Presently India’s economy continues to grow at a rapid pace, the automobile industry is be a key beneficiary. This is true in whole automotive markets—from those serving customers with two-wheelers and four-wheelers to those offering commercial vehicles. The major determinants behind such growth are the increasing affluence of the average consumer, overall growth in GDP, the arrival of ultra-low-cost cars, and the increasing maturity of Indian original equipment manufacturers (OEMs).Automotive Industry in India is presently working in terms of the dynamics of an open market. In India, automobile sector is one of the largest growing industries. Many joint ventures have been set up in India with foreign collaboration. India also has one of the fastest growing economies, and many U.S. companies view India as a potentially lucrative market. This paper gives an overview of Indian Automobile Industry.

1. Automobile Industry in India: A Review
Abstract
Presently India’s economy continues to grow at a rapid pace, the automobile industry is be
a key beneficiary. This is true in whole automotive markets—from those serving customers
with two-wheelers and four-wheelers to those offering commercial vehicles. The major
determinants behind such growth are the increasing affluence of the average consumer,
overall growth in GDP, the arrival of ultra-low-cost cars, and the increasing maturity of
Indian original equipment manufacturers (OEMs).Automotive Industry in India is
presently working in terms of the dynamics of an open market. In India, automobile sector
is one of the largest growing industries. Many joint ventures have been set up in India with
foreign collaboration. India also has one of the fastest growing economies, and many U.S.
companies view India as a potentially lucrative market. This paper gives an overview of
Indian Automobile Industry.
Keywords: Automobiles, Automobiles Mission Plan
Introduction
Indian auto industry is one the largest in world. Automotive industry is a wide range of
companies and organizations involved in the design, development, manufacturing,
marketing, and selling of motor vehicles. India is emerging as one of the world's fastest
growing passenger car markets. Presently countries has become a fast-growing auto
market over the past two decades. It has witnessed revolutionary changes in management
systems and manufacturing innovations of the world automotive industry. Easy
availability of finance and rising income levels are motivating the middle class population
to choose from the vast range of passenger vehicles.
Indian automobile sector is one of its most vibrant industries. Industry accounts for 22 per
cent of the country’s manufacturing gross domestic product (GDP). It comprises passenger
cars, two-wheelers, three wheelers and commercial vehicles. Presently it is the seventh-
largest in the world with an average annual production of 17.5 million vehicles, of which
2.3 million are exported. According to the Society for Indian Automobile Manufacturers
(SIAM), the automobile industry has already invested Rs.70,000 crores in the past four
years in building new factories, adding fresh capacity and bringing out new products. The
auto components industry too is gearing up to compliment the vehicle industry’s growth.
About $6 billion has been invested in the past 4 years according to Automotive
Component Manufacturers Association of India (ACMA)1.
The Indian auto industry has been showing tremendous growth over the years and has
emerged as a major contributor to India’s gross domestic product (GDP). Presently
industry accounts for almost 7.1 per cent of the country’s GDP, 26% of overall GDP and
49% of manufacturing GDP and employs about 29 million people both directly and
indirectly and contributes to 13% of excise revenue for the Government2. In April-March
2016, overall automobile exports grew by 1.91 per cent. PV, Commercial Vehicles (CV),
and Two Wheelers (2W) registered a growth of 5.24 per cent, 16.97 per cent, and 0.97 per
1
Automotive Component Manufacturers Association of India (ACMA).
2
Society of Indian Automotive manufacturers (SIAM) analysis

2. cent respectively in April-March 2016 over April-March 2015. In addition, several
initiatives by the Government of India and the major automobile players in the Indian
market are expected to make India a leader in the two wheeler and Four Wheeler market in
the world by 20203.
Present Scenario Indian Automobile Industry
Through Indian automotive industry has its genesis in the 40’s, it has seen considerable
growth in the last two decades mainly due to economic liberalization including 100% FDI
in the sector. Global auto and component manufacturing companies are motivated to
establish manufacturing and research & development facilities in the country due to
availability of large pool of skilled workers, low production costs, faster design and
development process and emerging market status. Presently, there are more than 30 OEMs
offering more than 75 options in all categories of vehicles. India’s automotive industry is
the world’s sixth largest producer of automobiles in terms of volume and value and has
grown 14.4% in the last decade. The industry contributes 7.1% to India’s GDP, 7-8% of
the total employed population (about 13 million people), 4.3% of exports, 39% of FDI
inflows (USD 5.5 billion between and contributes 17% to total indirect taxes collected.
