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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 twowheelers 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.
Market size
The cumulative foreign direct investment (FDI) inflows into
the Indian automobile industry during the period April
2000 August 2014 was recorded at US$ 10,119.68
million, as per data by Department of Industrial Policy and
Promotion (DIPP).
Data from industry body Society of Indian Automobile
Manufacturers (SIAM) showed that 137,873 passenger
cars were sold in July 2014 compared to 131,257 units
during the corresponding month of 2013. Among the auto
makers, Maruti Suzuki, Hyundai Motor India and Honda
Cars India emerged the top three gainers with sales
growth of 15.45 per cent, 12 per cent and 11 per cent,
respectively.
The three-wheeler segment posted a 24 per cent growth
to 51,461 units on the back of increased demands from
the urban market. Total sales across different vehicle
segments grew 12 per cent year on year (y-o-y) to
1,586,123 units.

Scooter sales have jumped by 29 per cent in the ongoing


fiscal, and now form 27 per cent of the total two-wheeler
market from just 8 per cent a decade back. The ever-rising
demand for scooters, which has far outstripped supply has
prompted Honda to set up its first dedicated scooter plant
in Ahmedabad.
Tractor sales in the country is expected to grow at a
compound annual growth rate (CAGR) of 89 per cent in
the next five years making India a high-potential market
for many international brands.
Investments
To match production with demand, many auto makers
have started to invest heavily in various segments in the
industry in the last few months. Some of the major
investments and developments in the automobile sector in
India are as follows:
Ashok Leyland plans to invest Rs 450500 crore (US$
73.5481.71 million) in India, by way of capital
expenditure (capex) and investment during FY15. The
company is required to manage Rs 6,000 crore (US$
980.56 million) of assets in seven locations across
the world, for which maintenance capex is needed.
Honda Motors plans to set up the world's largest
scooter plant in Gujarat to roll out 1.2 million units
annually and achieve leadership position in the
Indian two-wheeler market. The company plans to
spend around Rs 1,100 crore (US$ 179.76 million) on
the new plant in Ahmedabad, and expand its range
with a few more offerings.
Yamaha Motor Co has restructured its business in
India. Now, Yamaha Motor India (YMI) will take care of
its India operations. The restructuring is part of
Yamahas mid-term plan aimed at improving
organisational efficiency, as per Mr Hiroyuki Suzuki,
Chief Executive and Managing Director. YMI would be
responsible for corporate planning and strategy,
business planning and business expansion, quality
control, and regional control of Yamaha India
Business.

Tata Motors plans to use the 'hub-and-spoke' model


in which India will be the key manufacturing base
while it will have mini-hubs in overseas markets. The
company also plans to set up mini hubs in potential
markets like Africa, Middle-East and South East Asia.
Hero Cycles through its unit OPM Global has acquired
a majority stake in German bicycle company
MitteldeutscheFahrradwerke AG (MIFA) for 15 million
(US$ 19.11 million). The company plans to invest an
additional 4 million (US$ 5.09 million) as capital
expenses in restructuring the acquired company.
Government Initiatives
The Government of India encourages foreign investment in
the automobile sector and allows 100 per cent FDI under
the automatic route. To boost manufacturing, the
government had lowered excise duty on small cars,
motorcycles, scooters and commercial vehicles to eight
per cent from 12 per cent, on sports utility vehicles to 24
per cent from 30 per cent, on mid-segment cars to 20 per
cent from 24 per cent and on large-segment cars to 24 per
cent from 27 per cent.
The governments decision to resolve VAT disputes has
also resulted in the top Indian auto makers namely,
Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata
Motors announcing an investment of around Rs 11,500
crore (US$ 1.87 billion) in Maharashtra.
The Automobile Mission Plan for the period 20062016,
designed by the government is aimed at accelerating and
sustaining growth in this sector. Also, the well-established
Regulatory Framework under the Ministry of Shipping,
Road Transport and Highways, plays a part in providing a
boost to this sector.
The Government of India-appointed SIAM and Automotive
Components Manufacturers Association (ACMA) are
responsible in working for the development of the Indian
automobile industry.
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HISTORY OF AUTOMOBILE SECTOR IN INDIA
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From the policy standpoint, the Indian automobile industry


