INTRODUCTION

1. Definition and brief history of the product An automobile vehicle or mechanism; esp., a self-propelled vehicle suitable for use on a street or roadway. Automobiles are usually propelled by internal combustion engines (using volatile inflammable liquids, as gasoline or petrol, alcohol, naphtha, etc.), steam engines, or electric motors. The power of the driving motor varies from about 4 to 50 H. P. for ordinary vehicles, ranging from the run-about to the touring car, up to as high as 200 H. P. for specially built racing cars. Automobiles are also commonly, and generally in British usage, called motor cars. 2. Different uses and category of the product Segment Commercial vehicle Cars and vehicle multi utility

Two and Three wheeler

1. Brief overview of the industry (Dominant Industry Features)

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax reliefs by the Govt. of India in recent years has made remarkable impacts on Indian Automobile Industry. Indian auto industry, which is currently growing at the pace of around18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and Ford. A well developed transportation system plays a key role in the development of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the 'canvas' of Indian economy. Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles.

Among the two-wheeler segment, motorcycles have major share in the market. Hero Honda contributes 50% motorcycles to the market. In it Honda holds 46% share in scooter and TVS makes 82% of the mopeds in the country. Page No. 1 . 40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share. Among the passenger transport, Bajaj is the leader by making 68% of the three-wheelers. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger cars and is a complete monopoly in multipurpose vehicles. In utility vehicles Mahindra holds 42% share. In commercial vehicle, Tata Motors dominates the market with more than 60% share. Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer. INDUSTRY INVESTMENT According to Commerce Minister Kamal Nath, India is an attractive destination for global auto giants like, BMW General Motors, Ford and Hyundai who were setting base in India, despite the absence of specific trade agreements. Current Scenario • On the cost front of Indian automobile industry, OEMs are eyeing India in a big way, Investing to source products and components at significant discounts to home market. • On the revenue side, OEMs is active in the booming passenger car market in India. Snippets • By 2010, India is expected to witness over Rs 30,000 crore of investment. • Maruti Udyog has set up the second car with an investment of Rs 6,500 crore. • Hyundai will bring in more than Rs 3,800 crore to India. • Tata Motors will be investing Rs 2,000 crore in its small car project. • General Motors will be investing Rs 100 crore and Ford about Rs 350 crore. • Ashok Leyland and Tata Motors have each announced over Rs 1,000 crore of investment. Facts & Figures The automobile industry in India is on an investment overdrive. Be it passenger car or two-wheeler manufacturers, commercial vehicle makers or

 Annual production of over 2. Ashok Leyland and Tata Motors have each Announced well over Rs 1. Some new entrants will also taste the water.a sizeable chunk of this should come by 2010 since the company is also looking to enter the lucrative small car segment.000 crore of investment.000 units. Most of the companies have made their intentions clear. 2nd largest tractor manufacturer. Hyundai will also be unmasking the Verna and a brand new diesel car.     Production of 4-Wheelers Tata Motors Ltd. Talking about the commercial vehicle segment. Chinese bike major Lifan HarleyDavidson are expected to enter India soon. In two-wheelers segment. Maruti Udyog has set up the second car plant with a manufacturing capacity of 2.878 128. The Automotive Industry in India FACTS 9th largest automobile industry. Maruti Udyog is coming up with new Zen and the diesel version of Swift during the next few months. Alfa Romeo. Take note of this.718 crore for the car plant itself). General Motors will be investing Rs 100 crore. 449. General Motors will be launching a mini and may be a compact car. Nissan (separately. Volkswagen AG.three-wheeler companies – everyone appears to be in a scramble to hike production capacities. They are the big names in passenger cars like Citroen.800 crore to India.  The monthly sales of passenger cars in India exceed 100. Land Rover and Aston Martin. Hyundai will bring in more than Rs 3. 2nd largest two-wheeler market. Hero Honda is about to establish its fourth manufacturing plant.000 crore in its small car project. apart from its tie-up with Suzuki). Hyundai and Tata Motors have announced plans for investing a similar amount over the next 3 years. Tata Motors will be Investing Rs 2.5 lakh units per annum for an investment of Rs 6. Mahindra & Mahindra Ltd.200 crore for diesel engines and Rs 2. The country is expected to witness over Rs 30.000 crore over the next decade for India .601 .500 crore (Rs 3. Ford about Rs 350 crore and Toyota announced modest expansion plans even as Honda Siel has earmarked Rs 3. Maserati.000 crore of investment by 2010. 4th largest in Heavy Trucks.3 million units.

. Hindustan Motors Ltd. Eicher Motors Ltd.Ashok Leyland Ltd.458 MAJOR PLAYERS IN INDIA TECHNOLOGICAL Technology. 65.348 15. for cars or for any other automated innovations. No two consecutive years ever see one single car technology trend doing the rounds in the automobile industry. motorbike or any other vehicle.085 35. Force Motors Ltd. is a constantly evolving concept. There is always something new coming up in the form of an auto model. car enthusiasts always have something new to revel at. Be it a car.728 24.

