University of Delhi MBA Project: Automobile Sector Technology Analysis

This MBA project report, submitted to the Faculty of Management Studies, University of Delhi, analyzes the threats and opportunities presented by technology in the automobile sector. The report begins with an executive summary, literature review covering management of technology, technology forecasting, and technology intelligence. It then introduces the global and Indian automobile sectors, highlighting market trends, sales figures, and the impact of fuel emission standards. The study focuses on technology maturity in the Indian automobile sector, assessing the impact of ACES (Automated-Connected-Electrified-Shared) technologies. The report provides recommendations based on the analysis, aiming to offer a third-party perspective on the sector's future, considering factors like environmental enablement, marketplace forces, and the growth of electric and autonomous vehicles. The research examines three segments of the Indian automobile market: premium, middle segment, and economy segment. The project also acknowledges the contributions of various research studies and papers to support the findings.

Threat and Opportunity
Analysis of Technology in
the Automobile Sector
A Project Report Submitted for the partial fulfilment of the award of degree of
Master of Business Administration (M.B.A.)
Under the Guidance of
Prof. Soma Dey
Submitted by-
Shreya Kashyap
F-350, MBA (FT) – 2017-2019
Area Code: SBM
Faculty of Management Studies
University of Delhi
February 2019

CERTIFICATE
This is to certify that the project titled, “Threat and Opportunity Analysis of Technology in
the Automobile Sector” submitted in partial fulfilment of the requirements for the Degree
of Master of Business Administration is a record of original research work carried out by
myself. Any material borrowed or referred to is duly acknowledged.
Student
Shreya Kashyap
Roll No. F-350
MBA(FT)-2017-19
This is to certify that the above-mentioned project titled, “Threat and Opportunity Analysis
of Technology in the Automobile Sector” submitted by Shreya Kashyap, MBA(FT) Batch of
2019, Roll No. 350 has been carried out under my supervision.
Project Guide
Prof. Soma Dey
Faculty of Management Studies
University of Delhi

ACKNOWLEDGEMENT
I would like to express my heartfelt gratitude to my guide Dr. Soma Dey for providing me the
opportunity to work under her guidance. Ma’am provided me with constant help and
support throughout the duration of this project. Pursuing a project in such a vast and
dynamic field would not have been possible without her encouragement.
Apart from the project work, I would also like to hereby thank Dr. Soma Dey for being a
faculty member who has always laid strong emphasis on creative thinking and always been
there for her students whenever they needed her support and guidance.
I would also like to thank the entire faculty at FMS, Delhi for providing me with an enriching
and I have learnt from several articles, research studies and papers from national and
international entities. I acknowledge the value I have received from these bodies of
knowledge.
Last but not the least, I would like to thank my colleagues and friends for their support and
words of motivation during the project tenure.
Shreya Kashyap
Faculty of Management Studies
University of Delhi
February 2018

INDEX

EXECUTIVE SUMMARY
The automobile sector is at an interesting crossroad today. Over the past few years, the
explosion of digital and the introduction of smart technologies have pushed this sector into
the next stage of its growth trajectory. Clean fuels and climate change concerns have put
great pressure on this industry to innovate. This makes it important to optimise the impact
of technological developments on the business and avoid threats that come from both
within and outside the sector/industry.
In this project, using a technology planning support function, the technology maturity of the
automobile sector in India will be estimated. This function highlights possible threats and so
helps planners and decision makers in making the right decision before the anticipated
problem occurs. Based on the function output estimates and prediction of the future
landscape, recommendations will be provided for the automobile sector in India.
This research is aimed to provide a 3rd party analysis of the sector, a view that is different
from individuals working in this sector currently. Apart from technology readiness,
environmental enablement through policy and regulations along with marketplace forces
play an important role in the success of an industry.

