Automobile Report

CHAPTER 1
INTRODUCTION
[AN ANALYSIS OF AUTOMOBILE INDUSTRY] March 27, 2010
INTRODUCTION
The automobile industry is one of the largest industries in India as in many other countries. It
plays a major role in the growth of economy in India. The automobile industry in India is
the ninth largest in the world with an annual production of over 2.3 million units in 2008. The
industry comprises automobiles and auto component sectors, which encompass passenger cars,
two-wheelers, three-wheelers, tractors, commercial vehicles, multi- utility vehicles and
components. Today, the Indian automobile industry is the world s largest motorcycle
manufacturer, the second largest two-wheeler and tractor manufacturer, the fifth largest
commercial vehicle manufacturer and the fourth largest car maker in Asia. Apart from serving
the domestic market, the Indian auto sector has also become a sourcing hub for the global auto
giants. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan,
South Korea and Thailand. The Government of India has introduced an ambitious project of
setting up world-class automotive testing and R&D infrastructure to place India in the USD 6
trillion global automotive business. This book details the current status and factors influencing
the growth of the Indian automobile industry; its future prospects and the success stories of some
automobile giants in India. It also focuses on the future growth of the industry as a result of the
newly adopted technologies and strategies. India is set to emerge not only as a large domestic
market for automotive manufacturers, but also as a crucial link in the global automotive chain.
Among other industries, the automotive industry in India is understood to be the most dynamic.
It has been experiencing strong growth rates after de-licensing of the industry in 1991, when
major economic reforms took place in India. In this report we have studied the various trends and
changes that had occurred over the years in this industry, more specifically the passenger vehicle
segment.
Alliance Business School | Group12 , Finance A 2

OBJECTIVES
• To understand and analyze automobile industry in India and in global market.
• To understand challenges, threats, opportunities and weakness of industry.
• To understand Impact of industry on global market.
• To understand the future of this industry and its role in the growth of the Indian economy.
• To identify the changes those have taken place in the Automobile Industry over the past
few years.
• To identify the past and current overview of Automobile Industry.

CHAPTER 2
LITERATURE REVIEW

According to Carney D.(2010, February 9), there are various technologies which are specially
developed in order to facilitate automobile safety. Technologies such as stability-control
systems, antilock brakes and better airbags are the primary reason U.S. highway fatalities have
steadily declined for decades. 2008 had the lowest number of fatalities since 1961, and the latest
data from the National Highway Traffic Safety Administration suggest 2009 will be even
better. Still, engineers around the world are working on ever better ideas for safety tech. Here are
five of the most promising. These technologies include skidding airbags, expandable door
beams, inflating seatbelts, autonomous breaks, auto steering correction. These are some of the
technologies which might help the next generation in having a better and a more safer ride.
Ohnsman.A, Green .J and Inoue K. talks about the production mishaps that happen with Toyota
which led to death of many. A combination of high-speed global growth and ambitious
cost cuts led to the quality lapses that have tarnished the once-mighty brand. The authors
talks about Those production mishaps occurred in 2006, a year after company
President Katsuaki Watanabe boasted about having squeezed more than $10 billion
from global operating costs in the previous six years—this despite an impressive run
of profit growth and global market share gains in the middle of the last decade. Then
Toyota pushed even harder for more cuts. 8 million cars recalled due to mechanical
failures linked by U.S. regulators to 51 deaths. Before company officials knew that
runaway acceleration was causing crashes, one of these executives says, a simple
manufacturing process would sometimes ignite small fires in a component as a direct
result of corner-cutting. It was just one early sign that the focus on cost reduction had
gone too far. But the Toyota people were not ready to accept the fact that it was
mainly due to cost reduction. They said, that It's not true that by reducing cost
automatically reduces quality. They suggested that it got carried away chasing high-
speed growth, market share, and productivity gains year in and year out. All that
slowly dulled the commitment to quality embedded in Toyota's corporate culture.
According to Sunil Kewalramani (Jan 7, 2007) There is a boom in Indian Automobile industry
because of its demand in all the segments available in the society. It is considered as one of the
fastest growing industry all over the world. To meet the customer need it has been observed that
every week companies are coming up with new model of car or bike. Gone are the days when
people had to wait for their preferred vehicle. Today, there are several institutions which are
contributing to make automobile industry a success and they are financial institutions which are
bringing people closer to their dream car or bike. Indian automobile sector do have no. Of
companies that provide all type of vehicles. As now a day cars have become a need for today’s
world. Automobile companies are offering various premium cars to entry-level cars for the
customers. TATA worked hardly in order to bring in a low budget car for Indian market. The
boom can easily be tracked by the presented statistics that car production increased from 7,
23,330 to 13, 08,913 over a period of last three years in India. Such performance of automobile
Industry in India has bring in huge development and consumption of vehicles that encourages for
potential growth in Indian auto part market. Some giants in Car manufacturing are Audi, Maruti,
BMW, Mercedes, Mahindra & Mahindra Ford, Skoda etc. All the companies are providing
servicing facility by their own service centres. The user can visit the service centre and consult
about the problem of vehicle with the experts.
Researcher Suleyman Semiz (2009) after doing his research on Using advanced technology in
automotive sector and Relationship of technology management, he concluded that it is possible
to maintain the manufacturing and productivity efficient by making right decisions at the right
times, also by realizing their investments related to advanced technologies companies can
respond in better way to customer needs and expectations and sustainable competition. The
process connected with these investments is very complex and also high cost involving. Due to
all these facts it has been found that technology management has become important in recent
years to manage successfully all the processes. In the search, the situation about technology
management is considered by evaluating data related to using advanced technology in
organizations. Automotive sector is one of the sectors which are most affected by the changing
of economical and social conditions. From the result obtained in his research, it has been stated
that the problems are partly present in the implementation of the advanced production and
management technologies and that the approach of the technology management is not completely
adopted by the organizations. But the organizations are trying to realize their technological
changes by connecting with different institution also.

According to Dent.T, Curtis.l (2010) car sales have leapt, as people trade in older vehicles for
new ones. The scrappage scheme may save the car industry, but not the planet. This is because e
failed to take into account energy used to build a new car. Research by the US Department of
Energy calculates that the average new car sold in 2009 required the energy equivalent of 1,540
gallons of petrol to manufacture. This is just the energy used to make new cars. It does not take
into account the energy used in scrapping older cars. Nor does it take into account the cost of
transporting the new car from the point of manufacture to the point of sale. This scheme may not
save the planet but was economically successful. Car sales rose because of this scheme.
According to just-auto.com editorial team The profile of the automotive lighting industry
has lately been undergoing rapid and significant change, under the combined
influences of multiple forces. Lighting regulations, once many in number and
significantly different in technical prescriptions in the world's many markets, are now
greatly reduced in number. Lighting technology has advanced at a staggering pace
since the beginning of the 21st century, presenting a wide array of engineering and
design options. At the same time buyers are demanding stylish lighting. Globalization
has led to competition among auto lighting manufacturers. However, the lighting
sector is unique in the degree of cooperation among its major and minor participants
and its degree of global integration. There are numerous symposiums going on
worldwide, at which the latest research and technology is showcased and discussed in
great detail among the industry's community of researchers, marketers, regulators,
scientists.
According to John Pearley Huffman (2010) Toyota’s current recall crisis is massive but not
unprecedented. In 1996 Ford recalled millions of vehicles due to faulty ignition modules. This
recall by Ford is largest till date. It's not size that makes a recall bad, it's the damage it does to the
reputation of a company's products. In 1960’s Detroit car markets faced stiff competition from
German imports. In order to bring down the price rate of ‘Pinto’ there was not only a cut in the
interior design but also in the placement of fuel tank. In 1980 Gm introduced Front drives X-cars
to compete with cars all around the world. But it had to be recalled. Maladies on that car

included everything from faulty fuel lines to steering gear that detached from its mounts to coil
springs in the front suspension that could slip out of their seats. With only about 92,000 vehicles
involved, the first recall of the Audi 5000 back in the 1980s was relatively puny in size. But its
effect was absolutely devastating to Audi's business in North America. In 1976 Dodge Aspen
and Plymouth Volare were recalled. The recalls were for everything from the emissions control
systems to fuel systems and seatbelt retractors. Rust was the major problem.

CHAPTER 3
GLOBAL SCENARIO

3.1 INTRODUCTION
Taking a look back in the 1890’s which was referred as the “horseless carriage”, the global
automobile industry of 2009 has come a long way as an emerging market leader in the
manufacturing activity, by providing employment to 1 out of 7 people either directly or
indirectly. It is hailed as the “Industry of Industries” by the management guru, Peter Drucker, ,
the automobile industry set standards in the manufacturing activity by contributing mass
production techniques during the early 1910s. The Japanese soon followed by offering lean
production techniques in the 1970s. Riding high on economical revival in many developing
countries in Asia and Europe, the industry’s global output touched 64.6 million vehicles in 2005.
But with a downward slide in the market share, the Big Three was fast losing their dominant
position to Toyota, Honda, and Nissan, thereby setting the ground for the emergence of the New
Six. Meanwhile UK, served as the single largest customer for European auto-makers. Japanese
players were the leaders in the light vehicle market and hybrid market. China and India attracted
the attention of global auto-makers, vying for setting up a cost-effective export base for meeting
the demand from Asian markets. Despite government controls, the Chinese market boasted of
sales of more than 2.7 million commercial vehicles in 2004. With industry reports on the highest
growth in mobility in the world at 3% per annum, a further surge in demand was anticipated
from the Chinese market. A booming economy and a low interest regime helped India to make
its mark in the automobile sector in 2004, with sales figures exceeding more than 1 million in the
passenger car segment for the first time. The sale of commercial vehicles showed a record
growth of 29% over 2003. Foreign auto-makers such as Mercedes Benz, Volkswagen Group,
General Motors, Honda, Toyota, Ford, Fiat and Mitsubishi were all making a bee-line to set up
their manufacturing units in India to tap the growing demand.
In the environment front, the Kyoto Protocol, which came into force in February 2005, led to the
emergence of a closed loop strategy encompassing production, vehicle operation and recycling in
the global automobile sector. On analyzing the response of auto-manufacturers to climate
change, it is noticed that despite fragmented views on the ratification of the Kyoto Protocol,
automakers were in the forefront of popularizing environment-friendly initiatives. They were
investing on engine modifications and related pollution-reducing technologies aimed at
producing more fuel efficient vehicles. Hybrid vehicles and green vehicles running on alternative

fuels are proving to be commercially viable options with customers queuing up for these
products, which offered significant savings on gasoline prices.
3.2 BIRTH OF A CAR

The birth of the car as we know it today took several years and the works and developments of
many people. It was not until 1885 that the first car rolled down the streets; however, earlier
attempts at steam powered road vehicles were successful, giving people the idea that cars as we
know them today have existed for a lot longer than they have.
The first steam-powered vehicle was designed by Nicolas-Joseph Cugnot and constructed by M.
Brezin in 1769 and could attain speeds of up to 6 km/hour. Two years later, he designed another,
much faster steam-driven engine, which was so fast that it rammed into a wall, recording the
world's first car accident. These early steam-powered vehicles were so heavy that they were only
practical on a perfectly flat surface as strong as iron. However impractical as these cars may have
been, the design for these vehicles were the basis for the first self-propelled vehicles and
ultimately the basis for the design of the car we know today.
The next step towards the development of the car was the invention of the internal combustion
engine. Francois Isaac de Rivaz designed the first internal combustion engine in 1807, using a
mixture of hydrogen and oxygen to generate energy. Several designs were developed for a car to
run on the internal combustion engine during the early 19 th century, but with little to no degree
of commercial success due to the fact that there was no known fuel that could be safely internally
combusted.
In 1860, Jean Joseph Etienne Lenoir, a Frenchman, built the first successful two-stroke gas
driven engine. Two years later, he again built an experimental vehicle by his gas-engine, which
ran at a speed of 3 kms/hour and drove it from Paris to Joinville. Both of these cars became
popular and by 1865 could be frequently seen on the roads. Unfortunately, Lenoir died broke
before he could ever make any money or even enjoy his invention.
After several small changes to Lenoir's design, In September of 1893, after several small changes
to Lenoir's design, the first gasoline powered car, built by brothers Charles and Frank Duryear,
was ready for road trials. The first run on public roads was made on September 21, 1893 in
Springfield, MA.. When most people think of the first cars on the road, they think Henry Ford,
but it was not until 1896 that one of Henry Ford's cars could be seen on the road. He sold his first
car, which he called the Quadracycle, for $200 and used the money to build another car. With the
financial backing of the Mayor of Detroit and other wealthy Detroiters, Ford formed the Detroit
Automobile Company in 1899. A few prototypes were built, but no production cars were ever
made by this company and it was dissolved in January 1901. Ford would not offer a car for sale
again until 1903.