audio and video in a single automotive space. or under the hood of a car or any other vehicle. system OEMs and automakers in the global automobile industry are increasingly opting for cutting-edge technology driven semiconductor devices. Games Consoles etc. No wonder. wireless communication in cars and vehicles. vehicle manufacturers are coming up with more sophisticated digital systems addressing vehicle safety. Computer in various forms is becoming an integral part of a motor body. They are now considered mainstream products in automobile industry. “Platform” concept: A Landmark Technology Trend in Automotive Industry “Platform” concept is the newest thing in the evolutionary history of automotive designing. Electronic Suspension. Climate Control etc. • PLD: A Major Technology Trend in Automobile Industry PLDs or Programmable logic devices are a power alternative to the silicon technology based semiconductors ASIC and ASSP. infotainment. There was a time when these were the preferred semiconductor options.The Mainstay in Automobile Industry . automobiles today are increasingly being recognized as modern “computers on wheels. Braking Systems etc. Collision Warning etc. You find them almost everywhere. • • Driver Assistance: Heads Up Display. Quality. car manufacturers in the global automobile industry are opting for more powerful yet cost-effective car design platforms to meet the growing networking needs of their increasingly complex car digital systems. On-board motor digital content such as rear seat entertainment systems. Adaptive Cruise Control. Digital technology has largely taken over the automotive industry. Security Alarm Systems. navigation systems. Vehicle Controls and Comfort/Convenience: Dashboard/Instrument Cluster. one basic design is used for car model differentiation. The concept is further gaining popularity due to increase in the trend of converging data. and telematics. Tire Pressure Monitoring.Recently. Increased Demand for Digital Content in Automobile Industry Motivated by the enhanced use of high definition. In this concept.” Following are the four major areas where automotive technology is making great progress: • Powertrain and Safety: Engine Management. but now. a lot of happenings in the car technology arena have kept the global auto market abuzz.inside the passenger cabin. and driver assistance applications are no more add-ons in a car model. With each auto model year. Telematics. Power Steering. Navigation/GPS. Communication and Infotainment: Audio Systems.

entertainment). infrastructural. we depart somewhat from the contemporary practice of focusing on the ways in which specific information technologies (e.. making possible subtle but profound changes in nearly every aspect of the industry. from changing the supply chain (e. It affects the broad fabric of economic and social enterprise in a world where information. In a way. enablers.g. results in fundamentally new characteristics in the industry.g.All these technology progress in the automobile industry has significantly brought down the automotive design cycle from 60 months to approximately 24 to 36 months. and in the records systems that have fundamentally important in altering the relationship between OEMs. in time. they have not yet done so. this panel?s main interest is in the relationship between information and the automobile realm. the Internet. It is not surprising that this kind of change is difficult to see. and complementary asset provision • Atmospheric emissions control • Passenger safety • Entertainment. automobile users. This panel will examine the mechanisms and logic of transformation in a world of rapidly changing capabilities in information processing and communication.g. The role of information technology has been profound in the slow transformation of the industry from its original status as a product industry into what is increasingly a service industry in which ?product? is something far different from what it was when the industry first became a powerful global force.g. In this. IMPORTANCE: The automobile industry is often characterized in terms that limit the scope of discussion to the manufacture and sale of new automobiles. knowledge. To this point. We break this analysis into six regimes of change: • Property regulation. Our focus is more upon the slow accretion of capability enabled by information technology that. This is further going to expedite the innovation of automotive technology in the years to come.. produce such changes. and it is difficult to predict whether or how they will. and in myriad ways. The contemporary developments in the Internet and the World Wide Web might very well. and other actors in the automobile realm. conviviality and control • Expediting and coordinating production and distribution • Manufacturer-customer relationship construction and maintenance The most important impacts of information technology in this transformation have been deep in the infrastructure of the vehicles themselves (e.. or e-commerce) change specific practices in the industry as it currently operates. Attempts to e-enable or e-transform the automotive industry. The automobile industry co-evolved with modern IT. Covisint) to revolutionizing sales (e. incorporated that technology as it grew. This panel broadens the scope to include the broad set of complements. safety. risk mitigation.. emissions control. The role of information technology (IT) in this process has never been in the foreground: it has always been infrastructural. accretionary change that produces powerful cumulative effects. dealers. industry transformation is not limited to the businesses processes of the firms. Moreover. and constraints that make the industry one of the largest and most influential human enterprises in history. Auto-by-Tel) have thus far proved to be far less significant than their proponents hoped. The story of IT in enterprise transformation in the automobile industry is one of slow. large experiments. The full . in time. and value are easily reproduced and transported. World Wide Web. The history of the automobile industry has from the start been one of complementary use of IT.

These vehicles navigate the roads themselves and give you a taxi experience. Electric Cars: The Reva India's first battery car was launched recently after 13 years of research and development. The company has managed to sell 2. It will benefit in the accessibility of loss incurred due to accident and also if you are being accused even if you are not at fault. This in turn is forcing the automobile companies to implement these latest technologies in their vehicles in order to have an edge over competitors. The Reva is a small car carrying a price tag of Rs 2.500 units already and still hopes to upgrade the Reva for higher sales figures and a green environment Driverless cars: Driverless cars also known as autopilot. This is mainly meant to come of use during accidents. Multi Point Fuel Injection Engine (MPFI) This technology sticks to stricter auto emission norms and manages to squeeze out the maximum benefit of the fuel by making optimum use of even the last drop of petrol or diesel and providing the vehicle with a great mileage.99.000 and a fuel efficiency of 80 kms per charge. Common Rail Direct Injection Engine (CRDI) The Common Rail Direct Injection offers 25% more power than the normal direct injection and makes better use of the fuel by breaking up the fuel into small particles and making optimum use of it. The car will be having fixed solar panels on the roofs of the car. to put it in a better way they actually do not require drivers to drive them. diverse. Latest technologically superior cars Solar Power Car by Toyota: Global automobile giants Toyota already have designed a car air conditioner running on solar power and now they have taken a great leap and are about to design a car that runs on solar power. INVENTION: The automobile industry is one of the fastest growing industries in India. Latest Automobiles Inventions in India Latest technologies invented to improve the engine of a vehicle. Smart Pedal Technology: The brake override or Smart pedal technology is a system which is built into the car to prevent fatal accidents. That is the reason why a broader view of automotive industry transformation is necessary to understand the effects of a class of technologies as broad as information technology on an industry as large. The CRDI engine has provided a tremendous boost to diesel engines. and complex as the automobile industry. The computer system known as the smart pedal tells the engine to disregard the accelerator if the brake and the gas . Latest inventions in automobile components In Car Journey Recorder: The latest inventions by Nikkai is the in car journey recorder. The Indian automobile industry is on a high and hence there is immense competition because everyone wants to be the best whether it is the domestic players or foreign players who have their manufacturing units in India. autonomous vehicle or auto-drive car are intelligent vehicles because of the simple fact that they drive themselves. The concept of the battery car was introduced mainly to have a pollution free environment. Latest technologies are being equipped into the vehicle. With the continuous advancement of technologies new inventions in the automobile industry is only paving the way for more and more technologically superior and sophisticated vehicles. This would result in a real revolution in the history of automobile inventions doing away totally with the cost of fuels and emissions. The life of the battery of the Reva is 120 kms per charge. This is meant to be placed of the windshield of the car.effects of such evolution are difficult to spot because they take a long time and so much of what is important becomes infrastructural and invisible. The journey recorder is a video recorder which records in front of you while you are driving. Even the dearth and rising prices of traditional fuel have given the automobile companies reason enough to introduce electric cars and alternate fuel vehicle.

