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Report on Auto Industry
A Holistic Overview
PGDM (IB) 2009-11

Report on Auto Industry

Contributors
The following are the Members who contributed in this report

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S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13

Name of the Member Deepkiran Matta Gautam Gulati Keyoor Prashant Diwaker Monica Virbhan Nikhil Nikita Aggarwal Pallavi Chhabra Pragya Agarwal Upasana Singh Urooj Ansari Ankit Khandelwal Mohit Motwani Shivansh Sharma

Course PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB) PGDM (IB)

Roll No. 214 219 224 229 231 232 236 238 265 266 268 270 275

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ACKNOWLEDGEMENT
First and Foremost, we would like to thank our faculty, Professor R.J.Masilamani, (Strategic Management Course) at BIMTECH, Gr. Noida for the valuable guidance and advice. His foresight for creating an inhouse industry report repository has motivated us to produce this report. Besides, we would also like to thank the authority of college for providing us with a good learning environment and facilities to complete this project. This report has helped us in getting an overall overview about the Automobile Sector in Global Market along with India. W are sure that this report will find useful for many who would be seeking a collective information about the industry prior to their Final Placement Process.

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TABLE OF CONTENT
S.No. Topic Page No.

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1 2 3 4 5 6 7 8 9 10

History of Automobile Growth of Automobile Industry across the globe Technological shift in Automobile Industry Indian Automobile Sector - History Indian Automobile Sector – Growth Indian Automobile Sector - Case Study Indian Automobile Sector - Financial Growth Indian Automobile Sector - Recent Development Indian Automobile Sector – Innovations Indian Automobile Sector – Opportunity

5 7 21 32 36 37 41 48 52 57

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History of Automobile
In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, threewheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S.

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A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of non-rechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances.

Charles Kettering's invention of the electric starter in 1912, turned the process of starting automobiles more faster and easier at the same time, doing away with the hand tools. Crude oil being discovered in Texas, the automobiles driven by engines that ran on gasoline became even more affordable, as the prices of gasoline reduced. The prices of electric automobiles were going through a constant rise, in spite of the fact that these were less efficient than the gasoline automobiles.

Jean

Joseph

Étienne

Lenoir

was

the

first

to

invent

an

internal combustion engine that ran on petroleum and attached it to a three-wheeled carriage, and successfully traversed a distance of fifty miles in 1863.

Karl Benz manufactured the first automobile ( a three-wheeled car) that was affordable and compatible for travelling over long distances for its internal combustion engine that ran on gas, in 1886.Later in 1887, Gottlieb Daimler was the first to invent the predecessor of the modern automobile with an engine that had a
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vertical cylinder in addition to a gasoline driven carburetor. First building a twowheeled automobile (―Reitwagen‖) , Daimler was again the first to build a fourwheeled automobile in 1886. The engines manufactured by Daimler were improved upon and these portable and fast engines made automobiles the way we see them today.

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The advanced engines turned the slow, expensive automobiles of the yesteryears, a thing of the past, and cars became more affordable as both the prices of gasoline and petroleum as well as the manufacturing costs reduced through their mass manufacture at the assembly lines of factories. Penhard and Levassor in 1889, and Peugeot in 1991 became the earliest mass manufacturers of the modern automobiles.

The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and assembly lines ofcar factory came into existence. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses.

According

the History

of

Automobile

Industry US,

dominated

the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany.

The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets.

