A Study On the Contribution Of Automobile Industry To The Indian GDP

A Study On the Contribution Of Automobile Industry To The Indian GDP

1.1 INDIAN AUTOMOBILE INDUSTRYIndian market before independence was seen as a market for imported vehicles while assembling of cars manufactured by General Motors and other brands was the order of the day. Indian automobile industry mainly focused on servicing, dealership, financing and maintenance of vehicles. Later only after a decade from independence manufacturing started. India's Transportation requirements were met by Indian Railways playing an important role till the 1950's. Since independence the Indian automobile industry faced several challenges and road blocks like manufacturing capability was restricted by the rule of license and could not be increased but still it lead to growth and success it has achieved today.

For nearly three decades the total production of passenger cars was limited to 40,000 yearly. Even the production was confined to three main manufacturers Hindustan Motors, Premier Automobiles and Standard Motors. There was no expertise or research & development initiative taking place. Initially labour was unskilled and had to go through a process of learning through trial and error. In the 1950's, The Morris Oxford, became the Ambassador, the Fiat 1100 became the Premier Padmini. Then in 1960's nearly 98% of the product was developed indigenously. There were significant changes witnessed by the end of 1970's in the automobile industry. Strong and huge initiatives like joint ventures for light commercial vehicles did not succeed. Contessa, the Rover and the Premier 118NE, which were the new models, hit the market. Till later part of 1980's India by and large followed a socialist system. The main focus of the government was development through heavy, long gestation, capital intensive projects like steel manufacturing. Priority was to the quality of the finished good and customer feedback.

The Indian Automobile industry includes two-wheelers, trucks, cars, buses and three-wheelers which play a crucial role in growth of the Indian economy. India has emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads by 2050.The Economic progress of this industry is indicated by the amount of goods and services produced which give the capacity for transportation and boost the sale of vehicles. There is a huge increase in automobile production with a catalyst effect by indirectly increasing the demand for a number of raw materials like steel, rubber, plastics, glass, paint, electronics and services.

Market capitalization

Total contribution to the economy/ salesThe share of Automobile industry in the last decade in the Indian economy was around 5% of GDP. The Indian Automobile industry has become the seventh largest in the world with an annual production of over 2.6 million units in 2013.

Domestic and Export Share Passenger Car -- 25468121478 Multi Utility Vehicles -- 26543892 Commercial Vehicles -- 1010819931 Two Wheelers -- 100002256765 Three Wheelers -- 2113851535 Percentage Growth -- 16.632.8According to the research of Society of Indian Automobile Manufacturers (SIAM), the overall vehicle sales grew by 30 % in May 2010 to 1,208,851 units, and 8 per cent over the previous month of April 2010. Two wheeler sales rose 29 %, with motorcycle sales increasing 26% to 725,311 units, and scooter sales rising% to 157,509 units in May 2010. Commercial vehicle sales rose 58 % in May 2010. The medium and heavy commercial vehicle (M&HCV) segment grew to 33.5 % at 245,058 units and total commercial vehicle (CV) sales went up to 38.3 % to 531,395 units in 2009-10. At an estimated 25 % growth, the M&HCV segment would be about 306,000 units; total CV sales would be about 664,000 units in 2010-11. Mahindra and Mahindra (M&M) is the world's number one tractor company by selling a record of 1.59 lakh tractors in 2009 surpassing John Deere of the US.

Top & Major Manufacturers in Automobile Industry Maruti Udyog Ltd. General Motors India Ford India Ltd. Eicher Motors Bajaj Auto Daewoo Motors India Hero Motors Hindustan Motors Hyundai Motor India Ltd. Royal Enfield Motors Telco TVS Motors DC Designs Swaraj Mazda LtdEmployment opportunitiesIndia today is well known as a potential emerging automobile market and jobs in the automobile industry are rising. Several foreign investments are pouring into Indian automobile industry. It has become a major three-wheeler market and two-wheeler manufacturer in the world. India is also the second largest manufacturer of tractors. Candidates with bachelor's degree in mechanical, electrical or automobile engineering are eligible to get good job opportunities in automobile companies.

For the candidates with diploma courses and ITI courses there are many opportunities in this industry. Automobile companies even require IT specializations. While technical education is offered by plenty of engineering and polytechnic colleges in India,. The eligible candidates are selected by the companies. The considerable wide scope of Automobile sector, it is not that surprising that more and more candidates are dreaming to develop a career in Automobile Industry. With foreign automobile companies like Volkswagen, Audi, Renault etc. coming in and targeting India as a base for manufacturing cars, the scope for a career in Automobile Industry is rising rapidly.Year of commencement & periods of developmentThe Automobile Industry of India has come a long way since in 1898 the first car rolled out on the streets of Mumbai (then Bombay). Indian auto industry, is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto manufacturers like Volvo, General Motors and Ford. The Indian Automobile industry has adopted global standards which are manifested in the increasing exports of this sector. After a temporary decline in the years 1998- 99 and 1999-00, exports increased with robust growth rates of well over 50 per cent in 2002-03 and 2003-04 each to exceed two and- a-half times the export figure for 2001-02.The research of ministry of commerce and industry, shows high growth obtained since 2001- 02 in automobile production which continued for the first three quarters of the 2004-05. The Annual growth of the industry was 16.0 per cent in April-December, 2004; the growth rate in 2003-04 was 15.1 per cent. The compound annual growth rate (CAGR) of Indian Automobile Industry is of 22 per cent between 1992 and 1997. While the investments exceeding to Rs. 50,000 crore, the turnover of the industry was Rs. 59,518 crore in 2002-03. It even estimated to have exceeded Rs.1, 00,000 crore (USD 22. 74 billion) in 2003-04.PollutionThe category for Indian Automobile Industry is "Red" which represents the highly polluting industries Several Automobile exhaust pollutants are as follows: Hydrocarbons- are emissions caused by partially burnt fuel molecules and they react in the presence of nitrogen oxides and sunlight to from ground level ozone.

Nitrogen Oxidesare the gases of precursors to the formation of ozone and also contribute in the formation of acid rain. Ironically the catalytic converters are designed to break down nitrogen gases are generally forming nitrous oxide which is more potent as pollutant than carbon dioxide as greenhouse gas.

When a vehicle startsCarbon Monoxideis emitted without proper air supply, when the tuning of the vehicle is not proper and when a vehicle is driven at high altitudes where the oxygen content is lesser than in the plains. Carbon monoxide emissions great share comes from the commercial vehicles especially the heavier ones.

Carbon Dioxidein greater quantities traps the earth's heat and contributes to global warming.Pollution handling and environmental issues faced by the industry.If it is believed that smoking is harmful then there is a need to take a break from the personal automobile as the favourite set of wheels could be harming the environment and even the health more. As rest of the world is catching up with the concept of personal cars in the country, where days back having a car for the entire family will soon become a thing of the past as each bread winner of the family wants his or her personal set of wheels. Hence it is would not be surprising that the pollution levels in several metros of the country like Delhi, Mumbai, Kolkata and Bangalore are on the increase. In the cars the pollution comes from the process of the evaporation of the fuel and from the by-products of the combustion process.Cars use Petrol and Diesel which are a mixture of Hydrocarbons and compounds usually contain Hydrogen and carbon items. In simple terms the Oxygen in the air converts all the Hydrogen in the fuel to water and Carbon in the fuel would be converted to Carbon Dioxide. Nitrogen is supposed to remain unaffected in this whole process. However things are not that good as they look and engines are not that perfect either. Several types of harmful gases are emitted in the whole process of combustion which leaves the air polluted.The government is taking and has taken steps to introduce catalytic converters in the country a few years back to reduce air pollution. In addition to this petrol with lead has been phased out from several parts of the country to cut down on lead particles in the exhaust.In addition to this several cars and two wheeler companies are striving hard themselves to provide pollution free environment. Companies like Tata Motors and Mahindra are fine tuning their Diesel engines for optimum performance and reduced emission. In the two-wheelers category the companies like Hero Honda is providing pollution free vehicles.With all this support from the companies, Government has to take a proactive role to reduce the pollution levels in the country and should try phasing out old vehicles and impose heavy fines on cars and heavy vehicles that pollute the environment. It should provide tax benefits to electric cars like Reva as they don't pollute the environment and take very little space on the already congested Indian roads. Today in India several new trends are emerging to tackle the problem of pollution like people are opting for car pools while a small number are cycling their way to work.With the increasing growth in demand on back of rising income, expanding middle class and young population base, in addition to a large pool of skilled manpower and growing technology, will propel India to be among the world's top five auto-producers by 2015.The automobile industry accounts for 22 per cent of the country's manufacturing gross domestic product (GDP). The auto sector is one of the biggest job creators, both directly and indirectly. It is estimated that every job created in an auto company leads to three to five indirect ancillary jobs.