AISC is a committee set up by MoSRT&H. The CMVR provide the rules that explain the MVA in detail. The Chairman of this committee is the Director of Automotive Research Association of India (ARAI) which is one of the testing agencies constituted under CMVR-TSC. The CMVR-TSC is assisted by the Automotive Industry Standards Committee (AISC) and Bureau of Indian Standards (BIS). and to finalise and approve safety recommendations made by such committees. For preparing safety standards. Companies like Mercedes and BMW have been using this technology for quite some time now and soon General Motors are introducing the smart pedal in India as well. Department of IPP. The industry has been growing annually at 20 per cent. The National Standards for Automotive Industry are prepared by Bureau of Indian Standards (BIS). This committee is established to discuss the future emission norms and to recommend norms for in-use vehicles to MoSRT&H. The standards formulated by both BIS and AISC are considered by CMVR-TSC for implementation. ACMA and ARAI. The representative of ARAI is the member secretary of this committee. 5 Star Shine: This is a unique paint protection system that keeps your car clean for five years. SIAM.pedal are pushed at the same time. MoSRT&H then takes the final decision for incorporation of the recommendations in CMVR. Road Transport & Highways (MoSRT&H) which is the nodal ministry for regulation of the automotive sector in India. Along with MoSRT&H. AISC submits the draft safety standards in the form of recommendations to CMVR-TSC for final approval. Select State Governments. The AISC safety standards are formulated and prepared by separate Panel comprising of representatives of various stakeholder associations such as Department of Heavy Industries. This committee was established for the purpose of recommending emission norms. The Act governs emission norms and safety standards in India and consolidates the law pertaining to motor vehicles. MoSRT&H has constituted two committees to recommend and advise the ministry on issues relating to Safety and Emission Regulations. Vehicle Research and Development Establishment (VRDE). It has an annual production of approximately 2 million units. time frame required for implementation. ministries such as Ministry of Environment & Forests and Ministry of Petroleum & Natural Gas also have a vital role in the formulation of automotive regulations and standards in India. Central Motor Vehicles RulesTechnical Standing Committee (CMVR-TSC) was formulated to receive draft recommendations from other committees. consideration is on various aspects such as the status of technology. After approval CMVR-TSC submits its final proposal to MoSRT&H. Automobile Industry Regulations in India In view of the huge investment in the automotive sector. The automotive regulations in India are governed by the Ministry of Shipping. The competitiveness in the automotive sector has been increasing since then. The CMVR-TSC and SCOE recommend the safety standards and emission norms for implementation by the . The purpose of CMVR-TSC is to finalise and approve the draft standards and norms submitted by various committees. Bureau of Indian Standard (BIS). The CMVR – TSC looks into the recommendations of AISC and either approves or sends the recommendations to AISC for amendments. The principal instrument governing the automotive sector in India is the Motor Vehicles Act. This paint protection system increases the exterior life span of the car. India is set to be a key player in the automotive sector. Automotive Component Manufacturers Association of India (ACMA). etc. The Indian automobile industry is the tenth largest in the world. The joint secretary of MoSRT&H is the Chairman of CMVR-TSC. 1988 (MVA) along with the Central Motor Vehicles Rules 1989 (CMVR). CMVR-TSC comprises of representatives from Ministry of Heavy Industries and Public Enterprises. BIS. SIAM and other invitees.Central Motor Vehicles Rules-Technical Standing Committee (CMVRTSC) and Standing Committee on Implementation of Emission Legislation (SCOE). After approval the CMVR-TSC sends it to MoSRT&H for final approval. The purpose of establishing this committee was to review the safety standards with regard to motor vehicles in India on a periodic basis and to give recommendations. These standards are submitted for approval to the CMVR-TSC. Standing Committee on Implementation of Emission Legislation (SCOE) is another committee along with CMVR-TSC that was formulated under the MoSRT&H. it is important to be aware of the laws relating to and the regulation governing the automotive sector writes Vidya Sunderam. There has been a sustained growth in the automotive sector of India following the economic reforms of 1991 which opened up 100 percent Foreign Direct Investment in this sector. These committees are . Testing agencies. The standards formulated by AISC are also converted into Indian Standards by BIS. This committee finalises the test procedures and the implementation strategy for emission norms and advises MoSRT&H on any issue relating to implementation of emission regulations. Department of RT&H. such as Automotive Industry Standards Committee and Bureau of Indian Standards. It has been tested and has managed to survive 150 washings. necessity of a particular regulation in relation to the safety and emission issues.