Overall domestic sales are led by passenger vehicles (15.1%) and commercial vehicles
(4.45%). In the last five years there has been an overall growth in automobile production.
However, in global terms, even with export earnings of 4 billion USD (including 1.8
billion USD as exports of auto component sector), the automotive sector contributes only
2.37% of world production and is ranked a low 26th in rank in world auto export market
with a share of 0.53%. The Indian auto industry is one of the largest in the world. The Two
Wheelers segment with 81 per cent market share is the leader of the Indian Automobile
market owing to a growing middle class and a young population. Moreover, the growing
interest of the companies in exploring the rural markets further aided the growth of the
sector. The overall Passenger Vehicle (PV) segment has 13 per cent market share.4
India is also a prominent auto exporter and has strong export growth expectations for the
near future. In April-January 2016, exports of Commercial Vehicles registered a growth of
18.36 per cent over April-January 2015. In addition, several initiatives by the Government
of India and the major automobile players in the Indian market are expected to make India
a leader in the Two Wheeler and Four Wheeler market in the world by 2020.5
Automotive Mission Plan 2016-266
The Automotive Mission Plan 2016-26 (AMP 2026) is the collective vision of
Government of India (Government) and the Indian Automotive Industry on where the
Vehicles, Auto components, and Tractor industries should reach over the next ten years in
terms of size, contribution to India’s development, global footprint, technological maturity,
competitiveness, and institutional structure and capabilities. AMP 2026 also seeks to
define the trajectory of evolution of the automotive ecosystem in India including the glide
3
"Automotive Industry in India". www.ibef.org. Indian Brand Equity Foundation, February 2017
4
“Automotive Mission Plan 2006-2016 – A Mission for Development of Indian Automotive
Industry”, Ministry of Heavy Industries & Public Enterprises, Government of India.
http://dhi.nic.in
5
“Automotive Mission Plan 2006-2016 – A Mission for Development of Indian Automotive
Industry”, Ministry of Heavy Industries & Public Enterprises, Government of India.
http://dhi.nic.in
6
Automative Mission Plan 2016-2026

3. path of specific regulations and policies that govern research, design, technology, testing,
manufacturing, import/ export, sale, use, repair, and recycling of automotive vehicles,
components and services.
AMP 2026 is a document that is aimed at multiple stakeholders in India and overseas, and
seeks to communicate the Government and industry’s intent and objectives pertaining to
the Indian Automotive industry, comprising the automotive vehicle manufacturers, the
auto-component manufacturers and tractor manufacturers who operate in India.
The automobile industry in India has received extensive government support and this has
encouraged a lot of foreign direct investment in the industry. The government permits
100% foreign direct investment in this industry and it is fully delicensed making it easy for
investors to penetrate it and set up shop in India. Additionally, there are also tax incentives
and investors can actually export the automobiles for free.
Stable Economy: Many experts predict that the future of the automobile industry in India
is bright. However this is subject to the economic stability of the country and currency
inflation rates. Economic stability and low inflation will increase incomes for majority of
Indians and raise the domestic consumption of automobiles in the country.
Automobile Companies in India
Following are the Top Automobile Companies in India. Out of them few are to be
mentioned in this paper. Audi, BMW, Cheverolet, General Moters, Hindustan Moters,
Hyundai, Mahindra & Mahindra, Maruti Udyog, Skoda, Fiat, Ford, Mercedies (Daimler
Chrysler) are the top leading automobiles industries in the world.
They have their own contribution in the whole GDP of the world and in the automobile
industry.
Fig.1Reasons for the changing in Automobile Industry
Market Size: India’s automobile industry has grown largely due to its large market size.
The industry has had its fair share of both local and foreign consumers leading to higher
production levels. The growing domestic income is expected to make motor vehicles more
affordable for local consumers so increase the domestic market size for India’s automobile
industry. The sales of PVs, CVs and 2Ws grew by 9.17 per cent, 3.03 per cent and 8.29 per
cent respectively, during the period April-January 2017.