LITERATURE REVIEW
1 MANAGEMENT OF TECHNOLOGY
The term technology refers “not only to physical items (e.g. machines or tools), but also to methods,
techniques, or software that humans require in order to solve a problem or gain achievement. The
term technology has evolved more so with the managerial concept compared to any other concept.
When technology is defined in the literature, it is described as applied knowledge focusing on the
know- how of the organisation. Technology management is a process, which includes planning,
directing, controlling, developing and implementing technological capabilities to shape and
accomplish the strategic and operational objectives of an organization. Irrespective of what is
managed, management involves concerns about the future. In technology management a decision
must be made by managers today that will affect the organisation’s future. This decision process
needs accurate inputs to support technology managers in anticipating the future. This could be using
technology forecasting, which is further discussed.”
2 TECHNOLOGY FORECASTING
Technology is responsible for many changes. The decision-making process can be greatly improved
by technology forecasting due to greater accuracy of the future. “A technological forecast includes
four elements: the time of the forecast or the future date when the forecast is to be realised, the
technology being forecast, the characteristics of the technology or the functional capabilities of the
technology, and a statement about probability. The greater part of the technological forecasting
literature since the 1960s has been devoted to structured judgmental approaches such as Delphi
surveys and cross impact matrices. There are few real industrial applications of technology
forecasting and most of the tools are described only in theoretical terms. Therefore, there is a need
for a systematic process that can generate dynamic support for technology planning and can use
simple and useful tools.”
3 TECHNOLOGY INTELLIGENCE (TI)
Most strategic managers claim that their companies keep up-to-date in their field but they do not
have a systematic way to capture the important elements of technology changes from the general
information around them. In today’s world, an arbitrary process is insufficient. “Methods and tools,
primarily in the technology intelligence field such as those described in are needed to offer actions
to cope with threats that are not necessarily obvious to detect. Such a threat, in the form of an
emerging technology or new technological innovation, product or service, may replace the existing
dominant technology in the market, despite the fact that it may initially perform worse in terms of
the measures used by the current market leaders; this concept is referred to as disruptive
technology. The activity of collecting and evaluating information on technology developments is
called technology intelligence (TI) or technology watch. Literature on technology intelligence
describes many processes. TI is an important subject matter in this dissertation in helping to develop
technology watch (TW) framework that will work as a tool for monitoring; identifying and assessing
the technologies that emerge and could disrupt the business by affecting or replacing the existing
technologies which comprise the bottom line of the company.”

CHAPTER 1: INTRODUCTION
Globalisation of competition and the accelerating rate of technology change have created
difficult challenges for advanced technology-based industries in this new millennium.
Companies in these industries must now continually reduce costs and develop better
products and services in order to maintain a competitive advantage in an environment that
is constantly changing.
High costs for research and development (R&D) force high technology companies to choose
which technologies to invest in more carefully. Technologies are introduced into a company
in order to make a positive contribution to its products and services. Companies need
technology planning in order to make better decisions with regard to strategic corporate
planning, R&D management, product development, production and marketing.
The automobile sector has long been at the forefront of embracing new-age technology.
The technology future of this industry is ACES (Automated-Connected-Electrified-Shared). As
the automotive sector keeps innovating and the competition intensifies alongside, the risks
associated with extensive R&D in one field can have a detrimental impact on market share
and bottom line. Unpredictability of results and secrecy involving competitor R&D
investments makes technology planning and forecasting extremely important for a company
in this sector.
As the developing countries’ gross incomes rise, more and more people in these countries
are willing to make investments in the auto industry; buy cars for personal travel, trucks for
transporting goods or tractors for field work or even put in money for further avenues of
income generation. Since level of transportation and the GDP of any country are inter-
linked, improved GDPs of developing countries like BRICS (Brazil, Russia, India, China and
South Africa) indicate greater scope for automobile sector growth and penetration within
these countries. New technologies bring in benefits of greater cost to scale, improved
efficiency, increased comfort to end consumers and at times, a competitive advantage to
companies.
India is expected to emerge as the world’s 3rd largest passenger market by 2021 and also a
leader in shared mobility by 2030. It is expected to be at the forefront of electric and
autonomous vehicles in the years to come. With the benefits of growing demand due to
rising incomes of the middle class and young population, improving regulatory processes in
FDI and FII and a fairly competitive marketplace, India becomes an interesting geography for
this study.
As Uber and Ola are changing marketplace dynamics in the shared mobility space, Indian
government is going ambitious with its Electric Vehicles Plan, it is important to understand
the opportunities and threats that come with such developments. Understanding India’s
maturity in accepting these factors as well their feasibility of implementation are important
considerations for this study. Indian automobile companies in three segments will be
analysed using this model – Premium, Middle Segment and the Economy Segment. Before
delving into that, a background is provided in the initial segments of this report.