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Global Growth of Automobile Industry
Europe Auto Industry
Europe relies on a strong automotive sector. Further financial and economic pressure on the sector will affect the European economy as a whole; 2.2 million people are employed directly in automotive Manufacturing; an additional 9.8 million rely on it for their jobs in closely related sectors. The real multiplier, in terms of employment in the wider economy, is still higher. ACEA members generate a turnover of €551 billion, and total industry exports are worth €77 billion. Around €378 billion in taxes come from vehicles, reinforcing the sector‘s reputation as the engine room of Europe. Vehicle Production In 2008, 18.4 million vehicles were made in Europe, 7% fewer than the 19.7 million produced in 2007. Of the five major vehicle producing countries, Italy reported the worst decline (-20.3%), followed by France (-14.9%), Spain (-12%), the UK (-5.8%) and Germany (-2.8%). Car production fell 7%, from 17.1 to 15.9 million units. Output in Austria fell most dramatically (-37.3%), followed by Italy (-27.6%) and Finland (25%). New member states, which account for 18% of EU production fared better; Poland and Hungary, reported output increases of 20.9% and 18.9% respectively. Van and truck production reflected a dramatic decline in the economy in the final quarter. From January to June 2008, light commercial vehicle production had risen 6.5%; by quarter four, it crashed 7% or 138,481units. Heavy truck production also rose in quarter two by 15%, only to fall 20% from September to December. Bus and coach production reported growth in output last year, rising 7%, however markets showed signs of faltering by December.

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In 2009, New passenger car production in the EU recorded a rebound of 34% three months into the year, compared to the first quarter of 2009. However, production was still 13% down when compared to the first quarter of 2008. The same picture emerged in the segment of vans. Despite a 51% increase three months into the year 2010, production of vans remained 35% below the pre-crisis level of 2008. Truck production decreased by 5% until April this year, and by 63% compared to the first quarter of 2008. The segment of buses declined by 22% three months into the year compared to the same period in 2009.

In units produced, Germany remained the largest auto manufacturing country in the EU (1.4 million units, +33%), while the UK saw its car production pick up most (+72.7%) compared to the first quarter of the previous year. Except for Finland (59.5%), Belgium (-10.5%), the Netherlands (-7.5%) and Italy (-0.1%), all countries posted growth.

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Market Demand

In Western Europe, only five countries posted new car growth, Finland (+11.2%), Portugal (+5.7%), Belgium (+2.1%), Luxembourg (+2.0%) and Switzerland (+1.0%). Among the five major markets, Spain reported the steepest fall in demand in its history (-28.1%), while Italy (-13.4%) and the UK (-11.3%) fell by more than 10%. Across Europe, new car demand fell 7.8% to 14.7 million units. In the final quarter it crashed 19.3%. Consumer choices reflected concerns about the economy. Market penetration of small cars was the highest ever at 38.8%; SUVs penetration which had peaked in 2007 at 9.9.% fell back to 9%, with the most dramatic fall in France from 7.2 to 4.6%. Average engine size fell to 1706cc, from 1740cc a year earlier, while average power output, which had risen steadily since 1990, fell to 86 from 87 KW. More than half of all new cars sold were diesel models (52.7%).

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Commercial vehicle registrations were down 9% across Europe, the sharpest downturn since 1993. Truck registrations, down 4% overall, suffered most in new 10 member states (-21.1%). Light commercial vehicle demand (LCVs), up 5.1% in new member states, was dragged down by performance in Western Europe (-12%) to end 10.4% down overall. Bus and coach registrations rose 12.1% over the year, but in December they fell 7.5%. By March 2009, government fleet renewal schemes had been introduced in 11 countries to boost flagging markets and help sustain the transition to ‗greener‘ cars. In Germany, new car sales rose by an encouraging 21.5% in February. Effects were also notable in other markets, such as France, Italy and Slovakia.

In 2010, demand for new passenger cars in the EU continued to grow until a 7.4% decline was noted in April. In May, new registrations further decreased by 9.3%. The recent drops reflect both the end to government support schemes as well as the continuing challenging economic situation in the EU. From January to May, small cars* (segments A and B) accounted for 44.6% of the total market for new cars compared to 45.3% in the same period of 2009. Half of all new cars registered had a diesel engine, compared to 46.3% over January – May last year. Demand for commercial vehicles cautiously points towards recovery, although the segment of vans was the only one to record positive figures since February.

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* based on AAA data for the EU15 + EFTA

Vehicles in Use There are more than 250 million vehicles on the European roads –  About 6% of them are new vehicles  The average age of the European car fleet is about 8 years*.