Research & Development: There have been many research and development initiatives,
both private and governmental. The government started the Automotive Component
Manufacturers Association of India (ACMA) which is an apex body that deals with the

4. automobile industry in India. This body looks into matters such as upgrading of
technology in the industry, collecting information on industrial events and trends as well as
disseminating this information to relevant stakeholders. The body does this through
research and also promotes trade in both domestic and foreign circles. For example the
Mahindra and Mahindra research center for electric vehicles in India.
Competition: There are many investors from all over the world who are part of the
automobile industry in India. This has created competition amongst several renowned
brands of automobiles. The competition has in turn led to economies of scale with most
companies working hard to meet the demands of both domestic and foreign consumers.
Investments: In order to keep up with the growing demand, several auto makers have
started investing heavily in various segments of the industry. The industry has attracted
Foreign Direct Investment (FDI) worth US$ 15.79 billion during the period April 2000 to
September 2016, according to 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:
• Electric car maker Tesla Inc. is likely to introduce its products in India sometime in
the summer of 2017.
• Several automobile manufacturers, from global majors such as Audi to Indian
companies such as Maruti Suzuki and Mahindra & Mahindra, are exploring the
possibilities of introducing driverless self-driven cars for India.
• JustRide, a self-drive car rental firm, has raised US$ 3 million in a bridge round of
funding led by a group of global investors and a trio of Y Combinator partners,
which will be utilised to amplify JustRide’s car sharing platform JustConnect and
Yabber, an internet of things (IoT) device for cars that is based on the company’s
smart vehicle technology (SVT).
• Ford Motor Co. plans to invest Rs 1,300 crore (US$ 195 million) to build a global
technology and business centre in Chennai, which will be designed as a hub for
product development, mobility solutions and business services for India and other
markets.
• General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase
the capacity at the Talegaon plant in Maharashtra from 130,000 units a year to
220,000 by 2025.
• FIAT Chrysler Automobiles has recently invested US$280 million in its
Ranjangaon plant to locally manufacture Jeep Compass, its new compact SUV
which will be launched in India in August 2017.
Review of Literature
Various studies shows that automobile companies are give up due to weightage the desires
of buyers , after sale services, customer relationship management, dealer satisfaction and
supply chain management and logistics management.
Customer Relationship Management
Customer relationship management (CRM) is increasingly siognificant to firms as they
seek to improve their profits through longer-term relationships with customers. In recent
years, many have invested heavily in Information Technology assets to better manage their
interactions with customers before, during and after purchase (Bohling et al., 2006). Still,
measurable returns from IT investment programs rarely arise from a narrow concentration

5. on IT alone, with the most successful programs combining technology with the effective
organization of people and their skills (Bhardwaj, 2000; Piccoli and Ives, 2005). It follows
that the greater the knowledge about how firms successfully build and combine their
technological and organizational capabilities, the greater will be understanding of how
CRM influences performance. Although the market for CRM software and support is
strong that remains considerable skepticism on the part of business commentators and
academics as to its ultimate value to the corporation and customers (Maoz et al., 2007).
Surveys of IT executives in the business press report that CRM is an overhyped
technology and some academics claim the concept is fundamentally flawed because CRM
ignores the reality that many customers do not want to engage in relationships (Dowling,
2002; Danaher et al., 2008).7
Abhijeet Singh (2011), stated that 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.
Susan Suffes (2006), discussed that Audi (UK), a leading manufacturer in the prestige
automobile market implemented CRM successfully and this helped Audi to develop a
model to drive growth and engineer a dramatic turnaround by creating a superior customer
experience.
Profitability and Sales Services
Cusumano, Steve and Suarez (2008), analyzed that in many product oriented industries,
services have become increasingly significant. In case of automobiles, many automakers
generate the vast majority of their profits from a service activity closely tied to their
product activity. The automobile industry overall generates a large portion of its profits
from other product-related service activities such as insurance and repairs. The researchers
stated that despite the seeming importance of services, there is not much theory to help
researchers or practitioners to explain the circumstances under which services matter in
product industries. The general view that emerges from the services literature is that
services tend to become important for manufacturing firms once their industries reach a
mature stage.
