A

MINI PROJECT REPORT

ON

INDIAN AUTOMOBILE
INDUSTRY
Submitted for the Partial fulfilment of the Requirement of Award of

MASTER OF BUSINESS ADMINISTRATION

(2021-2023)

(AFFILIATED TO AKTU UNIVERSITY, LUCKNOW)

UNDER THE GUIDENCE OF Submitted BY:

Dr. Satendra Soam Arnav Soam
(Director) MBA: 2nd Sem

MASTER SCHOOL OF MANAGEMENT STUDIES,

Meerut Uttar Pradesh
(Affiliated to AKTU, Lucknow)
ACKNOWLWDGEMENT:
It is really a matter of great pleasure for us to undertake and present this mini
project on the topic INDIAN AUTOMOBILE INDUSTRY: “CHALLENGES AND
EMERGING TECHNOLOGY”
This report has been prepared by keeping in mind various aspects related to
market condition, financial feasibility and operational feasibility as well.
I undertake this opportunity to express my sincere thanks to Prof. (Dr.) Satendra
Soam (Director, MSM) who has guided me in preparing this report. Also, I would
like to thank my family and friends for their support and encouragement .
INTRODUCTION: The Indian automotive industry is the fourth largest in the
world as per 2021 statistics. In 2022 India became fourth largest country in the
world by valuation of automotive industry. In 2020, India is the 5 th largest
automobile market in the world, surpassing Germany in terms of sale.
Currently Indian auto industry is worth of more than 100 billion USD and
contributes 8 percent of country total export and accounts 7.1 percent of Indian
GDP.
Major firms of Indian automobile sector are: - Tata Motors, Hyundai Motors,
Maruti Suzuki, Mahindra and Mahindra and Pravaig Dynamics etc.
The Indian automotive industry has come a long way since it was launched in
Bombay in1898. The Indian automotive sector has witnessed excellent growth in
the recent past and is all set to carry on this momentum. Directly or indirectly this
sector employs more than ten million people in the country.
Since independence, there have been several limitations that the automotive
sector has overcome. Measures such as reduction of tariffs on imports relaxation
of the foreign exchange and equity regulations and refining the banking policies
played a major driver in the turning around of Indian automobile industry.

SIGNIFIICANCE OF INDIAN AUTOMOBILE INDUSTRY: The industry contributes

about 2.8 percent to the Indian economy and and contributes about 35 percent to
the manufacturing GDP, supports over 37 million jobs directly (OEMs dealers and
suppliers) and as many as 30 million more in value chain.
Automobile industry is the key driver of Indian economy. It plays a vital role in the
economic and industrial development of India. It supports the development of
some other industries by procuring of raw material those basic industries are
steel, metal, plastic, petrochemicals, rubber, glass and so on.
The two-wheeler segment with81 percent market share is the leader of Indian
Automobile market owing to a growing middle class and younger population. The
main strength has been a large unsaturated domestic market for small cars (and
presence of a large middle economic class) low production cost (on availability of
low-cost labor and other inputs) and skilled engineering talent.
GOVERNMENT INITIATIVES TO PROMOTE AUTOMOBILE INDUSTRY: 1: The
Automobile Mission Plan of the Government of India is to set a goal to increase
the contribution of automobile sector towards national GDP to 12% and generate
about 50 million new jobs.
2: The road transport and highways minister said the Indian automotive industry
is a key driver in the economic growth of the country.
3: The contribution of automobile sector to overall GDP of India is 7.1% and 49%
in the manufacturing GDP, with an annual turnover of RS. 7.5 lakhs crores and
exports of RS. 3.5 lakh crores.
4: The minister said the government is working to make India the no.1 automobile
manufacturing hub in the coming years.
5: According to Gadkari, it is estimated that37 million jobs, directly and indirectly
supported by the industry.
6: According to Gadkari the automobile industry is a vital player in making India an
economy of $5 trillion.
CHALLENGES FACED BY THE INDIAN AUTOMOBILE INDUSTRY IN THE RECENT
YEARS: -
1: - Manufacturing Shutdowns: The onslaught of the COVID-19 pandemic
manifested in the form of massive production halts given intense social distancing
and nationwide lockdowns. Governments the world over enforced and safety
regulations making manufacturing shutdowns one of the most significant
challenges of the automotive market. The virus outbreaks presented a huge
question pertaining to whether normal production would ever resume in
response, 2021 China returning to production although with the same rigor as
before. The United States and Europe, however, are struggling to get to get back
to regular vehicle production. Recent studies depict that in April 2020, vehicle
sales in Europe fell by 84% as opposed to April 2019.