The development of the automobile changed the face of small-town America. As time passed,
cars became less of luxury and more of a necessity. However, after a century of automobiles, we
are finally realizing the long-term effects of transport by internal combustion and are looking for
alternative forms of fuel and transportation.
Conclusion
Human had thirst for movements with help of machines was from the 18th century. The success
of steam operated cars gave confidence to human to strive hard to achieve its dreams. Henry
Ford revolutionised the sector and results are very much significant today.
Table 3.1-Production statistics
Country Cars
Argentina 399,577
Australia 285,590
Austria 125,436
Belgium 680,131
Brazil 2,561,496
Canada 1,195,436
China 6,737,745
Czech Rep. 933,312
Egypt 72,485
Finland 18,000
France 2,145,935
Germany 5,526,882
Hungary 342,359
India 1,829,677
Indonesia 431,423
Iran 940,870
Italy 659,221
Japan 9,916,149
Malaysia 419,963
Mexico 1,241,288
Netherlands 59,223
Poland 840,000
Portugal 132,242
Romania 231,056
Russia 1,469,429

Country Cars
Serbia 9,818
Slovakia 575,776
Slovenia 180,233
South Africa 321,124
South Korea 3,450,478
Spain 1,943,049
Sweden 252,287
Taiwan 138,709
Thailand 401,309
Turkey 621,567
Ukraine 400,799
UK 1,446,619
USA 3,776,358
Uzbekistan 195,038
Supplementary 332,917
Total 52,637,206
From the above table, we can see that the maximum numbers of cars are produced in Japan,
followed by China, America, Germany and Korea. These 5 countries are stand at the top when
the production of cars is concerned. The below discussed are the automobile industries of the
above prominent manufacturing countries as per the OICA statistics.

3.3 PROMINENT MANUFACTURING COUNTRIES

3.3.1 JAPAN
The Japan External Trade Organization (JETRO) has helped 11 foreign auto-related companies
invest in Japan in 2007 (January-October period), up from one in 2003, three in 2004, six in
2005, and eight in 2006. This demonstrates the steadily growing desire by foreign auto-related
suppliers to improve the products, technologies, and services they supply to Japan's auto industry
The growing number of auto-industry manufacturers and service providers setting up in Japan
reflects the increasing willingness of Japanese auto makers to tie-up with foreign suppliers. And
the foreign companies recognize that to remain globally competitive they cannot ignore the
important business opportunity this represents. "While boosting the proportion of cars they make
overseas, Japanese auto makers have been increasing their procurement of parts and technology
abroad," says Yoshihiro Yano, director general of the Japan Automobile Manufacturers
Association's international department. "But today they are shifting from merely procuring parts
from foreign suppliers to working with them from the design and development stages.
Japanese automotive manufacturers are featuring more telemetric systems in their vehicles to
keep them globally competitive. Wireless voice and data communications and GPS (Global
Positioning System) location capabilities provide drivers with location-specific information,
security and functionality-enhancing services that increase driver convenience, safety and
efficiency of the transportation system. The expansion of telemetric systems increases the
amount of computers and mobile communication technology used in vehicles and along roads,
creating a growth of opportunities for a large number of fields.
Major players
• Toyota
• Honda
• Nissan

• Mitsubishi
• Kawasaki
• Komatsu
• Yamaha
• 3.3.2 CHINA
There are over 100 auto makers based in China which currently is the world's second
largest car market. In recent years, China's automobile industry has seen a phenomenal
growth. This growth was expected from a country whose economy has been growing
steadily since the last 15 years and who has a vast base of consumers. The major focus of
this report is to look into the dynamics that is shaping up the automotive industry and
then to assess what holds for its players in the near future. China is currently making an
effort to super-specialise in auto-component sector. The demand for auto-components
produced in China is very high in domestic as well as international markets. China’s
entry into the World Trade Organization agreement in the year 2001 gave a major thrust
to its automotive industry. The industry, which was growing at the rate of around 12%
prior to the signing of the agreement, peaked to levels of around 40% within 2 years. This
research work suggests that the unpredictability of the Chinese consumer is a major
concern for the manufacturers. The Chinese customer is not known for brand loyalty and
the falling prices of the products have further added to their unpredictability.China’s
major exporting destinations are the US, Japan and Canada, while its main importing
sources are Japan, Germany and the US.
Major Players
• Volkswagen
• Mazda
• Nissan Motor company Ltd
• Honda

• General Motor
• Hyundai motor company
• Toyota
• Suzuki
Graph 3.1: Biggest Sellers in China
Source: JD Power Asia Pacific
Domestic sales continue to be dominated by overseas brands like Volkswagen, Toyota and
Honda. Only two Chinese firms -- Chery and Geely -- made the top ten list of annual passenger
vehicle sales last year.
3.3.3 AMERICA
America has two auto industries. The one represented by GM, Ford and Chrysler is Midwestern,
unionized, burdened with massive obligations to retirees, and shackled to marketing and product
strategies that have roots reaching back to the early 1900s.The other American auto industry is
largely Southern and non-union, owes relatively little to the few retirees it has, and enjoys a
variety of advantages because its Japanese, European and Korean owners launched operations in
this country relatively recently. Their factories are newer, their brand images and marketing
strategies are more coherent -- Toyota uses three brands in the U.S. to GM's eight -- and they
have cars designed for the competitive global market that exists today. Honda Co. sells one basic

Civic world-wide. Ford sells two different versions of its rival Focus compact car. Ford is
engineering one Focus to take advantage of global economies of scale, but the new car won't hit
the U.S. market until 2010.
Major players
• GM
• Ford
• Chrysler
• Toyota
• Honda Motors
• Nissan
With the rising fuel prices and increasing demand for environment friendly cars American
giants- GM, Ford and Chrysler are losing their ground to Toyota, Honda and Nissan. In 2008
Toyota became the largest car maker in the world.
AMERICA’S BIG 3 AUTOMOBILE CAR MAKERS
In recent years, the recurring troubles of the American Big 3 automakers have been coming to a
head. General Motors (GM), Ford, and Chrysler face a host of problems. Legacy costs inherited
from past manufacturing heydays in the form of costly pension and health care plans for retired
employees add up to hundreds of billions of dollars. Unappealing gas-guzzler product lines that
are a step behind current auto buying trends aren't driving strong earnings, either; instead, the
Big 3 are trying to pad flagging normal sales rates with price incentives.

However long-term survival still remains unclear, both because the possibility of longer term
government subsidy remains unclear, and because many now believe that the US auto market
was artificially inflated during the past decade. Low interest loans and cheap leases led to a glut
of consumption, illustrated by the following statistics: forty years ago only 6% of US households
owned three or more cars, in 2000 that number was 18%; America currently has 244 million
vehicles for its 202 million drivers. At the same time, the quality of cars has improved
considerably, which means that the average automobile can reliably be used for a decade. This
situation meant that automakers came to expect 16 million new car sales annually in the US.
Most now believe the level of sustainable US fleet replacement is closer to 14 to 15 million per
year. While this will be an improvement over the 12 to 13 expected as the final tally for 2008,
such a recovery will not be back to pre-recession levels.
Graph 3.2 Market Shares of Big Three
Source: mjperry.blogspot.com
3.3.4 GERMANY
Germany is considered to be the birthplace of the automobile since Karl Benz and Nikolaus
Otto independently developed four-stroke internal combustion engines in the late 1870s, with
Benz fitting his design to a couch in 1887, which led to the modern day motor car. By 1901,
Germany was producing about 900 cars a year.

Germany's auto industry is brimming with confidence and cash and even greater ambition. It has
leapt vigorously from the hospital bed to which it was confined after its world collapsed in 1993,
following the post-reunification boom of the late 1980s and early 1990s. Then total vehicle
production plunged 22% within a year -- a fall bigger than after the 1973 oil crisis.By the mid-
1990s, Germany was hobbled by sky-high wage and social costs, heavy taxes, inflexible labor
practices, long vacations, short work weeks, dwindling domestic demand, an unfavorable
exchange rate and much tougher competition. Many of those problems remain but the obituaries,
which were then being prepared, are not required-- at present.
Vehicle production in Germany last year amounted to a 4% increase over the previous year.
Exports were at an all-time high. The automotive sector, accounting for one-fifth of the country's
exports, ended the year with a trade surplus of $46 billion over the value of imports.
Major players in the market
• General Motors
• Toyota Motors
• Ford
• Nissan
• Hyundai
• Honda
3.3.5KOREA
Korean automotive industry drew world’s attention as it grew to be the 5’h largest producing
country in two decades as a later comer. Now it faces a transitory period as domestic market
growth drops to less than 5% despite more rapidly increasing overcapacity and it has to cope
with greater competition pressure in both domestic and overseas markets.
Change in domestic market directs Korean manufacturers in two ways:

• To develop more of larger cars and various types of vehicles like RVS to meet
customers’ preferences
• To raise their competitiveness in price and quality to survive unprecedented power
struggle among new and incumbent players.
Entering the ‘90s, exports of Korean-made cars rose rapidly for several reasons. Among these
were redoubled efforts to control quality, expansion of after sales service networks, production
of a wider range of export models, and more aggressive marketing efforts. Perhaps most
importantly of all, however, the rapid rise was also due to aggressive efforts by Korean
manufacturers to explore overseas markets. Korean-made cars are now being exported to a
greater number of countries than ever as a result, especially to developing countries. The volume
of exports did in fact rise substantially as export markets became diversified, but the growth rates
between regions has varied far too greatly. This indicates that Korean manufacturers have not yet
secured competitiveness overseas. The rise in exports of Korean-made cars was greatly
influenced by external factors such as the appreciation of the Japanese Yen. The trade imbalance
of Korean auto industry drew attention from advanced countries. After successive reduction s,
the tariff rates on imported cars in Korea now stand at 8%, which is an even lower level than in
the EU. In the wake of the trade negotiations between Korea and the US in 1995, foreign auto
manufacturers were given wider access to the Korean market. Korean auto manufacturers have
been aggressive in recent years in expanding their overseas operations.
Major players
• Hyundai
• Kia
• Daewoo
Conclusion:
The west had dominated the automobile industry in 20th century. But companies like Toyota,
Hyundai etc gave good competition from Asia. Europe still leads when it comes to the stylish
designs for the cars. Germany and United Kingdom are European car majors along with Italy.
The high class performance has remained key utility of US and European cars. Of late Asia
challenged US and European car makers with efficient technology and easy access to the huge
demands from India and China and other crowded Asian markets. Now China has become
world’s production house and India s considered as home for small passenger cars.

CHAPTER 4
INDIAN SCENARIO

4.1 INTRODUCTION:
Automobile industry is one of the fastest growing industries of the world. With more than 2
million new automobiles rolling out each year, on roads of India, the industry is set to grow
further. Automobile industry made its silent entry in India in the nineteenth century. Since the
launch of the first car in 1897, India automobile industry has come a long way. Today India is
the largest three wheeler market in the world and is expected to take over China as the second
largest automobile market, in the coming years.
Some facts on Automobile industry in India:
 India has the fourth largest car market in the world

 India has the largest three wheeler market in India
 India is the second largest producer of two wheelers in the world
 India ranks fifth in the production of commercial vehicles.
 Hyundai Motors ranks second in car production in the world.
The automotive sector, comprising of the automobile and auto component sub sectors, is one of
the key segments of the economy having extensive forward and backward linkages with other
key segments of the economy. It contributes about 5 per cent in India's Gross Domestic Product
(GDP) and 6 per cent in India's industrial production.
The well-developed Indian automotive industry ably fulfils this catalytic role by producing a
wide variety of vehicles like passenger cars, light, medium and heavy commercial vehicles,
multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.
Since the first car rolled out on the streets of Mumbai in 1898, the Automobile Industry of India
has come a long way. During its early stages the auto industry was overlooked by the then
Government and the policies were also not favorable. The liberalization policy and various tax
reliefs by the Govt. of India in recent years have made remarkable impacts on Indian Automobile
Industry. Indian auto industry, which is currently growing at the pace of around 18 % per annum,
has become a hot destination for global auto players like Volvo, General Motors and Ford.

