ECONOMICS PROJECT

GROWTH OF CAR INDUSTRY IN INDIA

SUBMITTED BY:YASH JAIN-171 VIKAS TRIPATHI-167 VINOD KUMAR-168 VIVEK DUBEY-170 VIPUL GANGWAR-169

SUBMITTED TO:Prof.R.K.OJHA

INTRODUCTION

Industry analysis is finding of data, relevant to specific industry. This project is a written presentation with observation and references derived from the secondary data. The report starts by giving an industry profile, internal view about the companys production, sales, demand, market structure. In order to achieve the objective and better under stand the growth of industry, it was decided to collect the secondary data concerning to particular industry.

ACKNOWLEDGEMENT

We express my sincere gratitude to Mr.R.K.Ojha, whos consistent guidance helped me in completing this project. we would also like to thank my friends to help me in making this project and we would like to thank Google and Siam for providing us with valuable information about the industry and its major players.

INDUSTRY OVERVIEW
As per the history of Automobile Companies in India, in the late 1890's Tata Motors launched its first truck in India. It was done in collaboration with Mercedes-Benz. Though automobiles were introduced to India in the late 19th century, it was only after the Indian independence in 1947 that India started manufacturing automobiles. Some of the early Automobile Companies in India are:
Hindustan Premier Tata

Motors

Automobiles

Motors Suzuki

Maruti

Sanjay Gandhi was the first Indian politician who championed the need for a "people's car". Thus the state-owned firm, Maruti Udyog, was launched and gained over 50% market share. After the liberalization in 1991, India's Automobile Industry grew in leaps and bounds. With the growth in the Indian economy, big international car manufacturers like General Motors, Ford, Toyota, Honda, Hyundai, Rolls Royce, Bentley and Maybach entered the Indian market. Earlier in the 1920's Rolls Royce collections was the maharajas status symbol. With time the middle class also started possessing their own automobiles. With the introduction of several automobiles in India, highways or expressways were constructed. The renowned international automakers like Ford, Suzuki, GM and Honda have their manufacturing bases in India. But, Automobile Industry in India is dominated by domestic companies like

Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Ashok Leyland and bajaj auto. Today Indian automotive industry is fully capable in producing various kinds of vehicles.

MILESTONES ACHIEVED

The milestones achieved by the Automobile Companies in India are:

The first automobile in India rolled in 1897 in Mumbai. International players are adding to their investments in Indian auto Cars dominate the Indian passenger vehicle market by 79%. Indias Automobile Industry is the largest three-wheeler market in the The Automobile Industry in India is the fifth largest commercial India is the fourth largest car market in Asia.

industry.

world.

vehicle manufacturer in the world.

MAJOR PLAYERS IN INDIAN CAR INDUSTRY

Fierce competition among the major car players can be witnessed in the Indian Car industry. The following major players are dominating the India car industry:-

Car Manufacturers In India

Hindustan Motors Maruti Udyog Reva Electric Car Co Daimler Chrysler India Fiat India Private Ltd Ford India Ltd General Motors India Honda Siel Cars India Ltd Hyundai Motors India Ltd Toyota Kirloskar Motor Ltd Skoda Auto India Private Ltd AUDI AG BMW CHEVROLET FORCE MOTORS NISSAN MOTOR CO. LTD PORSCHE ROLLS-ROYCE MOTOR San Motors TATA MOTORS Daewoo Motors

CAR STATISTICS IN INDIA

The Indian automotive industry is the 2nd fastest growing in the world. About 8 million vehicles are produced annually in this country toady. During 2005-2006, India has emerged as the 3 rd largest market in the Asia Pacific Region. With various car manufacturing companies setting up their units in different parts of the country, the production of the cars will increase at a very fast rate. The car reports indicate that India will soon become one of the top 10 car manufacturing countries , leaving behind the U.K. Car statistics also show that by the end of the fiscal year 2006-2007, the car production capacity in India will exceed the mark of 2 million. Thus, the production of cars will increase by 70% from the present capacity of 1.2 million. The Indian automotive industry is the 2nd fastest growing in the world. About 8 million vehicles are produced annually in this country toady. During 2005-2006, India has emerged as the 3 rd largest market in the Asia Pacific Region. With various car manufacturing companies setting up their units in different parts of the country, the production of the cars will increase at a very fast rate. The car statistics indicate that India will soon become one of the top 10 car manufacturing countries , leaving behind the U.K. Car statistics also show that by the end of the fiscal year 2006-2007, the car production capacity in India will exceed the mark of 2 million. Thus, the production of cars will increase by 70% from the present capacity of 1.2 million. The domestic sale of passenger cars have increased significantly over the years. A graphical representation of the domestic sale of cars will give you an insight about the present market situation prevailing in the country: In the recent years, India has emerged as one of the major bases for manufacturing small passenger cars. At In the recent years, India has emerged as one of the major bases for manufacturing small passenger cars. At present the Indian automotive industry boasts of being the 3 rd largest manufacturer of small cars . According to the car statistics almost 70 % of the cars sold in this country come under the segment of small cars. A number of car manufacturers like: Maruti Udyog, Tata Motors, Hyundai, Honda, Ford, Hindustan Motors, Fiat, General Motors etc offer various new model of cars now and then. It is expected that the various automobile manufacturers will be investing about $ 5 billion in India, between 2005-