Manufacturing shutdowns accentuate the already existing automotive industry

challenges access production and resource shortage. They also led to massive
financial losses directly impacting GDP. Even after production commenced in 2021
the sales graph remains linear. To that end, automotive companies will now have
to alter their car making embracing industry 4.0 foe efficiency and manufacturing
resilience takes the cake here.

In addition, experts opine that manufacturing shutdowns may continue to remain

the most critical challenges facing the automotive industry during COVID-19. This
indicates that government will now have to ease emission laws to incentivize
battery electric vehicle adoption. Automakers will also have to speed up the
technology shift in the automotive sector to move from conventional
manufacturing standards and processes.
2: LESS VEHICLE SALES: - Reduced car sales emerged as one of the critical
challenges facing the automotive industry during COVID-19. According to reliable
estimates, pre-pandemic numbers for auto sales in the United States alone was
forecast to be 16-17 million units in 2020. The onset of the pandemic brought
forth spate of financial losses due to statewide lockdowns, social distancing, and
shutdown of manufacturing units.

This course does not come as a surprise, in the event of a pandemic, purchasing of
vehicle would be the least priority of a person. Despite the anticipation the
numbers are pretty shocking- according to the society of Motoring Manufacturers
and Traders, the UK automotive industry lost GBP 1.3 billion in sales in 2020. Lack
of sales have led to excess inventory, high level of debt and demand uncertainty.

3: - MASSIVE LAYOFFS: Loss of labor is an overt impact of manufacturing

shutdowns. As the coronavirus spread, many companies had to resort to many
layoffs, that emerged as one of the crucial challenges of the automotive market.
Nissan, for example closed its unit in Barcelona, Spain after reporting huge losses.
Many companies in Europe had to put their workforce on short-term work during
COVID-19. Swedish automobile maker AB Volvo, declared declared last year that
it planned to lay off 4,100 white collar positions in its company in H2 2020.
Despite closing shop, automotive companies encouraged its workforce to apply
for unemployment benefits and other benefits. For example, when BMW U.S.
production facility in Spartanburg, South California, delayed its opening date until
April 30 instead of April 12, the German automaker stated that it will furlough
11,000 of its employees at the unit until the extension date while also providing
them healthcare benefits. Although the industry is beginning to recover, dealing
with the workforce is likely to remain one of the consistent challenges of
automotive industry, as it will take quite a while before it is at a stable position
again.
4: DISRUPTED SUPPLY CHAIN: - The onset of COVID-19 brought about an
immediate halt in the current production, disrupting supply chains the world over.
China, that was impacted by the pandemic at the outset, had almost two-third of
its vehicle manufacturing affected due to the nationwide lockdown, which
severely affected the supply chain. Auto supply chains are, more often than not,
spread across geographies, with every country imposing its own protocol post the
pandemic, supply chain management took a massive hit, emerging as one of the
most vital challenges faced by the automotive industry during COVID-19.
Automotive supply chains have faced more than disorganization and disruption,
they will now be under additional pressure, due to the bottleneck in
semiconductor manufacturing and the reinstalment of electric mobility. General
Motors, for example, in January 2021, declared that it aims to have a complete
portfolio of zero emission vehicles to sell, by 2035. The pandemic clearly brought
forth the fragility of the existing supply chain analytics, highlighting that resilience
and transparency through digitization and other agile practices is the only way
forward for automotive companies.