4.2 INDIAN AUTOMOBILE INDUSTRY ASSOCIATIONS:
The Indian automobile industry is represented by two associations which plays major role in the
development of the industry. They are:-
 ACMA (Automotive Component Manufacturers Association of India)

 SIAM (Society of Indian Automobile Manufacturers)
4.2.1 ACMA
The Automotive Component Manufacturers Association

of India (ACMA) is the nodal agency for the Indian
Auto Component Industry. Its active participation in
various aspects has made it a vital catalyst for this industry's development.
It’s main activities include:
 trade promotion,
 technology up-gradation,
 quality enhancement
 collection and dissemination of information
 participation in international trade fairs,
 sending trade delegations overseas and
 bringing out publications on various subjects related to the automotive industry.
ACMA is represented on a number of panels, committees and councils of the Government of

India through which it helps in the formulation of policies pertaining to the Indian automotive
industry.
4.2.2 SIAM
Society of Indian Automobile Manufacturers (SIAM) is

the apex Industry body representing 38 leading vehicle
and vehicular engine manufacturers in India.
SIAM is mainly involved in:-
 an important channel of communication for the Automobile Industry with the

Government, National and International organisations.
 The Society works closely withy all the concerned stake holders

 actively participates in formulation of rules, regulations and policies related to the

Automobile Industry.
 aims to enhance exchanges and communication,
 expand economics,
 trade and technical cooperation between the Automotive Industry and its international
counterparts.
 aims to facilitate up gradation of technical capabilities of the Indian Industry to match the
best practice worldwide.
SIAM also interacts with worldwide experts to assess the global trends and developments
shaping the Automotive Industry. It has been actively pursuing issues like Frontier Technologies
viz. Telematics: Promotion of Alternative Fuels including Hydrogen Energy for automotive use
through cell vehicles and Harmonisation of Safety and Emission Standards etc.
SIAM has been striving to keep pace with the socio-economic and technological changes
shaping the Automobile Industry and endeavour to be a catalyst in the development of a stronger
Automobile Industry in India.
4.3 THE INDIAN AUTOMOBILE INDUSTRY

Evolution of Indian Automotive Industry
While the genesis of Indian Automotive Industry can be traced to the 1940s, distinct growth
decades started in the 1970s. Between 1970 and 1984 cars were considered a luxury product;
manufacturing was licensed, expansion was restricted; there were quantitative restriction (QR)
on imports and a tariff structure designed to restrict the market. The market was dominated by
six manufacturers - Telco (now Tata Motors), Ashok Leyland, Mahindra
& Mahindra, Hindustan Motors, Premier Automobiles and Bajaj Auto.
The decade of 1985 to 1995 saw the entry of Maruti Udyog in the passenger car segment and
Japanese manufacturers in the two wheelers and light commercial vehicle segments. Economic
liberalization, started in 1991, led to the delicensing of the passenger car segment in 1993. QR on
imports continued. This decade witnessed the emergence of Hero Honda as a major player in the
two wheeler segment and Maruti Udyog as the market leader in the passenger car segment.
Between 1995 and 2000 several international players entered the market. Advanced technology
was introduced to meet competitive pressures, and environmental and safety imperatives.

Automobile companies started investing in service network to support maintenance of on-road

vehicles. Auto financing started emerging as an important driver for demand.
Starting in 2000, several landmark policy changes like removal of quantitative restrictions (QR)
and 100 percent FDI through automatic route were introduced. Indigenously developed (Made in
India) Vehicles were introduced in the domestic market and exports were given a thrust. Auto
companies started collaboration with financial firms to provide auto financing and insurance
services to customers. Manufacturers also introduced systems to improve capacity utilization and
adopted quality and environmental management systems. In 2003, Core-group on Automotive
R&D (C.A.R.) was set up to identify priority areas for automotive R&D in India.
Following the economic reforms of 1991, the automobile section underwent delicensing and
opened up for 100 percent Foreign Direct Investment. A surge in economic growth rate and
purchasing power led to growth in the Indian automobile industry, which grew at a rate of 17%
on an average since the economic reforms of 1991. The industry provided employment to a total
of 13.1 million people as of 2007, which includes direct and indirect employment. The export
sector grew at a rate of 30% per year during early 21st century. However, the overall
contribution of automobile industry in India to the world remains low as of 2007. Increased
presence of multiple automobile manufacturers has led to market competitiveness and
availability of options at competitive costs. India was one of the largest manufacturers of tractors
in the world in 2005-06, when it produced 2,93,000 units. India is also largely self-sufficient in
tyre production, which it also exports to over 60 other countries. India produced 6.5 crore tyres
in 2005-06.
4.3.1 Before Independence

Before independence India was seen as a market for imported vehicles. The assembling of cars
manufactured by General Motors and other leading brands was the order of the day. Indian auto
industry focused on servicing, dealership, financing and maintenance of vehicles. Manufacturing
started only after a decade from independence.
4.3.2 After Independence

Till the 1950s the Indian Railways played a pivotal role in meeting India's transportation needs.
The railways used to carry 90 per cent of the total freight, while road transport accounted for the
balance. But in the current context the dynamics have changed. Surface transport accounts for
65% of freight movement and 80% of passenger movements. The slow growth of railway
infrastructure has been partly due to administrative reasons, partly due to difficulty in acquiring
land and partly due to high capital cost involved for every additional railway line.
The Indian automobile industry faced several challenges and road blocks to growth since
independence. Manufacturing capability was restricted by the rule of license and could not be
increased. The total production of passenger cars was limited to 40,000 a year for nearly three
decades. This production was also confined to three main manufacturers Hindustan Motors,
Premier Automobiles and Standard Motors. There was no homegrown expertise or research &
development initiative. It was difficult to import scientific know how and vital spare parts and
cumbersome to recruit foreign technical experts.
The pricing was kept under control by the government. Here was the contradiction, a passenger
car was thought to be a premium product only for the rich, yet it came under the purview of
protection of a socialist regime.
Initially labor was unskilled and had to go through a process of learning through trial and error.
But to the credit of these workers, it was they who developed the skill set required for future
expansion in the industry.
The earlier automobiles were a domestic version of prominent International Brands. The Morris
Oxford popular in the 1950s, became the Ambassador, the Fiat 1100 became the Premier
Padmini. By 1960s nearly 98% of the product was developed indigenously.
By the end of 1970s, significant changes in the automobile industry were witnessed. Initiatives
like joint ventures for light commercial vehicles did not succeed. New models like Contessa, the
Rover and the Premier 118NE, hit the market.
4.3.3 Socialistic Pattern of Growth

India by and large followed a socialist system till the later part of 1980s.The government focused
on development through heavy, long gestation, capital intensive projects like steel
manufacturing. The quality of the finished good and customer feedback were not given much
priority. As a result the country missed a golden opportunity to accelerate to a faster growth
trajectory by at least 2 decades.
4.3.4 The Pioneering Achievements

Mr. J.R.D Tata's role in the development of the Indian automobile industry has to be mentioned.
The Tata group set up a high standard Engineering Research Centre (ERC) in 1965 to facilitate
technological advancement. Mr. Tata pioneered the indigenization of scientific knowledge for
trucks in collaboration with Mercedes Benz.
The launch of Maruti 800 in 1983 changed the dynamics of the passenger car sector in India. It
was also known as the people’s car.
4.3.5 Stability in the Market

The Indian automobile industry has come a long way since independence, from being an
importer of automobiles to a manufacturer, from having minimum foreign collaborations to joint
ventures. This attribute cannot be considered as a weakness, but as sharing of best practices. This
phenomenon can be compared to the business collaboration in the outsourcing industry.
4.4 ATTRACTIVENESS OF THE INDUSTRY
1. Large and growing domestic demand:

 Demand growth expected to be around 10% CAGR making India one of the fastest
growing markets.
2. Proven Product Development capabilities:
 Industry in India has capabilities to develop complete vehicles and systems.
 More than 125 fortune 500(including large auto companies) have research and
development centres in India.
 The companies which are present in India can leverage India’s leadership in IT
industry.
3. Stable Economic Policies:
 India has continuity in reforms and policies.
 The policies and reforms are oriented towards manufacturing hub for small cars.
4. Export Potential:
 Increased outsourcing has led to a large potential to export components and
vehicles to other markets.
5. High Quality Standards:
 12 Indian component manufacturers have won the Deming Prize for quality.
 Most leading component manufacturers are QS and ISO certified.
6. Competitive Manufacturing Cost:
 After introduction of VAT, India positioned itself as one of the leading low cost
manufacturing sources.
4.5 VARIOUS SEGMENTS:

The Indian automobile industry mainly constitutes the following four segments:
 Passenger vehicle

 Commercial vehicle
 Two wheeler
 Three wheeler
Graph 4.1
source: www.siamindia.com
The above graph displays the market share of the various segments in Indian automobile
sector. Two wheelers segment have the highest market share of 76.49%, followed by the
passenger vehicle segment having 15.96% market share. Commercial vehicles and three
wheelers segment are having very negligible market share of 3.95% and 3.6%, respectively.
The main reason of two-wheelers segment having highest market share is Economical price,
safety, fuel-efficiency, better technology and the younger generation today prefer to own two
wheeler bikes.
4.5.1 Passenger vehicle segment:

Passenger cars and utility vehicles are the main segments of the Indian passenger vehicle
industry with the former accounting for ~80% the total volumes. Within the passenger car
segment, the mini and compact segment together accounts for around 80% of total volumes.
Over the last 5-6 years the compact car segment in particular has been the focus for most OEMs,
leading to a large number of product introductions and the segment has outperformed the rest of

the industry in terms of growth. Being the largest segment by volume, the compact car segment
is also intensely competitive with the presence of seven players with as many 16 offerings. The
segment has also witnessed the highest number of launches over the past 12-18 months with
major ones being Ritz, A-Star, Zen Estilo (from MSIL), i10, i20 (from HMIL) and Indica Vista
(from Tata Motors Limited - TML).
Passenger vehicle segment:

Small cars Mid size cars Premium cars Luxury cars
Graph 4.2
Source: www.siam.com
The above graph shows the trends in the growth of passenger car segment in terms of domestic
sales and productions. Over the years (2002-2009), the domestic sales has increased with a
growth rate of 54.4% whereas, the production of passenger car has increased remarkably with a
growth rate of 60.6% during the same period. In th years 2007-2009, the domestic sales of
passenger cars were considerably lower than the units produced. This was due to the
recessionary effects on supply and demand.
4.4.1: Small car market

The small car market in India is increasing by leaps and bounds. The indigenous market for
small cars now occupies a substantial share of around 70% of the annual car production in India

of about one million. The main players in the car market like Tata Motors and Maruti Udyog are
fiercely competitive and more or less all the automobile companies in India that have forayed
into the production of small cars are trying to out-do each other in terms of design, innovation,
pricing, and technology, in order to gain control of the small car market in India.
The various reasons for the growth of the small car market in India are -
The increase in the demand for small cars can be attributed to the aspirational lifestyle of people
which makes them strive for a car early on in life. The overall age for owning a car has also
decreased in recent years. Further, with the growing affluence of the rural sector, owning a car, at
least a small car, is a foregone conclusion in modern India. However, since small cars are more
affordable and utilitarian, the demand for them has shot through the roof. This rising demand for
small cars is attracting companies like General Motors which has increased its yearly production
in India to 140,000 vehicles. The Maruti 800 which is the most preferred car among the Indian
middle classes can now be bought at a lower cost. Tata Motors has launched Nano in March
2009, which cost as less as US$ 2,500. Tata Motors is also going through a process of decision-
making, to launch a variety of mini-cars in association with Fiat. Honda has also decided to
increase its manufacturing capacity in India to 100,000 very soon.
4.4.2: Mid Size car market

The mid-size car market in India has grown tremendously in the last few years. A mid-size car
is an automobile which have a size that is between a compact and a car of full size. It typically
has the capacity to carry 4 passengers. In India the mid-size car price ranges between Rs. 3-8
lakh. Although the automobile market in India is growing at 7% per year, the mid-size car
market in India is growing at the rate of around 20% per year. This shows how fast the growth is
taking place in the market of mid-size car in India. It is no wonder therefore, that most of the
latest car launches in India have been in the mid-size segment.
The various reasons for the growth of the mid-size car market in India are -
 The economy in the country is rising leaving the people with a lot of disposable income.
This money is being spent by the people in buying the mid-size car.

 Various loan schemes have been launched by the automobile manufacturers and financial
institutions giving a boost to the market of mid-size car in India.
 The government in relation to the automobile industry have taken out various polices
such as reducing the import tariffs and also relaxing the equity regulations. This has led
to the reduction in the prices of the mid-size cars.
 The youth in the country are earning high pay packages due to the IT boom in the
country. This enables them to buy the mid-size car which further boosts the mid-size car
market in India.
4.4.3: Premium Car Market in India
The premium car market in India has registered a fair amount of growth in the last few years.
A premium car is a luxurious automobile which effectively blends cargo capacity and passenger
space for the sake of style and grandeur.
Cars belonging to this segment usually have a carrying capacity of 5 passengers. The prices of
the premium cars in the Indian market range between Rs. 7-15 lakhs. As the premium cars are
expensive, the manufacturers of these cars target the high-income group of people and there are a
lot of such takers in the Indian car market.
The various reasons for the growth of the premium car market in India are -
 The economy of the country is rising as a result of which the people have more
disposable income which they are spending on buying premium cars.
 The government have reduced the import tariffs and also relaxed equity regulations with
regard to the automobile industry in India. This has reduced the prices of automobiles
giving a boost to the premium car market in India.
 The IT boom in the country has resulted in the youth earning high pay packages. This
enables them to buy premium cars, which have further boosted the premium car market
in India.
 Many loan schemes have been launched by the financial institutions and automobile
manufacturers.