can be viewed in terms of the pre-1991 (before
liberalization) and post-1991 (after liberalization) phase.
1880's & early 1900's:
About hundred years ago the first motorcar was imported
and Import duty on vehicles was introduced. Indian Great
Royal Road (Predecessor of the Grand Trunk Road) was
conceived. First car brought in India by a princely ruler in
1898.
Simpson & Co established in 1840. They were the first to
build a steam car and a steam bus, to attempt motorcar
manufacture, to build and operate petrol driven passenger
service and to import
American Chassis in India. Railways first came to India in
1850's. In 1865 Col. Rookes Crompton introduced public
transport wagons strapped to and pulled by imported
steam road rollers called streamers. The maximum speed
of these buses was 33 kms/hr.
1942 Hindustan Motors Ltd incorporated and their first
vehicle was made in 1950.
In 1944 Premier Automobiles Ltd incorporated and in 1947
their first vehicle was produced.
In 1947 the Government of Bombay accepted a scheme of
Bajaj Auto to replace the cycle rickshaw by the auto and
assembly started in a couple of years under a license from
Piaggio.
Manufacturing Program for the auto and scooter was
submitted in 1953 to the Tariff Commission and approved
by the Government in 1959.
In 1953 the Government decreed that only firms having a
manufacturing program should be allowed to operate and

mere assemblers of imported CKD units be asked to


terminate operations in three years.
Only seven firms namely Hindustan Motors Limited,
Automobile Products of India Limited, Ashok Leyland
Limited, Standard Motors Products of India Limited,
Premier Automobiles Limited, Mahindra & Mahindra and
TELCO received approval. M&M was manufacturing jeeps.
Few more companies came up later. Government
continued with its protectionism policies towards the
industry.

1960s:
In sixties 2 and 3 Wheeler segment established a foothold
in the industry. Escorts and Ideal Jawa entered the field in
the beginning of sixties. Association of Indian Automobile
Manufacturers formally established in 1960.

1970`s:
Major factors affecting the industry's structure were the
implementation of MRTP Act, FERA and Oil Shocks of 1973
and 1979. During this decade there was not much change
in the four-wheeler industry except the entry of Sipani
Automobiles in the small car market. Girnar Scooters Ltd
entered into the market in 1971 and its output was less
than 5000 units until 1980. In the Two Wheeler Industry
there were many entries during this decade. Scooter India
established in 1972.

1980's:
The period of liberalized policy and intense competition
Since the 80s, the Indian car Industry has seen a major
resurgence with the opening up of Indian shores to foreign

manufacturers and collaborators.First phase of


liberalization announced and unfair practices of monopoly,
oligopoly, etc slowly disappeared. It was beginning of
Liberalization of the protectionism policies of the
Government.Lots of new Foreign Collaborations came up
in the eighties. Many companies went in for Japanese
collaborations. Andhra Pradesh Scooters entered into
collaboration with Piaggio for manufacture of Vespa model.
Hindustan Motors Ltd. in collaboration with Isuzu of Japan
introduced the Isuzu truck in early eighties. ALL entered
into collaboration with Leyland Vehicles Ltd. for
development of integral buses and with Hino Motors of
Japan for the manufacture of W Series of Engines.
The Two Wheeler market increased. Since 1982 the
Government had permitted foreign collaborations for the
manufacturing of Two
Wheelers up to 100 cc engine capacity. Foreign Equity up
to 40% was also allowed.
In 1983 MarutiUdyog Ltd was started in collaboration with
Suzuki, a Japanese firm. Other three Car manufacturers
namely, Hindustan Motors Ltd., Premier Automobiles Ltd.,
Standard Motor Production of India Ltd. also introduced
new models in the market.

Post-1991: After Liberalization, the Freedom to Grow


Beginning with mid-1991 the government of India has
made some radical changes in its polices bearing on trade,
foreign investment, exchange rate, industry, fiscal affairs
and so on. Mass Emission Norms were introduced for in
1991 for Petrol Vehicles and in 1992 for Diesel Vehicles. In
1991 new Industrial Policy was announced. It was the
death of the License Raj and the Automobile Industry was
allowed to expand. Further tightening of Emission norms
was done in 1996. In 1997 National Highway Policy has

been announced which will have a positive impact on the


Automobile Industry. The Indian Automobile market in
general and Passenger Cars in particular have witnessed
liberalization. Many multinationals like Daewoo, Peugeot,
General Motors, Mercedes-Benz, Honda, Hyundai, Toyota,
Mitsubishi, Suzuki, Volvo, Ford and Fiat entered the
market.
Various companies are coming up with state-of-art models
of vehicles. TELCO has diversified in Passenger Car
segment with Indica. Despite the adverse trend in the
growth of the industry, it is resolutely trying to meet the
challenges. Various issues of critical importance to the
industry are being dealt with forcefully.
In 1999 The Honble Supreme Court passed an order
directing all car manufacturers to comply with Euro I
emission norms (India 2000 norms) by the 1st of May 1999
in National Capital Region (NCR) of Delhi. The deadline
was later extended to 1st June 1999.
The 90s have become the melting point for the car
industry in India. The consumer is king. He is being
constantly wooed by both the Indian and foreign
manufacturers. Though sales had taken a dip in the first
few months of 1999, it is back to boom time. New models
like Marutis Classic, Alto, Station Wagon, Fords Ikon and
the new look Mitsubishi Lancer have all been launched
with an eye on the emerging market.

