Automobile Industry

Topics: Automotive industry, Automotive industry by country, Suzuki Pages: 58 (20263 words) Published: August 4, 2013

The objective of this project is to analyze the Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data.

The main objectives of the Project study are:

* Detailed analysis of Automobile industry which is gearing towards international standards. * Analysis of the impact of qualitative factors on industry’s and company’s prospects. * Comparison of the Global automobile scene with its Indian counterpart. * Study of the challenges facing the Indian Automobile Industry * Analysis of the implementable strategies to counter the effects of the discussed challenges.


The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. The Indian Automobile Industry embarked on a new journey since 1991 with delicensing of the sector and subsequent opening up for 100 per cent FDI through automatic route. Almost all the global majors have set up their facilities in India taking the next level of production of vehicles from 2 million in 1991 to 110+ million in 2011. The Auto Sector in India is set to continue in its growth trajectory for the next five years and India is an increasingly favourite destination for Global Majors looking at emerging market. This in turn, has fuelled a boom in the domestic auto market, with close to 10mn vehicles sold in India in 2009-10 The automotive industry is increasingly becoming the cynosure of the manufacturing sector across the globe. Due to its intense forward and backward linkages with several key segments of the economy, the automotive industry has a strong multiplier effect and acts as one ofthe key drivers of growth across the globe. The attention and importance to the automotive industry in the economic development and planning policies of Government and its agencies has also witnessed significant up rise. The industry has been evolving over the years, meeting up with challenges as diverse as transitions, consolidations and restructuring, and thereby adapting to the new market conditions.

As of 2011, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2011 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.

The Indian Automobile Industry manufactures over 11 million vehicles and exports about 1.5 million each year. The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three-wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. The supply chain is similar to the supply chain of the automotive industry in Europe and America. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. With a high cost of developing production facilities, limited accessibility to new technology, and increasing competition, the barriers to enter the...
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