Indian Automobile Industry

Topics: Automotive industry, Japan, General Motors Pages: 9 (2092 words) Published: May 26, 2011
I. Introduction
Automobile industry is a symbol of technical marvel by human kind. Being one of the fastest growing sectors in the world its dynamic growth phases are explained by nature of competition, product life cycle and consumer demand. Today, the global automobile industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. The industry is at the crossroads with global mergers and relocation of production centers to emerging developing economies.

Due to its deep forward and backward linkages with several key segments of the economy, the automobile industry is having a strong multiplier effect on the growth of a country and hence is capable of being the driver of economic growth. It plays a major catalytic role in developing transport sector in one hand and help industrial sector on the other to grow faster and thereby generate a significant employment opportunities. Also as many countries are opening the land border for trade and developing international road links, the contribution of automobile sector in increasing exports and imports will be significantly high. As automobile industry is becoming more and more standardized, the level of competition is increasing and production base of most of auto-giant companies are being shifted from the developed countries to developing countries to take the advantage of low cost of production. Thus, many developing countries are making serious efforts to grab these opportunities which include many Asian countries such as Thailand, China, India and Indonesia.

The rising competition and increasing global trade are the major factors in improving the global distribution system and has forced many auto-giants such as General Motors, Ford, Toyota, Honda, Volkswagen, and Daimler Chrysler, to shift their production bases in different developing countries which help them operate efficiently in a globally competitive marketplace. During the second half of the 1990's, the globalization of the automotive industry has greatly accelerated due to the construction of important overseas facilities and establishment of mergers between giant multinational automobile manufacturers. Over the years, it is being observed that Asia is emerging as a global automotive hub. Exports of automobiles including components from Asia are also increasing by leaps and bounds. Asia has become the major consumer as well as supplier of automobiles.

At this juncture, the study makes an attempt to evaluate the growth pattern, changes in ownership structures, trade pattern, role of government etc. in automobile sector of selected Asian countries (viz. China, India, Indonesia and Thailand). The objective of the study is to understand the dynamics of Indian automobile sector in comparison to the same sector in other selected Asian countries. Thailand is a major auto exporting country from Asia. The sector is mainly driven by Japanese FDI. Chinese automobile sector is growing very fast and is poised to make its dent in the international 5

trade arena very soon with its strong position in component sector. India, on the other hand is consolidating its position with strong domestic and external demand. The Indonesian automotive industry is essentially an assembly industry, dominated by the major Japanese car manufacturers is also coming up in post-liberalization period and increasing its exports.

Japan and Korea Rep already have developed automobile industry. Hence, comparison with these two countries may not be worthwhile. Selected four are developing countries and making an effort to develop the automobile sector through different paths. The paper will compare the alternative strategies for the growth of automobile industry in these selected countries.

II. Changing Structure of Global Automobile Industry:
II. I Growth of Automobile industry:
The production of automobiles in volume began in the early 1890s, in Western Europe. The USA started...
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