India is expected to become a major automobile manufacturing hub and the third largest market for automobiles by 2020, according to a report published by Deloitte.India is currently the seventh-largest automobiles producer in the world with an average annual production of 17.5 million vehicles, and is on way to become the fourth largest automotive market by volume, by 2015.

1.2 Market SizeThe growth story for the Indian automobile industry in 2014 rode on the two-wheeler segment. The segment has clocked positive growth at 12.9 percent year-on-year to reach sales of nearly 13.5 million units by October 2014.

India's automobile sector has also picked up pace, with eight of the country's leading manufacturers' reporting combined passenger vehicle sales of 198,427 in November 2014, a 10 per cent annual rise. The rise in sales in November 2014 was led by Maruti Suzuki, whose sales increased 17 per cent to 100,024 units in the domestic market.The commercial vehicles (CV) industry in India has registered an increase of 8.59 per cent in September 2014, as fleet owners have started to buy trucks in the anticipation of an improved economic activity.

The automobile sector in Andhra Pradesh has a potential for US$ 1 billion investment and US$ 1.50 billion output, according to a recent analysis by Automotive Components Manufacturers Association of India (ACMA) and city-based Andhra Chamber of Commerce and Industry Federation (ACCIF).

1.3 InvestmentsTo match production with demand, many auto makers have started to invest heavily in various segments in the industry in the last few months. The industry has attracted FDI worth US$ 11,351.26 million during the period April 2000 to November 2014, according to the data released by Department of Industrial Policy and Promotion (DIPP).Some of the major investments and developments in the automobile sector in India are as follows: Snapdeal.com has entered into a partnership with Hero MotoCorp Ltd to sell two-wheelers and expect its online automobile sales to generate Rs 1,000 crore (US$ 162.33 million) of business in next six to 10 months.

Automotive supplier Uno Minda and Japans Toyoda Gosei Co Ltd have announced a joint venture (JV) partnership to manufacture and sell rubber hoses to automobile makers in India. The JV will be set up with a total investment of Rs 85.3 crore (US$ 13.84 million) in a phased manner. Taaffe Motors and Tractors Ltd (TAFE) have invested around US$ 140 million by way of equity in the US-based AGCO Corporation, a worldwide manufacturer and distributor of agricultural equipment.

Flipkart founders Mr Sachin Bansal and Mr Binny Bansal have led a US$ 1 million investment in Ather, an electric vehicle start-up focused on designing high-speed electric two-wheelers.

Harley Davidson Motor Co. has expanded their line up in India as it has launched three new models the Breakout, Street Glide and CVO limited edition.

Hero Electric is looking for merger and acquisition (M&A) options or technology tie-ups to encourage its next generation electric vehicle technology.

1.4 Government InitiativesThe Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route. To boost manufacturing, the government had lowered excise duty on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent, on sports utility vehicles to 24 per cent from 30 per cent, on mid-segment cars to 20 per cent from 24 per cent and on large-segment cars to 24 per cent from 27 per cent.Some of the major initiatives taken by the Government of India are:

The governments decision to resolve VAT disputes has resulted in the top Indian auto makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors announcing an investment of around Rs 11,500 crore (US$ 1.86 billion) in Maharashtra.

The Automobile Mission Plan for the period 20062016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector.

The Government of India-appointed SIAM and Automotive Components Manufacturers Association (ACMA) are responsible in working for the development of the Indian automobile industry.

The government plans to come out with policies to introduce clean fuels such as biodiesel, bioethanol and electricity for public transport vehicles and school buses in big cities to tackle air pollution.

The Look Sabha passed the Motor Vehicles Amendment Bill, 2014, paving the way for regularisation of e-rickshaws.

The government has set up National Automotive Testing and R&D Infrastructure Project (NAT Rip) at a total cost of US$ 388.5 million to enable the industry to be on par with global standards.

1.5 Road AheadIndia is probably the most competitive country in the world for the automotive industry. It does not cover 100 per cent of technology or components required to make a car but it is giving a good 97 per cent, highlighted Mr VicentCobee, Corporate Vice-President, Nissan Motors Datsun.The vision of AMP 2006-2016 sees India, to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion; accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016.

The automobiles sector is compartmentalized in four different sectors which are as follows: Two-wheelerswhich comprise of mopeds, scooters, motorcycles and electric two-wheelers

Passenger Vehicleswhich include passenger cars, utility vehicles and multi-purpose vehicles

Commercial Vehiclesthat are light andmedium-heavy vehicles

Three Wheelersthat are passenger carriers and goods carriers.The automobile industry is one of the key drivers that boosts the economic growth of the country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country.Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the US and Mahindra & Mahindra have set up manufacturing bases in India. Furthermore, according to internal projections by Mercedes Benz Cars,India is set to become Mercedes Benzs fastest-growing market worldwide ahead of China, the US and Europe.As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the total FDI inflows in terms of US $. The production of compact superbikes is also expected to take place in India. The country has a mass production base of 16 million two-wheelers and the several global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.

The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is as follows:

Largest three-wheeler market Second largest two-wheeler market Tenth largest passenger car market Fourth largest tractor market Fifth largest commercial vehicle market Fifth largest bus and truck segmentHowever, the year 2013-2014 has seen a decline in the industrys otherwise smooth-running growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with economic slowdown are the major reason for the downturn of the industry.Except for the two-wheelers, all other segments in the industry have been weakening. There is a negative impact on the automakers and dealers who offered high discounts in order to push sales.To match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which capacity utilization for most automakers remains at a dismal level.Despite the comprehensive market being under extreme burden, the luxury car market has observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at compelling lower price points. Further, with the measured increases in the price of diesel, the overall market continues to shift towards petrol-fuelled cars. This has lead to the growth in sales of the 'Mini' segment of the PV market by of 5.5%.

1.6 Factors determining the growth of the industry Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products. Sturdy legal and banking infrastructure Increased affordability, heightened demand in the small car segment and the surging income of the Indian population India is the third largest investor base in the world The Government technology modernization fund is concentrating on establishing India as an auto-manufacturing hub. Availability of inexpensive skilled workers Industry is perusing to elevate sales by knocking on doors of women, youth, rural and luxury segments Market segmentation and product innovation.

1.7 Employment OpportunitiesThere are a wide range of jobs available in the automobile industry. With the number of vehicles available on the road today, the need and requirement for people who can fix these machines is fast increasing. Careers like automobile technician, car or bike mechanics are a great option. Becoming a diesel mechanic is also a significant alternative. Diesel mechanics are responsible for repairing and servicing diesel engines. As they are also required to repair engines of trucks and buses, other than cars, they are provided with hefty wages.If communication with people instead of repairing cars is what interests you, then you have the opportunity of becoming a salesperson or sales manager in an automobile company. Career opportunities in automobile design, paint specialists, job on the assembly line and insurance of vehicles is also available.

1.8 Employment TrendsThe Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a global automotive hub. The idea is to make India as the destination choice for design and manufacture of automobiles and auto components, with outputs soaring to reach US$ 145 billion which is basically accounting for more than 10% of the GDP. This would also provide further employment to over 25 million people by 2016 making the automobile the sunrise sector of the economy.According to the Confederation of Indian Industry, the automobile sector currently employs over 80 lac people. An extension in production in the automobile industry is forecasted, it is likely to rise to Rs. 600000 crore by 2016.

