Market force analysis of Indian Auto Component Industry

The decade of 1985–1995 was an important watershed in the history of international automobile industry. World demand for automobiles had stagnated, with declining international competitiveness, throwing North American and European automobile manufacturers into labor turmoil. While these problems festered in the West, the Asian auto market was exploding. Economic growth rates were high throughout the Asian region; a middle class with a significant disposable income was emerging; and number of people, who owned cars, increased. The Indian auto industry in the early nineties was influenced by the liberalization wave and was flooded with top brands from across the globe. As a result of the derived demand, the scope and opportunity for the component industry increased multifold. This paper traces the evolution of Indian auto component industry. Porter Five Force Analysis is performed and the market forces are analysed to assess the current status of the industry and predict the future potential.