Manesar. Inc.BO] MARUTISUZUKI [MARUTI.00% 17. Indian Institute of Petroleum.00% 25. Every manufacturer of motor vehicle has to submit a prototype of the vehicle to be manufactured to any of the test agencies mentioned hereafter.Major Top of Form 330 Long-Term Grow th Rate (5 yr) Bottom of Form View Leaders in Long-Term Growth Rate (5 yr) BMW [BMW. The Indian standards and norms are at par with international standards to the extent that there is a sustained growth in the automotive sector.11% 17. After approval by the Ministry. Vehicle Research & Development Establishment. The standards and norms that are finalized by the CMVR-TSC are then sent for approval of the Secretary (MoSRT&H) and the Minister. Inc. Commo [HMC] Tesla Motors.73% 18. Central Institute of Road Transport.30% 35. The test agencies are – Automotive Research Association of India. Leaders & Laggards in Auto Manufacturers . Ltd. Ahmednagar. Dehradun.AX] General Motors Company Common S [GM] MARUTISUZUKI [MARUTI. After testing the vehicle for compliance of all standards and norms. [MNM. Budni. [SORL] 8.39% 13. [SORL] Ford Motor Company Common Stock [F] MAHINDRA & MAHINDRA LTD.30% 12. Pune (ARAI).00% .DE] Toyota Motor Corporation Common [TM] Tata Motors Ltd Tata Motors Lim [TTM] Honda Motor Company.39% 10. [MNM. [TSLA] SORL Auto Parts. The finalized standards and norms are notified through General Statutory Rule/Statutory Order.30% Laggards in Long-Term Growth Rate (5 yr) FLEETWOOD FPO [FWD.67% 10.41% 56.11% 12.BO] MAHINDRA & MAHINDRA LTD.00% 18.BO] Ford Motor Company Common Stock [F] SORL Auto Parts. MoSRT&H issues notification for necessary amendments / modifications in the in Central Motor Vehicle Rules. the test agency shall grant a certificate to the manufacturer. Central Farm Machinery Testing and Training Institute.73% 13.BO] General Motors Company Common S [GM] 88. Pune and International centre for Automotive Technology. and based on the recommendations from CMVR-TSC and SCOE. But there is a need to consolidate the laws further by bringing a master legislation in force that would govern and regulate all committees in force India rather than the committees being governed by various Ministries.MoSRT&H.10% 20. Inc. various test agencies are established to test and certify the vehicles based on the safety standards and emission norms prescribed by the Ministry. Under Rule 126 of the CMVR.

Tesla Motors. both public and private. companies.S.00% 56. . market size for the Automobile and Light Duty Automobile Manufacturing industry includes all companies. the table contains details on employees.30% Market Size .S. [TSLA] Honda Motor Company. both public and private. and average firm size. and average firm size. The total U. Ltd.Automobile and Light Duty Automobile Manufacturing The total U. In addition to total revenue. companies. Commo [HMC] Tata Motors Ltd Tata Motors Lim [TTM] Toyota Motor Corporation Common [TM] 20. market size for the Automobile and Light Duty Automobile Manufacturing industry includes all companies. the table contains details on employees.10% 35. Inc.00% 25. In addition to total revenue.

total automobile sales in the . INDIAN EXPENSES: At present time. In addition to total revenue. both public and private. In January 2010. market size for the Automobile and Light Duty Automobile Manufacturing industry includes all companies.S. companies.Market Size . the table contains details on employees. Indian automobile industry is making a major contribution in increasing the country's GDP by 9% every year. New heights has been scaled by the industry in the year 2010.Automobile and Light Duty Automobile Manufacturing The total U. and average firm size.

the production rate for different category of vehicles is as followed(As per SIAM) Passenger Vehicles : 2.32% Three Wheelers : 3.243.000 vehicles manufactured in its India plant by 2011. fourth largest commercial vehicle producer and eleventh largest passenger car producer. This data is valid for the Indian domestic market only. Nissan. Nissan Motors plans to export 250.949.368 . annual car sales are estimated to reach 5 million vehicles by 2015 and more than 9 million by 2020 To believe New York Times reports.238 million USD by Soceity of Indian automobile Manufacturer (SIAM).889 Grand Total : 14.830 in terms of total vehicles production.146 Commercial Vehicles : 45. several automobile companies like Hyundai Motors. Annually. The Commercial Vehicles segment grew marginally at 4.776 Commercial Vehicles : 531. India has made a huge profit by exporting 1. Listed below is the statistics showcasing export sales rate of Indian automobile industry for the year 2009-10. Even for the month of April-October after a gap of 11 years.120. there has been a growth of 32.351.5648 and for the current year it has reached 14. of vehicles from their Indian plants. Volkswagen and Suzuki have expanded their manufacturing facilities owing to India's strong engineering base and expertise in the manufacturing of low-cost.30 percent during the current financial year.29 percent. As a result of all this.07 percent.395 Three Wheelers : 440.23% Production Rate Statistics The production of automobiles in India has greatly increased in the last decade.093 Two Wheelers : 10.240 Commercial Vehicles : 566.68. As per the SIAM records automobile exports have under gown a growth of 22. Light Commercial Vehicles recorded a growth of 12.282 Two Wheelers : 1. Listed below is the statistics showcasing domestic market sales rate of Indian automobile industry for the year 2009-10. United Kingdom is largest export market for India's automobile industry followed by Germany.512. justified from the January 2010 sales 145.804.86% Commercial Vehicles : 4. For the year 2003-2004 the production rate crossed 7. the figures shows an increment of 44.000 cars manufactured in India by 2011. Passenger Vehicles : 15.66 percent. the automobile industry is experiencing tremendous success. While Medium & Heavy Commercial Vehicles declined by 1.081 Units. the Indian automobile industry is growing at an average rate of 30% and marking itself as one of the fastest growing industries in India.28% in the domestic car sales. According to the reports of Society of Indian Automobile Manufacturers. Different brands are utilizing the Indian automobile engineering expertise to manufacture and export maximum no.049. General Motors announced its plans to export about 50. At present India is the largest tractor and three-wheel vehicle producer. For the year 2009-10. In the year 2009-10. total automobile sales in India stood at 1.007 Three Wheelers : 173. As per statistics launched by Society of Indian Automobile Manufacturers (SIAM). Passenger Vehicles : 446. India's automobile exports had reached $4. the resultant annual turnover of the Indian automobile industry for the year is recorded to be 38.619 Domestic Market Statistics Even in the domestic market. Toyota.5 billion and a consistent export growth rate can be estimated in the year 2010 also with the estimation that it will cross $12 billion by 2014.domestic market reached 1114157 units. Netherlands and South Africa.804.619 no.9% compared to the sales units of 7.049.58% Two Wheelers : 76. vehicles.905 units against the 2009 sales of 110.140. second largest two-wheel vehicle producer.300 units.184 Grand Total : 1.698 of same period last year. fuel-efficient cars. Passenger Vehicles : 1. Similarly.830 Export Market Statistics Last year.608 Three Wheelers : 619. The following statistics explains the market share of different vehicles in the Indian automobile Industry.