1.9 Future Trends in the Automobile IndustryAs the auto-shows began in January 2014, the industry promised a blend of technology and automotive. With the recession trend breaking its leashes form the past two years, 2014 is expected to get back on track with the sales of automobiles in the country. Almost Self-governing cars are predicted to be on the streets by 2020 More than half the cars on the streets are going to be powered by diesel by 2020 Industry watcher Gartner indicates that 30 percent of motorists want parking info. The facility is likely to come up after glitches in the infrastructure catch up. High Performance Hybrid cars are likely to gain greater popularity among consumers.The Indian automobile industry has a prominent future in India. Apart from meeting the advancing domestic demands, it is penetrating the international market too. Favoured with various benefits such as globally competitive auto-ancillary industry; production of steel at lowest cost; inexpensive and high skill manpower; entrenched testing and R & D centres etc., the industry provide immense investment and employment opportunities.

Gross Domestic Product

The GDP or Gross Domestic Product is the chief marker used to estimate the wellbeing of a nation's economy. 1990s and 2000s witnessed major changes in the Indian economy due to economic liberalization in India. This revitalization took place in the whip of balance-of-payment emergency.

The government of India allowed private infusions in Indian market which facilitated monetary infusion from FDI and FII. As per the estimate by Ministry of Statistics and Programme Implementation, GDP of India in the year 1990 stood at 5,542,706 in comparison with 842,210 in 1975. Information technology, telecommunications, electronics and hardware, pharmaceuticals, biotechnology, consumer durables, retail, infrastructure, airlines, hospitality, power, etc. are sectors which contributed to the success of India GDP history post 1990s.

The GDP of a nation is defined as the market price of overall goods and services generated within a country in an allotted time frame. Year 2000 saw a significant rise with GDP touching the benchmark of 20,791,898.

Contribution on the automobile Industry in India GDP

The Indian Automobile Industry is on overdrive. The rapid urbanization, coupled with an overwhelming growth in the middle class population, has created an Indian market that is extremely conducive for the automobile industry to flourish. Indian automobile industry recorded a growth of 16.07% in 2006-2007.Automobile industry contributes 4% of the national GDP and accounts for 5% of the industrial output in India. It is moreover, a major employment generator in the country. The Indian automobile industry provides employment to around 13 million people directly or indirectly at present, a number that is likely to double by 2016.The liberalization policies of government have been one of the biggest factors behind the industry's rapid growth. Supportive policy measures like relaxation of foreign exchange and equity regulations, reduction tariffs on imports, and banking liberalization leading to a boom in financing driven purchases and convenient EMIs have contributed to the present success of the Indian automobile industry.With a number of foreign brands joining ranks with the domestic manufacturers, the Indian consumer is now flooded with choice. An average Indian can now select from a wide range of Indian and foreign products. Some of the major Indian players are Maruti Udyog, Tata Motors, Mahindra, Ashok Leyland, Hero Honda and Bajaj. Toyota, GM Honda, Daimler Chrysler, Ford, Volvo and Hyundai Suzuki are the key international players in the Indian Automobile market. However, despite the presence of foreign brands, the domestic companies are still the biggest players. Maruti Udyog and Tata vehicles share the top honours for passenger and commercial vehicles respectively.The ICRA analysis of the Indian market projects heavy growth for competitively priced sports-utility-vehicles or SUVs and two wheelers. A number of major global brands like Honda, Suzuki, General Motors and Hyundai have launched their products in the SUV segment of the Indian automobile market. An average of 11.5% growth in the two-wheelers sales in 2004-2007 has kept a number of global companies interested in this segment as well. The market has been moreover bolstered by a healthy rise in the sales of heavy commercial vehicles, and the presence of a strong auto component industry that now ranks 2nd in the world.One of the best things to happen for the Indian automobile market in the recent years was its telling improvement in the export sector. There was a 56% growth in exports from 2003 to 2004. Although economy cars continue to hold the lion's share of the export market, vehicles worth more than USD 1 billion were also exported in 2004, for the first time in history.This increasing demand for Indian cars on the foreign shores has helped the country's automobile industry in two significant ways. First, it has decidedly contributed to the economic growth of the industry. Secondly, it has helped to improve the image of the Indian manufacturing infrastructure at a global level. This increased confidence has resulted in more and more foreign brands opening manufacturing units in India, directly contributing to economy and employment.The Indian automobile industry is now riding high on success, and the bright picture does tend to obscure the problems and challenges that lay on the track of its growth. Poor road conditions, heavy pollution and large scale traffic related accidents are serious impediments in the way of the industry's growth. However, steps are being initiated by the government to address these problems at various levels, and solutions are being worked out at a steady pace.TheRole of Automobile Industry in India GDPhas 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 Indian automobile industry, faced with declining sales in the current fiscal due to high interest rates, rising fuel costs and commodity prices, needs a shot in the arm in the coming Budget to ride out of this tough situation. With the need to grow at a much faster clip, the industry is demanding excise duties to be brought to previous levels and policy stimulus.It is seeking anexcise dutystructure as stated in the auto policy and the 10-year Auto Mission Plan (AMP), and has asked for a concessional excise duty structure -- an equivalentGSTto be applicable at 10% flat across all segments such as cars, two-wheelers and commercial vehicles.

While in the case of bigger cars, the industry wants the distortion with smaller cars and the tax differentials to be narrowed, it wants duties to be reduced from 24%-27% to a uniform 22% irrespective of size of the vehicle and its engine displacement. Car sales fell 0.33% to 13.81 lakh units in the April-December period even as discounts to sell new vehicles have almost doubled this fiscal. "The government needs to expedite economic growth to increase demand and improve disposable incomes. It has to control inflation and bring in more financial discipline in its policies," said RC Bhargava, chairman,Maruti Suzuki BSE 0.20%.

The slowing demand has lowered industry growth to 4.57% in the first nine months of the current fiscal. The auto sector is one of the most important sectors in manufacturing, forming around 6% of India's GDP. The Indian auto industry was expected to reach the size of $145 billion, around 10% of the GDP, by 2016. However, going by the current indices, the target looks a little remote, and the apex body of the Indian automotive sector -- Society of Indian Automobile Manufacturer' (Siam) -- says it may reach a size of $111 billion by 2016. "There is likelihood that AMP may not achieve its projected targets and will fall short by a huge margin. We need some urgent steps to boost demand," said Siam president S Sandilya.High interest rates have really pushed car makers to the back foot, with potential customers putting off their purchases. Car loans are available at 10.5-13%, for trucks it is 14-17%, and for bikes and scooters it can be as high as 22-25%.

"The interest rate regime needs to move southwards to bring the cost of acquisition of new vehicles down. We need to have a firm policy for pricing fuel, especially diesel, so that we are able to plan for the long term," said Hyundai Motor India vice-president (sales and marketing) Rakesh Srivastava.The other ancillary manufacturing sectors in the industry like components, tyres, batteries have also been demanding faster implementation of GST.The Automotive Component Manufacturers' Association of India has also asked for uniform taxes on components that go into the manufacturing different vehicles, while the $1.2 billion Indian bicycle industry, which is aiming to reach $5 billion, has asked for incentivising prices by relaxing taxes on this segment."The government should strive for early introduction of GST which would pave the way for rationalising the tax structure. Automotive industry involves large-scale manufacturing at various levels, so there's an urgent need to streamline thetaxationprocess in India while some faster reforms are needed to do away with multiple and overlapping taxes," said Gurupratap Boparai, CEO, and Fiat India. Other segments have also aired their views. The Automotive Tyre Manufacturers' Association (ATMA), for instance, has demanded permission to allow import of limited quantity of natural rubber under a Tariff Rate Quota (TRQ) basis for FY 2013-14 at a concessional duty rate of 7.5% or Rs 10 per kg, whichever is lower. It wants a relook at the customs duty on natural rubber or increase in the existing customs duty on tyres to correct duty inversion. The customs duty on tyres needs be enhanced from the existing 10% to 20%," said Anant Goenka, chairman of ATMA and MD ofCeat BSE 5.25%Tyres.10.0 Autos Contribution to the Global EconomyThe core automobile industry (vehicle and parts makers) supports a wide range of business segments, both upstream and downstream, along with adjacent industries (see figure1). This leads to a multiplier effect for growth and economic development. Furthermore, R&D and innovation within automobile can benefit other industries, such as the insurance industrys use of innovative ideas (for example, automotive telematics).Automobile contributes to several important dimensions of nation building: generating government revenue, creating economic development, encouraging people development, and fostering R&D and innovation (see figure 2).The core automobile industry supports upstream and downstream industries

