24-11-2012, 05:10 PM
Indian Automobile Industry
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Intorduction:
Indian automobile industry has grown leaps and bounds since 1898, a time when car touched the Indian streets for the first time. Now it is the one of the major industrial sector in India.Subsequent to the liberalization , the automobile sector has been aptly described as the sunrise sector of the Indian aconomy as this sector has witnessed tremendous growth. It contributes about 4% in India’s GDP and 5% in India,s industrial production. This sector has generated about 4.5 Lack of direct employment and about 1 crore of indirect employment.
The Indian automobile segment can be divided into six segments . two-wheelers (motorcycles, geared and ungeared scooters and mopeds), three wheelers, commercial vehicles (light, medium and heavy), passenger cars, utility vehicles and tractors.
At present it holds a promising tenth position in the entire world with being No. 1 in Two wheelers and No. 4 in commercial vehicles.According to the industrial policy 1991 no industrial licence is required for setting of any unit for manufacture of automobiles except in some special cases.Now 100% Foreign Direct Investments permissible.The technology on royalty payment of 5% without any duration limit.
Given the breadth of the automotive industry (from backward linkages to raw materials such as metals and logistics to forward linkages with dealerships and gas stations), it is one of the largest industries by manpower, directly or indirectly employing managers, scientists, mechanics, technicians, salespeople and marketers, amongst others.
Current scenario:
The cumilative production data for April ’09 to January 2010 shows production growth of 23.07 percent over same period last year. Passenger vehicle segment during April ‘09 – January ’10 grew at 25.2% over same period last year.Passenger cars grew by 24.75 %. Utility vehicles grew by 21.95 % multi purpose vehicles grew by 37.05% in this period.Three wheeler growth of 25.77%.
Auto component industry supports industries likeautomobiles, machine tools, steel, electrical , electronics, forgings and machining.
India has also emerged as an outsourcing hub for auto parts for international companies such as Ford ,General motors ,Fiat, Volkswagon and Toyota.During the year 2008-09 the turnover and export for auto component industry was recorded at US $3.11 billion respectively to U.S. and other countries in international market at high prices. The automobile sector is also playing very vital role in growth of Indian economy. The increasing demands of bikes, cars and various heavy vehicles for transport and carriage purpose respectively are very essential requirement for today's business era and especially then, when we are facing big challenges by mode of competition in the era of globalization. If we go through the concept of National Income and considering the per-capita-income of Indians, we are getting that it is increasing in a speedy and in proper growth oriented way.
Automobile exports of India:
While India has managed to be the 7th largest producer of vehicles in the world but it remains a small player in the global market, observed FICCI Study on Indian Automobile Exports. The share of India in global automobile exports is a meager 1% in 2009 and India ranks 22nd in automobile exports falling behind countries like Thailand, China, Mexico, Argentina, Brazil and Turkey, noted FICCI Study. Despite this, Indian automobile industry is confident of achieving its export target of $12 billion 2013-14 itself, which will be good two years ahead of the target year of 2016 laid-out in Automotive Mission Plan 2006-16. Currently, India exports $ 4.5 billion of automobiles which include tractors, passenger vehicles, commercial vehicles and two-wheelers.
Share of India in global exports was 1% in 2009, whereas that of Japan, the largest exporter of automobile, the share was around 19%. Some of the other major countries ahead of India in automobile exports are UK, USA, Germany, Italy, Netherland, South Korea and Canada. FICCI said that there is a need to revisit the targets set in Automotive Mission Plan and perhaps there is also a need to scale-up the targets in the background of robust growth of this industry in last few years. Government should aim at achieving a share of at least 3% within the Automotive Mission Plan (AMP) by 2016, FICCI pointed-out. As per the AMP, Indian automobile industry aims to achieve an output level of $145 billion by 2016, which would imply a domestic market of $82-119 billion and export market of $ 12 billion. Indian automobile exports have been growing at a CAGR of more than 25% in last 5 years and with this rate of growth it will achieve a size of $17.7 billion by 2016. In terms of segments, FICCI study observed passenger vehicles.
Growth Potential:
The automotive industry remains one of the highest revenue-earning industries in India and contributed over 5% to India’s GDP in 2009, providing direct and indirect employment to more than 13 million people. The market outlook for the industry remains promising, especially in the small car segment. The Indian automobile market is currently dominated by the two-wheeler segment but with an expanding middle class population, growing earning power and industrial development, the demand for passenger cars and commercial vehicles will increase exponentially.
Also, the low vehicle presence (with passenger car stock of only around 11 per 1,000 population in 2008) indicates a very low base with significant growth potential. As per ‘Just-Auto’ analyst reports, sales of passenger cars in 2008-2016 are expected to grow at a CAGR of around 10%.
In addition to increased domestic demand, there is also likely to be increased investment by global auto manufacturers to India due to its strong technological capability and availability of trained manpower at competitive prices. Currently, the foreign auto companies with assembly plants in India include, General Motors, Ford, Hyundai, Honda, Suzuki, Nissan Motors, Toyota, Volkswagen, Audi, Škoda, BMW, Fiat and Mercedes Benz.