segment could witness a round of mergers and acquisitions.
More Views on News
Aug 14, 2017
Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.
Aug 2, 2017
GST realted cost impacts Margins, Management expects good year ahead.
Aug 1, 2017
Good Recovery in the Scooters market, expects pick up in exports too.
Aug 1, 2017
New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.
Jul 6, 2017
Ends the year on a Flat note. Expects good recovery in the exports market.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407