Original equipment manufacturers (OEMs) PassengerCommercial vehiclesTwo wheelersThree - wheelersComponent manufacturersMining Steel Metals (primary and fabricated)FuelPlastic, rubber, glassElectronicsFinance and insurance After market (services, auto parts)Used car market Car hires and rentalsFuel supply Advertising Transportation Warehousing

Adjacent industries (finance, legal)

The auto industrys contribution to the economy

R&D and innovation Role of Automobile Industry in India GDP-Facts India has become one of the international players in the automobile market In the year 2010-11, the Indian Automobile Industry produced 2.06 million four wheelers and 9 million two and three wheelers The four wheelers include passenger cars, multi-utility vehicles, sports utility vehicles, light, medium and heavy commercial vehicles, etc The three wheelers include mopeds, motor-cycles, scooters, and three wheelers India ranks 2nd in the global two-wheeler market India is the 4th biggest commercial vehicle market in the world India ranks 11th in the international passenger car market India ranks 5th pertaining to the number of bus and truck sold in the world It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016.

In India, the automotive industry has not yet had the significant growth in contribution to GDP the AMP aspires to

Role of Automobile Industry in India GDP-Growth The growth rate of the Passenger Cars in the year 2009 is 13.50% The growth rate of the Utility Vehicles in the year 2010 is 10.10% The growth rate of the Multi-Purpose Vehicles in the year 2009 is 24.40% The growth rate of the Light Commercial Vehicles in the year 2009 is 16.05% The growth rate of the Commercial Vehicles in the year 2010 is 3.43% The Maruti Udyog Ltd is the largest car manufacturer in the country and the rate of growth in the year 2009 was 20.7% The Mahindra & Mahindra Ltd.s cumulative sales for the year 2011 was 1,06,094 units and the rate of growth was 35.8% The Honda Siel Cars India Ltd, the leaders in India pertaining to the manufacturing of premium cars, registered a growth of 16.1 % during the year 2012 and sold 41,638 units The Daimler Chrysler sales for the year 2010 was 1,681 units in India and the growth rate was more than 22% The General Motors India, registered a 114% increase in the national sales in the August of 2009 The Hero Honda sold more than 2 million units in the Jan-Aug period of the year 2012 The export pertaining to the motorbikes was 3,21,321 units in the year 2009 It is estimated that in the year 2009-10 the motorcycle sales would be 7 million, the car sales would be 1.55 million, and the two-wheelers sales would be 8.3 million.

Role of Automobile Industry in India GDP-Foreign Investments The Indian Automobile industry is at present engaged in mergers and acquisitions on the international scale The Indian automobile industry's foreign sector worth US$ 515 million The Mahindra and Mahindra company will be establishing a utility assembly plant in collaboration with Bramont, a local company at Manuas, in North Brazil In Egypt, the Mahindra and Mahindra company has set up assembly plants in collaboration with the Bavarian Motors The Tata Motors have entered the passenger car market in Saudi Arabia with the launch of Tata Indigo, Tata Indicia, and Tata Indigo Marina The TVS Motor Company has established a two-wheeler manufacturing unit at Kerrawang, in Indonesia The Maruti Udyog Ltd has captured nearly 60% of the small car market in Indonesia The Nissan Motor facility in South Africa was acquired by the Tata Motors to manufacture Tata vehicle for European and South African market The Jaguar and Land Rover Company owned by the Ford Motor Company was acquired by the Tata Motors Ltd for estimated price of US$ 1.5 billion.

CHAPTER NO.2RESEARCH DESIGN

2.1 Review of literatureRelevant literatures pertaining to the present study on four wheeler automobile industry are included in this chapter. The literatures are helpful for proper understanding the four wheeler automobile industry and its various related aspects. Review of literature is also helpful in effectively fulfilling the objectives for which the research project has been undertaken.

G.S. Dangayach and S.G. Deshmukh, in their study on Advanced manufacturing technologies: evidences from Indian automobile companies in International Journal of Manufacturing Technology and Management, reports the findings of an exploratory survey on Advanced manufacturing technologies (AMT) administered in Indian automobile companies. The objective of the survey is to assess the status of advanced manufacturing technologies, identify advanced manufacturing technologies relevant to Indian automobile sector companies, identify competitive priorities, and assess the degree of investment in advanced manufacturing technologies. Responses from 68 companies are analysed and presented.

RNCOS industry in their study of Indian Automobile Sector provides a forecast and analysis based on various macro- and microeconomic factors, sector and industry specific databases, and an in-house statistical and analytical model. This model takes into account the past and current trends in an economy, and more specifically in an industry, to bring out an objective market analysis. In this research main topics covered are: Study of the Indian automobile industry structure, Analysis of performance of industry sub-segments and their future outlook, Understanding the Indian auto component market and its growth aspects, Identification of future prospects for the Indian automobile industry.

S. Sarasvati undertook a study on Customer Satisfaction on Post-Sales Service with Reference to Four-Wheeler Automobile Industry which reveals that the key to success of automobile industry lies not only in having good products but also in being able to provide the customer with the level of service they desire. Because of increasing competitiveness in the Indian automobile industry, almost all automobile manufacturers have invested valuable resources on customer satisfaction as a tool to understand the needs and expectations of their customers. Increased presence of four- wheeled vehicles throughout the country has created a growing need for providing service infrastructures closer to the customers homes or offices.

Dr V Sumantran (Executive Director-Passenger Car Business Unit and Engineering Research Centre at Tata Motors Limited during November 2001 to August 2005, conducted a study on The Indian Auto Industry & The Role of Dealers which reveals that the global auto industry has been the subject of much analysis in recent years. While global capacity creation proceeds at a good clip on one hand, continued capacity creation in the face of sluggish sales have led to depressed levels of capacity utilization. Today, the Indian auto industry is one of the largest industrial sectors with a turnover that contributes to roughly 5 per cent of Indias GDP. More importantly, it contributes to employment of over 2 million people directly and indirectly to another 10 million. The industry is important for national policy in that it contributes 19 per cent of indirect taxes.

Ronald Schettkat & Lara Yocarini A third group of studies tries to explain the rising share of service employment in terms of changes in the inter-industry division of labour. Using input-output tables, that outsourcing from manufacturing to services has increased, but that this increase is insufficient to explain the trend to service employment.

Venugopal, 2008Investment support (deduction on R&D expenditure, Excise duty concessions, tax/levy exemption, research grants) Introduction of stiffer emission standards; infrastructure investment (ports, roads, rail, energy/power) Setting up of testing-, certification and homologation facilities. Development of centers of excellence in the area of: noise (at Mansear), vibration & harshness, auto components (at Mansear); engine and material testing (at Pune); automotive safety and crash testing (at Chennai); testing track and vehicle dynamics (at Indore) development of focused lab facilities at the Indian Institutes of Technology and Management (Ministry of Heavy Industries & Public Enterprises, 2006).

While the National Automotive Testing and R&D Implementation Project (NATRIP), is envisioned to play a coordinating role, different States have also taken individual initiatives with regard to providing R&D facilities. The government of Maharashtra, for example, has set up what it calls an Auto Cluster providing testing facilities for OEM and their suppliers (Interview MCCI). While the political initiative is there, the question is to what extent the Indian automobile industry actually moves beyond being a mere technology adopter and producer for the domestic markets? In terms of exports, the 2000s show a new trend pointing towards rising exports in the passenger car sector. What is more, most of the vehicle exports do focus on the lower market segments with Hyundai being the dominant exporter. With regard to R&D there was an emerging trend of using and developing local capability. On the one hand there is a general development of increasing R&D expenditure in the Indian automobile industry, which has also been stimulated recently by more stringent emission regulations (Shastry, 2004). On the other hand, there is an increasing small car R&D focus among some manufacturers, who seek to develop India into their corporate hub for car R&D.

