Assignment on "AUTOMOBILE SECTOR OF ECONOMY”

(SESSION: 2009-2011) ASSIGNMENT ON “AUTOMOBILE SECTOR OF ECONOMY”SUBMITTED TO: PROF.RAVEENDRA DESAI SUBMITTED BY: PRADEEP SAHU (18) AMIT MAITHIL (19) HARSHITA JAIN (20) SALIL SHRIVASTAVA (23) TUSHAR PHOPILI (40) SUNIL PATIDAR (41) SHAILESH PATEL (51) POOJA GUPTA (53) APOORVA KHARE (56) KAMAL SEHWANI (59) INTRODUCTION OF AUTOMOBILE SECTOR  It begins as early as 1769.  The automobile sector is one of the key segments of the economy having extensive forward and backward linkages with other key segments of the economy.  Indian Automobile sales growth rate would be 9.5 % by 2010.  It contributes about 4 per cent in India's Gross Domestic Product (GDP) and 5 per cent in India's industrial production.  This sector has generated about 4.5 lakh of direct employment and about 1 crore of indirect employment.  India holds huge potential in the automobile sector including the automobile component sector owing to its technological, cost and manpower advantage.  India has a well developed, globally competitive Auto Ancillary Industry and established automobile testing and R&D centers.  India enjoys natural advantage and is among the lowest cost producers of steel in the world. KEY PLAYERS Maruti Hyundai Ford Sonalika International Force M&M Skoda Mercedes Benz Volkswagon TATA Honda GM HM Toyota Kirloskar Fiat Audi BMW Mitshubishi THE AUTOMOBILE INDUSTRY IN INDIA        9th largest automobile industry. 2nd largest two-wheeler market. 4th largest in Heavy Trucks. 2nd largest tractor manufacturer. Annual production of over 2.3 million units. The monthly sales of passenger cars in India exceed 100,000 units. 11th largest passenger car market and expected to become 7th largest by 2016.  Sale of passenger cars in India is likely to grow at an average of 14.9% each year to touch 2.1 million marks by 2010. CURRENT SITUATION OF AUTOMOBILE SECTOR  Despite economic slowdown that has affected the automobile industry, production and exports of the sector went up last fiscal, said the Economic Survey 2008-09, and underlined that the industry employs over one crore people.  While the overall automobile production went up by 3 per cent to reach 1.11-crore, exports increased by over 23 per cent to over 15-lakh. The domestic turnover of the sector stood at Rs. 2.19-lakh crore, while exports totaled at Rs. 31,782 crore, taking the total size of the industry to Rs. 2.50-lakh crore during 2008-09. GLOBALIZATION IN AUTOMOBILE SECTOR In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Foreign auto companies with assembly plants in India include, General Motors, Ford, Hyundai, Honda, Suzuki, Nissan Motors, Toyota, Volkswagen, Audi, Skoda, BMW, Fiat and Mercedes Benz. India has overtaken China in global auto exports of compact cars for 2009. Suzuki Motor Corp, Hyundai Motor Co, and Nissan Motor Co are making India a manufacturing hub for small cars. In 2007, India was ranked as the 12th fastest growing market in the world. Presently, India is the 2nd largest two wheeler market in the world and 4th largest commercial vehicle market worldwide. India is the 11th largest market in the passenger car segment globally which is expected to become the 7th largest market by 2016. Tata is all set to take its world trucks to South Africa, Mahindra & Mahindra is taking its Scorpio to US, Tata is developing an European version of its ultra low cost car Nano. China’s largest automaker Shanghai Automotive Industry Corp. (SAIC) announced a collaboration to jointly develop and manufacture commercial vehicles through the Indian unit of General Motors Co. in the Indian market. Hero Group is holding exploratory talks with Malaysian car manufacturer, Proton, for establishing a small car manufacturing facility in India. General Motors Co, US-based automaker, has joined hands with India’s Reva Electric Car Co. to develop a small and affordable electronic car for the Indian market. Foreign Cars sold in India as Completely Built Units                      Audi: A8, TT, R8, Q5, Q7. Bentley: Arnage, Continental GT, Continental Flying Spur, Arnage. BMW: 6 Series, 7 Series, X3, X5, X6, M3, M5, M6 and Z4. Chevrolet: Captiva Fiat: 500. Honda: Civic Hybrid, CR-V. Hyundai: Tucson. Jaguar: XF, XK. Lamborghini: Gallardo, Mucilage. Land Rover: Range Rover, Range Rover Sport, Discovery 4, Friedlander 2. Maybach: 57 and 62. Mercedes-Benz: CL-Class, CLS-Class, S-Class, SL-Class, SLK-Class, M-Class, Viano. Mitsubishi: Pajero, Montero, Outlander. Nissan: Teana, X-Trail. Porsche: 911, Boxter, Panamera, Cayman, Cayenne. Rolls Royce: Ghost, Phantom, Phantom Coupé, Phantom Drophead Coupé. Skoda: Superb. Suzuki: Grand Vitara. Toyota: Camry, Land Cruiser, Land Cruiser Prado. Volkswagen: Touareg. Volvo: S80, XC90. ADVANTAGES OF AUTOMOBILE SECTOR The various advantages of automobile sector are as follows:  The fluctuating price of oil in the world market has helped in the sale of these new vehicles as well as compact cars.  People who once owned SUV’s have also replaced these vehicles with those that have smaller engines.  It help in the annual contribution to the economic growth by 4% to the GDP and accounting for about 5% of the total industrial output  Offers support to other industries such as iron, steel, rubber, glass, plastic, petroleum, textiles, oil & gas, paints & coatings, transportation industries.  Rising foreign investments have led to the rapid growth in terms of automobile production and exports. Overseas companies are making huge investments and are installing extensive production capacities in developing countries.  