Category: Economics

Introduction

Japanese and Indian makers lead the Indian market for auto vehicles.  Major manufacturers of foreign cars include Toyota, Tata Motors, Honda, Daimler Chrysler, Fiat, and Ford.  Notable Indian brands include Hindustan motors, Maruti Udyog (now Maruti Suzuki), and Tata motors.  Passenger and commercial vehicles claim only about 20% of the market share while two-wheel vehicles boast the lion’s share of the market.  Native manufacturers have traditionally focused on making small and basic models under state sanctioned protections.  The majority of foreign manufacturers also chose to target the intermediate range of the market, taking a conservative approach when it comes to introducing bigger cars for the Indian consumer.  Increased investments in the Indian auto sector have resulted in idle capacity.  This has led many manufacturers to look towards exports as a solution.

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Tata Motors PEST Analysis

A PEST analysis for Tata Motors identifies many salient factors in the macroeconomic environment in India that are important for the organization (Kant, 2008).  Political factors include substantial investments in the highway infrastructure, lower effect of taxes and duties because of WTO, and the encouragement of profit repatriation offered for FDI. Economic factors include impressive domestic growth, cheaper labor, the availability of a large pool of English speaking technical personnel, and an increasing volume of exports.  Social factors include an expanding middle class, which in turn is giving rise to lifestyles that require mobility, and a relatively younger population (half of all Indians are 25 years or younger).

Technological factors include growing demand for fuel-efficient and dependable cars, the implementation of international quality standards like six sigma, TQM, and ISO, and the presence of world-renowned auto manufacturers and top of the line suppliers. Continuously transforming itself to respond to this changing environment and the challenges and opportunities that it brings has been a hallmark of Tata motors.  It has done so while retaining its values and capitalizing on constant innovation, which is what makes the organization successful.

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