Wendy Dunn & George Hall (2008)India is also an emerging market for worldwide auto-giants. Due to low cost of labor many multinational companies are investing in India. Its automotive industry hasgrown very rapidly from the middle of 1990s. Recently, there are two big investments expected to boost the sector further, one is from Maruti and the other is from Honda Spiel.Tatas proposed investment to manufacture cheap car is also expected to boost theirdustry.India is the second most populated country in the World, and the growth rate ofIndian economy is very high, which indicates the presence of huge demand in differentindustrial sectors. Automobile industry is not the exception in this regard. Indianautomobile sector has huge demands from its own country. This demand also attracts the19giant automobile suppliers throughout the world to come and invest in the Indian automotiveindustry. Due to the contribution of many different factors like sales incentives, introduction of new models as well as variants coupled with easy availability of low cost finance with comfortable repayment options, demand and sales of automobiles are risingcontinuously.Government has also contributed in this growth by liberalizing the norms for foreign investment and import of technology and that appears to have benefited theautomobile sector. The production of total vehicles increased from 4.2 million in 2007- 08 to 7.3 million in 2010-11. It is likely that the production of such vehicles will exceed10 million in the next few years.The increase in the exports of automobile sector is also due to the adaptation ofinternational standards. After a temporary slump during 1998- 99 and 1999-00, suchexports registered robust growth rates in last few years. Investment is also a major factorfor this growth of Indian automotive industry, with investment exceeding US$ 11.11billion, the turnover of the automobile industry exceeded US$ 13.22 billion in 2009-08.The turnover has increased to US$ 18.5 billion by the end of 2010-11. Recently in 2011, Maruti invested US$ 0.67 billion and Honda invested US$ 0.2 billion on small cars. It isexpected that by the year 2016, the turnover of the Indian automobile sector could growto $145 billion. Today, this sector has emerged as a sunrise sector. However, theovercapacity problem is haunting many of the players as demand may not go up significantly. Hence, many players are looking for an external market for Indianautomobiles. The prospect of component industry is quite positive. The leading local firms have established over 200 technical cooperation agreements with foreign firms tobe able to reach international standards in cost and manufacturing.

Abhijeet Singh and Brijesh Kumar (2011) Hero Honda Motors Ltd, is running a program called Good life Passport to Relationship Reward, with an objective to create an innovative environment for interaction between Hero Honda and its customers. Members of this program are given a magnetic card in which all information is stored and this card is swiped when using any service at a showroom or workshop and it works like a loyalty benefit card. Tata Motors uses a customer relationship management and dealer management system (CRM-DMS) which integrates one of the largest applications in the automobile industry, linking more than 1200 dealers across India.CRM DOS has helped Tata Motors to improve its inventory management, tax calculation and pricing. This system has also proved to be beneficial to dealers because it has reduced their working capital cost.

Arvind Saxena (2010) Director and Board member (marketing and sales), Hyundai Motor India (HMIL) No company in automobile sector can fight competition on price. Companies need to have the right product, distribution, CRM and after sales service network to grow.

Biswajit Mahanty and Virupaxi Bagodi (2006) The success of two wheeler manufacturers in India depends on the competitive advantage gained by them through after sales service and providing and maintaining customer satisfaction in the face of rapid changes in technology is a difficult task, which can be overcome by timely addition of capacity and upgrading of technical manpower and focusing on the CRM programs. Biswajit Mahanty (2007) More than 55 million two-wheelers are moving on Indian roads. Accordingly, two-wheeler service sector should have generated revenue amounting to INR 100,000 million per year, but in reality, this has not been realized in the organized service sector, the Indian two-wheeler service industry has not considered servicing as a line of business and providing conveniently reliable services is most important in two-wheeler services in India to capture the market.

Pawan Chabra (2011) has mentioned that the death knell off Bajajs scooters business was sounded when the company officially stopped the production of its flagship Chetek in December 2002, to get cracking on its ambition of becoming a credible motorcycle brand manufacturer, the company invested big in R&D and product development, but the company faced challenges in the sales and distribution because their dealers had little idea how to sell motorcycles, so the entire dealership network was trained to sell motorcycles.

Philip Kotler (2012) Harley Davidson dealers ranging from the CEO to the sales staff, maintain personalized relationships with customers through face to face and social media contact. Knowing customers as individuals and conducting ongoing research to keep up with their changing expectations and experiences which helps Harley Davidson to define their customers needs better.

R K Garg (2011) CRM requires a seamless, single view of the customer with consistent cross-channel interaction models and it is recommend that companies bundle all internal CRM strategies into one comprehensive multi-channel strategy. More over if the two wheeler manufacturer integrate CRM with SCM, then product design and production planning can be aligned with the customer information available, to increase customer loyalty.

2.2 STATEMENT OF THE PROBLEM-According to the review of literature it has been identified that industry sector is contributing a significant amount to the Indian GDP. But the contribution from automobile industry in particular has not been explored / studied in a significant way. In the present research an attempt will be made to study the contribution of automobile Industry to the Indian GDP and the various challenger faced by the Automobile Industry in India.

2.3 OBJECTIVES OF THE STUDY-

To study the nature of automobile industry in India. To analyse the contribution of automobile Industry to the Indian GDP. . To understand the role of automobile Industry in the Indian economy. To suggest various measures to improve the automobile sector in India.

2.4 HYPOTHESES Ho: There is no significant contribution from automobile industry to the Indian GDP.H1: There is significant contribution from automobile industry to the Indian GDP.

2.5 SCOPE OF THE STUDY-The present study covers only automobiles sector of India.

2.6 Sources of Data- Secondary Data: - The data required for the study will be collected by various resources like- Books Internet Newspaper Magazines

2.7 LIMITATIONS OF THE STUDY- The result of the study cannot be generalized as it has been conducted only in India. 2.8 CHAPTER SCHEME-The present study has been divided into five different chapters as follows: Chapter1: Introduction Chapter2: Research design Chapter3: Industry profile Chapter4: Data analysis and Interpretation. Chapter5: Findings, suggestions and conclusion

CHAPTER NO 3INDUSTRY PROFILE

3.1 INDUSTRY PROFILE-Automobile Industry in India has witnessed a tremendous growth in recent years. Come a long way since the first car ran on the streets of Bombay in 1898.It employs more than 10 million people. After independence Indian automobile industry was plagued by unfavourable government policies. All it had to offer in the passenger car segment was a 1940s Morris model called the Ambassador and a 1960s Suzuki-derived model called the Maruti 800.The automobile sector in India underwent a metamorphosis as a result of the liberalization policies initiated in the 1991 Measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies played vital role. After the sector opened to foreign direct investment in 1996 global major moved in. Matured in last few years and offers differentiated products for different segments of the society.

3.2 MAJOR CHARACTRISTICS OF INDIAN AUTOMOBILE SECTOR Second largest two-wheeler market in the world. Fourth largest commercial vehicle market in the world. 11thlargest passenger car market in the world expected to become the world's third largest automobile market by 2030, behind only China and the US.

3.3 INDIAN AUTOMOBILE SECTOR-A BOOMING MARKET Allowance of 100% FDI in 2002 made the industry easily attractive for the global players. Japanese, Korean, European, and American OEMs entered the Indian market and added more than 1 Million four-wheelers during 2005-06. The production of 2-wheelers grew at a CAGR of 14.6% from FY2001 to FY 2006. In passenger car segment, rise in disposable incomes has opened the roads for luxury cars too in India.

