Indian Automobile Industry Swot Analysis

SWOT Analysis of the the Indian Automobile Industry
Strengths
1. The domestic market is very large.
2. The Government helps the companies by providing monetary assistance for the manufacturing units that are set up.
3. Labor cost is low.
4. The growth of the economy has led to increasing purchasing power of the customers.
5. There is a lot of investment by foreign car makers.
6. Expert skills in producing small cars.
7. There is a very large pool of talent i.e. engineers in India.
8. There is an increase in the export levels.
Weaknesses

1. Infrastructural setback
2. Low productivity
3. Too many taxes levied by government increase the cost of production
4. Low investments in Research and Development. The quality of the units are low compared

The major strength of the company is that it has the highest number of dealers as well as after-sales service centers in the country.
2. It has a very good product portfolio and its brands compete amongst themselves.
3. It has the highest market share of around 45% approximately.
4. It has a loyal customer base that believes in it which raises the company’s brand equity.
5. It has a robust brand image.
6. The company is a subsidiary of Suzuki Motors, a Japan-based company. Suzuki is a pioneer and market leader in small car manufacturing segment in Japan. Its mini car section rolls out innovative yet economical passenger car for the masses. The company has high brand recognition and operates in more than 190 countries across the world. Thus, this brand recognition allows Suzuki to charge premium prices than its competitors and thus register relatively higher margins. Hence, Suzuki’s strong brand image gives MSIL a significant competitive advantage and helps it to register higher sales growth.

Weakness
• Low interior quality inside the cars when compared to quality players like Hyundai and other new foreign players like Volkswagen, Nissan etc.
• Government intervention due to having share in

Net Profit Margin
6. Current Ratio
7. Net Cash Accrual to total debt
The interest coverage ratio has been given the highest weight as it is important to determine and ensure that you pay off your interest charges on time without any default. It gives an incentive for the creditors or the lenders to further increase their exposure or to provide new debt. Thus, it is given the highest weight which is 0.25.
The next ranking is given to debt equity ratio as the auto mobile industry is a hugely capital intensive industry which requires large amounts of investment. Thus, this ratio helps us to determine the total proportion of debt in the company. A higher ratio is not considered as favorable, so this makes it important for us to rate a company which is in auto mobile sector, thus a weight of 0.20 is awarded for the same.
Next in the ranking comes Net worth, which is basically an important parameter to determine the long term solvency of the company. Thus it is awarded a weight of 0.15.
Return on Capital Employed determines the return that is expected on the total capital employed for the smooth function of a business. This is an important parameter that is taken into consideration by the investors and lenders when they infuse money into an organization, i.e., how much profit will they be earning for the capital they have employees. This ratio is given the fourth rank with a weight of