Supply Curve

Price of Vehicle v/s Price of Aluminium

We assumed aluminium as the sole input for the manufacturing of a vehicle. We performed a regression analysis on
aluminium's price (x-axis) with the average price of automobiles (y-axis) for data spanning 15-years.,
Average price of vehicle = - 211770*IC
IC – Input cost of aluminium.
Result: Negative coefficient instead of a positive coefficient and a downward-sloping curve. This anomaly was because we
didn't factor in other parameters that also influence vehicular price and supply.
Government Regulations
The automobile industry is heavily regulated, the key regulations that were introduced recently or are expected to be introduced
include-
• • Introduction of BS VI Norms –The Government introduced Bharat Stage VI emission norms with effect from 1 st
April 2020, leading to an increase in the cost of production and price of automobiles.
• • Electric Vehicle (EV) and CNG Vehicle-related Initiatives- subsidies to EV companies, tax rebate in the purchase
of EV to consumers. Also, several state governments are demanding similar initiatives for CNG vehicles as well.