MARKET SHARE OF TWO WHEELERS

PASSENGER VEHICLES MARKET SHARE

Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years.To understand this industry for the purpose of investment we need to analyse it by following two approaches:

1). Fundamental Analysis (E.I.C Approach)a. Economyb. Industryc. Company

2).Technical Analysis

1) FUNDAMENTAL ANALYSISA) ECONOMYEconomic analysis is the analysis of forces operating the overall economy a country. Economic analysis is a process whereby strengths and weaknesses of an economy are analysed. Economic analysis is important in order to understand exact condition of an economy.

B) INDUSTRY ANALYSIS (AUTOMOBILE)The current trends of the global automobile industry reveal that in the developed countries the automobile industries are stagnating as a result of drooping markets, whereas the automobile industry in the developing nations, have been consistently registering higher growth rates every passing year for their domestic flourishing domestic automobile marketsBeing one of the fastest growing sectors in the world its dynamic growth phases are explained by the nature of competition, Product Life Cycle and consumer demand. The industry is at the crossroads with global mergers and relocation of production centers to emerging developing countries. In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth.Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers.Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry.C) COMPANY ANALYSIS The company analysis shows the long term strength of the company that what is the financial Position of the company in the market where it stand among its competitors and who are the key drivers of the company, what is the future plans of the company, what are the policies of government towards the company and how the stake of the company divested among different groups of people.

The automobiles sector is compartmentalized in four different sectors which are as follows: Two-wheelerswhich comprise of mopeds, scooters, motorcycles and electric two-wheelers

Passenger Vehicleswhich include passenger cars, utility vehicles and multi-purpose vehicles

Commercial Vehiclesthat are light andmedium-heavy vehicles

Three Wheelersthat are passenger carriers and goods carriers.The automobile industry is one of the key drivers that boosts the economic growth of the country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has come a long way. Today, almost every global auto major has set up facilities in the country.Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson from the US and Mahindra & Mahindra have set up manufacturing bases in India. Furthermore, according to internal projections by Mercedes Benz Cars,India is set to become Mercedes Benzs fastest-growing market worldwide ahead of China, the US and Europe.As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which amounted to 4% of the total FDI inflows in terms of US $. The production of compact superbikes is also expected to take place in India. The country has a mass production base of 16 million two-wheelers and the several global as well as Indian bike makers are looking forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.

The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is as follows: Largest three-wheeler market Second largest two-wheeler market Tenth largest passenger car market Fourth largest tractor market Fifth largest commercial vehicle market Fifth largest bus and truck segmentRestructuring Status of Automobile Industry in 2010

Top automobile companies in IndiaStarting from the era when there was too slim of a variety of cars available in Indian market, Indian automobile industry has come up a long way to have a diverse array of cars these days. There are a number of top automobile companies running their operations in India, which again have a range of models in different segments of cars. However, while looking for top 10 automobile companies in India; one name that would always lead the list is Maruti Suzuki India. Maruti Suzuki has consistently been the dominant leader in the Indian automobile industry. However, there are also other big names like Tata Motors, Mahindra and Mahindra, Hyundai Motors, Hindustan Motors etc.During its early days, the most of the Indian car auto manufacturers banked upon foreign technologies. But the scenario has changed over the years and currently, the Indian auto manufacturers are using their own technology. Due to the growing pace of Indian automobile market, a number of car manufacturers including the global leaders have locked their horns in the Indian auto market.

After the recent setback due to the global recession, the Indian automobile market has again started to grow up. Though the auto sales except commercial vehicles started creeping up since the beginning of this financial year, it's only the month of September 2009 when the market saw buoyant sales. It fuelled optimism in the industry. The retail trade also started soaring up. The auto sales saw a 9.6% rise in the month of September with a sale of 1,092,262 units. The passenger vehicle sales also grew by 20.32%. The two wheeler market was also augmented by 7.67% during the same period with a total sale of 838,150 units. The same trade is applicable for the three-wheeler market, which saw a growth of 13.51% (with sale of 41,137 units) during the same period.

List of Top 10 Automobile Companies in India (Figures in Crores)ET 500 RankCompanyTurnoverPATMCRP CRAssets

7Tata Motors Ltd.123222.919273.6256499.7752209.48

21Mahindra & Mahindra Ltd.37026.373079.7349945.1736926.19

19Maruti Suzuki India Ltd.38140.692382.3731475.6314762.9

41Hero MotoCorp Ltd.19669.291927.940398.634447.22

46Bajaj Auto Ltd.17008.053454.8946885.695154.96

67Ashok Leyland Ltd.11133.04631.36653.156621.16

101Sundaram Clayton Ltd.7419.4164.63529.232428.87

110TVS Motor Company Ltd.6569.99127.9429851745.06

148Either Motors Ltd.5138.64243.124448.27474.14

396Force Motors Ltd.1574.0558.62730.05583

3.4 Production and Market StructureIn India, automobile market is mainly dominated by Japanese and Indian manufacturers; also some other multinational companies are currently investing in India. The major foreign automobile manufacturers in India are Honda, Toyota, Ford, Fiat, Daimler Chrysler, etc. The major Indian players are Marutyi Udyog, TATA motors, Hindustan motors, etc. Automobile production in India rose substantially in last five years. 77% of market share is captured by two wheelers. Passenger and commercial vehicles capture around 19% market share (SIAM statistics for 2012-13). In China, JVs have given preferences for development of automobile sector. On the contrary, in India government made an attempt to develop automobile sector through domestic private sector before the liberalization. As a result of this, important Indian players have diversified ownership structures (see Diagram 3) where promoters, banks and financial institutions own significant shares of the companies. Maruti was developed as a subsidiary of Suzuki. Today, government owns around 10.27% and Suzuki Motors around 54% of total shares. In case of Tata Motors, Indian corporate bodies own 23 significant shares (33%) and only around 7% comes from FDI. In both the companies, FII owns limited number of shares. In case of Hindustan motmotors, promoters own around 29%, financial institutions 11% and individuals around 31%.

In India, domestic producers initially concentrated on producing small and basic models under a protective environment. Most of the foreign players in India have focused on mid-range market (with exceptions such as Hyundais Santro) with the models which have been successful in other countries.

The overall automotive Components sector is highly fragmented and has important quality problems. Over 300 small and medium companies service directly more than 20 companies assembling vehicles in the country, with as much as 5,000 other micro firms working for the first tier suppliers and for the replacement market. Mostly due to regulation, component import dependence is also small, with 87 percent of the domestic demand satisfied by local firms.

Despite these levels of localization, the industry is quite small by international standards (Veloso & Kumar 2010). Indian auto producers are capable of exploiting the cost advantage due to cheap labour and sufficient amount of localization but they are unable to do so due to small demand and low level of productivity.

CVD Anomaly: Effective levy of a lower CVD on imports than relevant excise duty on a locally manufactured product CVD is levied on an imported product so that it attracts the same kind of tax (excise duty) that would be levied on a locally manufactured product in order to ensure that there is a common tax treatment on both from the excise side. However, in the case of vehicles the reality works out differently.The following table illustrates the case. On Effective CVD versus excise duty:Locally manufacturedImported CBU

Cost of Manufacturing 75Landed cost 75

Post manufacturing 25ExpsExcise, % 25.13%

Pre-Excise price 100Excise value 18.8

Excise, % 25.13%Post manufacturing exps 25

Excise Value 25.1

Post Tax Price 125.1Post tax price 118.8

Difference 6.3

Note: Post manufacturing expenses include selling and distribution costs (advertising, personnel, incentives, warranty, branding, and transportation) as well as margins As can be seen from the table, the effective CVD on an imported Completely built up vehicle (CBU) is 18.8% against the 25.13% effective excise duty on a similar locally manufactured vehicle if the selling and distribution costs are assumed at the level shown (which will vary depending on the segment and company).