4.4.4: Luxury Car Market in India

The luxury car market in India has registered a fair amount of growth in the last few years and is
growing at the rate of 25% per year. A luxury car is a luxuriously styled automobile which is
designed to give satisfaction and comfort to its owner.
A luxury car typically has carrying capacity of 4 passengers. The luxury cars in the Indian
market are very expensive, with price tags that start from Rs. 20 lakh. Hence, luxury cars can
only be afforded by the people who belong to the high income group and there are a lot of such
takers in the Indian automobile market.
The various reasons for the growth of the luxury car market in India are -
 The economy is rising in the country which has given the people more disposable income
which they are spending in buying luxury cars.
 Various loan schemes have been launched by the automobile manufacturers and the
financial institutions. This has made it very easy for the people to buy luxury cars and
this has boosted the luxury car market in India.
 With the IT boom in the country many youngsters are earning high pay packages which
enable them to buy luxury cars. And this have further given boost to the market of luxury
car in India.
 The government have formulated many polices such as the relaxation of equity
regulations and the reduction of import tariffs pertaining to the automobile industry.
These have helped to reduce the prices of the luxury cars, which in turn have led to the
growth of the luxury car market in India
4.5 COMMERCIAL VEHICE SEGMENT:
With India being the next large and lucrative market after China, global players are entering the
Indian market in association with local partners. Besides, local players are also diversifying their
business to have a sizeable share in the total commercial vehicle market. With global majors
planning to invest around Rs. 60 billion in the coming year to create capacities, the Indian CV

market is likely to get crowded. Technology trends in the global commercial vehicle industry are
being increasingly driven by tighter emission standards and demanding customer requirements.
These are set to dictate tougher tasks to new product development teams worldwide in
terms of providing products with high 'value-cost' equation.
Key Market drivers:
a) Road Network Development

b) Low interest rates.
c) Wide variety and easy availability of financing options.
d) High sensitivity to Fuel prices
Commercial vehicle segment

Buses Trucks Tractors
Ambulance Defense Vehicles Construction Equipments

Graph 4.3
Source: www.siamindia.com
In the above graph, the domestic sales and the production of the commercial vehicles are shown.
It shows a remarkable decrease in the domestic sales as well as the production of the vehicles in
the year 2008-2009. The domestic sale went down by 27% and the production went down by
31%. . This change was mainly because commercial vehicle (CV) industry faced challenging
times in 2008-09 due to reduction in cargo and passenger traffic, lower freight rates, difficulty in
availability of vehicle finance, stricter appraisal norms for financing - all on the back of the
global financial crisis.
4.6 TWO WHEELER SEGMENT:
Motorcycles Scooters Scooterettes/Mopeds

The above graph shows the trend in the domestic sales and production of two-wheelers segment.
The two- wheelers segment experienced a decline in the sales and production of products from
year 2007-2009. The domestic sales decreased by 5% over the years whereas the production
decreased by 4.5%. This decline was mainly due to the dominance of the market by the
passenger car and the growth of small car segment.
4.6.1: Two Wheeler Market in India

India is the second largest producer of two-wheelers in the world. In the last few years, the
Indian two-wheeler industry has seen spectacular growth. The country stands next to China and
Japan in terms of production and sales respectively.
The two-wheeler market in India is the biggest contributor to the automobile industry with a size
of Rs. 100,000 million. The two-wheeler market in India comprises of 3 types of vehicles,
namely motorcycles, scooters, and mopeds. Foreign collaborations have been playing a major
role in the growth of the Indian two-wheeler market, and most of them are Japanese firms. The
modern two-wheeler firms in India have been manufacturing new categories of two wheelers
such as Step Thrus and Scooterettes. These have been produced by combining two or more two-
wheeler segments. Foreign firms have already taken initiatives to own their two-wheeler
subsidiaries in India. Among the 3 segments of the Indian two wheeler market, major growth
trends have been seen in the motorcycle segment over the last four to five years. One good

reason for such increase in demand for motorcycles is due to its resistance and balance even on
bad road conditions. Most of the rural areas in India do not have decent roads and hence the need
for good, shock-resistant, and steady two-wheelers such as motorcycles had been felt.
The following are the main factors that affect two-wheeler sales in India -
 Increase in credit and financing for auto vehicles - Two-wheeler loans and financing has
been on the rise.
 Increase in consumer's salary - Due to opportunities offered by multinationals the
disposable incomes of salaried individuals have increase manifold.
 Constant petrol prices - Today, the government of India has been working on reducing
subsidies on kerosene and diesel which will keep petrol prices at more or less the same
level.
 Delay in initiation of Mass Transport System - Probably a future threat to the two-
wheeler market, the implementation of the mass transport system has been delayed.
However, the two-wheeler market in India is a fast growing market due to its technological
advancements in product manufacturing and emphasis on design innovation. The Two Wheelers
Manufacturers in India, at present are doing good business. The growth of the two wheelers
sector was noteworthy in the past few years. In the period 2006 - 07 the total number of the two
wheelers and three wheelers produced in India, were around 9 million. The sales pertaining to
two wheelers in the period 2006 - 07 was 7,857,548, which was a growth of 11.41 %. In the
same period the motorcycle exports from India was 321,321 units.
4.6.2 Two Wheelers Manufacturers - Growth Factors

 The general income level has increased
 The taxes, excise, and other duties have been lowered by the Government
 The latest two wheelers are fitted with economic engines
 The present generation is using more two wheelers
 The options of financing has become easier and user friendly
 Economical price
 Safety

 Fuel-efficient
 Comfort level
4.7 THREE WHEELERS SEGMENT:

In the three wheeler segment, the classification is broadly in terms of carriage and passenger
vehicles. Since the former does have a very limited capacity to carry goods and is not preferred
by many, the three wheeler manufacturers are more into the passenger three wheelers. Mahindra
& Mahindra has got the Champion range of three wheelers. There are Champion pick up and
Champion delivery vans while the Champion Passenger carrier is mostly seen in the western
parts of the country. This segment consists:
 Carriage purpose
 Passenger purpose
Graph 4.5
The above displayed graph shows the trend in the domestic sales and production of the three-
wheelers segments from year 2002-2009. There has been a consistent growth in the sales and
production of the three wheelers segment till the year 2007. But in the year 2008 and 2009 there
is a decrease in the production as well as the sales of the three wheelers. From the year 2007 to
2009 there is a decrease of around 11% in the production of the vehicles. From 2007 to 2008,

there was a decrease of 11.8% in the domestic sale and during 2008-2009, the sales decreased by
4% again. This was mainly due to the restrictions put by the government due to financial crisis.
Key Market drivers:
a) “Last Mile” Transportation needs.

b) High product manoeuvrability & drivability. Ideal for congested Indian roads and
tropical conditions.
c) Inadequate urban & rural public transportation infrastructure
d) Low initial ownership cost
e) Self-employment opportunity for large segment of urban youth
4.8 INDIAN AUTOMOBILE INDUSTRY AND GDP

The Role of Automobile Industry in India GDP has been phenomenon. The Automobile Industry
is one of the fastest growing sectors in India.
The increase in the demand for cars, and other vehicles, powered by the increase in the income is
the primary growth driver of the automobile industry in India. The introduction of tailor made
finance schemes, easy repayment schemes has also helped the growth of the automobile sector.
The automotive sector, comprising of the automobile and auto component sub sectors, is one of
the key segments of the economy having extensive forward and backward linkages with other
key segments of the economy. It is expected that the Automobile Industry in India would be the
7th largest automobile market within the year 2016
It contributes about 6 per cent in India's Gross Domestic Product (GDP) and 6 per cent in India's
industrial production and its contribution to GDP is expected to grow by 10% in 2016.
4.8 IMPACT OF SMALL AND HYBRID CARS:
4.8.1 Electric cars:

As a seventh-grader, James Worden began building electric cars. Throughout high school and
college he perfected his designs. Now, at the age of 26, Worden is head of the Solectria electric-
car company. He has sold more than seventy of his Force cars so far. An electric car is
an alternative fuel automobile that uses electric motors and motor controllers for propulsion, in
place of more common propulsion methods such as the internal combustion engine (ICE).
Electric cars are specifically a variety of electric vehicle created or adapted for use on the road.
In recent years, increased concerns over the environmental impact of gasoline cars, along with
reduced consumer ability to pay for fuel for gasoline cars, has brought about renewed interest in
electric cars, which are perceived to be more environmentally friendly and cheaper to maintain
and run, despite high initial costs.
The hybrid electric car has become the most common form of electric car, combining a internal
combustion engine power train with supplementary electric motors to run the car at idle and low
speeds, making use of techniques such as regenerative braking to improve its efficiency over
comparable gasoline cars, while not being hampered by the limited range inherent to current
battery electric cars. Hybrid cars are now sold by most major manufacturers, with notable models
including the Toyota Prius and the forthcoming Chevrolet Volt, a plug-in hybrid which uses a
fully electric drive train supplemented by a gasoline-powered electric generator to extend its
range. As of 2009, the world’s most popular battery electric car is the REVAi, also known as the
G-Wiz, manufactured in Bangalore, India and sold in 24 countries including India and others in
Europe, Asia, and Central America. In late 2009 REVA Electric Car Company, the maker of the
REVAi, completed a new ultra-low carbon vehicle assembly plant in Bangalore, the worlds
largest dedicated to building EVs with a capacity of 30,000 cars annually. Popular hybrid cars
include Toyota Prius (Motor Trend magazine’s car of the year for 2004), Honda Accord Hybrid,
and Ford Hybrid Escape.
4.8.2 The Impact of Hybrid Cars on the Automotive Industry
Hybrid market has been estimated to increase to some 3 million cars year within a decade and
some, such as Toyota, expect to sell 1 million a year by themselves within a shorter period of
time.
The trend is clear. In time, almost all cars will be hybrids as these cars are eco-friendly, cost-
effective and easy to handle and maintain.
4.8.3 Small cars:
The small car segment is the easiest place to find fuel-thrifty autos. The small car class also is
where you can find the lowest-priced new cars. Small cars are generally very economic, cost-
efficient, easy to manage, and provide better safety.

The effect of small cars on the automobile industry includes:
Impact on other market players:

The car manufacturer which is most affected by the small car segment is maruti Suzuki.
Emerging small car segment would hamper the monopoly practiced by this company to a greater
extent. There will be very soon an increase in competition between various players as all of them
are coming up with new products e.g. Tata Nano, Hyundai etc
Impact on two-wheeler manufacturer:

The stated target market of small car is the two wheeler buyers. The small car segment is
planning to take away at least 10% of the market share from the two-wheeler market. This would
have a great impact on the two-wheeler market segment.
Impact on used car market:

The other causality of small car will be the used car market. With a new car available for as low
as 1.5 lakhs, there will be a fall in the sales of used car and compact cars. This will lead to a glut
of used cars and a fall in valuations of used cars.
Auto component manufacturers:

Small car manufacturing company would involve the group of auto component suppliers right
from the stage of conception. His will lead to path breaking innovations and will take india’s
well developed auto industry which has already achieved global standards a step further.
4.9 USED CAR MARKET:

Second hand or used cars are an integral part of the car market. According to a recent estimate
the used car market demand is 1.4 million cars annually buying a second hand car has a lot of
advantages:
 The cost of car is significantly lower than new car,
 the depreciation is lesser,
 The loans are easier and to top it is readily available.
People prefer purchasing a second hand car because it proves to be more economical as
compared to buying a brand new car. A second hand car will always have the issue of repair and

maintenance since it has already been used so the need for maintenance would be more in the
case of a second hand car than for a new car.
Some of the well known certified used car dealers in India are – Maruti TrueValue, Honda Auto
Terrace, Ford Assured, Toyota U Trust, Hyundai Advantage, Mahindra and Mahindra’s First
Choice and many more are yet come to India. The branded used car chains have realized the
potential for used car market.
Some industry watchers predict that 50 percent of the used cars sales will be brought under
organized car market by 2013. Mahindra plans to increase its numbers to 300 outlets in five
year’s time. Maruti TrueValue already has 270 outlets and plans to increase them a few hundred
more in five years. Other car manufacturers plan the same. Used car outlets will spread into II
tier cities in the next couple of year.
With the increasing used car demand, there is an element of threat attached to the other
segments of the automobile industry. People would prefer a second hand car instead of buying a
new car because it is much more economic and cost-efficient. Similarly, people from lower
segment of society would prefer a second hand car instead of owning a motor bike or scooter.
Therefore, growing used car market is having greater impact on the Indian automobile industry.
Certified Used Cars:

To combat fraudulent car dealers the reputable car dealers in cooperation with manufacturers
have come up with a way of certifying cars to assure that the customers are paying the right price
for the right product. This move made by the dealers and manufacturers subjects the cars to
rigorous tests and thorough inspection. Dealers and manufacturers may then add certain
advantages like extended warranties, financing terms, service perks just like in the case of
purchasing a new car.
4.10 EXPORTS:
The industry has adopted the global standards and this was manifested in the increasing exports
of the sector. Aided by the liberalization steps taken by the government of India, such as,
relaxation of the foreign exchange and equity regulations, refining the banking policies, and
reduction of tariffs on imports, the Indian automobile industry is on a fast growth track for
exports. The key destinations for exports are SAARC countries, European Union (Germany, UK,
Belgium, the Netherlands and Italy), Middle East and North America. Maruti Udyog, Tata
Motors and Hyundai Motor India are key exporters for passenger cars; Mahindra & Mahindra
and Tata Motors for light commercial vehicles, medium and heavy commercial vehicles,
Mahindra & Mahindra for MUVs, Bajaj Auto for two and three wheelers and Mahindra &
Mahindra and TAFE for tractors. A 3% growth in global demand is anticipated over the next five
years and it will be led by Asia (mainly by China, India and ASEAN). Also global auto
companies are increasingly sourcing components and vehicles from low cost countries. The

outsourcing pie is slowly extending to services like engineering design and other business
processes. India is well positioned to take advantage of the outsourcing opportunities.
Table 4.1 Year-wise Export growth

CATEGORY 2002- 2003- 2004- 2005- 2006-07 2007-08 2008-09 %
03 04 05 06 Growth
(02-09)
PASSENGER 129,29 166,40 175,57 78.55
72,005 198,452 218,401 335739
VEHICLES 1 2 2
COMMERCIAL 71.28
12,255 17,432 29,940 40,600 49,537 58,994 42673
VEHICLES
THREE 70.7
43,366 68,144 66,795 76,881 143,896 141,225 148074
WHEELERS
TWO 179,68 265,05 366,40 513,16 82
619,644 819,713 1004174
WHEELERS 2 2 7 9
GRAND 307,30 479,91 629,54 806,22 1,011,52 1,238,33 1,530,66 79
TOTAL 8 9 4 2 9 3 0
Graph 4.6
So
urce: www.siamindia.com
The above graph shows the number of units exported in each segment from year 2002-2009. It is
clear from the graph that the exports of the automobiles in India has increased considerably over
the years. But the exports in commercial vehicle segment has reduced from the year 2008-2009
by 38.2% and in case of three-wheeler segment, there is an increase of merely 4% from 2008-
2009. On the other hand, the exports of passenger vehicle and two-wheeler vehicles increased by

34% and 18% respectively during the same period. This was mainly due to increased demand in
two-wheeler and passenger vehicles, especially the small cars. The commercial vehicle (CV)
industry faced challenging times in 2008-09 - reduction in cargo and passenger traffic, lower
freight rates, difficulty in availability of vehicle finance, stricter appraisal norms for financing -
all on the back of the global financial crisis.
Graph 4.7
In the above displayed graph, the percentage growth in exports of various segment has been
shown from the year 2002 to 2009. As per the graph, two wheeler vehicles and the passenger
vehicles are among those segments which reported the highest growth rate of 82% and 78.55%
respectively over the years. While three wheeler and commercial vehicles have comparatively
lower growth rate.
One of the key factors responsible for the growth of the Indian automobile industry is its low
cost advantage. On the back of cheap labor and raw material cost, the cost of production
becomes extremely less. This ultimately leads to low cost of end product, thereby luring people
who are not in a position to own expensive luxury cars. Moreover, the cost competition, which is
getting increasingly tough in the developed markets under the pressure of high input cost, will
provide an additional edge to the Indian automobile industry in increasing its passenger car sales
in overseas markets.
Besides this, India is rapidly emerging as a quality auto component manufacturing base, which is
further supporting the country’s auto industry. There are several well-equipped small passenger

car assembling plants, as a result of which India-manufactured small passenger cars are gaining
good response in the overseas markets.
Export of Auto Components: The Indian auto component industry is one of India's sunrise
industries with tremendous growth prospects. From a low-key supplier providing components to
the domestic market alone, the industry has emerged as one of the key auto components centers
in Asia and is today seen as a significant player in the global automotive supply chain. India is
now a supplier of a range of high-value and critical automobile components to global auto
makers such as General Motors, Toyota, Ford and Volkswagen, amongst others.
Graph 4.8
Source: www.acmainfo.com
The graph shows the increase in number of units of auto components exported over the years
2002-2009. It has gone upto around 70.12%. While over the year 2008-2009, it has increased to
about 6 % only.
Investments in the auto ancillary sector are rising rapidly. In 1997, the size of the auto
component industry was US$ 2.4 billion and now in 2004-05 it has become US$ 8.7 billion
industry.
Jai Parabolic Springs (JPSL) is a leading manufacturer of parabolic springs in India and has
bagged two major orders from international auto majors, General Motors (GE) and Ford.
Robert Bosch, auto parts maker of Germany has relocated manufacture of certain products to
MICO, India. Crosslink International Wheels, Malaysia's leading automobile security provider

Wheels Electronic SDN, is setting up its manufacturing unit at Baddi to make India the export
hub for the SAARC region.
PSA Peugeot Citroën, French automobile group has placed orders for components worth US$ 10
million with Indian companies.
Fiat India exported components worth US$ 8.3 million in 2004-05 to its operations in South
Africa. GKN Driveline and Dubai based auto ancillary major Parts International plans for an
investment in India.
Graph 4.9
Source: www.acmainfo.com
Analysis of Indian Exports:

Strengths
 Cost competitiveness in terms of labor and raw material.

 Established manufacturing base. Economics of scale due to domestic market.
 Potential to harness global brand image of the parent company.
 Global hub policy for small car like Hyundai, Suzuki, etc.
Weakness
 Perception about quality.

 Infrastructure bottlenecks

Opportunities
 Huge export markets such as Europe, America, Africa, and others for Indian cars.
Threats
 China, Malaysia, Thailand, etc.
 Many other countries also have strategies for export
Export Imperatives:
Internal Factors:
 Attaining high quality for global standards.

 Continuous cost reduction for global competitiveness.
 Supply chain management (logistics).
 Attaining economies of scale & scope.
External Factors:
 Improve infrastructure (ports, roads, etc).

 Improve EXIM regulations.

CHAPTER 5
INDUSTRY ANALYSIS

5.1 MAJOR PLAYERS
The Car industry in India has seen a tremendous growth and seems to be the
fastest growing sector in the world. This sector has responded with an exponential
progress in the number of new models launched in the last few months. The craze
for cars among people is growing day-by-day. Hence, all the car manufacturers are
giving tough competition to each other by opting innovative and unique ideas to
capture the market.
The car market deals with different types of cars like big cars, small cars, sports
cars, luxurious cars, etc. For those, who cannot afford to buy a new car can go for
used cars. This on-line platform will provide you a complete database of car owners
who are willing to sell cars. Browse through the extensively researched categories
of cars and get the most updated information related to cars. Some of the major
players are:
5.1.1 MARUTI SUZUKI INDIA LIMITED
The Maruti story began in the year when scooters had a waiting period and the
Indian car customer had limited options. The Government of India identified the
need for a small car for the Indian masses, a car that would be economical,
environment friendly yet contemporary in technology. In short 'A people's car'. The
result, Maruti Suzuki India Limited (MSIL) was born in February 1981. Maruti Suzuki
started as a government company, with Suzuki as a minor partner, to make a
people's car for middle class India. Company started its production in the year 1983
and launched Maruti 800. Over the years, the company's product range has
widened and ownership has changed hands. A subsidiary of Suzuki Motor
Corporation (SMC) of Japan, the Maruti Suzuki India Limited headquartered in Delhi,
running with 3 vehicle assembly plants at Gurgaon and 1 vehicle assembly plant at
Manesar. Also Maruti have 16 Regional offices. The product portfolio of the company
consist 11 models with around 100 variants including Maruti 800, Omni, Alto,
WagonR, Swift, Zen, Gypsy, Dzire, Versa, SX4 and Grand Vitara.

5.1.2 HYUNDAI MOTORS INDIA LIMITED

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor
Company, South Korea and is the second largest car manufacturer and the largest
passenger car exporter from India. HMIL presently markets 54 variants of passenger
cars across segments. The company has a fully integrated state-of-the-art
manufacturing plant near Chennai.
The company was incorporated in the year 1996. In September 27, 1998, Hyundai
Santro (Atos Prime) makes its world debut in India and in March 31, 1999 the
company emerged as the second largest auto-manufacturer in the country.
In October 14, 1999, the company launched 'Hyundai Accent' and in May 8, 2000, it
launched 'Santro zipDrive'. In July 18, 200l, the company launched new luxury car
'Sedan Sonata'. In August 16, 2002, the company launched 'Accent VIVA' and in
September 6, 2002, it launched Santro Automatic Transmission. In October 10,
2002, the company launched 'Accent CRDi'.
During the year 2003-2004, the company increased the installed capacity of Motor
Vehicle from 124,800 to 160,000. During the year, the company was selected as the
'Car Maker of the Year' by Overdrive. During the year, the company commenced
exporting car to Western Europe and Eastern Europe.
5.1.3 TATA MOTORS

Established in 1945, Tata Motors entered into collaboration with Daimler Benz of
Germany in 1954 to manufacture commercial vehicles. The collaboration ended in
1969 Tata Motors has since grown from strength to strength. It is one of the largest
companies in the Tata group now, with a total income of US$ 14.7 billion in the year
2008-09. More than 4 million Tata vehicles ply on Indian roads making Tata a
dominant force in the Indian automobile industry. Tata Motors is India’s only fully
integrated automobile manufacturer with a portfolio that covers trucks, buses,
utility vehicles and passenger cars. The Company has spread its manufacturing
facilities across India by setting up plants at Jamshedpur, Pune and Lucknow. This is
coupled with a nation-wide sales, service and spare parts network.
Tata Motors has the unique distinction of giving India it’s first and only indigenously
built passenger car -The Tata Indica. The Indica launched in 1998 reached the
250,000 sales mark within 52 months of launch. Tata Motors’ Engineering Research

Centre has over 900 scientists and engineers dedicated to product and process
development, technology up gradation and new product introduction. Besides, the
Company works with leading international design and styling houses.
India's most reliable, dynamic and futuristic automobile manufacturer with more
than 130 models spanning a wide range of Commercial Vehicles, Passenger Cars
and Multi-Utility Vehicles, Tata Motors provides the wheels for India's growth.
5.1.4 FORD INDIA LIMITED
Ford India Private Limited manufactures and markets automobiles. The company
offers passenger, luxury, sports utility, and urban activity vehicles. Ford offers its
vehicles under Ikon, Mondeo, Endeavour, and Fusion brand names. Additionally, the
company offers sale and purchase of used vehicles. Ford is based in Chengalpattu,
India. Ford India Ltd. is wholly owned subsidiary of Ford Motor Co.
Ford India was established in 1995, Ford Motor Company received government
approval to establish Mahindra Ford India, Limited (MIFL). It was a 50:50 joint
venture with Mahindra and Mahindra Limited. In November 1998, Ford received
approval to increase its stake in the joint venture to 92.18%. The Company was re-
christened as Ford India Limited. It set up 250 acre manufacturing plant near
Chennai with an investment of over US$ 354 million and capacity to manufacture
100,000 vehicles per annum. During the year 2003-2004, the company launched
SUV model vehicle namely Ford Endeavor and in the same year the company
extensive and well equipped network of 93 dealership covering 73 cities. During the
year 2004-05, the company launched new model namely, Ford Fusion in December
2004 and in the same year, it expanded to dealership in 106. During the same year,
'Ford international Service lnc.', USA, a wholly owned subsidiary of Ford Motor
Company, bought shares of the company held by Mahindra and Mahindra Limited.
Consequent of this, the company wholly owned subsidiary of 'Ford Motor Company
USA'.
5.2 PEST ANALYSIS

PEST analysis stands for "Political, Economic, Social, and Technological analysis"
and describes a framework of macro environmental factors used in the
environmental scanning component of strategic management. It is a part of the
external analysis when conducting a strategic analysis or doing market research

and gives a certain overview of the different macro environmental factors that the
company has to take into consideration. It is a useful strategic tool for
understanding market growth or decline, business position, potential and direction
for operations. An analysis of the following four components of the macro-
environment can help you to think how your business should respond to these
external influences.
5.2.1 Political factors

The Government of India (GOI) has identified the automotive sector as a key focus
area for improving India’s global competitiveness and achieving high economic
growth. The Government formulated the Auto Policy for India with a vision to
establish a globally competitive industry in India and to double its contribution to
the economy by 2010. It intends to promote Research & Development in
automotive industry by strengthening the efforts of industry in this direction by
providing suitable fiscal and financial incentives.
Some of the policy initiatives include:
Automatic approval for foreign equity investment up to 100 per cent of manufacture
of automobiles and component is permitted.
National Automotive Fuel Policy has been announced, which envisages a phased
programme for introducing Euro emission and fuel regulations by 2010.
100% FDI allowed