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About 34% of the cars on EU roads are older than 10 years

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 

The average annual distance travelled by a car in the EU is about 22 000 km/year*. Car density per 1000 inhabitants in Western Europe in 2007 was 458.



The European vehicle fleet reached over 256 million units in 2008, an increase of 1.2% compared to the previous year. With 224 million vehicles, passenger cars accounted for the highest share of the vehicle fleet (87%). he European car fleet is mainly concentrated in Western Europe, with over 7 out of 10 cars registered in Germany, Italy, France, the UK and Spain. The number of diesel cars on the roads increased by 7%* in 2008, compared to 2007.

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US Auto Industry
The decline in production and sales of motor vehicles accelerated in the winter and spring of 2009. This section analyzes the factors behind the nosedive in U.S. auto sales and production during the past year and near-term projections for a possible revival of auto sales and production. It also discusses the fallout of the recession in the auto industry on auto suppliers and the unions that represent Detroit 3 auto workers, primarily the United Auto Workers (UAW). Vehicle production In 2009, U.S. motor vehicle production declined dramatically, as shown in Table 1, with overall U.S. output of cars and light trucks dropping by 34% from the previous year. Chrysler and GM sales dropped by 57% and 48%, respectively. Toyota, BMW, and Honda each fell by over 25%. Ford‘s performance, with sales dropping by only 13% year over year, was better than other automakers.

In January 2009, U.S. automobile production bottomed out. In that month, U.S. production at a seasonally adjusted annual rate (SAAR)10 fell to only 3.7 million vehicles (cars and light trucks), compared to a SAAR of 10.7 million units in January 2008. Production in the first two quarters of 2009 fell by more than 50%, compared to 2008 levels.11 The U.S. ―cash for clunkers‖ program, which began on July 24, 2009, increased the production of vehicles in July and August to 6.2 and 5.9 million SAAR, respectively. After the clunkers program ended, many automakers faced depleted inventories. Increased production in the fall resulted in a 1.2% increase in production during the fourth quarter of 2009 over the same quarter in 2008. For all of 2009, 5.8 million vehicles were produced.12 According to IHS Global Insight, U.S. production performance in 2009 was the lowest in nearly 50 years, with the previous