5: - Liquidity: - Liquidity was the biggest challenge facing the automotive industry
last year. The pandemic regime reemphasized that cash is indeed king. Production
shutdowns and slumping sales gradually led to heavy financial losses, OEMs
operating on minimal liquidity. Lack of funds is likely to result in many small-time
automotive companies going out of business. Cash reserves were at all time low
during COVID-19, the situation is not likely to be reversed soon enough.
As financial automotive industry challenges continue to reign, automakers will
need to secure government support measures to secure liquidity assistance. Using
artificial intelligence in automotive market to predict real time cash influx and
establishing a liaison with financial institutions for investment in connected
technologies and automation are also some options automakers can tap into as
they deal with liquidity challenges of the automotive industry.
6: SHORTAGE OF SEMI CONDUCTOR CHIP: The shortage of semiconductor chip is
one of the biggest problem faced by the Indian automobile industry in recent
times because of the global lockdown due to COVID-19 the production became
short and now the automobile companies are not able to fulfil the demand of the
customers because to make a car with fully loaded features companies needs
semi-conductor chips, more the features in the car more the need of the
semiconductor chip and the companies totally imports the semiconductor chip
from foreign countries because there is not even a single semiconductor
production plant in India.
7: - CHANGE IN CONSUMER BEHAVIOUR: The collapse of the economy, rise in
prices, and the all-around dire states of public health and financial brought about
a considerable change in the buying patterns of consumers. To begin with tough,
during a critical time like the pandemic, purchasing a car was least of everyone
worries. Scarce finances and uncertainly about the future led the consumers
backing out of making vehicle purchases, that emerged as one of the key
challenges of automotive industry.
For ones that could afford, buying cars from dealership and offline showrooms
was next to impossible, given to stringent protocol of lockdowns. To combat the
same, post COVID-19 many automakers attempted to go offline, offering short
term subscription-based lease models for consumers, making car purchases
digital, and undertaking numerous other steps to restore declining consumer
confidence.
Although 2021 saw the resurgence of percentage of the consumer base, overall
customer footfall is still low and likely to remain one of the significant problems of
automotive industry for a few years. Changing customer behavior may, however,
lead to considerable alteration in business model of automakers, ushering in a
new era for electric mobility, connected cars, and automation.
Experts anticipate the automotive sector to be replete with risks and challenges
for quite a while, it may take years before pre pandemic success levels for this
industry are restored. In the years ahead, automotive companies must work on
resolving the existing challenges through strategic measures. To begin with,
opting for digital modes and bringing about convenience for consumers could
work. Further on, automakers need to shift from the conventional manufacturing
models to automated working processes while ensuring flexibility.
Adoption of the latest technologies and bringing connected vehicles to the
mainstream are likely to open up new income sources for automakers in the years
ahead. As government help out by bringing in changes in emission laws,
automotive companies work on creating a more resilient supply chain, and more
intense R&D programs are carried out to set new standards, the automotive
industry could slowly itness a rebound within the next half decade or so.
EMERGING TECHNOLOGY IN AUTOMOTIVE INDUSTRY: -
1: AUTONOMOUS VEHICLES: - Self driving autonomous vehicles minimize the
need of human drivers and look poised to transform everyday transportation.
Fleets of AVs expand the scope of last-mile deliveries, reduced downtime, and
aim to make public transport relatively safer. For example, by reducing accidents
caused due to driver fatigue or negligence. Avs are equipped with advanced
recognition technologies, such as AI advanced computer vision to identify
obstacles along the route.