FDI Inflows to Automobile Industry have been at an increasing rate as India has
witnessed a major economic liberalization over the years in terms of various
industries. The automobile sector in India is growing by 18 percent per year. 100%
Foreign Direct Investment (FDI) is allowed in the automobile industry in India which
has led to a turnover of USD 12 billion in the Indian auto industry and USD 3 billion
in the auto parts industry.
Advantages of FDI in the Automobile Sector in India

The basic advantages provided by India in the automobile sector include, advanced
technology, cost-effectiveness, and efficient manpower. Besides, India has a well-
developed and competent Auto Ancillary Industry along with automobile testing and

R&D centers. The automobile sector in India ranks third in manufacturing three
wheelers and second in manufacturing of two wheelers
5.2.2 Economical factors

High GDP Growth
Automobile industry currently contributes 6% to India’s GDP and it is expected to
increase to 10% in 2016. This shows that automobile industry is one of the major
contributors for GDP growth. So it has huge impact on environment. India expects
the automobile sector to double its share of gross domestic product to 10 per cent
and contribute $25 billion in export earnings in a decade, the trade minister said on
Thursday. Kamal Nath also said the government would consider incentives for
exporters of cars and auto-part makers and keep policy favourable to help auto
makers sustain high growth in output.
India’s Huge Geographic Spread –Mass Transport System

India’s huge geographic connectivity has lead to increase in transportation system.
Due to geographic and religious diversity in India there is increase in mass
transportation system. Because of huge population there is increase in mass
transportation system. Population spread throughout India is very dense thus there
is a uniform growth in the automobile sector.
Rapid increase in disposable income of Middle class

The per capita income of India has gone up as much as 14.2% in 2006-07.
According to March 2009 data, the per capita income of India was $1032 a year.
This high rise in the per capita income of people has enabled them to spend more
products like mobile, health. This high rise in the per capita income has also
increased the savings of the people. Increase in house hold's income levels and the
growth of 7.2% in the GDP have resulted in this increase of the per capita income of
the people. The rise in income levels of the Indians and the emergence of the
consuming class that has higher propensity to spend offers great opportunities for
growth to companies across various sectors.
Usually the demand of cars and other heavy carriage vehicles is on the rise in
upper middle class and bikes and small cars will come in the segment of lower

middle class and middle class. In a survey it was found by researchers that the
middle class is expanding 30-40 million every year.
5.2.3 Social factors

Growth in Urbanization
There has been increase in urbanization in India which has lead to increase in
competition. Consumer has become the king and he determines the price of the
product i.e. cars and two wheelers. This has also created more option for
consumers.
Increase in Population
India’s population is increasing at a fast pace. This has caused increase in demand
for automobiles leading to market segmentation and offering wide variety of
products. Population growth has also lead to greater market penetration. Car
manufacturers are now able to offer their product to large number of people.
Cars now more for convenience than status symbol
Now a days since the price of bike is also equivalent so cars are no more a status
symbol, rather people now prefer cars more for convenience.
Growing concept of Second Vehicle in Urban India

Change in lifestyle has lead to buying of more than one vehicle within the same
family because of increased independence of family members. This has lead to
increase in demand of automobile industry.
5.2.4 Technological factors

Research and Development Institutions
Various researches are going on in the automobile industry to change the trends
and to develop efficient vehicles. For instance that Indian market was once
dominated by moped, ambassador, and scooter while today there is a drastic shift
towards faster and expensive cars, fast motor bikes and scooty. Fuel efficiency is
also targeted in these institutions and thus soon hybrid electric cars or cars with
hydrogen fuel will be available in the markets.

Increased Government involvement in Technology Development

Government is also taking initiatives in development of technology in automobile
industry. This provides encouragement to manufacturers as government provides
them with subsidiaries which can be used in research and development. Thus
automobile industry is encouraged to make higher investment in research and
development.
5.3 SWOT ANALYSIS

SWOT Analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favourable and unfavourable to
achieving that objective
• Strengths: attributes of the organization those are helpful to achieving the
objective.
• Weaknesses: attributes of the organization those are harmful to achieving the

objective.
• Opportunities: external conditions those are helpful to achieving the

objective.
• Threats: external conditions which could do damage to the business's

performance
5.3.1 Strengths:
Large & cheap labour pool
In India for skilled labour, the wage rate is fixed around Rs.350/hr, which is
very less compared to wage rate in developed countries, which leads to low
cost of production
Leading small car market

The Indian passenger car market is known to be one of the most price
sensitive car markets in the world. The small car sub-segment is hotly
contested by several car makers. India is the third largest producer of small

cars in the world after Brazil and Japan. Small cars account for 71 per cent of
the domestic market of passenger cars. Global automotive majors such as
Hyundai and Suzuki already have establishments to produce small cars in
India, and companies like Honda, Ford, Renault, and Volkswagen are
finalizing their small car plans. For instance, Toyota has announced plans of
setting up a new small car manufacturing plant by 2010 with an annual
production capacity of 100 000 units. Tata Motors has launched Nano, priced
at USD 2 500 making it the world’s cheapest car. Given the current
projections for the Nano, India can become the world’s second largest
market for small cars soon. India’s second largest motorcycle manufacturer,
Bajaj Auto is also bringing out a small car by 2010–2012 in collaboration with
Renault and Nissan in the same price range
Rising income and favourable demographic trends

Per capita incomes in India are rising and the demographic changes taking place
are expected to fuel further growth in the Indian economy through increase in
demand for products. India has one sixth of the world’s total population. The
median age in India was 24.8 in 2007. According to an analysis done by the
Population Research Centre, Institute for Economic Growth in India, 67 per
cent of the Indian population will be aged between 15 and 64 in 2025. Thus
increasing incomes combined with a very large young population will drive
growth of the automotive industry as an automobile is a symbol of increasing
prosperity for the young Indian consumer.
5.3.2 Weakness
Lack of skilled labour
Quality and quantity of skilled labour is problematic, especially the lack of
engineers. The number of available people (trained engineers) is much less than the

demand, labour churn, where employees move to rival firms for better
compensation or conditions, is a growing problem.
R&D
India’s ability to perform its own automotive R&D is perceived as a gap between
India’s domestic companies and the international automotive companies they
compete with, especially in the areas of power train and alternative fuels. Indian
manufacturers spend around 0.5% of sales on research & development, which is
very less compared to global manufacturers. The cost of running full-scale R&D
programs is beyond the grasp of some Indian original equipment manufacturers
(OEMs) and many suppliers. Also many Indian OEMs and suppliers have relied on
their foreign partners for technology for so long that they have not developed their
own competencies.
Low growth in supply side

There are concerned about whether India’s automotive suppliers are developing
rapidly enough to go beyond India’s own market and meet the needs of the global
market. If India is to compete with established global manufacturers and suppliers
on the world stage, then it needs to get on par with those competitors in terms of
scale, quality, and delivery capability.
5.3.3 Opportunities
Growth potential
With saturated markets in developed nations, India after China has the maximum
growth potential. With the availability of cheap labour and materials India is turning
out to be the production hub, with every global manufacturer setting up its
production plant in India. India is envisaged to be the third largest automobile
market in the world by 2030 only behind USA and China. According to the UNIDO
International Yearbook of Industrial Statistics 2008, India ranks 12th among the
world’s top 15 automotive nations
Shorting replacement cycle

The average time taken to upgrade or replace a vehicle has declined sharply from
an average of 61 months (5 years) in 2002 to 53 months (4.5 years) in 2005.
Growth in exports
The Indian automotive industry is gaining worldwide recognition with a steady
increase in the rate of growth of exports. Automotive exports crossed the USD 1
billion mark in the year 2003–2004, and increased to USD 2.76 billion in the year
2006–2007. The industry exported 15 per cent of its passenger car production, 10
per cent of commercial vehicles production, 26 per cent of three-wheelers
production and 7 per cent of two-wheelers production in 2006–2007. The key
exporters for passenger cars are Maruti Suzuki, Tata Motors and Hyundai Motors,
the key exporter for MUVs is Mahindra & Mahindra. Key destinations of exports are
the SAARC countries, European countries, Middle East and North America.
5.3.4 Threats
Competition from foreign players
India’s exports have increased marginally but China’s export zoomed by a billion
dollars. China now exports 10 times more components than India where as Thailand
does 3 times more compared to India.
Alternates in the market

With the improvement in the railways and introduction of Metro, people have
started using them as their mode of transportation.
Increasing oil prices

Increase in oil prices, which will not completely stop the growth of automobiles but
will make these significantly more expensive.

5.4 PORTER’S FIVE FORCES
Porter's five forces analysis is a framework for the industry analysis and business
strategy development developed by Michael E. Porter of Harvard Business School in
1979. It uses concepts developed in Industrial Organization (IO) economics to derive
five forces which determine the competitive intensity and therefore attractiveness
of a market. These are:
5.4.1 Bargaining power of suppliers
Suppliers of raw materials, components, labour, and services (such as expertise) to

the firm can be a source of power over the firms. The bargaining power of suppliers
arises from low Cost of inputs relative to selling price of the product. Further the
threat of forward integration by suppliers relative to the backward integration by
firms. The automotive industry is comprised of powerful buyers who are generally
able to dictate their terms to their suppliers. Therefore car manufacturers are
evaluating suppliers not only on technical skills, quality of work and pricing, but also
on environmental and social standards.
5.4.2 Bargaining power of customers

The Bargaining Power of Customers is the ability of customers to put the firm under
pressure and it also affects the customer's sensitivity to price changes. This
depends on buyer concentration to firm concentration ratio. The higher is the ratio
the better is the bargaining power of the firm. Further higher is the buyer volume
greater is the power of the buyer to bargain.
Consumers yield the greatest power in this relationship due to the fairly
standardized nature of the automotive commodity (a vehicle) and the low switching
costs associated with selecting from among competing brands. As a result of this
brand loyalty is fading in this industry.
5.4.3 Threat of new entrants

With the expected entry of more than 10 car manufacturers and introduction of new
models from the existing players there is threat to the domestic market. These
companies’ offer better styles together with great technology. With the Indian
population largely composed of the youth lying between the age sectors of 18-35
these are great attractions for such segments. As a result of these facts the demand
for such vehicles would be more thus posing a threat to the local players. The
upcoming segment is that of a niche market comprising of the hybrid cars. This
includes vehicles running on energy other than petrol such as electric cars. Since
local players don’t have hybrid technology they have to rely on their lower price tag
so as to remain competitive.
5.4.4 Threat of substitute product

The threat of substitutes to the automotive industry is fairly mild. Numerous other
forms of transportation are available, but none offer the utility, convenience,
independence, and value afforded by automobiles. The switching costs associated
with using a different mode of transportation, such as train, may be high in terms of
personal time (i.e., independence), convenience, and utility (e.g., luggage capacity),
but not necessarily monetarily. But with the introduction of Metro and improvement
in Railways system and low Air fares things have changed.
Indian Railways
Indian Railways is the state-owned railway company of India, which owns and
operates most of the country's rail transport. Indian Railways has one of the largest
and busiest rail networks in the world, transporting over 18 million passengers and
more than 2 million tonnes of freight daily. It is the world's largest commercial or
utility employer, with more than 1.4 million employees.
The railways traverse the length and breadth of the country, covering 6,909 stations
over a total route length of more than 63,327 kilometres (39,350 mi). IR owns over
200,000 wagons, 50,000 coaches and 8,000 locomotives of rolling stock.
Suburban rail
Many cities have their own dedicated suburban networks to cater to commuters.
Suburban networks operate in Mumbai, Chennai, Kolkata,

Delhi, Hyderabad, Pune and Lucknow. New Delhi, Kolkata, and Chennai have their
own metro networks, namely the New Delhi Metro, the Kolkata Metro, and
the Chennai MRTS, with dedicated tracks mostly lay on a flyover. Suburban
trains that handle commuter traffic are mostly electric multiple units. They usually
have nine coaches or sometimes twelve to handle rush hour traffic. A standard
coach is designed to accommodate 96 seated passengers, but the actual number of
passengers can easily double or triple with standees during rush hour.
Air travel
India's booming economy has created a large middle-class population in India. Five
years back, air travel was a dream for the majority of the Indian population. But
rapid economic growth has made air travel more and more affordable in India. Air
Deccan, Jet Airways, Kingfisher Airlines, IndiGo Airlines and Air India are the most
popular brands in domestic air travel in order of their market share. Of these, Jet,
Indian and Kingfisher also operate overseas routes after the liberalisation of Indian
Aviation. These airlines connect more than 80 cities across India. However, a large
section of country's air transport system remains untapped, even though
the Mumbai-Delhi air corridor was ranked 6th by the Official Airline Guide.
5.4.5 Competitive rivalry