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production low having been recorded in 1961, when 5.5 million light vehicles were 14 manufactured (in a United States with a population of 179 million). U.S. production is forecast to rise by nearly 23% to 6.9 million in 2010, to reach 8.1 million in 2011, and climb thereafter to reach more than 10 million light vehicles in 2014, for the first time in nearly a decade.14 In the near term, production will remain below pre-recession levels. As automakers have moved to rebuild depleted inventory, new production plans have emerged. GM, Ford, and others raised their production levels during the fourth quarter of 2009. For the Detroit 3, SUVs and pickup trucks remain a staple of their business plans. In 2009, 82% of Ford‘s U.S. production and 83% of Chrysler‘s was light trucks (i.e., pickup trucks and SUVs). By contrast, 44% of Honda‘s and 37% of Toyota‘s 2009 production in the United States was light trucks.15 While neither Honda nor Toyota are generally perceived to be dependent on SUV and light truck sales, these vehicles are rapidly becoming a large part of their businesses, demonstrating how potent the market for these products can be. Vehicle Sales In addition to the slide in production, the first months of 2009 were the low point in motor vehicle sales: the seasonally adjusted annual rate (SAAR) of car sales bottomed out in February 2009, at 9.11 million units. But the cash for clunkers program in summer 2009 and strong sales in December 2009 helped cushion results for the year, with greater than expected sales of 10.4 million vehicles in 2009. Still, for 2009, GM‘s U.S. sales fell by 30%, Chrysler‘s by 36%, and Toyota‘s and Honda‘s by 20% each. (see Table 2.) Toyota posted its first annual net loss since 1950. Table 2 shows the change in auto sales by manufacturer in terms of year-over-year sales for 2008 to 2009 and for 2007 to 2009 (2007 was the last full year of sales before the recession hit the industry in 2008), and the shift in market share from 2008 to 2009. GM‘s share fell from 22.2% to 19.8%, while Ford‘s share rose to 15.5% and Hyundai/Kia‘s to more than 7%. The turmoil and bankruptcies of GM and Chrysler have likely been a boon to Ford. Federal ownership of GM and Chrysler became a distinguishing factor that apparently led to a preference for Ford among many buyers. Ford‘s top marketing executive said, ―Ironically, the debate around the industry was the best thing that happened to Ford. We‘re finally relevant in North America.‖16 The attention on the Detroit 3 during 2009 also allowed Ford to introduce consumers to its new lines of trucks and automobiles and its new, more fuel-efficient engines. A national survey of online auto shoppers conducted during the summer of 2009 showed that 22% were actively looking at Ford vehicles, equal to the number looking for Toyotas.17 During the fourth quarter of 2009, Ford closed the gap with Toyota and during January and February 2010, sold 55,301 more vehicles than Toyota. February also marked the first time that Ford outsold GM since 1998. Hyundai‘s increase in market share demonstrates that a once little-known Asian automaker— whose early vehicles, introduced in the U.S. market 20 years ago, rated poorly in terms of quality—can transform itself. ―For years, Hyundai enjoyed a protected home market in Korea. This ensured its prosperity there, but the lack of competition meant the company didn‘t develop the product quality or consistency to compete effectively in international markets. The result: Hyundai‘s initial U.S.
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success in 1986 was undercut quickly by quality problems.‖19 More recently, Hyundai opened a U.S. plant in Alabama and a nearby Kia plant in Georgia. It has 15 also improved its product quality and offers one of the longest warranties in the business, which is luring new customers away from both U.S. and Japanese manufacturers. The three automakers with the largest U.S. market shares in 2009 were GM, Toyota, and Ford. During 2009, Honda surpassed Chrysler to become the fourth-largest seller of vehicles in the United States. Hyundai‘s surge to a 7% market share placed it within striking range of Chrysler‘s diminished 8.9% share.

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Japan Auto Industry
Automobiles are the focus of an extremely wide range of industrial and related activity, from materials supply and vehicle production and distribution to sales, servicing and other auto-centered operations. Auto-related employment in Japan at present totals 5.15 million people. Vehicle Production In 2009, motor vehicle production in Japan decreased for the second consecutive year, totalling 7.93 million units, down 31.5% from the previous year. Passenger car production fell 30.9% to 6.86 million units. Within that category, standard car production declined 40.2% to a total of 3.46 million units, small car production dropped 21.0% to 2.15 million units, and mini car production decreased 11.9% to 1.26 million units. Truck and bus production also showed a decline from 2008, plunging 34.7% and 37.3%, to 985,000 and 87,000 units respectively.

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Vehicle Sales Passenger car and commercial vehicle demand in Japan in 2009 totalled 4.61 million units, a decline of 9.3% from the previous year. Total passenger car sales dropped 7.2% to 3.92 million units, with the standard car segment decreasing 7.3% to 1.16 million units, small cars falling 4.5% to 1.48 million units, and mini cars sliding 10.1% to 1.28 million units. Sales of trucks and buses declined 19.8% and 18.0% from 2008, to 673,000 and 13,000 units respectively.

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International Comparison

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Global Technological Shift in Automobiles Industry
The automobile is a technology that has changed society dramatically over the last century. But not only society changed, the technology of the motorcar itself has changed significantly: an automobile of the 1900's has almost only the concept of four wheels and an engine in common with today's modern cars. The academic world has given little attention to the history of the car, but the last couple of decades the body of literature is growing. Still there is little attention to the technical history of the motorcar itself.

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Theory of technical change in automotive history

Technological change has been the field of study for more than seventy years now. Technology has been studied from several different directions, but mainly from an economical perspective because technology is seen as the driving factor behind economic growth. In the 1970's however technology as a theme of study has also come under the attention of sociologists, philosophers and historians.