3.5 Investment increases in automobile IndustryInvestments in Indian auto component sector have grown from around ~USD 4 billion in FY08 to ~USD 10.3 billion in FY14 (Figure 8). Due to recession there was postponement of investment plans because of which the investment levels remained unchanged between FY08 and FY09. Investment picked up again in FY13 registering a CAGR of 14%. Several large Indian auto component manufacturers are in the process of substantially investing in capacity expansion, establishing partnerships in India and abroad, acquiring companies in foreign countries establishing Greenfield ventures, research & development (R&D) facilities and design capabilities. The auto component industry invested USD 2 billion in FY11 in several Greenfield as well as expansion projects.

Tax holiday for Automobile Industry for investment exceeding Rs.500 crore (as given to power projects, firms engaged in exports, EOUs, infrastructure projects, etc.) One-stop clearance for FDI proposals in automotive sector including the local clearances required for setting up manufacturing facilities

Tax deductions of 100 per cent of export profits.

Deduction of 30 per cent of net (total) income for 10 years for new industrial undertakings.

Concession of Import duty on machinery for setting up of new plant or capacity expansion

Deduction of 50 per cent on foreign exchange earnings by automotive companies (like Construction companies, hotels, etc.)

State Government to be urged to offer the following: Preferential allotment of land to automotive plants as is given to IT sector by different State governments

Ensuring Continuous uninterrupted power supply as is done by many states to some sectors

Captive Generation in the sector could be promoted, for instance, by exemption of Electricity Duty for five years as is done for biotech industry in some states.

Investment in Auto component Sector (USD billion)

An attempt has been made to understand and analyse the past and current trend in Indian automobile industries. Secondary data collected from website and research publications have been used. Forecasted values have been calculated for the period 2013-14 to 2015-16 using statistical approach. Despite various ups and downs in the past years, our experiments show positive growth in all segments. The segment wise average forecasted growth rate for the next three years is given in table 8.

SEGMENT WISE AVERAGE FORECASTED GROWTH RATESegment

Average growth rate (%)

Production trend-passenger vehicle7.88

Production trend-commercial vehicle7.23

Domestic sales trend-passenger vehicle6.00

Domestic sales trend-commercial vehicle6.01

Export trend-passenger vehicle7.58

Export trend-commercial vehicle11.25

The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra grow even more than expectations. We have also come to know that share price movement of TATA Motors is just according to the movement of SENSEX, whenever there is a negative sentiment in the market regarding TATA Motors there is a steep fall in the stock price of TATA Motors but we have seen quick recovery in its share prices to regain its primary trend E.g. as we seen in last 3-4 months TATA recovers approx.90% after downfall. By analysing the current trend of Indian Economy and Automobile Industry we can say that being a developing economy there is lot of scope for growth and this industry still have to cross many levels so there is huge opportunities to invest in and this is proving as more and more foreign Companies setting up there ventures in India.

CHAPTER NO 4DATA ANALYSIS AND INTERPRETATION

4.1 ANALYSIS AND INTERPREATIONTable1. Production, Domestic Sales and ExportsCategoryProductionDomestic salesExports

Segment/sub segment 201320142013201420132014

I. Passenger vehicles

Passenger cars2080881902361507371384334049435149

Utility vehicles 4408754213405704068016206535

Vans192151388917034124284775

Total passenger vehicles 2713902583332083411885414216141759

II. Commercial vehicles

M&HCVs

Passenger carriers5161393640152877694475

Goods carriers1917016832145951255273617772

Total M&HCVs2433120768186101542914292247

LCVs

Passenger carriers6338457243473897189214

Goods carriers434553178933722375434863286

Total LCVs4980336361380732765136723500

Total commercial vehicles7413457129566834308051015747

III. Three wheelers

Passenger608775453927181264683505527053

Goods carrier8367764971677314159120

Total three wheelers692446218834348336023521427173

IV. Two wheelers

Scooter25639934637426147532968047869407

Motorcycles9517841073804843909911908153358187421

Mopeds64292640166271662859245615

Total two wheelers127247514819411681001304447197443197443

Grand total of all categories1687243186184914674721569670240855272122

Analysis:From the above table it can be analysed that the production of automobile in Indian have increased from 1687243 to 1861849 from the year 2013 to 2014.

Diagram1. Production, Domestic Sales and Exports

INTERPRETATION:-

Table2. Automobile Production of India (in nos.)

Category 2009-20102010-20112011-20122012-20132013-2014CAGR

Passenger cars 70263125320160670169990 19274531.36

Utility Vehicles 117730494505448944037.43

MPVs56592212271093133010.29

Total Passenger Vehicles7200512929116640217557219847830.14

M&HCVs5638818813474140781883831.32

LCVs6617924416466265223092834.43

Total Commercial Vehicles 122551743229940406004976633.20

Three wheelers 4336668144667957688114389656.23

Scooters 32566536876069983934356854.72

Motorcycles12372518728727712338605454588757.19

Mopeds 233912407828585431813756614.64

Total Two wheelers 17968226505236640751316961913842.82

Grand total 307308479919629544806222101127840.50

Analysis:

Diagram2. Automobile Production of India (in nos.)

INTERPRETATION:-

Table 3. Automobile industry sales in domestic market (in numbers thousand)2009-102010-112011-122012-132013-142014-15Rate(000/perunit)

Cars126212621388138815271527400

Multi utility vehicles265287309334361390560

LCVs202220240261285311600

Buses & Trucks2612772943113303501000

Scooters10221053108411171150118535

Motorcycles11274133031569818524218582579250

Mopeds44547851455259463825

Three wheelers54760767374783092175

Tractors360378397417437459200

Analysis:The above graph determines thatMotorcycles30435 sales in domestic market and car are 1679 in sales in domestic market. Three wheelers are 1022 sales in domestic market respondents participated consider.Diagram 3:- sales in domestic market 2008-2015

INTERPRETATION:- From the above analysis it can be inferred that majority of the respondents feel performance is more with compare to other vehicles for Motorcycles are outstanding sales in domestic market in India.

Table4. Automobile Industry of vehicle exports (In nos. thousands)2008-092009-102010-112011-122012-132013-142014-15

Cars281.0331.5391.2461.6544.7642.8758.5

Multi utility vehicles7.28.49.911.513.515.818.5

LCVs34.638.141.946.150.755.761.3

Buses & Trucks18.620.522.524.827.330.033.0

Scooters111.8123.0135.3148.8163.7180.1198.1

Motorcycles718.3883.51086.71336.71644.12022.22487.3

Mopeds80.098.4121.1148.9183.1225.3277.1

Three wheelers133.1159.7191.6229.9275.9331.1397.3

ANALYSIS:From the above data, it can be inferred that the exports of car and motorcycles is more than any other vehicle in India in all the years and the situation will remain same in coming years.

Diagram 4:- Exports of Automobile Industry 2008-2015

INTERPRETATION:In India majority of exports is taking of cars and motorcycles, as people in India prefer more of them than any other vehicle. India is specifically known as land of two wheeler, so the export of motorcycles is more with compare to cars, but at same time people in India prefer the luxurious car leading to increase in exports of car in India.

DIVERSIFICATIONDiversification is an activity which is new to a particular company concerned and it usually requires the development of new skills and attitudes. The related diversifiers in the automobiles industry were generally engaged in the manufacture of commercial vehicles, mining, and industry equipment. While Mahindra and Mahindra too up the manufacture of tractors, trucks, steel castings, instruments and machine tools.Table 1 presents the overall position of diversification profile of the Indian Industry. Table 2 analyses the diversification profile of multinational corporations. Table 3 shows the phenomenon of diversification in the Indian Industry for different industries.