Mona J Fitzsimmons (2010), observed that the profitability of automobile manufacturers
depends on exploiting value added services for instance automobile manufacturers have
discovered that financing and after sales service can achieve significant profits.
V.G. Ramakrishnan (2003), explained that the vehicle servicing business in India is
undergoing a transformation. Previously, the servicing needs of the vehicles were
undertaken mostly by roadside mechanics and a few organized workshops. Companies
need to focus on building a chain of authorized service stations covering the entire country
to service its vehicles. As the competition in the market has intensified and profit margins
squeezed, companies need to view servicing as a money spinner for the entire operation. In
the recent years, other players have entered in the field and the creation of national chain
of organized workshops is underway and that is likely to change the nature of vehicle
servicing market in India
7
University Journal of Research, 1(1), 2015 published by Ganpat University

6. Sales and Demand
Kahl and Suarez (2008), discussed that existing models of industry lifecycle evolution
tend to focus on changes in the products and processes and largely overlook the dynamics
of services, but increasingly, the revenues of many firms are becoming dominated by sales
of services rather than products, or products sold with services to gain competitive
differentiation in markets marked by increasing product commoditization.
Julka and Modi (2011), stated that On the basis of emergent automobile trends, NMCC
(2006), observed that competitiveness of manufacturing sector is broad, multidimensional
concept that embraces numerous aspects such as price, quality, productivity, efficiency and
macro-economic environment. Presently Indian Automobile manufacture are providing a
wide variety of transportation solutions across different levels. There is a drastic growth in
sales and distribution setup which enables an automobile company to play a vital role.
Automobile manufactures have clearly committed themselves to supply the market with
ever safer and more environment friendly products.8
Opportunities in Indian Market
A growth in any industry presents an opportunity to shape a market for long-term
prosperity. Motorbikes, the prime driver of two-wheeler growth, carry fairly high margins
in a rapidly growing market. High-value sports and luxury motorbikes boast fat margins,
too, yet global market leaders such as Harley-Davidson, BMW, and Ducati are not
aggressively investing in the Indian market, which leaves an opening for domestic
manufacturers. Sales of lower-margin scooters have increased somewhat, whereas sales of
mopeds, with the thinnest margins, have declined. Mainstream consumers use two-
wheelers for personal or family transport. New engine technologies that increase
horsepower while maintaining the high fuel efficiency of the four-stroke engine have
strong potential to further boost sales. To sustain
sales growth, manufacturers, dealers, and consumer finance groups must work together to
build innovative financing options for consumers.
The four-wheel passenger vehicle market has grown impressively at the hands of the new
middle class, although market penetration remains low. Four-wheel automobiles are still
too expensive for the vast majority of Indian motor vehicle buyers, although the Tata Nano
and other Sub-A segment automobiles will bridge a significant gap in the automotive
ladder.
While the small-car market continues to develop, local players like Tata and Maruti are
also aggressively pushing into the compact and entry midsize segments. The entry midsize
market represents particularly fertile ground, expected to grow 27 percent over the next
five years. At present, the Honda City, Hyundai Accent, and Maruti Esteem are the leading
models in this segment. To become a global player in small cars for both domestic and
export markets, Indian manufacturers will need new innovations in power-train and
manufacturing technologies to drive down costs and compete with two-wheelers.
There are opportunities on the cost side of the entry midsize segments as well, as
automakers utilize India’s worldclass engineering and low-cost manufacturing labour.
Global OEMs now have an opportunity to develop cars in India and even manufacture
them for export to the Western markets. Even in a moderate economic scenario, we expect
the four-wheel passenger market to reach at least 2.5 million units by 2015. India’s
8
Tapasya Julka, Sakshi Modi, Rising Indian Automobile Industry:Looks Do Matter!, International
Journal Of Education and Information Sciences, Vol.1, No.2, 289-296, (december 2011)

7. commercial vehicle industry, although one of the largest in the world, is nascent by
Western standards. Only 20 percent of the nation’s commercial vehicles are in fleet
ownership, compared with about 70 percent in the Western markets. An increase in fleet
ownership will make the market more regulated, more consolidated, less price sensitive,
and more apt to be driven by economics than by emotion.9
Prospects of Indian Automobile Industry
Indian automotive market is full of tremendous opportunities and is capable of scaling to
greater heights.10 Some of the technology drivers for car sales are as follows:
1. Connected Cars: Connected cars and infotainment are the future. Auto manufacturers
are increasingly focusing on connected cars to significantly advance the driving experience
of drivers. A connected vehicle could also have Predictive Diagnostic Tools to check
vehicle’s health and accordingly warn the driver in case there are any issues with the
vehicle, eliminating any unexpected breakdowns. With additional features like parking
assistance, driver warning systems, weather and traffic reports, and music streaming,
connected cars promise to make driving more safe, convenient and enjoyable. However,
this trend is not restricted to passenger vehicles alone and is applicable to public
transportation as well.