2: VEHICLE CONNECTIVITY: Nowadays, vehicles come with a tamper-proof digital

identity that differentiates them from other vehicles in the network. This enables
easy tracking vehicular data for various use cases such as insurance, driver safety,
predictive maintenance, and fleet management. Sharing vehicular data helps not
just the individual customer but overhauls the entire mobility system. Startups
and scaleups develops vehicle connectivity solutions that enable them to connect
and exchange data with other vehicles(V2V), an electric vehicle grid(V2G), public
infrastructure(V2I), as well as new ways to utilize vehicle data (V2X).

3: - ELECTRIFICATION: The depleting fossil fuel reserves and the harm to the
environment caused by their use call for prompting the use of electric mobility
solutions. For greater adoption, EVs need to address issues such as high price,
poor battery, inadequate charging infrastructure, fleet electrification, as well as
powering renewable energy-based charging grids. These challenges, along with
the need to tackle increasing greenhouse gas emission across the world, startups
are working on electrification solutions.
4: SHARED MOBILITY: With connected vehicles, new business models have come
up that focus on shared mobility as an alternative to traditional vehicle ownership.
These enables mobility-as-a service (MAAS)and discourages unused vehicles. Such
solutions meet the requirements of a city or a business without adding new
vehicles, thus reducing waiting time for fleets and pollution caused by petrol or
diesel vehicles.
5: ARTIFICIAL INTELLIGENCE: Artificial intelligence technologies such as machine
learning, deep learning, and computer vision find applications in robotic
automation within the automotive industry. These guide self-driving cars, manage
fleet assist drivers to improve such as vehicle insurance or inspection. AI also finds
applications in automotive manufacturing, where it accelerates the rate of
production and reduce costs.
RevitsOne provides AI based fleet management solutions: Indian startup
RevitsOne offers an AI power fleet management software that is suitable for fleets
of varying sizes. The startup vehicle management system provides insights into
speed, running vitals and health information. Drivers benefits from VOICERA ID, a
voice based virtual assistant that helps them keep track of the information they
need.
Additionally, the onboard speed recorder limits the speed to discourage
dangerous drivers behaviors.

6: Big Data & Analytics: The age of big data and analytics informs various
decisions throughout the life cycle of a vehicle. Data gathered from vehicles
enable predictive maintenance, informs managers about their fleets, and alert
concerned authorities in case of emergency. Moreover, customer automotive
data finds applications in driving sales optimizing supply chains, and enhance
product design for newer vehicles. Startups and emerging companies develop big
data solutions to help automotive manufacturers, as well as ancillary industries,
streamline their operations to maximize their margins.

7: HUMAN MACHINE INTERFACES (HMI) As self-driving cars transform the

automotive landscape; it will fundamentally change how drivers interact with
vehicles. Human Machine Interfaces use voice based or haptic feedback to
operate vehicles. These expand the scope of how and what aspects of a car that
user’s control. Consequently, such interfaces make the driving experience safer
and more enjoyable. Another form of HMI includes smart virtual assistants who
help riders and drivers interact with h=the vehicles and other service providers. 8:
BLOCKCHAIN: Block chain enables multiple applications in the automotive
industry. These includes sharing vehicle data over a secure network of
connectivity and shared mobility solutions such as ride hailing, urban
transportation and deliveries. Moreover, block chains find applications in verifying
the supply chain of spare parts or making sure that the raw materials and spare
parts are sourced from legal and trusted sources.

9: 3D PRINTING: 3D printing helps the automotive industry in three primary ways.

Firstly, it enables rapid prototyping with 3D printed models that accelerates the
design and testing and designing phase of production. Secondly, it allows
manufacturers to print spare parts to match their requirements. Lastly, additive
manufacturing of composite materials lead to automotive parts that are more
stronger, lighter and durable.

10: INTERNET OF THINGS: In the automotive industry, IoT enables secure

communication between vehicles as well as vehicles and infrastructure
components. The technology Improves road safety, solves traffic congestion, and
reduces pollution and energy expenditure with better fleet management. Startups
and emerging companies develop advanced sensing technologies to gather more
data about the vehicle as well as allow the vehicle to understand its surroundings.
The technology also automates payments for fuel and tolls.