One of the main questions in this emerging field of Science and Technology Studies is how technological change occurs. Overtime two different main directions of explanations for technological change have emerged.

First is Technological Determinism, best expressed by the work of Lewis Mumford. 1 The premium assumption of Technological Determinism is that technology has its own intrinsic power that steers the direction of future developments. Opposite to this view the SCOT (Social Construction of Technology) approach emerged in the late 1970's and beginning of the 1980's.2 SCOT emphasizes the role society, existing out of different groups with different powers, plays in the development of technology. The opposition between Technological Determinism and SCOT has many forms and gradations. The polarized difference between the intrinsic powers of technology

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versus the external or contextual powers are expressed differently in different fields of technology and therefore have a broader scope than simply the Science and Technology field. In studying history of technology it makes sense to at least beware of this ongoing discussion to analyze technical developments. This research will continue from the basic viewpoint that technology has a dual nature: it contains an intrinsic power to shape the future path of development, but also is submitted to external forces that create or limit new opportunities. Furthermore the two discussions in the field of history of technology will serve as a theoretical background. Technological determinism versus Social Construction of Technology and Narrative history versus Theoretical history are interesting oppositions for further research. The hypothesis is that both are extreme oppositions and the best view lays somewhere in the middle. But this is of course oversimplified. The main purpose is to understand more about technical change on the artefact level and the discussion will be kept in mind in looking into the technical specifications of the artefacts.

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All three layers (artefacts, human activities and knowledge) of technology as introduced by Bijker (1995) will be studied. The artefacts will be the automobiles and there technological components. For studying the artefacts a structural model as developed by Gijs Mom will serve as a tool to analyze technological change on different levels (see figure 2.1). The second layer (human activities) is the broadest and will involve the engineers and users of the technology. In the case of the car, the users are of course the drivers and passengers, but also people who are affected by cars. Although it is not the idea to explain how automobiles have changed the lives of people in general (I would suggest to read Flink or Sachs), it is important to look at users and non-users to investigate motives for technological changes. The knowledge about automobiles, in a large variety of forms (books, papers, tacit, manuals) is also shared by users and non-users. In this case users are not merely car users, but more car engineers; people who are involved in technological developments of cars.

The three levels of technology corresponded partly with three other levels of analysis: artefact, system and society. Here the main focus is upon the artefacts, but this study also tries to make a link with the car as a system and the role of automobiles in society. An automobile is a complex structure of components varying
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in complexity and dependency. Studying technical change in automotive technology requires a hierarchical structural model that makes it possible to analyze changes on different levels. The model used here is developed by Gijs Mom and it consists of a hierarchical division on the level of artefact, subsystems, main functional groups, auxiliary functional groups, component assemblies and basic components. The artefact here is a passenger car that has a propulsion system (subsystem) that consists of a number of parts. For instance the engine and gearbox (main functional group) with a gear system (auxiliary functional group)

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The artefact here is a passenger car that has a propulsion system (subsystem) that consists of a number of parts. For instance the engine and gearbox (main functional group) with a gear system (auxiliary functional group) and synchromesh (component assembly) and finally a number of nuts and bolts (basic component). The argument is that changes can occur on different levels of the structural model and these changes differ in impact they have on other components, the artefact as a whole and on society. Using this particular model will give insight in the nature of technological change by showing not only the important revolutionary changes, but also the small evolutionary developments.
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In fact the assumption here is that most revolutionary changes start as a small change on a lower level and thus could be called an evolutionary development. The level of analysis in this part of the research is the automobile as an artefact. In his book The productivity Dilemma Abernathy puts the theme of innovation in automobile technology in the perspective of production factors.

Basically he argues that the automotive industry has grown to such a proportion major innovations do not take place anymore since the Second World War, as these innovations would be far too costly to implement in the whole production process. His focus is mainly on the American automotive industry where indeed the production process causes inflexibility in design options. However, in Europe and especially in Japan other production methods have led to different design processes, allowing more innovation.