2. Intelligent Public Transportation: State transport buses funded under the Indian
government’s JnNURM II (Jawaharlal Nehru National Urban Renewal Mission) program
are required to have On-Bus Intelligent Transport Systems. The first ARAI approved
(ITS), which is compliant to JnNURM II standards has been recently developed and
launched by KPIT. The On-Bus (ITS) comes with features like automatic vehicle location,
vehicle health monitoring and diagnostics along with backend support from KPIT via
cloud and remote diagnostics. The console displays information about the passengers,
routes and vehicle health, ensuring the safety and security of both the bus driver and
passengers.
3. Green Cars: Indian Government is on a serious mission to go green. Continuous
increasing in fuels costs and pollution levels are some of the reasons for this endeavour. In
fact, the India National Electric Mobility Mission Plan 2020 envisages that by 2020, there
will be 5-7 million electric vehicles (EVs) on the roads. There has also been a conscious
shift by auto manufacturers to move towards energy efficient vehicles and hybrid/ electric
vehicles.
4. Cloud and Big Data: Indian auto industry has usually carried out processes for
marketing and sales manually. Cloud and big data has the potential to not just bring in
operational efficiency in the automotive functions but also drive down IT applications and
infrastructure costs. Adopting cloud-based solutions will enable Indian auto manufacturers
to standardize processes and automate data-heavy transactions that come in the form of
invoices, purchase orders and shipping notices, and so on, thereby eliminating delays and
human errors.
9
Booz & Co’ India Automotive Market, 2020’ in Delhi 2011
10
Society of Indian Automotive manufacturers (SIAM) analysis

8. Challenges : Indian Automobile Industry
Indian Automobile Industry faces more tremendous opportunities and also great
challenges. These challenges should be overcome and the challenges are follows:
• Low Research &Development: In India Research and Development program is in
automotive sector is very low compared to other countries.
• Fuel Price Volatility: It is one of the major factor. As price of fuel increases, rate
of vehicle purchasing decreases.
• Slowdown in Demand: There is slowdown in demand of vehicles India due to
high price of vehicles.
• Skilled Manpower: Auto industry, like many other industries is facing severe
shortage of skilled technical as well as managerial manpower. This challenge
becomes all the more daunting because of lack of adequate training infrastructure.
There is also an urgent need to improve the quality of skilled and semiskilled
manpower working in the auto industry.
• Growing Competition: There is fierce competition among the automobile players
in India. Everyone wants to have a share in the domestic market. Manufacturers’
margins have been squeezed severely and they are all under pressure to cut costs to
be profitable and competitive.
• Taxation Complexity: Tax laws in India are believed to be one of the most
complex laws across the globe. The complexity is due to a plethora of associated
processes.
• Infrastructural Constraint Land Acquisition Norms, Processes, and
Timelines: Due to lack of proper implementation of standardized processes
relating to land acquisition as well as difficulty in approaching the concerned
department/ ministry/organisation or at the right time, it becomes difficult to
acquire required land and other challenges includes Environmental issue, changing
customer preferences, growth in input cost.11
CONCLUSION
The automotive industry is at the core of India’s manufacturing economy. India is
positioned to become one of the world’s most attractive automotive markets for both
manufacturers and consumers. The resulting benefits to society—in economic growth,
increased jobs, and stability for families employed by the automotive industry are
considerable. All in all, India is set to become one of the biggest automobile industry in
coming time.
