Trends in Automobile Industry in India


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This is a Research report which includes study conducted on Automobile Industry in India.

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Trends in Automobile Industry in India

  1. 1. Pillai institute of management studies and research Recent trends in Automobile Industry in India Subject: Research Methodology Submitted by: Submitted to: Rohit U. Jadhav : 21 Prof. Farha Hassan Naazma Khan : 30 Research Methodologies Aditya Kumar Singh : 01 Trupti Nayak : 26 Binoop Balakrishnan : 09
  2. 2. Executive Summary The automotive industry in India is one of the largest in the world and one of the fastest growing globally. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. Though the automotive industry is booming in present date, due to the steep petrol hike graph in India since mid 2009, sales of passenger vehicles with petrol have been declining. Petrol price hike did not affect the consumer much in the fiscal yr 2010-11 when the price was below Rs.60/-. As soon as the price rose above Rs 60 the consumer buying behavior started changing and as soon as the price reached the Rs. 70 mark, the consumer switched on to Diesel cars rather than buying a petrol car. This report will mainly focus on developments in Indian automotive industry; the auto hubs India; hike in petrol price and its affect on the sales of automobiles in India. The research to be done is a causal research where consumer buying behavior will be studied because of the petrol price hike in India. In relation to the problem statement desired hypothesis will be formulated and their testing will be carried out based upon the data obtained.
  3. 3. Research Problem The automotive industry in India is booming at an alarming rate due to the increase in purchasing power of individuals. Even though the sales of automobiles are increasing, sales of Petrol engine based has been declining and those with diesel engines have been increasing. The research will seek to find out a reason of decline in sales and the consumer buying behavior in today’s date. Research Objectives To find out sales of automobiles in India and ratio of Petrol to Diesel engine based car sales. To collect data from local people to what are their views on buying behavior of consumers. To study buying behavior of automobile users. To find and study the reason for change in consumer buying behavior. To interpret the data and frame a conclusion for the problem. Hypothesis a) Ho: There is no relation between sales of automobiles and purchasing power of people. Ha: There is relation between sales of automobiles and purchasing power of people. b) Ho: There is no relation between price hike of petrol and fall in sales of petrol engine cars. Ha: There is relation between price hike of petrol and fall in sales of petrol engine cars. c) Ho: There is no relation between consumer buying behavior for cars and petrol price. Ha: There is relation between consumer buying behavior for cars and petrol price.
  4. 4. Introduction India’s automobile industries history can be traced back to 1897 when first car ran on Indian roads. Until the 1930s, cars were imported directly, but in very small numbers. Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from Willys. The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors. Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (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. About Auto Industry This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines. Products and Services The primary activities of this industry are: Motor cars manufacturing Motor vehicle engine manufacturing The major products and services in this industry are: Passenger motor vehicle manufacturing segment (Passenger Cars, Utility Vehicles & Multi Purpose Vehicles) Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles) Two Wheelers Three Wheelers
  5. 5. Oil Price rise International price of crude oil has crossed US$ 125 per barrel and is rising at an alarming rate. The forecast of market experts that the crude oil price will plateau around US$ 100 per barrel has been proved wrong. The skyrocketing crude oil price rise will affect the economic growth of most of the nations of the world including India. The prospects of India and China of becoming economic superpower will be seriously affected. Also, the rise in oil prices will impact the growth of global automotive industry. Unless the use of alternative fuels increases, it is very unlikely that the situation will change for the better. This necessarily means that more and more investments should be directed towards R&D, establishing mechanisms to translate R&D results into products and their efficient manufacturing. This will also require radical redesigning of engines. Challenges faced by Indian Automotive Industry in the new age The Indian automotive industry has been facing new challenges due to the rapid changes taking place during the last decade. The Indian auto industry is changing rapidly. During the last decade, many international auto manufacturers, either by themselves or in partnership with Indian companies, have started manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of production in small- and medium-scale industries has improved to such an extent that they started exporting products to international manufacturers. The major breakthrough of recent years is the unveiling of "Nano" by Tata Motors during the auto expo 2007. This has received worldwide attention and proved that India can not only design an automobile of international standards but also execute the project at a much lower cost through innovative choice of components, materials, engine design etc. These developments in the auto sector have given new confidence to everyone related to the auto industry and specifically to the government which resulted in the announcement of the Auto Policy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every year two to three million people are expected to purchase new vehicles. Several million vehicles and components are expected to be exported to both developed and developing nations. To achieve these goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to remain at the same level for the next 8-10 years. The government is also giving some concessions to the auto industry. To realize the above growth predictions, it is important to overcome various challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of fuel and the paucity of highly skilled manpower. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster near Chennai is the biggest with 35% of the revenue share. The western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with 32%. Chennai, is also referred to as the "Detroit of India" with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana
  6. 6. form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat with manufacturing facility of General Motors in Halol and further planned for Tata Nano at Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country. The above figure itself says how rapidly the automobile industry is growing in India. Also many big foreign giants have come forward and invested in India for expansion of their firm. This in turn also tells us that India is been awarded with a status of ‘Country of Opportunity’ for growth by foreign firms.
  7. 7. RESEARCH DESIGN To conduct the market research first of all it is necessary to create a research design. A research design is basically a blue print of how a research is to be conducted, it may include; 1. Choosing the approach 2. Determining the types of data needed. 3. Locating the source of data. 4. Choosing a method of data. Basically there are 3 types of approaches used during the any research:- 1. Exploratory. 2. Descriptive. 3. Causal. During this research Descriptive and Exploratory approach is taken into consideration because of the availability of relevant information to describe the relationships between the marketing problem and the available information. Significance to the industry: This is a limited study which takes into consideration the responses of 108 people. This data can be explorated to take in the trends across the industry. The significance for the industry lies in studying these trends that emerge from the study. It is a rapidly changing and evolving sector. People are only beginning to wake up to its vast possibilities. A study like this can attempt to guide the future of the industry based on current trends. Research Design Exploratory Collecting data Conclusion Descriptive Observation (Secondary data) Survey Experiment Causal Secondary Data Survey
  8. 8. Significance for the researcher: To facilitate and provide all the useful information of the study, the company, the automobile industry and bring out the consumer buying behavior of today’s consumer. Data source Research included gathering both primary and secondary data. Primary data is the first hand data, which are selected a fresh and thus happen to be original in character. Primary Data was crucial to know various customers and past consumer views about bikes and to calculate the market share of this brand in regards to other brands. Primary data is collected during the survey with the help of questionnaires Secondary data are those which have been collected by someone else and which already have been passed through statistical process. Secondary data has been taken from internet, newspaper, magazines and companies web sites.