Artefacts consist of a nested hierarchy of subsystems, although there has not been sufficient attention to this in empirical research on dominant design, some however do. Henderson and Clark distinguish between incremental, modular, architectural and radical innovations the hierarchical structure has an important implication: a modular change at one level in the hierarchical system can be an architectural or radical change at a lower level in the hierarchy.

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The concepts used by Henderson and Clark prove to be useful in analyzing automotive technology. The concepts can be coupled to specific levels in the automobile as an artefact (described in figure 2.1), where the architecture could be a change in vehicle platform (the basis of a motorcar, consisting of its underbody construction), the modular level can be compared with e.g. a engine or gearbox and incremental level can be any small change. What an radical innovation would be remains the question, because on this level the step from the horse drawn chariot to the automobile would be the last radical change that occurred.

Peter Hugill goes into the architectural innovation of the automobile in his analysis of drive systems.5 Hugill defines the placement of the engine, transmission, driveshaft and final drive as the main characteristic of an automobile (See Appendix A). By using these limited amounts of components he is able to track the major innovations in 100 years of automobile technology as they are simply coupled to the variations of placing the core components.

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Problem however is that all incremental changes are overlooked and thus this analysis has rather limited explanation power. For instance the Issigonis/Christie system would not have been a technical possibility without developments that allowed engineers to limit the size of the engine and gearbox. This system was used in the famous Mini of the British Motor Corporation (BMC) from 1960-2000.6 For a further explanation on technical change we need to look beyond these general architectural concepts and look at incremental changes as well. Before doing that I will discuss some problems that one runs into while researching automobiles in history.

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Engine size and horsepower 1950-1980

The main analysis in this paper consists of data for cars on the European Market in the period 1950-1980. The data used is derived from catalogues and automotive journals, which are also used as qualitative sources for consumer behavior. Finally engineering journals and conference proceedings are used to research producer behavior. The importance of the specific period 1950-1980 is shown in figure 4.1:

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It is clear to see the rapid growth of density of cars per inhabitant in The Netherlands in both large and small municipalities for this period (the graph is based on a study of diffusion of the motorcar in The Netherlands). Such a rapid growth could well imply some major changes in the technology, as a great number of new users start to adopt the automobile. The following data on engine capacity was taken from yearbooks for each second year (1960, 1962, 1964 and so on) that contains prices and technical data of all the vehicles available on the Dutch market.8 For each specific model an average type was chosen, as some car models are available in different configurations. For instance a Golf Mark I was available as a 1100, 1300, 1500, GTI and 1600 Diesel version, with L, S or LS specifications. In this case all the different engine variants are included, but leaving the trim level (L, S or LS) out of consideration.9

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The graph shows some distinctive developments. The average engine size of cars on the market in The Netherlands is floating between 2 litres and 3.7 litres, which is quite large. This is caused by the relatively high number of American automobiles that were sold in The Netherlands, a long-standing tradition dating back before the
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Second World War. The rapid growth of the maximum engine size in the late fifties can also be explained by the growth of American cars in both vehicle size and engine size. The period from halfway through the fifties until the beginning of the sixties which show a drop of the minimum engine size can be explained by the numbers of small engine vehicles from Eastern Europe.

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One of the biggest problems in making an analysis is the lack of concurrent sales data that specifies the make and model for each year. Only from the seventies onwards these figures were documented in The Netherlands. Figure 4.3 shows the minimum, maximum and average horsepower of the 20 best selling cars in The Netherlands. From 1970 onwards these are based on actual sales numbers, but earlier figures are derived from journal articles and loose information in yearbooks.

It is clear that the maximum, minimum and average power of the 20 best selling vehicles in The Netherlands went up during the period 1950-205, although we can see some variance in the figures. The drop after halfway through the seventies in maximum engine power could easily be coupled to the oil crises in that period, but this drop has no significant meaning for the average power of the best selling vehicles. The maximum and minimum are however slowly closing up to each other when one looks at the trend lines.

