AUTOMOBILE SECTOR

The global automotive industry designs, manufactures, and markets the Worlds motor vehicles. In 2008 alone, global production exceeded 70 million vehicles. The industry can be classified into 3 broad product segments, namely, commercial vehicles, passenger vehicles and two and three-wheelers. As their names suggest, commercial vehicles include goods and passenger carriers such as trucks and buses, while passenger vehicles are those we are all familiar with, from the luxury Rolls Royce to a 13-seater Toyota minivan to the modest Tata Nano. Two and three wheelers, of course, include motorcycles, scooters and the like. Given the breadth of the automotive industry (from backward linkages to raw materials such as metals and logistics to forward linkages with dealerships and gas stations), it is one of the largest industries by manpower, directly or indirectly employing managers, scientists, mechanics, technicians, salespeople and marketers, amongst others. Performance Unfortunately, during the global meltdown in 2008, auto companies suffered a double whammy with rapidly rising oil prices and escalating raw material costs coupled with a drastic drop in demand of their fuel guzzling SUVs due to changes in consumer buying habits. As consumers tightened their purse strings, many looked for more fuel efficient, smaller cars while others re-evaluated their private vehicle usage, deciding to switch to public transport and delaying their auto purchases. As a result, many leading manufacturers, including the American Big Three (Chrysler, Ford and General Motors) and Japans Toyota suffered major losses and were forced to seek government assistance, shut down manufacturing plants, retrench large numbers of

workers, re-organize their line-ups and offer substantial discounts across their existing ranges. Leveraging its burgeoning demand and domestic low cost production, China was one of few countries to experience significant growth in 2009, becoming both the largest automobile producer and market in the world. The Indian domestic market too, managed to escape the downturn relatively unscathed, due primarily to the relatively inelastic demand for compact vehicles and 2 wheelers, the launch of new variants by all major players and reduced excise duty in the 2008-09 Budget. The largest automotive companies in India are Maruti Suzuki, Hyundai Motor India, Tata Motors and Mahindra & Mahindra. The Indian automobile industry gathered momentum rapidly, with Indian Automotive citing April 2009's overall vehicle sales rising by 9.83 percent year-on-year. According to figures released by the Society of Indian Automobile Manufacturers, the domestic passenger car sales managed a growth of 17.15 percent. Growth Potential The automotive industry remains one of the highest revenueearning industries in India and contributed over 5% to Indias GDP in 2009, providing direct and indirect employment to more than 13 million people. The market outlook for the industry remains promising, especially in the small car segment. The Indian automobile market is currently dominated by the two-wheeler segment but with an expanding middle class population, growing earning power and industrial development, the demand for passenger cars and commercial vehicles will increase exponentially. Also, the low vehicle presence (with passenger car stock of only around 11 per 1,000 population in 2008) indicates a very low base with significant growth potential. As per Just-Auto analyst reports, sales of passenger cars in 2008-2016 are expected to grow at a CAGR of around 10%.

In addition to increased domestic demand, there is also likely to be increased investment by global auto manufacturers to India due to its strong technological capability and availability of trained manpower at competitive prices. Currently, the foreign auto companies with assembly plants in India include, General Motors, Ford, Hyundai, Honda, Suzuki, Nissan Motors, Toyota, Volkswagen, Audi, koda, BMW, Fiat and Mercedes Benz. With the introduction of the Tata Nano, the cheapest car in the world at USD 2200, and FDI from Suzuki Motor Corp, Hyundai Motor Co, and Nissan Motor Co to make India their manufacturing hub for small cars, India has made huge inroads in the compact car segment. In fact, in 2009, India overtook China in the global auto exports of compact cars for the first time. Future Prospects All in all, this bodes very well for the industry outlook over the forthcoming years. As a result, the job opportunities in this sector are going to remain huge, especially for trained professionals involved in key production areas. Foreign firms looking to capitalize on the local talent are likely to offer attractive remuneration and provide accelerated growth prospects for ambitious individuals, and local firms hoping to grow their footprints are also likely to step-up their hiring and upward movement of staff.