3.1 WORLDWIDE AUTOMOBILE SECTOR AT A GLANCE
The global economy is transforming dramatically, triggered by the accelerated increase in
new technologies, development in emerging markets like India, policies towards
sustainability and evolving consumer preferences with respect to ownership. The mobility of
people and goods has also witnessed a considerable transition over the last century. As
claimed by the experts, the automobile industry is at the cusp of disruptive in the last
decade. For instance, the sale of new passenger vehicles1 has grown at a CAGR of 3.15%2 as
shown in exhibit 1.
2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8
74.9
78.2
82.1
85.6
88.3
89.7
93.9
96.8
99.1
Glo b a l T r en d s i N P A S S en g er Veh i c l e S a l es
Year
Sales in Millions
While the automobile industry is primarily dominated by manufacturers based out of
Germany, US and Japan as highlighted in exhibit 2, their new profits is likely to come from
emerging markets of BRICS countries, whereas the growth in US, Europe, Japan and South
Korea is expected to remain stagnant in terms of profitability.
Toyota Motor
Volkswagen
Daimler
General Motors
Ford Motor
Honda Motor
Fiat (FCA)
SAIC Motor
BMW Group
Nissan Motor
0 50 100 150 200 250 300
265.4
261.1
185.4
160
158
140.1
133.7
130.4
112.3
109.8
Revenue of the leading automotive manufacturers worldwide
in FY 2018 (in billion U.S. dollars)
3
1 Passenger vehicles
2 Taken from Statista
3 Statista

3.2 INDIAN AUTOMOBILE SECTOR AT A GLANCE
The Indian automobile industry, in 2018, became the 4th largest in the world with sales
witnessing amongst the fastest growth with a CAGR of 7.53% as presented in exhibit 34. This
accelerated growth is primarily driven by the country’s growing population, increasing
income and rising urbanisation with detailed factors can be observed in exhibit 4.
2012 2013 2014 2015 2016 2017 2018
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
Vehicle Sales in India
Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers
Year
Sales in Absolute Numbers
The two wheelers have the maximum market share in sales volume as can be observed in Exhibit 45.
While the sales of passenger vehicles in India have constituted to about 2.9%-3.5% of the world’s
share, the Indian market has emerged as the biggest market for two and three-wheelers. This
growth is attributed to the massive spending by the Indian Government in rural programmes and
large road-construction, leading to an accelerated pick up sales volume in smaller towns and villages.
12 3 2
83
Percentage Share of Vehicle Sales in 2018
Passenger Vehicles Commercial Vehicles
Three Wheelers Two Wheelers
4 SIAM
5 SIAM

3.2.1 Fuel Emission Standards
The Indian Government regulations and safety, among other standards, have pushed
automobile manufacturers to make greener and safer vehicles. This can be observed with
the notification from the Ministry of Road, Transport and Highways (MoRTH) to enforce
Bharat Stage VI (BS VI) emission regime nationwide from April 2020. This rachet-up of
emission standards is in continuation to the implementation of BS IV emission standards in
2017. The implementation of BS VI mandates a 68% reduction in NOx and 87% reduction in
particulate matter (PM) for diesel vehicles as compared to BS IV standards, whereas the
vehicles based on gasoline fuel are mandated for a reduction of 25% reduction of NOx.
While it is worth noting the Government’s decision to leapfrog from BS IV to BS VI bypassing
BS V standards, the transition is expected to increase the vehicle costs by 12-20%6.
3.2.2 Electric Vehicles
The electric vehicles market was unregulated until in 2013-14, the country saw the
burgeoning of electric rickshaws in various parts of the country. Tripura, though a small
state, was the first to regulate the EV market, with a policy titled “Tripura Battery Operated
Rickshaw Rules 2014”, under which the registration of electric rickshaws was made
compulsory7. Simultaneously, the Indian Government unveiled the National Electric Mobility
Mission Plan 2020 (NEPMP) with a target to add 6-7 million new full range electric vehicles
including an estimated 4-5 million two-wheelers by 2020. This was brought in the context of
national energy security wherein petroleum products are primarily imported, environmental
change mitigation and promote domestic manufacturing8.
The major push for EVs came when the Faster Adoption and Manufacturing of (Hybrid &)
Electric Vehicles (FAME) scheme was launched in April 2015. The scheme offered incentives
for adoption in form of rebates and lower taxes. Depending on the vehicle, battery
technology (hybrid or full electric) subsidies were fixed. It ranged from INR 29,000 for 2-
6 CSE Report
7 http://agartalacity.tripura.gov.in/act/AMC_Battery.pdf (Retrieved on 20th February 2019)
8 http://www.pib.nic.in/newsite/erelease.aspx?relid=91444 (Retrieved on 20th February 2019)