The constant changes in the existing car models with regard to design, innovation,
technology, and colours, have led to a fiercely competitive market. Fierce
competition among the major car players can be witnessed in the Indian Car
industry. The India car industry is being dominated by the major players like
Hindustan Motors, Maruti Udyog Ltd., General Motors, Hyundai Motors India Ltd, etc.
With the presence of so many domestic as well as foreign car manufacturers
imparting path breaking models in the market, the competition among them has
become very tough and rigid.
Maruti Suzuki dominates the Indian car market with 50 percent share in the
industry. Whereas car brands like the Hyundai and General Motors are very close to
Maruti Suzuki. When speaking about small cars, the winning model 'Hyundai i10'
cannot be neglected. The car has captured everyone's attention with its style,
performance, and reliability. Wagon R standing against the Hyundai i10 has
maintained the brand image of Maruti Suzuki with comparable sales score.
CHAPTER 5
COMPANY ANALYSIS

COMPANY ANALYSIS
6.1Ratio Analysis
Introduction
The ratio analysis tells about the financial capabilities of companies. It briefs about
company’s capacity to pay back its liabilities, effective use of its inventories, and
debt collection over a year. This analysis gives insights about soundness of the
company in terms of its financial aspects.
Debt-Equity Ratio
It is a measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of equity and debt the
company is using to finance its assets. A high debt/equity ratio generally means
that a company has been aggressive in financing its growth with debt. This can
result in volatile earnings as a result of the additional interest expense.
Current Ratio
It is a liquidity ratio that measures a company's ability to pay short-term obligations.
The ratio is mainly used to give an idea of the company's ability to pay back its
short-term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). The higher the current ratio, the more capable the company is of
paying its obligations. The current ratio can give a sense of the efficiency of a
company's operating cycle or its ability to turn its product into cash.
Inventory Turnover Ratio

A ratio showing how many times a company's inventory is sold and replaced over a
period. A low turnover implies poor sales and, therefore, excess inventory. A high
ratio implies either strong sales or ineffective buying. High inventory levels are
unhealthy because they represent an investment with a rate of return of zero. It
also opens the company up to trouble should prices begin to fall.
Interest Coverage Ratio

Interest cover is a measure of the adequacy of a company's profits relative to
interest payments on its debt. The lower the interest cover, the greater the risk that
profit (before interest) will become insufficient to cover interest payments. This ratio
used to determine how easily a company can pay interest on outstanding debt. The
lower the ratio, the more the company is burdened by debt expense.
Debtor Turnover Ratio
Debtor turnover ratio indicates the velocity of debt collection of a firm. In simple
words it indicates the number of times average debtors (receivable) are turned over
during a year.
Debtors Turnover Ratio = Total Sales / Debtors.
Companies taken:
We have chosen five companies on the basis market share. Maruti-Suzuki and
Hyundai represents top two players, Ford and Hindustan Motors represent bottom
two and Tata represents middle level player in terms of market shares.
• Maruti- Suzuki Ford
• Hyundai Hindustan motors

• Tata
6.1.1Debt-Equity Ratio:
Table6.1
Debt/equi 2005 2006 2007 2008 2009
ty
Maruti .09 .10 .06 .04 .05
Hyundai .36 .26 .53 .9 1.20
Tata .61 .33 .59 .8 .9
motors
Hindustan 2.96 1.64 2.1 1.5 .45
Motors
Ford 3.34 3.38 2.41 2.51 1.27
Industry .17 .15 .23 .21 1.8
avg
Source: Capitaline database and Tata motors annual reports

Graph6.1
Observations:
• For all the five years Ford and Hindustan motors have high debt equity ratios,
which also exceeds the industry average. This shows that they have taken
more debt as compared to rest of the players.
• Maruti Suzuki is not aggressive while raising the debt while for remaining
players debt ratio is fluctuating relatively
6.1.2Current Ratio:
Table6.2
Currrent ratio 2005 2006 2007 2008 2009
Maruti 1.42 1.73 1.52 1.11 1.16
Hyundai 1.14 1.27 1.36 1.45 .83
Tata motors .88 1.13 1.24 .9 .89
Hindustan .87
1.03 .88 .92 1.00
Motors
Ford .71 .68 .74 .83 .97
Industry avg 1.01 1.09 1.39 1.42 1.31

Graph 6.2

Observations:
• Ford and Hindustan motors have currents ratios for all the years (2005-09)
below the industry average
• Maruti, Hyundai and Tata motors have current ratios close to respective
industry averages in all the years
6.1.3 Inventory Turnover Ratio
Table 6.3
Inventory turnover 2005 2006 2007 2008 2009
ratio
Maruti 24.11 19.06 21.74 24.18 23.9
Hyundai 13.35 12.29 9.81 8.08 9.07
Tata motors 10.99 10.32 11.02 14.43 11.69
Hindustan Motors 9.10 8.92 8.55 9.23 24.78
Ford 9.37 7.46 10.57 7.36 6.84
Industry avg 12.78 12.97 14.79 14.56 18.13

Graph 6.3

Observations:
• Maruti is taking less time as compared to all other players to convert
inventory into sales, its inventory turnover ratios are higher than industry
averages for the respective years
• Ford and Hindustan Motors should decrease their inventory turnover days to
compete well
6.1.4 Debtor Turnover Ratio:

Table 6.4
Debtor turnover 2005 2006 2007 2008 2009
ratio
Maruti 24.11 19.06 21.74 24.18 23.9
Hyundai 13.35 12.29 9.81 8.08 9.07
Tata motors 10.99 10.32 11.02 14.43 11.69
Hindustan Motors 9.10 8.92 8.55 9.23 24.78
Ford 9.37 7.46 10.57 7.36 6.84
Industry avg 12.78 12.97 14.79 14.56 18.13

Graph 6.4
• Maruti has high ratio which implies that it is able to recover debt faster. All
other companies are below the industry standard and have to decrease their
debtor days.
6.1.5 Interest Coverage Ratio:

Table 6.5
Interest Coverage 2005 2006 2007 2008 2009
ratio
Maruti 37.25 86.78 61.63 43.00 33.86
Hyundai 47.26 241.26 51.84 5.47 2.35
Tata motors 8.58 8 7.98 6.623 1.66
Hindustan Motors -0.35 -4.16 -2.62 -1.86 -7.06
Ford 0.62 -1.45 1.67 0.25 -2.9
Industry avg 8.58 7.45 8.20 5.79 1.66
Graph 6.5

Observations:
• Maruti and Hyundai have good interest coverage ratio.
• Ford, Hindustan motors and Tata motors have low interest coverage ratio,
which implies that they are burdened by debt.
Conclusion
Though companies are competing with each other but their strategies and priorities
seems to be different like in case of Maruti Suzuki and Hindustan Motors which
weren’t aggressive while raising the debt but has good interest cover while same
interest cover showed fluctuations in case of Hyundai. Ford as compared to Maruti
Suzuki did well in Debt raising. Tata Motors performance in general is satisfactory.
6.2 Profitability Ratios:
6.2.1 Operating Profit (%)

Table 6.6
Operating Profit 2005 2006 2007 2008 2009
(%)

Maruti 10.05 12 13.47 12.19 7.45

Hyundai 8.49 9.56 7.35 8.65 3.21
Hindustan -11.41
-1.23 -6.64 -5.44 -4.37
Motors
Ford 1.2 -4.85 2.29 .81 -4.08
Industry avg 9.41 9.35 10.07 7.5 3.43
Graph 6.6
• Maruti and Hyundai are able to earn good profits when compared to
Hindustan motors and ford.for Hindustan motors we can see negative
operating profit margin.
6.2.2 Return on Capital Employed (%)

Table 6.7
Return On 2005 2006 2007 2008 2009
Capital
Employed (%)
Maruti 31.28 34.68 35.63 30.51 17.84
Hyundai 32.80 35.72 20.86 7.87 7.94
Hindustan -
-3.54 - -14.71 -11.57
Motors
Ford - - 3.98 - -
Industry avg 32.73 29.52 28.93 17.46 7.76
Graph 6.7

• Maruti and Hyundai are getting good returns on capital employed .how ever
there is a declining trend over the period of 2007-09, when industry average
also decreased.
6.3 Special Ratios:
Two ratios apart from traditional ratios were also considered. The two ratios are:
6.3.1 Research and Development Expense Ratio:

It provides an insight into the company’s interest to develop new technology.
R&D Focus = R&D Expense / Net Sales
Table 6.8
Companie 2005 2006 2007 2008 2009
s
Hyundai 0.105 0.091 0.0857 0.0833 0.0587
4 97 0
Hindustan 0.026 0.018 0.1394 0.0097 0.00595

Motors 63 45 7 5
Tata 0.019 0.014 0.0113 0.0100 0.00842

Motors 54 2 2
Maruti 0.009 0.007 0.0068 0.0079 0.00476

67 31 4 9
Ford - - - - -

Graph 6.8
As we can see Hyundai and Tata’s have been very keen on developing new cars, as
they want to enter all the segments and cater to all class of people. As the
recession took its course Hyundai‘s R&D reduced due to less R&D as their sales
were not up to margin.
6.3.2 Working Capital Ratio:
Working Capital Ratio = (Current Assets- Current Liabilities)/Net Sales

The long term solvency position of a firm usually measured in terms of its working
capital (current assets-current liabilities) over sales indicates the ability of a
company to weather difficult financial periods.
Table 6.9
Companies 2005 2006 2007 2008 2009
Hyundai 1.14 1.27 1.36 0.99 0.83
Hindustan 1.03 0.88 0.92 1 0.87
Motors
Tata Motors 1.42 1.73 1.52 1.2 1.16
Maruti 2.09 2.34 2.36 1.89 1.34
Ford 0.71 0.68 0.74 0.83 0.97


Graph 6.9
Working capital ratio determines the solvency of the co. It also determines whether
a co is able to pay all its liabilities with the assets it has. As we can see Tata motors
and Maruti have been able to pay their creditors and other liabilities due to the cash
generated internally and also because of their capacity to convert their assets into
cash very easily and quickly.
Hyundai and Hindustan Motors also have been able to pay their liabilities but due to
recession they have faced liquidity crunch and hence have lowered their capacity of
repaying. But they have always been able to sell their assets and recover cash
quickly and pay their liabilities.
6.4 Industry Performance

Net Sales Growth Comparative Analysis (w.r.t previous year):
Table 6.10
Mar Mar Mar Mar 06(12) Mar
09(12) 08(12) 07(12) 05(12)
Maruti 20,530.10 17,891.6 14,696.3 12,015.90 10,923.8
0 0 0
Ford 42,796.88 42,333.9 34,943.9 30,235.71 23,776.8

0 1 3
Hyundai 15,522.55 10,118.8 8,762.49 7,339.14 6,305.90
7
Hindustan
626.65 704.66 666.51 456.02 1,114.83
Motors
Tata 25,415.03 28,537.9 27,185.7 20,293.30 17,088.5
9 7 9
Graph 6.10
6.5 Company wise Sales Forecast:
Hyundai
Table 6.11
2009 2010 2011

Net Sales(In 15695.726 17217.21 18738.694
Crores)
Graph 6.11

Tata Motors
Table 6.12
2009 2010 2011
Net Sales(In 38654.94 32010.14 33671.34
Crores)
Graph 6.12
Hindustan motors
Table 6.13
2010 2011 2012
Net Sales(In 4317.492 4598.454 4879.415

Crores)
Graph 6.13
Ford
Table 6.14
2010 2011 2012
Net Sales(In 13831.67 52107.5 55564.67
Crores)
Graph 6.14
Maruti
Table 6.15

