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IMT Ghaziabad
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1.Introduction
The automobile industry is one of Indias most vibrant and growing industries.
This industry accounts for 22 per cent of the country's manufacturing gross
domestic product (GDP). The auto sector is one of the biggest job creators,
both directly and indirectly. It is estimated that every job created in an auto
company leads to three to five indirect ancillary jobs.
India's domestic market and its growth potential have been a big attraction for
many global automakers. India is presently the world's third largest exporter
of two-wheelers after China and Japan. According to a report by Standard
Chartered Bank, India is likely to overtake Thailand in global auto-export
market share by the year 2020.
The next few years are projected to show solid but cautious growth due to
improved affordability, rising incomes and untapped markets. With the
governments backing, and trends in the international scenario such as the
decline in prices of natural rubber, the Indian automobile industry is slated to
witness some major growth.
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2.
Literature Review
2.1 Demand Elasticity: In economics, the demand elasticity refers to how
sensitive the demand for a good is to changes in other economic variables.
Demand elasticity is important because it helps firms model the potential
change in demand due to changes in price of the good, the effect of changes
in prices of other goods and many other important market factors. A firm
grasp of demand elasticity helps to guide firms toward more optimal
competitive behavior. Elasticities greater than one are called "elastic,"
elasticities less than one are "inelastic," and elasticities equal to one are "unit
elastic."
Demand Elasticity = % Change in Quantity Demanded / % Change in Price
2.2 Income Elasticity: A measure of the relationship between a change in the
quantity demanded for a particular good and a change in real income. Income
elasticity of demand is an economics term that refers to the sensitivity of the
quantity demanded for a certain product in response to a change in consumer
incomes. The formula for calculating income elasticity of demand is:
Income Elasticity of Demand = % change in quantity demanded / % change in
income
2.3 Cross Elasticity: An economic concept that measures the responsiveness in
the quantity demand of one good when a change in price takes place in
another good. The measure is calculated by taking the percentage change in
the quantity demanded of one good, divided by the percentage change in
price of the substitute good:
Cross Elasticity,
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(Number
of Vehicles)
2008-09 2009-10
2010-11
2011-12
2012-13
2013-14
Category
Passenger 15,52,703 19,51,333 25,01,542 26,29,839
26,65,015
25,03,685
Vehicles
Commercial 3,84,194 5,32,721
6,84,905
8,09,499
7,93,211
6,32,738
Vehicles
5,26,024
5,13,281
5,38,290
4,79,634
Three Wheelers 3,49,727 4,40,392
74,37,619
93,70,951
1,17,68,910
1,34,09,150
1,37,97,185
1,48,05,481
Two Wheelers
Grand Total 97,24,243 1,22,95,397 1,54,81,381 1,73,61,769 1,77,93,701 1,84,21,538
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Sportz 1.2
On-Road Price
On-Road Price
On-Road Price
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25000
20000
15000
Swift
10000
Polo
i20
5000
(Car Sales for 2014 Maruti Swift, Fiat Polo, Hyundai i20)
While the last month of every year generally witnesses dealerships handing
out discounts, benefits and special schemes, trying to push out the crop of
current model year cars, December 2014 was markedly different. While the
buyer benefits were still on offer, incentives didn't seem to be the decisive
factor in drawing customers to the showrooms. With news of the government
discontinuing excise duty sops filtering in and some carmakers even
announcing expected price hikes in the range of 4-6 percent from January,
dealerships saw a rush of buyers.
It is evident that Customers are more driven by Economic policies, Interest
rates, Income and other economic factors as compared to the price of Car.
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6.Conclusion:
The demand for Automobiles in India is :
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Appendix:
http://www.thehindu.com/sunday-anchor/low-fuel-prices-may-help-autosector-drive-up-sales/article6668317.ece
http://www.infomine.com/investment/metal-prices/crude-oil/5-year/
http://www.team-bhp.com/forum/indian-car-scene/156360-september-2014indian-car-sales-figures-analysis.html
http://www.ibef.org/industry/india-automobiles.aspx
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