2.4. THE INDIAN AUTOMOBILE INDUSTRY AT


PRESENT
The Indian automobile industry has come a long way since
the first car ran on the streets of Mumbai in 1898. The
initial years of the industry were characterized by
unfavorable government policies. The real big change in
the industry, as we see it today, started to take place with

the liberalization policies that the government initiated in


the 1991. The liberalization policies had a salutary impact
on the Indian economy and the automobile industry in
particular.
The automobile industry in the country is one of the key
sectors of the economy in terms of the employment
opportunities that it offers. The industry directly employs
close to around 0.2 million people and indirectly employs
around 10 million people. The prospects of the industry
also has a bearing on the auto-component industry which
is also a major sector in the Indian economy directly
employing 0.25 million people.
The automobile industry in India is gradually evolving to
replicate those of developed countries. The trends are
emerging in the industry across segments, namely,
passenger cars, multi-utility vehicles, commercial vehicles,
two-wheelers and tractors. The qualitative analysis of the
various trends reveals that the industry offers immense
scope even for allied industries and those looking at
investing in the auto industry.
The Indian automobile industry is undergoing a revolution
of sorts. The vehicle war is on. And it's a fight to the finish.
Within the span of a few years, the vehicle market has
displayed an array. Most of these new entrance all
multinational companies that have joint venture with
Indian companies. Multinational companies own more than
50% stake in their joint ventures, and sometimes this
stake comes near to 100%. For example Italian Auto
major, FiatAuto Spa has 94.77% stake in Fiat India Limited.
A few of these new companies are fully subsidiary of
foreign companies like Yamaha Motor India Ltd which is
100% subsidiary of Yamaha Motor Company of Japan.
Some Indian Automobile companies have several
subsidiaries for manufacturing different vehicles, same as
Eicher Ltd, SonalikaGroup, Escorts Ltd and Mahindra &

Mahindra.Eicher Ltd includes Eicher Tractors Ltd for


tractors manufacturing and Royal Enfield Motors Limited in
motorcycles section. SonalikaGroup has International
Tractors Limited for the manufacture of tractors
(incorporated 1995) and Sonalika Agriculture Corporation
(established in 1971) that has approximately 80% share in
Indian market of farm machinery. Escorts Ltd also includes
Escorts Tractors Ltd and Escorts JCB Ltd. Mahindra &
Mahindra has Mahindra Nissan Allwyn and Gujarat Tractors
Corporation as subsidiaries.
Several companies in the Industry were declared sick
during their life; because they have come under the Sick
Industrial Companies (Special Provisions) Act, 1985. Thus
they have been referred to the Board of Industrial and
Financial Reconstruction (BIFR).
Finally 26 companies in the industry have been listed in
Bombay Stock Exchange (BSE); and only 18 of them were
listed in 2001 or before that date and were not delisted of
BSE or not referred to BIFR. One company also has
eliminated because of its negative values for average
operating income during the period of the study.

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LIST OF AUTOMOBILE COMPANIES IN INDIA

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Changes in technology
Most people know that the Ford Model T was the first truly
affordable automobile. But do you know what kind of
engine it had? The original Model T, released in 1908,
packed a 2.9-liter four-cylinder engine with just
22 horsepower.
That's a tiny output for its size compared to the engines of
today, but it sure beat the engine in what's considered to
be the first automobile -- the 1885 Benz Patent
Motorwagen. That car had a single-piston engine and
generated just two-thirds of a single horsepower.
As we can see, automobile engines have been in constant
evolution since the very beginning of motoring. Today they
are more powerful, quieter, more durable, less polluting
and morefuel-efficient than they have ever been before,
thanks to constant advancements in engine design and
technology.
Automotive engineers are constantly working on ways to
improve the internal combustion engine and carry it into
the future. How many other inventions do you know that
have been continuously refined for more 150 years?