Ford. means that it is mature and developed. and 196 million drivers in 2003. it is considered consolidated. But the important thing to note is that cars have permeated US culture to a mature. which leaves the existing giants in a comparatively good position. saturated degree. According to one source. The red X in the industry life cycle chart below represents where the industry is in the US today. the largest and most successful have emerged in dominant positions. There are just a few players which command the majority of the US automobile market. Cars have been around for more than a century (so has GM) and almost all adult Americans own one or more cars. Toyota. Being so consolidated. there are older people who are no longer driving. This represents approximately 1. to corporations and small businesses. there is little scope for new entrants into the industry.371. GM.833 vehicles in the US. with 38% of the 21 manufacturers amounting to just over 79% of all cars made and sold in the US. In fact. The car industry has reached maturity in the US.3 vehicles per licensed driver. it is almost Pareto-optimal. The potential customer base is large and broad and ranges from individual private buyers. While there are more people receiving driver’s licenses. It has already reached a saturation level. Over the years.Two Wheelers : 9. According to 2006 Department of Transportation statistics.231 Grand Total : 12. . In 2008. and degree to which the major automakers are developed. They have engaged in horizontal and backward integration and have grown into massive firms. there were 250. Another aspect relevant to this industry’s life cycle is the fact that it is highly consolidated (as opposed to being fragmented). if fewer than four firms control over 60% of the market. GM sold 8.851. and Chrysler comprise more than 60% of the US market. Given this saturation level.292. and with high barriers to entry.770 Automotive Industry Life Cycle This section addresses the automotive industry in the US.35 million vehicles.

It can be more attributed to current economic conditions and the recent rise in oil prices. the automotive industry life cycle is in maturity – between shakeout and decline. As such. One point which demonstrates the type of shakeout that has already happened in the US market is that there have been approximately 1. the real shakeout occurred decades ago.While the automotive industry is going through a shakeout of sorts during this financial crisis. and by the 1980s there were only three major brands: The Big Three. decline is indeed occurring in car sales. but this is likely not endemic or specific to the automotive industry.800 automakers in the US during the 20th century. . Also.

(iv) Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. phased. . affordable passenger cars and a key center for manufacturing Tractors and Twowheelers in the world. (ii) Promote a globally competitive automotive industry and emerge as a global source for auto components.POLITICAL AUTO POLICY VISION TO ESTABLISH A GLOBALLY COMPETITIVE AUTOMOTIVE INDUSTRY IN INDIA AND TO DOUBLE ITS CONTRIBUTION TO THE ECONOMY BY 2010 1. The objectives are to:(i) Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country. POLICY OBJECTIVES This policy aims to promote integrated. (iii) Establish an international hub for manufacturing small. enduring and self-sustained growth of the Indian automotive industry.

Premier Automobiles and M/s. ii. (vi) Steer India's software industry into automotive technology. iii.1 Automotive industry has universal5ly emerged as an important driver in the economy. After the lifting of licensing in 1993. From the fourth year . Hindustan Motors. Although the automotive industry in India is nearly six decades old. it perpetuated obsolete technologies and was out of sync with the world industry. Maruti Udyog Ltd. research and development. Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved majority foreign equity ownership.M/s. (vii) Assist development of vehicles propelled by alternate energy sources. EXTANT POLICY 3. In 1982. only three manufacturers . Standard Motors tenanted the motor car sector. Indigenise components upto a minimum of 50% in the third and 70% in the fifth year or earlier from the date of clearance of the first lot of imports. M/s.1 Before the removal of QRs with effect from 01-04-2001. 2. (FOB). 3. 11 companies signed MOUs with DGFT under which they agreed to: i. BACKGROUND 2. auto components etc. iv. This industry currently accounts for nearly 4% of the GNP and 17% 0f the indirect tax revenue. Neutralise foreign exchange outgo on imports (CIF) by export of cars. the policy placed import of capital goods and automotive components under open general licence. Thereafter the MOU and import licensing will abate. Owing to low volumes. (viii) Development of domestic safety and environmental standards at par with international standards. but restricted import of cars and automotive vehicles in Completely Built Unit (CBU) form or in Completely Knocked Down (CKD) or in Semi Knocked Down (SKD) condition.(v) Conduce incessant modernization of the industry and facilitate indigenous design. Establish actual production of cars and not merely assemble vehicles. Car manufacturing units were issued licences to import components in CKD or SKD form only on executing a Memorandum of Understanding (MOU) with the Director General Foreign Trade (DGFT). 17 new ventures have come up of which 16 are for manufacture of cars. This obligation was to commence from the third year of start of production and to be fulfilled during the currency of the MOU. until 1982. (MUL) came up as a government initiative in collaboration with Suzuki of Japan to establish volume production of contemporary models.