Table 5:- Nature of diversification in Indian IndustryCategory No. of companies Percentage

Undiversified 9136.7

Related Diversification 6425.8

Unrelated Diversification9337.5

Total 248100

ANALYSIS:

Diagram 5: Nature of diversification in Indian Industry

INTERPRETATION:

Table 6:- Nature of diversification in Indian subsidies of multinational corporationsCategory Indian Subsidiary

Number of companies percentage All companies percentage

Percentage

Undiversified8 2536.7

Related 12 37.525.8

Unrelated 12 27.537.5

Total 32 100100

ANALYSIS:

Diagram6: Nature of diversification in Indian subsidies of multinational corporations

INTREPRETATION:

AUTOMOBILE INDUSTRY PROFIT LEVELS

The Indian auto industry is one of the largest in the world with an annual production of 21.48 million vehicles in FY 2013-14.The automobile industry accounts for 22 per cent of the country's manufacturing gross domestic product (GDP).Table7. AUTOMOBILE INDUSTRY PROFIT LEVELSApr 2015% change from apr14YTD 2015% change from YTD 2014

Cars665,924-1.52,499,976-0.5

Midsize 295,518-5.11,112,412-3.8

Small 276,5963.31,025,2893.3

Luxury93,663-3.4361,755-0.3

Large 147-49.0520-50.8

Light-duty trucks 789,02710.52,909,51911.0

pickup207,4968.0775,05610.7

Cross-over363,68918.61,325,49511.0

Minivan 37,882-25.6144,444-15.8

Midsize SUV74,0677.0301,03420.4

Large SUV22,997-13.285,54415.4

Small SUV26,65928.980,99511.6

Luxury SUV 19,12828.271,97630.4

Total SUV/Cross-over506,54015.61,865,04413.3

Total SUV142,8518.7539,54919.4

Total Cross-over363,68918.61,325,49511.0

ANALYSIS: In the above table it has stated that the profit of light- duty trucks companies is more than the profit from four wheeler car is more in India.

Diagram7: Profit Levels

INTREPRETATION:Majority of the customers gave response for quality is the utmost feature which chooses the product from the market. Majority of the customers havegiven response that they are interested to buy under unexpected quality of the vehicles and pickup only.

Taxes Top- line grown by20% Operating Profit grown by18% PBT grown by23% Net profit grown by29% Market Capitalization grown 25%Growth figures indicate CAGRDiagram8: Three/ four wheeler

Diagram9: Two Wheeler

Diagram10: Industrial

Diagram11: Net Revenues 1

Diagram12: EBITDA 2

Diagram13: Profit After Tax 3

EMPLOYMENT GENERATIONForeign Direct Investment (FDI) impact on the growth of Automobile Industry is visible across the spectrum of this sector direct employment in manufacturing, auto component suppliers and auto service segments. In the growth aspect it is distinctly discernible in the passenger vehicle segment. The cumulative Foreign Direct Investment (FDI) equity inflows2 from January 2000 to December 2010 in this sector is Rs. 25,972.59 crores (5.74 USD in billions) which is 4.52% of the total FDI inflows; the portion of Passenger Vehicle segment is Rs.13, 516.25 crores (3.008 USD in billions) which accounts close to 52% of the total inflows in Automobile Industry Sector. This has opened a challenging avenue for training and development centres and employment gateway for aspiring and talented individuals across all levels.Findings on Employment GenerationAs per the report compiled in 2010 unauthorized auto service centres across India, numbering 51,257 in Two-wheeler, 10,645 in passenger Car and 6,840 in commercial vehicles. In 2009, the direct and indirect employment in Indian automobile Industry is indicated as over13million and of these 8 to 9 million are in unorganized sector and indirect employment. The Indian automobile industry provides direct and indirect employment to over 17 million people as on 2012. Direct employment includes personnel working with automobile OEMs and TIER 1 manufacturer (which accounts about 30%).

Diagram14: Automobile industry Growth in Employment- FDI Impact

INTREPRETATION:

Diagram15: Employment Distribution across

INTREPRETATION:

Table 8. Employment potential of Indian Automobile Industry

Financial YearTurnover estimation (CAGR15%)In crore Total production employment strength-67% turnover(in crore) per employee 1.12Potential estimation-Incremental Growth in Direct Employment Total Direct Employment at all OEMs Estimation

2011-12309904256119-382268

2012-1336539029453738418439607

2013-1440984833871744180505382

2014-1547132638952650809581382

ANALYSIS:

Diagram16: Employment Generation

INTREPRETATION:

AUTOMOBILE INDUSTRYS TURNOVERDespite the two massive speed-breakers in 2008-09, 2012-13, the industry has made significant progress and many vehicle price increases have been contained within about 11% though the economy has witnessed an inflation of 77 percent over the past decade.

Indian has emerged as the second largest base for two wheelers and buses globally. India has also become the third largest heavy truck manufacture and the sixth largest passenger car manufacturer in the world. On the global map, India has developed as the hub for small car development and established itself as a best cost country saucing location for automobile components and engineering services.

Diagram17: Automobile Industrys TurnoverINTREPRETATION:

Domestic sales across all vehicle segments have exhibited double digit growth in India. The commercial vehicle segment witnessed a growth rate of ~

% p.a., while the passenger vehicle and two wheeler segment have seen a growth rates upward of ~15%p.s. the three wheeler grew at ~10% p.a. in this time period.

The Auto industry contributes to nearly 4% of Indias GDPDiagram18: Growth in real GDP and manufacturing in India (%)

INTREPRETATION:

HYPOTHESES

Ho: There is no significant contribution from automobile industry to the Indian GDP.H1: There is significant contribution from automobile industry to the Indian GDP.

yearsContribution of Automobile Industry toward GDPOverall GDP

2009-107.80%10.26%

2010-115.20%6.64%

2011-126.10%5.08%

2012-137.20%6.90%

2013-145.30%7.17%

2014-1510.40%7.46%

Contribution of Automobile Industry toward GDP Overall GDP

Contribution of Automobile Industry 1

toward GDP0.3765380891

Conclusion:- The correlation between contribution of automobile industry to Indian GDP and overall Indian GDP is.375, positive result.

CHAPTER NO 5FINDINGS & CONCLUSION

5.1 FINDINGD AND CONCLUSIONSAn attempt has been made to understand and analyse the past and current trend in Indian automobile industries. Secondary data collected from website and research publications have been used. Forecasted values have been calculated for the period 2013-14 to 2015-16 using statistical approach. Despite various ups and downs in the past years, our experiments show positive growth in all segments. The segment wise average forecasted growth rate for the next three years is given in table 8.

SEGMENT WISE AVERAGE FORECASTED GROWTH RATESegment

Average growth rate (%)

Production trend-passenger vehicle7.88

Production trend-commercial vehicle7.23

Domestic sales trend-passenger vehicle6.00

Domestic sales trend-commercial vehicle6.01

Export trend-passenger vehicle7.58

Export trend-commercial vehicle11.25

The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra grow even more than expectations. We have also come to know that share price movement of TATA Motors is just according to the movement of SENSEX, whenever there is a negative sentiment in the market regarding TATA Motors there is a steep fall in the stock price of TATA Motors but we have seen quick recovery in its share prices to regain its primary trend E.g. as we seen in last 3-4 months TATA recovers approx.90% after downfall. By analysing the current trend of Indian Economy and Automobile Industry we can say that being a developing economy there is lot of scope for growth and this industry still have to cross many levels so there is huge opportunities to invest in and this is proving as more and more foreign Companies setting up there ventures in India.

5.2 BIBLIOGRAPHYWeb Sites:http://wits.worldbank.orghttp://www.atimes.com/atimes/Southeast_Asia/GG01Ae01.htmlhttp://www.chinaccm.com/4S/4S11/4S1101/news/20070504/094559.asphttp://www.eurofound.europa.eu/emcc/publications/2004/ef0427en.pdfhttp://www.gaikindo.org/index.php?fuseaction=events.detail&id=150620061350496http://www.loc.gov/rr/business/BERA/issue2/industry.htmlhttp://www.loc.gov/rr/business/BERA/issue2/industry.htmlhttp://www.researchandmarkets.com/reports/357271http://www.researchandmarkets.com/reports/357271/china_automotive_industry_report_merger_and.htmhttp://www.siamindia.com/scripts/installed-capacities.aspxhttp://www.toyota.co.th/red/en/sales_summary.asphttp://www.economywatch.com/business-and-economy/automobile-industry.htmlwww.googlefinance.comwww.yahoofinance.comwww.google.co.inwww.moneycontrol.comwww.worldfact.comwww.rbi.org.inFDI statistic government of IndiaIndia Central Statistical OrganizationEconomic Times

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