Diesel vs. Petrol Vehicles

10 Year Old Diesel Vehicles Banned in Delhi


NGT (National Green Tribunal) is an Act of Parliament to
expedite the resolution of issues related to
Environmental Factors.
NGT has cited a set of measures to put a stop on
increasing Air Pollution of which 2 are
noteworthy is: Complete Ban of Petrol Cars Manufactured more than
15 Years Old

Ban on Diesel Vehicle Manufactured 10 Years Ago


The Ban has come in in form of
New Fitness Certificate Renewal not allowed for 15
Year Old Petrol Cars
Banned to Ply on Roads for Diesel Cars more than 10
Years Old or Petrol Cars 15 yrs+ Old and even having
Fitness Certificate in Capital City Delhi
The move is applicable on all Kinds of Vehicle - Private
or Commercial Vehicles.
Basis NGT Recommendation - if any of these vehicles
are found plying on roads / Parked in Public Places or
Entering in New Delhi - Traffic Police will have the right
to Seize the Vehicle and also simultaneously fine the
Owner.
The Implementation of Order is getting Executed from
8th April - wherein Government agencies will set up
Border Checks at :- Ghaziabad, Noida, Faridabad,
Gurgaon for vehicles entering in Delhi. Even - further
meetings to take place - wherein Fines and Public
Notification will be released in Coming Days about
Implementation or Order. The Objective is to Improve
Deteriorating Air Quality - which is causing Serious Air
Borne Diseases and is slowly impacting Health .
After Impact Consequences of 10 Year Old Diesel
and 15 Year Old Petrol Cars
However - Some Important Questions - which yet to be
addressed and needs to be answered
There are many vehicles which are not causing
pollution and have been maintained well even though
they may be more than 10 years old. Similarly, there
are vehicles that are polluting just 5 years after being
bought. Can there be no Stringent Pollution Check
Criteria instead of Ageing Factor
There Could be a Petrol Car Driven Just 50000 Kms in
15 Yrs or Diesel Car Driven just 80000 Kms in 10 Yrs well maintained with all Periodic Servicing done on time
Vis a Vis Petrol Car Driven 1.2 Lakh Km in 10 Yr or
Diesel Car Driven 1.5 Lakh Km in 5 yr without been

Maintained well. The Decision seems considering not


the entire Aspect
If Ageing of the Vehicle is the Sole Criteria, then
Whats the relevance of PUC Checks and Why is PUC
Checks not been stringent enough
What happens to people who have well maintained
old vehicles and cannot afford new ones. Been - Car
Value will Depreciate a Lot - who will bear in Loss
Substantial Depreciation in Used Car Value with hardly
any takers for 10 year+ Old Diesel Cars and 15 Yr+ Old
Petrol Cars. Used Car Dealers will Probably only give
Scrap Value on Exchange of 10 Year+ Old Diesel Car in
Delhi, 15 Year+ Old Petrol Cars and sell in Other States
Insurance Companies might Stop Renewing Car
Insurance for Vehicles which will be more than 10 years
Old in Delhi, leading to uninsured vehicles with
suspectible uninsured cars.
Last but not Least - Life Time Road Tax is Paid which is
Valid for 15 Years from Date of Registration. How can
the same be revoked within 10 Years Itself in case of
Diesel Cars, is there any such clause in Motor Vehicle
Act
http://www.mycarhelpline.com/index.php?
option=com_easyblog&view=entry&id=217&Itemid=91
Diesel Vehicles

Diesel vehicles may be making a comeback. Diesel


engines are more fuel-efficient and have more low-end
torque than similar-sized gasoline engines, and diesel fuel
contains roughly 10% to 15% more energy than gasoline.
So, diesel vehicles can often go about 20% to 35% farther
on a gallon of fuel than their gasoline counterparts. Plus,
today's diesel vehicles are much improved over diesels of
the past.
Better Performance

Improved fuel injection and electronic engine control


technologies have
Increased power
Improved acceleration
Increased efficiency
New engine designs, along with noise- and vibrationdamping technologies, have made them quieter and
smoother. Cold-weather starting has been improved also.

Cleaner

Today's diesels must meet the same emissions standards


as gasoline vehicles. Advances in engine
technologies, ultra-low sulfur diesel fuel, and improved
exhaust treatment have made this possible.
Although emissions of particulates and smog-forming
nitrogen oxides (NOx) are still relatively high, new "clean"
diesel fuels, such as ultra-low sulfur diesel and biodiesel,
and advances in emission control technologies will reduce
these pollutants also.

Siam.com
Auto ancillary tiers
Tiers
Petrol price and diesel price table with difference

Bibliography

http://www.ibef.org/industry/indiaautomobiles.aspx [1]
http://shodhganga.inflibnet.ac.in/bitstream/106
03/3722/13/13_chapter%204.pdf [2]
Bombay Stock Exchange (BSE) official directory,
companies annual reports, www.indiainfoline.com,
www.the-infoshop.com , www.cybersteering.com [3]