000 Multi Utility Vehicles. With an investment of Rs. India ranks second in the production of two wheelers and fifth in commercial vehicles.50. It employs 4. carry nearly 65% of freight and 87% of passenger traffic. the turnover was Rs.12% share of exports in the total production. cut costs and . The Indian car market is full of possibilities. address emerging problems and be WTO compatible. the component industry maintained a low but positive growth rate mainly due to its export performance.00.5 Roads occupy an eminent position in transportation as they.000 persons.4 The auto sector (excluding Tractors) attained a steep cumulative annual growth of 22% between 1992 and 1997. enlarge product range. Over the years. There has been a slowdown in the automobile sector in the past two years. India has 3. save by a few. 14 of Two/Three Wheelers and 10 of Tractors besides 5 of engines. 4. 5. which is the second largest in the world. 4.00. and conduces contention rather than competition. on the other hand.000 Commercial Vehicles and 2. is dependent on the demand for new vehicles. CURRENT STATUS OF INDIAN AUTOMOTIVE INDUSTRY 4. 4.000 crores.3 India’s automotive component industry manufactures the entire range of parts required by the domestic automobile industry and currently employs about 250. access new markets.50.000 2-wheelers. multi-utility vehicles. but present demand profile inhibits volume production.1 The extant policy has drawn many overseas companies into India but needs to be more investor friendly.70.000 passenger cars.imports were to be regulated in relation to the exports made in the previous year. Component production grew by 28%. The Tractors achieved a cumulative annual growth of 16%. 4. passenger cars. There are in place 15 manufacturers of cars and multi utility vehicles. as per the present estimate. the majors have consolidated to elevate technology.500 crores in Automotive Sector during 1999-2000. The replacement market is characterised by the presence of several small-scale suppliers who score over the organised players in terms of excise duty exemptions and lower overheads. the component industry has maintained a 10% . 5.2 India manufactures about 38. NEED FOR A COMPREHENSIVE AUTOMOTIVE POLICY 5. 4. The demand from the OEM market. the Indian highways are getting overpopulated.60. 59.000 people indirectly and is now inhabited by global majors in keen contention. 1. 9 of commercial vehicles. 1. Traffic management and road sense also need attention. tractors and auto components.000 people directly and 100.1 The industry encompasses commercial vehicles. Auto component manufacturers supply to two kinds of buyers – original equipment manufacturers (OEM) and the replacement market.70. However.000 tractors annually.3 million kilometers of road network. two wheelers. World over. Although.25. three wheelers.

lower productivity levels.2 Increased resource allocation to the highways sector to ensure collateral upgradation and development of road infrastructure in step with the increase in the population of vehicles. 7.5 Auto components manufacturers have been slowly gaining global recognition and maintaining a certain level of exports despite the recent downturn. The main challenges are lower volume – low scale. modular assemblies and systems integration by component suppliers and ECommerce. In this process. while the larger companies including most MNCs are being transformed into tier 1 companies. "System Supply" of integrated components and sub-systems is becoming the order of the day. most of the SSI units manufacturing smaller individual components are on their way to become tier 2 and tier 3 suppliers. 5. it is more important for automobile sector. These path government’s economic reform and are in harmony with the commitments made to WTO. India has the potential to be a global automotive power. concerted efforts will be required to take auto manufacturing to a selfsustaining level where they shall have volumes. MEASURES TO REALIZE THE POLICY OBJECTIVES 6. 5.7 billion by 2010. 6. However.3 Indian auto sector needs to grow collaterally and in harmony with world industry. 6. and sell to the auto manufacturers. 5. export to tier I manufacturers as a part of their international supply chain and direct exports to aftermarket. 5. safety and environmental aspects. FOREIGN DIRECT INVESTMENT . They have resorted to common platforms. with individual small components being supplied to the system integrators instead of the vehicle manufacturers. Lack of volume will not only inhibit efficient manufacture but also R&D and introduction of new models. generate requisite technology and meet evolving emission requirements. limited resources for international marketing and establishment of an efficient supply chain.4 Volume is important for any manufacturing enterprise. which purchase from tier 2 & 3. duties and imposts will be the instruments to achieve the Policy objectives.1 Initiatives relating to investment. both for the manufacture of vehicles as well as auto components. 6. tariffs. fragmentation. inadequate R&D/technology support.3 An appropriate regulatory framework for smooth movement of traffic.ingraft versatility. It should be possible to achieve an export target of US $ 1 billion by 2005 and US $ 2. This would require three pronged marketing strategy: exports through OEMs for their global sourcing requirements.2 The automotive industry is in the midst of a major structural transformation in today's globalised scenario. The investment and fiscal policies should create an environment for volume production and indigenous capability for innovation for small cars and auto components. However.

Mopeds. 8.e. These capture more than 85% of the market. Trucks.2 The Government will review the automotive tariff structure periodically to encourage demand. 8. IMPORT TARIFF 8.1. Buses. in respect of unbound items i. 8. India can build export capability and become an Asian hub for export of small cars. the import tariff shall be so designed as to give maximum fillip to manufacturing in the country without extending undue protection to domestic industry. Scooters and Auto Rickshaws. 8. CBUs and Auto components. 8. Tractors. 9. MUVs.4 In consonance with Auto Policy objectives. 9.1 The ownership of cars in India is just 6 per thousand of population as against 500 in the developed economies. promote the growth of the industry and prevent India from becoming a dumping ground for international rejects. Small cars occupy less of road space and save on fuel. ensure balanced transition to open trade. The contribution of the auto sector to the GDP and employment is likewise low. promote increased competition in the market and enlarge purchase options to the Indian customer.1 The incidence of import tariff will be fixed in a manner so as to facilitate development of manufacturing capabilities as opposed to mere assembly without giving undue protection. Motorcycles. 8. Expansion of local demand holds great potential and is vital to install scale volumes of production.1 Automatic approval for foreign equity investment upto 100% of manufacture of automobiles and component is permitted.1 Motor Cars 9.7 Appropriate measures including anti dumping duties will be put in place to check dumping and unfair trade practices. .2 Domestic demand mainly devolves around small cars not exceeding 3. Motor Cars. environmental requirements as per Public Notice issued by DGFT laying down specific standards and other criteria for such imports. EXCISE DUTY 9.5 The conditions for import of new Completely Built Units (CBUs).1. will be as per Public Notice issued by the Director General Foreign Trade (DGFT) having regard to environment and safety regulations.7.3 In respect of items with bound rates viz. The growth of this segment needs to be spurred. Government will give adequate accommodation to indigenous industry to attain global standards.6 Used vehicles imported into the country would have to meet CMVR..80 meters in length. 8.