wheelers to INR 138,000 for 4-wheelers. Phase 1 of the scheme, initially slated to continue
for just 2 years, was extended until March 2018. Of the INR 1.27 billion spent through the
FAME scheme till June 2017, around 60 % of the funds were used to support the purchase of
mild hybrid vehicles20. In March 2017, the FAME scheme was amended to exclude mild
hybrids from the demand-based incentives since most of the funds were used by them, with
the government feeling that mild hybrids were not significantly accelerating the path to the
development of full range EVs. This impacted the sales of Maruti Suzuki’s Ciaz and
Mahindra’s Scorpio which were the best-selling models under the mild hybrid category9.
As of November 2017, the FAME scheme had been extended to support the purchase of
163,997 vehicles10. Also, under the FAME scheme, support for research and development of
batteries stands at INR 0.3 billion, with INR 2.4 million allocated for Non-Ferrous Materials
Technology Development Centre, Hyderabad and INR 6.1 million allocated to IIT Kanpur11.
The push for electric mobility charging stations will first be rolled out in cities with a
population of greater than 4 million residents i.e. Mumbai, Delhi, Bangalore, Hyderabad,
Ahmedabad, Chennai, Kolkata, Surat and Pune. The rollout means that after much waiting
and uncertainty, India will finally have public electric charging stations as a reality rather
than just a pipe dream. The Indian government has already recently announced additional
benefits to electric car owners such as special green number plates.
9 http://www.autocarpro.in/news-national/government-subsidy-mild-hybrids-fame-scheme-withdrawn-24206 (Retrieved on 20th
February 2019)
10 http://www.newindianexpress.com/business/2017/dec/28/focus-on-e-mobility-in-public-transport-via-fame-scheme-government-
1738961.html (Retrieved on 20th February 2019)
11 http://www.autocarpro.in/news-national/government-spent-rs-crore-research-development-ev-battery-27566 (Retrieved on
February 20th 2019)

3.3 AUTOMOBILE TECHNOLOGICAL INNOVATIONS OVER THE YEARS
3.3.1 The Steam Engine
The steam engine was, undoubtedly, the most important innovation in automobile
engineering. The first reliable engine was developed by James Watt in 1775.
Steam engines would initially lead to the development of locomotives and ship propulsion
but would later be refined for use in early cars in the late 1800's to early 1900's. The steam
car became popular at this time, especially as roads improved. Fuel was relatively cheap as
well.
The fate of the steam engine car was sealed when Henry Ford fully developed his mass
production process. Electrical starters for internal combustion engines also removed the
need for hand crank engine starting but internal combustion engine driven cars would
ultimately win out as they were much cheaper to buy.
As the diagram above shows, coal for steam engines quickly became the leading source of
energy during the industrial revolution, taking over from animal power and biomass (usually
timber for burning).
3.3.2 The Internal Combustion Engine
The internal combustion engine is, by any standards, the de facto reason for the existence of
the automobile, today. “The modern internal combustion engine, as we know it, wouldn't
be developed until Nikolaus Otto patented his atmospheric gas engine in 1864. Later
developments were made by George Brayton (the first liquid fuel engine) and a
collaboration with Otto, Daimler, and Maybach gave the world the first four-cycle engine
in 1876. The two-stroke engine was developed by Karl Benz a little later in 1879 with
the production of Benz's first commercial motor vehicles commencing in 1886.”