Suggestion
Poor Road Infrastructure
India's road network, comprising of a modest national highway system is unhappily
insufficient and decrepit, and can barely keep pace with the auto industry's rapid growth.
Traffic laws are not well enforced leading to one of the highest per-capita accident rates in
the world. It is to be expected that the introduction of bigger and more powerful vehicles
11
A Review: Present Indian Automobile Industry, MIT International Journal of Mechanical
Engineering, Vol.5, No. 1, January 2015, 30-36

9. will only worsen the situation. Upgrading the existing highway system is itself expected to
cost $30 billion or more, and resource and land constraints prevent the building of new
highways. The Indian government's approach to solving this problem is to privatize the
road infrastructure, by having private firms build and operate toll ways
Sustaining the Growth Rate
There is a potential for much higher growth rate in the domestic market due to the fact that
current penetration level in India is just 7 car per thousand persons. The increase in
purchasing power in top stratum of about 300 million people of the country where the per
capita income of the country is above USD 1000 implies that passenger car growth in the
domestic market is on the verge of a major and sustained boom.
Need for Innovation
The competitiveness in the sector will largely depend on the capacities of the industries to
innovate and upgrade. The industry will definitely be benefited if it has strong domestic
competition, home based suppliers and demanding local customers. It is a crucial fact that
labour cost, duties, interest rate and economies of scale are the most important
determinants of competitiveness. But the productivity and capacity utilization are the
prime determinants of the competitiveness and influence the national per capita income.
The following are so other challenges faced by Indian automobile industry
• Increasing Competition & WTO Regime
• Cyclicality of businesses
• Increasing customisation & Application Proliferation
• Accelerated Infrastructure development
• Stiff Emission & Other Regulatory changes
• Operating Cost Pressures
• Increased Customer awareness
• Accelerated Technology up gradation requirements & other Change needs12
Consumer Sentiment Index
Customer Sentiment Index, 12 month rolling average of the Index; historical and forecast
data and analysis. The end customers are very important to ensure the survival of the
Motor Vehicle Manufacturing industry. Economic downturns and other events can affect
the expenditure decision of households. When customers are not happy or optimistic about
the future of the economy, they will tend to postpone expenditure until times are better
Domestic Goods Price Metal/ Iron and Steel
Steel is a major input used when manufacturing a motor vehicle. Rises in the price of steel
puts cost pressures on manufacturers, which often leads to a fall in profitability. Over the
past five years, the price of steel has been rising rapidly. These rises in price eventually
pass from the manufacturers to the end customers13
12 Prof. Sarbapriya Ray, ECONOMIC PERFORMANCE OF INDIAN AUTOMOBILE INDUSTRY: AN
ECONOMETRIC APPRAISAL, The Business Intelligence Journal, (151-162), January 2012
13
M. Krishnaveni* and R. Vidya, Growth of Indian Automobile Industry, International Journal of
Current Research and Academic Review, Vol.3 No.2, (February 2015), www.ijcrar.com

10. References
• Automotive Component Manufacturers Association of India (ACMA).
• Society of Indian Automotive manufacturers (SIAM) analysis
• "Automotive Industry in India". www.ibef.org. Indian Brand Equity Foundation,
February 2017
• “Automotive Mission Plan 2006-2016 – A Mission for Development of Indian
Automotive Industry”, Ministry of Heavy Industries & Public Enterprises, Government
of India. http://dhi.nic.in
• Julka, Modi (2011), Rising Indian Automobile Industry:Looks Do Matter!,
International Journal Of Education and Information Sciences, Vol.1, No.2, 289-296
• Booz & Co’ India Automotive Market, 2020’ Delhi 2011
• Society of Indian Automotive Manufacturers (SIAM) Analysis
• Prof. Sarbapriya Ray, Economic Performance Of Indian Automobile Industry: An
Econometric Appraisal, The Business Intelligence Journal, (151-162)
• M. Krishnaveni* and R. Vidya (2015), Growth of Indian Automobile Industry,
International Journal of Current Research and Academic Review, Vol.3 No.2,
(February 2015), www.ijcrar.com
• Automative Mission Plan 2016-2026
• A Review: Present Indian Automobile Industry, MIT International Journal of
Mechanical Engineering, Vol.5, No. 1, January 2015, 30-36