The Government will endeavour to provide fiscal incentives to this sector. A balanced and coordinated approach will be undertaken for proper maintenance. upgradation and development of roads by encouraging private sector participation besides public investment and incorporating latest technologies and management practices to take care of increase in vehicular traffic.2 The Government will encourage fabrication of bus body on bus chassis designed for better passenger comfort instead of truck chassis as is the current practice. 9.1 Presently excise duty on commercial vehicles sold by a manufacturer whether as a chassis or with a complete body is 16%. 9.9.3. .3 The Government will promote the use of multi-axle vehicles for carriage of goods as they cause reduced environmental pollution and lesser wear and tear on road surface in comparison to the existing 2-axle trucks.3.3 Commercial Vehicles 9. The duty imposed on the construction of bodies by an independent body builder. They are the first vehicle purchased by a number of farmers. 10.1 Traffic on roads is growing at a rate of 7 to 10% per annum while the vehicle population growth for the past few years is of the order of 12% per annum. However.2 For the convenience of traveling public the Government shall also promote multi-modal transportation and the implementation of mass rapid transport systems. small businessmen in rural and semiurban markets. Poor road infrastructure and traffic congestion can be a bottleneck in the growth of vehicle industry.1 The Government shall promote Research & Development in automotive industry by strengthening the efforts of industry in this direction by providing suitable fiscal and financial incentives. traders. small or organised sector.3.2 Multi Utility Vehicles 9. shall be equal to that of bodies built by a chassis manufacturer. IMPROVING ROAD INFRASTRUCTURE 10. 9.1 MUVs are an important mode of economical mass transport in rural India due to poor road infrastructure and lack of good State transport system. no duty is levied on the body that is built by an independent body builder on chassis bought from a manufacturer.2. INCENTIVE FOR RESEARCH AND DEVELOPMENT 11. 10. 11. This dispensation inveigles production of the complete trucks and buses by the chassis manufacturer and is detrimental to safety standards.

Starting with metropolitan and important towns. 13. 11. Vehicle manufacturers will also be considered for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on Research and Development carried either in-house under a distinct dedicated entity.2 The current policy allows Weighted Tax Deduction under I.2 The Government after considering the recommendations of the Expert Committee on Auto Fuel Policy headed by Dr. Appropriate fiscal measures will be devised to achieve milestones in the roadmap for implementation of auto fuel policy. Suitable institutional mechanism will be put in place for certification. faculty or division within the company assessed as competent and qualified for the purpose or in any other R&D institution in the country.3 In addition. 11.T.5 Allocations to automotive cess fund created for R&D of automotive industry shall be increased and the scope of activities covered under it enlarged. have approved a road map for implementation for the auto fuel quality consistent with the required levels of vehicular emissions norms and environmental quality.11. concessional duty on plant/equipment imports and granting automatic approval. the Government will pursue with State Governments and Local bodies amendments to bye laws for upward revision of the parking norms for new residential buildings.1 With the growth of vehicles. The Government will continue to promote the use of low emission fuel auto technology. R. . construction of common parking for existing residential areas besides parking upgradation in all commercial areas. COMMERCIAL AND OTHER USES 12. 12. 13. monitoring and enforcement of different technologies/fuel mixes. Act. BUILDING BYE LAWS FOR RESIDENTIAL. 1961 for sponsored research and in-house R&D expenditure. Mashelkar. Multi-storied parking shall also be encouraged. This will be improved further for research and development activities of vehicle and component manufacturers from the current level of 125%. This would include R & D leading to adoption of low emission technologies and energy saving devices. The Government will formulate a comprehensive auto fuel policy covering the other related aspects and ensure availability of appropriate auto fuel/fuel mixes at minimum social costs across the country.4 Government will encourage setting up of independent auto design firms by providing them tax breaks. 11. ENVIRONMENTAL ASPECTS 13. The problem has been aggravated because of inadequate provision of parking facilities generally.1 The automotive and oil industry have to heave together to constantly fulfill environment imperatives.A. smooth traffic movement has come under severe strain.

3 In the short run. will consider having a terminal life policy for commercial vehicles alongwith incentives for replacement for such vehicles. lie intreasured. In India. SAFETY 14. . the Govt. 14. As an impetus for the development of such vehicles.13. 13. Lifetime road tax is also in vogue. Auto Sector Budget 2011 Highlights at a Glance Full exemption of basic customs duty and concessional central excise of 4% extended to batteries imported for electric vehicles in replacement market. Hybrid vehicles part to be fully exempt from basic customs duty and special CVD. the road tax on vehicles varies in nature and quantum among the states. Hybrid vehicles and vehicles operating with batteries and fuel cells are alternatives to the conventional automobile. 15. 13.1 Government will duly amend the Central Motor Vehicles Rules. LPG kits) LED lights to attract only 5% excise from 10%.6 In order to facilitate faster upgradation of environmental quality. will tend to this requirement. Duty reduced from 10% to 5% on conversion kits for fossil-fuelled vehicles to hybrid (CNG. an appropriate long-term fiscal structure shall be put in place to facilitate their acceptance vis-à-vis vehicles based on conventional fuels. which in their early beginnings. Government.2 Testing and certification facilities need to be revised and strengthened in accordance with safety standards of global order. Bureau of Indian Standards (BIS) and other relevant provisions and introduce safety regulations that conform to global standards.1 Government recognises the need for harmonisation of standards in a global economy and will work towards it.4 There is prime need to support the development and introduction of vehicles propelled by energy sources other than hydrocarbons by promoting appropriate automotive technology. • • • • • Fuel-cell technology vehicles to get concessional excise duty of 10%. the practice is to levy higher road tax on older vehicles in order to discourage their use. in partnership with industry.5 Internationally. HARMONISATION OF STANDARDS: 15. Concessional rate of 5% excise duty to incentivize domestic production of hybrids. The endeavour will be to move to the international model. the Government will encourage the use of short chain hydrocarbons along with other auto fuels of the quality necessary to meet the vehicular emissions norms. 13. 14. exempt from special CVD.