2010.Some important statistics about cars also include car insurance

Types of Vehicle 2002-03 2003-04 2004-05 2005-06

Passenger Vehicles Utility Vehicles Multipurpose Vehicles Total

557400 782550 960480 1045880 114470 146330 182020 196380 51450 60670 67370 66665 723320 989550 129870 1308925

statistics, auto insurance statistics, auto accident statistics and car crash statistics. All these data and statistics help in framing the state policies and issuing the guidelines to different auto manufacturers and dealers. As per the car reports , export of passenger cars from India have also grown considerably over the last decade. A graphical representation of car export trend will help you to make an in-depth analysis of the present status of the Indian automotive industry: With new strategies being implemented and more investments being made in Indian automotive industry the production as well as the domestic sale and exports will increase substantially.

CAR PRODUCTION IN INDIA

Indian Market Analysts are jubilant over the fact that India has the fastest growing automobile industry (passenger cars segment) in the world today. This is seen as the result of rapid increase of middle-class population in the country combined with the government's pro-development policies. The findings of International Organisation of Motor Vehicle Manufacturers revealed that in India the car production had grown to 30% in 2004, thus leading the table, Brazil came a distant second with the increase of 17%. The table below attempts to capture in figures the rapid growth of production of automobile Sector in India:-

CAR SALES IN INDIA

India is fast emerging as an important market for cars. In terms of its car market, India ranks third in Asia having recently displaced South Korea from the position. The car sales India have almost doubled in a span of 4 years.
The following chart explains the growth of India Car Sale during the aforementioned period:Passengers Vehicles (PVS) From April-From April-Total MarketThe November 08-November 08-Share (in %) Change 09 09 between period (in %) Maruti Udyog Hyundai Motors India Ltd. Tata Motors HondaSiel cars India Ltd. Ford India Pvt. Ltd 2,69360 89,075 95,402 23,186 15,026 2,91,182 1,07, 066 24,348 24,348 10,512 52.2 19.2 16.6 4.4 1.9 8.1 20.2 -2.7 5.1 -30% 23,043 68,374 12,105 31 9,928 NetTotal number of exports in theApril 08-09

Utility Vehicles Mahindra and Mahindra Ltd. 49,897 Toyota Ltd. KirloskarMotorPvt24,404 19,967 51,540 24,983 21,610 12,027 42.7 20.7 17.9 10 3.3 2.4 8.2 71.6 1,878 0 905 0

Tata Motors Ltd

General Motors India Pvt Ltd. 7,008

Maruti Udyog Ltd . Hyundai Motor India Ltd. Multi-Purpose Vehicles Maruti Udyog Ltd. Mahindra & Mahindra Ltd Medium and Commercial Vehicles Tata Motors

2682 255

2472 1,042

2 0.9

-7.8 308.2

54 0

42,388 13

43,858 0

100 0

3.5 0

731 0

Heavy 79,614 27,577 8,043 3,573 73,538 33,406 8,700 4,080 61.1 27.7 7.2 3.4 -7.6 21.1 8.2 14.2 4,807 2825 318 115

Ashok Leyland Eicher Motors Swaraj Mazda Light Commercial Vehicles Passenger Carriers Tata Motors Mahindra and Mahindra Swaraj Mazda Force motors Ltd. Goods Carriers Tata Motors Mahindra and Mahindra Swaraj Mazda Eicher Motors

5,835 2,305 1,178 2,059

6,811 1,960 1,315 2,877

46.8 13.5 9 19.8

16.7 -15 11.6 39.7

1,096 115 12 59

30,955 23,563 2,671 3,019

44,380 23,731 2,299 2,954

58.9 31.5 3 3.9

43.4 0.7 -13.9 -2.1

12,461 1,600 204 451

CAR DEMAND IN INDIA

When the industry was deregulated in 1993, the global carmakers chose to operate in the high price-high value segment. However, the strategy did not work as the market for premium and luxury vehicles in India was not large enough. MUL was entrenched in the low price-low value segment, and given its scale economies, it could not be dislodged. In the latter half of the 1990s, foreign car manufacturers changed their strategy. It was still difficult to remove MUL from its market leadership in the dominant low price-low value segment as scale economies formed the basis of competition in this segment. Thus, the global players changed the price-value equation by offering superior value at a price that was still higher than that of the Maruti 800 and Omni, but significantly lower than of the cars in the high price-high value segment. The process gained momentum in FY2000 when the growth in the car market was led by the Compact segment. Although the compact segment now accounts for 65% of domestic sales of passenger cars, in recent years, the mid-size segment has captured a rising share of the market, and since 2004, sales in the mid-size segment have exceeded sales in the minisegment. The growth in this segment has been led by new launches, lower prices, and the significant success of four models - MUL's Esteem, Honda's City, HMIL's Accent, and TML's Indigo. Introduction of stripped down versions of the vehicles in the Mid-size segment, attractive pricing by manufacturers (who also offer sales incentives) coupled with lower rate of interests and easy availability of finance have facilitated the growth of this segment.

