“Automotive: Gaining the Required Edge”

1750 Words Apr 1st, 2010 7 Pages
1) What are the key challenges faced by automotive manufacturers in India?

The automotive sector today is probably one of the most intensely competitive sectors with almost all the major car manufacturers having set up manufacturing facilities in India. This has led to competition in every category and sub-category in this sector.
Technology as a product differentiator is only limited, with most manufacturers introducing models in India in line with their international product portfolios.
The rapid sophistication in this sector in a very limited period has led to a world-class ancillary and component industry, which has resulted in foreign car companies having a relatively large indigenous content. This has greatly enabled manufacturers
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Traffic laws are not well enforced leading to one of the highest per-capita accident rates in the world. 2) Cascading effect of Taxes: With multiple taxes at City, State and Centre level, the prices of Automobiles are varied. This effects into evasion of taxes, by registering the vehicles in low tax areas. Moreover the prices of Fuel and oil products are also inconsistent due to the rigid tax structure in India

3) Cost of Capital: Comparatively, the cost of Capital is higher in India vis-à-vis other countries. Automotive manufacturers with access to international Capital markets benefit from this, but local companies may have a major disadvantage on this account.

4) Cost of Power: Non-Availability, frequent power interruptions and long delays in supply, increase the cost of production.

5) Inflexible labor laws & Productivity issues: Indian Legal System with regards to Labor Law are not desirable for foreign countries to actively participate. Local companies also succumb to the demands of the strong labor unions. Moreover the productivity of Indian Labor is not comparable to international standards and increases the cost of production.

2) Some of the leading auto manufacturers are following best practice models with respect to IT integration. What are these best practices? How Indian companies adopt them?

IT integration has definitely helped Indian
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