LPG and electric. so no price hike for cars and bikes In the Budget 2011. LED lights are also likely to get cheaper (and can see more use in automobiles). A concessional rate of 5 percent excise duty has been proposed in Budget 2011 on hybrid vehicles to incentivize their domestic production. However. but when the time comes to replace its batteries. Pranab Mukherjee has proposed the setting up a National Mission for Hybrid and Electric Vehicles that will be launched in association with all stake holders. To spur research and development on fuel-celled vehicles running on hydrogen cell technology. which include carmakers and battery makers. tarring machines.• • • Outright concession in place of refund-based concession on excise duty for factory-built ambulances. It’s a good time for Toyota to consider making the Prius in India instead of importing it. you will get them much cheaper. What this means is. Tata Motors. Force Motors. . besides the 5 per cent duty to urge more carmakers to make hybrid vehicles locally. All hybrid vehicles in India (CNG. However. you will get the car cheaper because it is assembled locally and the battery cost will be lower. the Finance Minister has given such vehicles a concessional excise duty of 10 per cent only. Mahindra and other makers of factory-built ambulances can benefit from Mukherjee’s proposal of an outright concession instead of a refund-based concession from excise duty on ambulances. tunnel borers) from the same. if you drive an indigenous electric vehicle like the Mahindra Reva. as they now only attract 5 per cent excise duty according to Budget 2011 proposals for the auto industry. He has also incentivized the conversion of petrol and diesel vehicles to hybrid technology like CNG. though Mahindra and Honda have been doing some R&D on this locally. Existing concession on 7-seater taxis to stay. Mukherjee also wants green roads. The Finance Minister also extended the exemptions from basic customs duty and a concessional rate of Central Excise duty of 4 percent that was provided to specific parts of electrical vehicles in the last budget. LPG – dual fuel vehicles. This mission will strive to provide green and clean transport to the masses. These concessions now include batteries for electric vehicles imported by carmakers for the replacement market. by reducing the excise duty on conversion kits from 10 per cent to 5 per cent. you are not going to get any reduction in its price as there’s no reduction in import duties on completely-built cars. Now Mukherjee has also granted full exemption of basic customs duty and special countervailing duty (CVD) on specific parts for such vehicle. No change in existing excise duty. as well as exempted machinery for road construction (road-rollers. if you buy a Toyota Prius. there are no commercially available fuel-celled vehicles in India yet. It’s not just green cars. and has exempted bio-based asphalt in road construction from basic customs duty. Refund-based concession on taxis with seating capacity of upto 13 (including driver). and petrol-electric hybrids) get a concessional excise duty rate of 10 per cent.

Mukherjee has proposed a refund-based concession on excise duty to taxis that have a seating capacity not exceeding 13 people. For senior citizens. has granted concessions. other also has entered into  technology tie-ups. Thankfully. consumers will have a wee-bit more disposable income to spend on cars. of CVs plying on Indian roads. the age to qualify is now 60 years (from 65 earlier). This concession is already available to 7-seater taxis.  Several Indian firms have partnered with global players. Mukherjee also reduced excise duty on petrol.5 lakh.  Weighted tax deduction of up to 150% for in-house research and R & D Activities. This again will benefit Force Motors and Tata Motors. 20. but has tried to steer it in a green direction.  Govt. besides Mahindra. Other automakers that benefited from Budget 2010 were Tata Motors and Ashok Leyland. 2.000 to Rs.8 lakh. Of course. 1. putting a little more disposable income in the hands of Indians. Overall.5% per annum. Besides this. but that’s not likely to have a significant impact on fuel prices owing to the soaring price of oil. such as reduced interest rates for export  Financing. as the government funded 15.  The increased enforcement of overloading restrictions has also contributed  to an increase in the no. The income-tax exemption limit has been raised by Rs. . While some have  formed joint ventures with equity participation.  The Indian economy has grown at 8. the budget hasn’t significantly changed the pace of growth of the automobile sector. Many were expecting a hike in duties. the exemption limit is now Rs. and the exemption is Rs. Maruti and Toyota.  Economic The level of inflation Employment level per capita is right. For super-senior citizens (above 80 years of age).260 low-floor and semi-low floor buses in the NCR region under the Jawaharlal Nehru urban revival scheme.  More than 90% of the CV purchase is on credit. duties on regular cars and bikes remain unchanged in Budget 2011. Economic pressures on the industry are causing automobile companies to  Reorganize the traditional sales process. and made public transport more comfortable.Large taxis also benefit thanks to Budget 2011. 5 lakh.  The manufacturing sector has grown at 8-10 % per annum in the last few years. including the driver.  F inance availability to CV buyers has grown in scope during the last few years.

Growth in urbanization. for mini.  Social      85% of cars are financed in India. Vehicles priced between USD 7000-12000 form the largest segment in the Since changed lifestyle of people. Preference for fuel efficient cars with low running costs.‡ Establishment of India as a manufacturing hub. leads to increased purchase of Automobiles. They are socially acceptable even amongst the well off. 4th largest economy by ppp index. which makes it favorable to buy a four wheeler. Preference for small and compact cars.  OEMs and for auto components. Upward migration of household income levels  passenger car market. Car priced below USD 12000 accounts for nearly 80% of the market. educated and well informed.  Indian customers are highly discerning. They  Are price sensitive and put a lot of emphasis on value for money. so automobile sector have a large customer base to serve. . The average family size is 4. compact cars.

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