2010 2011 2012

Net Sales(In 25062.6 26853.62 28643.9
Crores)
Graph 6.15

CHAPTER 7
FUTURE OUTLOOK

FUTURE OUTLOOK
As the environmental impact of global warming rose to the forefronts of our awareness, so
consumer demands for greener methods of transportation rose to the top of the automotive
industry’s list of priorities. 2008 saw many improvements in the lowering of CO2 emissions into
the atmosphere, and while car companies like Toyota paved the way with their groundbreaking
Prius, every other company is chomping at their heels developing better, more efficient hybrids,
creating cars which are leaning further and further away from their dependence on gasoline. In
2007, there were 1.8 million alternative fuel vehicles sold, indicating an increasing popularity of
alternative fuels. There is growing perceived economic and political need for the development of
alternative fuel sources. This is due to general environmental, economic, and geopolitical
concerns of sustainability.
The major environmental concern, is that "Most of the observed increase in globally averaged
temperatures since the mid-20th century is due to the observed increase in greenhouse
gas concentrations. Since burning fossil fuels are known to increase greenhouse gas
concentrations in the atmosphere, they are a likely contributor to global warming.
Other concerns which have fuelled demand revolve around the concept of Peak oil, which
predicts rising fuel costs as production rates of petroleum enters a terminal decline. According to
the Hubbert peak theory, when the production levels peak, demand for oil will exceed supply and
without proper mitigation this gap will continue to grow as production drops, which could cause
a major energy crisis.
Lastly, the majority of the known petroleum reserves are located in the Middle East. There is
general concern that worldwide fuel shortages could intensify the unrest that exists in the region,
leading to further conflict and war.
Alternative Fuel Vehicle refers to a vehicle that runs on a fuel other than "traditional" petroleum
fuels (petrol or diesel); any method of powering an engine that does not involve
solely petroleum (e.g. electric car, petrol-electric hybrid, solar powered). Due to a combination
of heavy taxes on fuel, particularly in, tightening environmental laws, particularly in, the
potential for peak oil , and the possibility of further restrictions on greenhouse gas emissions,

work on alternative power systems for vehicles has become a high priority for governments and
vehicle manufacturers around the world.
Hybrid vehicles such as the Toyota Prius are not, of themselves, alternative fuel vehicles –
clever use of a battery, motor/generator, merely means that a more efficient but less powerful
engine can be used. Essentially all the power comes from petroleum. The first hybrid vehicle
available for sale in the United States was the Honda Insight, achieving around 70 miles per
gallon (3.4 litres per 100 km). Other research and development efforts in alternative forms of
power focus on developing fuel cells, alternative forms of combustion such as GDI and HCCI,
and even the stored energy of compressed air.
The following are some of the most innovative technological leaps forward in our journey to put
greener vehicles on the road:
Air Engine
The air engine is an emission-free piston engine that uses compressed air as a source of energy.
The first compressed air car was invented by a French engineer named Guy Negre. The
expansion of compressed air may be used to drive the pistons in a modified piston engine.
Efficiency of operation is gained through the use of environmental heat at normal temperature to
warm the otherwise cold expanded air from the storage tank. This non-adiabatic expansion has
the potential to greatly increase the efficiency of the machine. The only exhaust is cold air (−15
°C), which could also be used to air condition the car. The source for air is a pressurized carbon-
fibber tank holding air at 3,000 lbf /in² (20 MPa). Air is delivered to the engine via a rather
conventional injection system. Unique crank design within the engine increases the time during
which the air charge is warmed from ambient sources and a two stage process allows improved
heat transfer rates.
Thermal Energy Recovery System
In November 2008, a France-based developer of waste heat regeneration technologies won the
Power train Innovation of the Year Award at the Professional Motorsport World Expo in
Cologne with its Thermal Energy Recovery System (TERS). The company’s goal has been to
create fuel savings and to reduce C02 emissions in tomorrow’s vehicles. By focusing their
attention on the heat normally lost through the exhaust, they’ve managed to create a waste heat
recovery (WHR) system which captures and redirects this heat to improve engine performance
while lowering harmful emissions and improving fuel savings by 15-35% under all driving
conditions. The unit is compact, lightweight, simple to implement, and requires little to no
maintenance.
Gasoline Direct Injection (GDI) Engines
When it comes to going green, direct fuel injection technology is the way to go. As opposed to
multi-point injection (MPI), where fuel is injected through the intake ports before entering the
cylinders, GDI engines inject highly-pressurized fuel directly into the combustion chamber of
each cylinder which not only increases engine performance, but also increases fuel efficiency
while reducing CO2 emissions by as much as 25%. Companies like GM, Mercedes, and Volvo
are introducing their new cars with directly fuelled engines, even Ford’s 2010 Mustang comes a
twin turbo 3.5L “EcoBoost” engine, lowering emissions by 15% and increasing fuel efficiency
by 20% thanks to direct injection technology.
Nanowire Batteries
While many feared that GM was a something of the past, they released what promises to be the
vehicle of the future. They are ironically the same company that tried to squash the electric car,
but they’re making huge strides towards redeeming themselves with the new Chevrolet Volt. The
plug-in electric hybrid features a revolutionary propulsion system that permits the car to cover
over 64 km without using any gas. For longer distances the car runs on a gas tank, which serves
to recharge its batteries rather than running its engine. This brings us to the heart, literally, of the
electric car: the battery.
Keeping the batteries charged for as long as possible is the ultimate goal for any electric care
company. Electric cars use rechargeable lithium-ion batteries, known as Li-ion batteries. The
electrical storage capacity of a Li-ion battery is limited by how much lithium can be held in the
battery’s anode, which is typically made of carbon. Silicon has a much higher capacity than
carbon, but also has a drawback.

Silicon placed in a battery swells as it absorbs positively charged lithium atoms during charging,
then shrinks during use as the lithium is drawn out of the silicon. This expand/shrink cycle
typically causes the battery to pulverize, degrading the performance of the battery. The lithium is
stored in a forest of tiny silicon nanowires, each with a diameter one-thousandth the thickness of
a sheet of paper. The nanowires inflate four times their normal size as they soak up lithium. But,
unlike other silicon shapes, they do not fracture.
Hydrogen (Fuel Cell)
A hydrogen car is an automobile which uses hydrogen as its primary source of power for
locomotion. These cars generally use the hydrogen in one of two methods: combustion or fuel-
cell conversion. In combustion, the hydrogen is "burned" in engines in fundamentally the same
method as traditional gasoline cars. In fuel-cell conversion, the hydrogen is turned into electricity
through fuel cells which then powers electric motors. With either method, the only by product
from the spent hydrogen is water.
The most efficient use of hydrogen involves the use of fuel cells and electric motors instead of a
traditional engine.
Hydrogen reacts with oxygen inside the fuel cells, which produces electricity to power the
motors. One primary area of research is hydrogen storage, to try to increase the range of
hydrogen vehicles while reducing the weight, energy consumption, and complexity of the storage
systems.
BMW's Clean Energy internal combustion hydrogen car has more power and is faster than
hydrogen fuel cell electric cars. A BMW hydrogen prototype (H2R) using the driveline of this
model broke the speed record for hydrogen cars at 300 km/h (186 mi/h), making automotive
history.
Mazda has developed Wankel engines to burn hydrogen. The Wankel uses a rotary principle of
operation, so the hydrogen burns in a different part of the engine from the intake. This reduces
pre-detonation, a problem with hydrogen fueled piston engines.
The other major car companies like Daimler, Chrysler, Honda, Toyota, Ford and General
Motors, are investing in hydrogen fuel cells instead. VW, Nissan, and Hyundai/Kia also have
fuel cell vehicle prototypes on the road. In addition, transit agencies across the globe are running

prototype fuel cell buses. Fuel cell vehicles, such as the new Honda Clarity, which was launched
in America, can get up to 70 miles on a kilogram of hydrogen
Hybrid Method
A hybrid vehicle uses multiple propulsion systems to provide motive power. This most
commonly refers to gasoline-electric hybrid vehicles, which use gasoline (petrol) and electric
batteries for the energy used to power internal-combustion engines (ICEs) and electric motors.
These power plants are usually relatively small and would be considered "underpowered" by
themselves, but they can provide a normal driving experience when used in combination during
acceleration and other manoeuvres that require greater power.
The Toyota Prius is one of the world's first commercially mass-produced and marketed hybrid
automobiles. Manufactured by Toyota, the Prius first went on sale in Japan in 1997. The car was
introduced to the worldwide market in 2000 and almost 160,000 units had been produced for sale
in Japan, Europe, and North America as of the end of 2003. As of May 15, 2008 Toyota had
announced that it had reached a sales figure surpassing the mark of one million units.
The Honda Insight is a 2-seater hatchback hybrid automobile manufactured by Honda. It was the
first mass-produced hybrid automobile sold in the United States, introduced in 1999, and
produced until 2006. Honda now offers the Civic as an optional hybrid.

CHAPTER 8

CONCLUSION
We conducted various analyses to study the Automobile industry. The first analysis conducted
by us was the PEST analysis. In PEST analysis we studied the Political, Economical, Social and
Technological factors that affect the Automobile Industry. According to our analysis, the
political decisions related to 100% FDI and automotive mission plan will boost the auto industry
further. Increased Per capita income will definitely result in increase of sales. Social
improvements like urbanization and growth in population will also have a positive effect on the
Industry.
The next analysis that was done by us was the Porters Five forces analysis. This analysis tells
us about the precaution to be taken in order to sustain in the market. The most important way to
avoid the threat of substitutes and competitions a marketer must think upon differentiation. The
buying power of customers can not be avoided in oligopoly market but wide variety of models
will make sure that marketer is retaining its customers. Because of huge market, it is difficult for
suppliers to execute much of their power. Barriers for new entrants are significant because of
huge capital requirements but that can be solved through joint ventures, merger and acquisition
or other strategic partnerships.
The third analysis that we conducted was the SWOT Analysis. The strengths that we found of
the Indian Automobile Industry were availability of labour, advance technology and huge
demand are development indicators of industry and substantiate its growing potential in Indian
market. The weaknesses displayed by the industry consisted of low investment in R&D and
prolongation of new technologies. Opportunities consisted of the new developments like hybrid
cars etc whereas the threats were the global economic meltdown, recession and stiff competition.
The next analysis was the Ratio Analysis where in we did a comparative analysis which showed
that even though companies are competing with each other but their strategies and priorities
seems to be different like in case of Maruti Suzuki and Hindustan Motors which weren’t
aggressive while raising the debt but has good interest cover while same interest cover showed
fluctuations in case of Hyundai. Ford as compared to Maruti Suzuki did well in Debt raising.
Tata Motors performance in general is satisfactory.

The future of Automobile Industry looks very promising. Many new cost efficient and fuel
efficient models are being launched in the market. Tata Nano leads the cost effective cars
revolution by being the cheapest car available at a minimal price of Rs 1, 00,000 only, Renault is
also following the Tata by launching a new car at the price of Rs 150,000. There is a
technological dawn. Hybrid cars are now being launched in the market. Fuel has always played
an important role in automobile industry because for large presence of middle class market is
sensitive to the changing fuel prices. So alternative fuels like bio-diesel, solar energy or
alternative cars like hybrid cars are now being viewed as the solution for this. Many new
inventions like Air Engine car and Thermal Energy Recovery system have taken this Industry to
a new level all together.

REFRENCES
• www.siam.co.in
• www.marutisuzuki.co.in
• www.hyundai.co.in
• www.tatamotors.com
• www.timesofindia.com
• www.scribd.com
• www.ey.com
• Capitaline database
• Top 5 Next-Gen Auto-Safety Technologies

Carney.d February 2, 2010
Retrieved February 20, 2010 from Popularmechanics website
http://www.popularmechanics.com/automotive/new_cars
• The Humbling of Toyota
Alan Ohnsman, Jeff Green and Kae Inoue

March 11, 2010, 5:00PM EST
Retrieved from businessweeks website
http://www.businessweek.com/magazine/content/10_12/b41710325839
67.htm?chan=magazine+channel_top+stories
• Scrappage scheme ‘fails to cut pollution’
Dent.T, Curtis. I(2010,February 21)

Retrieved February 24 ,2010, from Sunday times website
http://www.timesonline.co.uk/tol/driving/news/article
The lighting sector’s open and cooperative culture

Editorial team (2008, February 11)

Retrieved February 20, 2010, from just-auto website
http://www.just-auto.com/article
5 Most Notorious Recalls of All Time
Huffman.J.P (2010, February 12)

Retrieved February 20, 2010 from Popularmechanics website
http://www.popularmechanics.com/automotive/new_cars
• Boom in Indian Automobile Industry
Sunil Kewalramani (Jan 7, 2007)

Scientific Research and Essay Vol. 5 (1), pp. 001-008, 4 January, 2010

Automobile Report

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CHAPTER 1

Alliance Business School | Group12 , Finance A 2

• To understand challenges, threats, opportunities and weakness of industry.

• To understand Impact of industry on global market.

• To identify the past and current overview of Automobile Industry.

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3.2 BIRTH OF A CAR

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Table 3.1-Production statistics

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3.3 PROMINENT MANUFACTURING COUNTRIES

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Source: JD Power Asia Pacific

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AMERICA’S BIG 3 AUTOMOBILE CAR MAKERS

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Graph 3.2 Market Shares of Big Three

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Major players in the market

Change in domestic market directs Korean manufacturers in two ways:

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Some facts on Automobile industry in India:

 India has the fourth largest car market in the world

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4.2 INDIAN AUTOMOBILE INDUSTRY ASSOCIATIONS:

 ACMA (Automotive Component Manufacturers Association of India)

The Automotive Component Manufacturers Association

It’s main activities include:

ACMA is represented on a number of panels, committees and councils of the Government of

Society of Indian Automobile Manufacturers (SIAM) is

SIAM is mainly involved in:-

 an important channel of communication for the Automobile Industry with the

Alliance Business School | Group12 , Finance A 24

 actively participates in formulation of rules, regulations and policies related to the

4.3 THE INDIAN AUTOMOBILE INDUSTRY

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Automobile companies started investing in service network to support maintenance of on-road

4.3.1 Before Independence

4.3.2 After Independence

4.3.3 Socialistic Pattern of Growth

4.3.4 The Pioneering Achievements

4.3.5 Stability in the Market

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4.4 ATTRACTIVENESS OF THE INDUSTRY

1. Large and growing domestic demand:

4.5 VARIOUS SEGMENTS:

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4.5.1 Passenger vehicle segment:

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Passenger vehicle segment:

4.4.1: Small car market

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4.4.2: Mid Size car market