Continuous investment in research & development has resulted in increased productivity and better quality automobiles, automotive accessories and parts.  Increase in standards of living and purchasing power parity have resulted in the increase demand of automobiles especially four-wheelers in developing nations, mostly in South Asian region.  This sector provides employment to major chunk of human population in the world i.e. 25 million. This industry not only provides millions of jobs to the people, but also produces billions of dollars in terms of worldwide revenues.  Adequate infrastructural facilities in form of power supply, machinery, capital, ready availability of raw materials and labor help in the tremendous growth of this industry.   They contribute 60 % of global production but 25 % of India Production United States automotive industry is strongest in the world. But things have changed. Due to deals and agreements with foreign countries, new cars are competing with the local brands. Since these are cheaper and in some cases better, sales have suffered.  Another advantage of the automotive industry is that it has generated new jobs. The United States just like Japan and Germany have moved manufacturing operations overseas. This is because the cost of labor is cheaper and there is a market for those vehicles in those countries. FUTURE PROSPECT OF INDIAN AUTOMOBILE SECTOR  Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians.  By 2010 India will take over Germany in sales volumes and Japan by 2012  The Indian automobile component industry is estimated to triple from USD 63 billion to USD 190 billion within a span of six years by 2012.  Industry analysts predict this industry to touch USD 13000 million mark by 2010, a cumulative growth of 9.5% annually.  It is said that for every Re 1 spent, the auto sector returns Rs. 2.24 to the Indian economy. HOW ECONOMY LOOK AHEAD  Automobile sector in India has good domestic and outer market to cater.  With the increase in the population in India there will be huge demand of passenger cars in future. According to a survey, till the year 2014-2015 three million units are projected.  It is forecasted that between the years 2008 till 2015 the CAGR of Indian automobile will grow around 10%.  There is huge demand of Indian automobile in other developing country in the world. So there is good market outside India also.  With the increase in the competition in the automobile sector, major players are going to setup their R&D centers in India.  With the enter of the global players like Audi, BMW etc. it is a positive sign for Indian automobile industry. CONCLUSION Automobiles are symbol of economic development and are one of the essential needs of today’s customer. The Indian automobile market has changed tremendously since past few decades and will change even further. Indian automobile industries have blossomed into a great industry since the first car ran on the streets of Bombay in 1898. From the study of the Indian automobile industry we conclude the following things. The Indian automobile sector is one of the key segments of the economy having extensive forward and backward linkages with other key segments of the economy. The forward linkage refers to its customer base, employment it provide and backward linkage refers to its supplier to the industry. According to Ministry of Heavy Industries & Public Enterprise (Government of India) automobile industry contributes about 4% in India’s GDP. These sectors provide 4.5 lack of employment to the people of India. From the study of the Indian automobile industry we have find the following problem in the development of industry.  Due to rise in inflation there is a rise in the price of the vehicles by 3% to 4% because the price of the raw material has gone up.  Inflation has not only affected the production and sale of vehicles but also affected the car dealers and the financers. As they get low rate of margins.  Other problem is due to rise in the fuel prices which can affect the growth of automobile sector. Most of automobile run o diesel, petrol and gas. The rise in the price of this thee fuel will create serious problem in future. SUGGESTION  The government should make reduction in the fuel prices or they should give subsidiary.  To reduce the production cost the automobile maker firms can cut the jobs.  With the entry of global competitors in the Indian automobile industry it has result in advanced technologies in the production and production process which has resulted in reducing the cost of production.  With the development of alternative fuels like electricity, bio-fuel etc. it has result in the evolution of new kind of car called hybrid cars. This will help to neutralize the effect of high fuel price.  Government should also take initiatives regarding tax rebate that can result in the reduction in the price on the vehicles.  India holds huge potential in the automobile sector including the automobile component sector owing to its technological, cost and manpower advantage. REFRENCE Hsu, Jamie C.(2002),Globalization within the auto industry from link http://www.allbusiness.com/management/benchmarking-key-businessprocess benchmarking/219 142-1.html Patrícia Guarnieri, Regina Negri Pagani” (2006), productive agglomerations of suppliers in the automotive industry journal technological management. Innovation”, volume 1, issue 3. http://www.scrid.com/ "2008 Global Market Data Book", Automotive News, p.5 Plunkett Research, "Automobile Industry Introduction" (2008)