VARIED CAR MARKETS IN INDIA

The market for small cars now occupies a substantial share of 70% out of the annual production of 1 million cars in India. Maruti Udyog, with its legendary Maruti -800 is the leader in the small car market. A number of manufacturing plants are coming up for advancements in the field of small cars. The recent launches in the small car market in India are:

Getz Prime by Hyundai Motor Co. Tata Magic by Tata Motors Tata Magic Palio Stile byFiat India Pvt. Ltd

Mid-sized cars are normally cars ranging from Rs. 3-8 lakh and generally meant to be 4 seaters. The mid-sized car section has recently moved beyond the 1 lakh target. The recent launches in the mid-size car market in India are:

1.4 SXI Duratorq by Ford Motor Co. Indigo XL by Tata Motors

Luxury cars and premium cars are quite expensive and they are purchased for their design, innovation, and technology. They are usually priced over Rs. 20 lakh and have many takers in India. The recent launches in the premium car market in India and the luxury car market in India are:

Sonata Embera H-Matic by Hyundai Motor Co. Nissan Teana by Nissan Motor Co. Ltd

Sports Utility Vehicles (SUVs) have also become very popular in India as they are considered advantageous due to their ability to accommodate more passengers. They are ideal for trips with the whole family. The Sport Utility Vehicle market in India is the most booming market in India presently and SUVs have become the fastest selling cars of India.

ELASTICITY
Price Elasticity:-In car industry of India price elasticity matters a lot as India is a mixed bag of consumers and buyers, every class of people exist in it. As the price of the car increases the demand for it also decreases, a car comes under a luxury good as its elasticity is greater than 1it is highly elastic. Therefore, the increasing trend of cars, price elasticity does not make a major impact on it. Cross Elasticity:-In car industry of India, cross elasticity plays a major role in it, because in price elasticity price of good affects the demand of other related good. Therefore, as car is a major good and petrol is a related good both are directly related, increase in price of petrol will effect in decreasing demand of a car. Therefore, cross elasticity is a component of car industry. Income Elasticity:-As car is a luxury good, so it is not necessary for everybody to bare the expense of car. Income elasticity is very important factor as the income is directly related to the demand of a good. When the income of the consumer increases the demand of car, also increases more and more consumers gets ready to pay the cost of car, but as the income decreases it simultaneously affect the demand of car. Therefore, income elasticity is another component of car industry of India.

GROWTH FACTORS
The Car industry in India has seen a tremendous growth and seems to be the fastest growing sector in the world. This sector has responded with an exponential progress in the number of new models launched in the last few months. The craze for cars amongst people is growing day-by-day. Hence, all the car manufacturers are giving tough competition to each other by opting innovative and unique ideas to capture the market. India is presently ranked 17th amongst auto car manufacturing countries in the world. Keeping in pace with the ever growing demand for cars, the production of cars has also been high, off late; thanks to a huge export potential and favourable Government policy. Multinational companies have been eyeing at India to set up their manufacturing facilities. According to auto experts and analysts, India is poised to become third largest auto car manufacturing hub in the world by 2020.The major factors for growth of car industry in India is:-

Launch of new technologies in the market such as CRDi, ABS,ESP,Ride control systems etc. Launch of new segments for all class of people. Introducing new concept cars with better enhancements. New price ranges in every segments for different choices of the people. Different companies introduced in Indian markets, with different car types.

CONCLUSION
Thus to conclude we would say, that Indian car industry is really a vast industry. It have large no of competitors with a large no of buyers with all type of choices. Companies are more focusing on the rural markets as the income in rural areas are increasing which in return is growing demands and pushed up sales. Increase in demands and cheap car loans have also pushed up sales of the companies. More and more foreign companies are trying to enter Indian car market because of growing car demand. India is presently ranked 17th largest car manufacturer of the world, more than that it is the biggest emerging market in the world. Indian car market is perfect example of oligopoly, as it is dominated by small no of sellers, decision of one firm influence the decision of other firms.

BIBLIOGRAPHY
SITES
1. 2. 3. 4.

www.google.com www.SIAM.in www.automobileindia.com www.auto.indiamart.com

MAGAZINES 1. Auto India 2. Motoring 3. Auto car India