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The two graphs are not fully comparable, but they do however raise a number of questions. We can assume from both graphs that engineers were able the retrieve slightly more horsepower from the same engine size. The engine size tells a lot about the characteristics of an automobile. Coupled to the horsepower it could be used as an efficiency measurement of developments of in engine technology. So the engines became more efficient, but we need to look deeper into the technology to see why this could happen. New technologies like turbo chargers, superchargers and improvements in fuel quality may well have contributed to this development. So we need to analyse the work of the engineers some further and with different, more qualitative, tools. Conclusion A car is an artefact that consists of a complex hierarchy of different components and that is used in a specific context. Some components change over time, the hierarchical value changes, and the context changes, while other components remain the same or are rediscovered after a few years time. Analyzing this world of changes is difficult but with the help of the structural model and concepts of change like radical and incremental change, it should be possible to investigate the nature of technical change in automotive history and technological change in general. For explaining technical change in general, without only putting up narratives on engineering or artefact histories, the challenge is to work systematically to cover as much ground as possible. For this a model or scheme can be useful to keep track of all the developments and relations that surround the technical artefact. In figure 5.1 such a framework is shown.

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This framework allows us to study both the production side of the artefact and the use side. As one of the assumptions is that users have a lot of influence on the design of an artefact, either directly or trough mediating agencies. The application (the use) and the expectation (the pictured use) are both strong driving forces for engineers to work on new technologies, which they express in the properties of the artefact. They do this through routinized processes, or by breaking through these processes, which we can call practices. The same goes for users. In the simplified scheme (figure 5.2), the importance of practices is more put forward.

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The next step is to try to put this schemes to work in a number of case studies partly derived from analysis of the technical shown in part 4 (the European car, shock absorbers) and partly taken from some general developments in the automotive culture (the safety debate and the car as consumer good/symbol).

Advantage of understanding change in automotive technology

First of all, a gap in the existing knowledge and literature will be filled. Second, a general knowledge of the past can help to understand more about current and future developments. It is possible to prevent mistakes in development processes by comparing and understanding at similar processes in the past and projecting them to the future. The possible adoption of hydrogen cars is an interesting case in that respect, as it shares some similarities with the steam cars and gasoline cars competition. Third point is more general as this research tries to contribute to the history of technology as an academic field by jointly studying society and technology thoroughly and try to link the two of them on different levels. So this research aims further than merely show developments in automotive technology, it also tries to explain historical developments in society and show patterns of technological development in general.

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Indian Automobile Sector - History
1950 Premier Automobiles was established in 1944 as a result of successful negotiations with Chrysler Corporation in 1939, resulting in licenses to build a Plymouth car and a Dodge truck, sold under the Dodge, Plymouth, DeSoto, and Fargo names starting around 1949. In the early years, quality was considered good by both Chrysler and the Indian Department of Defense. In 1949, parts were being made in India, starting with simpler components and gradually building up to more complex pieces. Two companies made parts: Premier and Hindustan Motors of Calcutta. The early years of Premier and Hindustan were marked by very low sales, due to the size of the market; only about 20,000 vehicles per year were made in India, in 65 different models. To prevent foreign companies from dominating by mass-producing parts to be assembled into cars in India, the government set up steep import duties on imported parts in 1954, allowing Indian parts-makers to survive. 1954 Tata Motors: Collaboration with Daimler Benz AG, West Germany, for manufacture of medium commercial vehicles. The first vehicle rolled out within 6 months of the contract which ended in 1969. 1958 The Hindustan Ambassador is a car manufactured by Hindustan Motors of India. It has been in production since 1958 with few modifications or changes and is based on the Morris Oxford III model first made by the Morris Motor Company at Cowley, Oxford in the United Kingdom from 1956 to 1959. Despite its British origins, the Ambassador is considered as a definitive Indian car and is fondly called "The king of Indian roads". The automobile is manufactured by Hindustan Motors at its Uttarpara plant near Kolkata, West Bengal. It was the most popular car in India and is perceived to be best suited to the harsh Indian terrain due to its very good suspension.

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1960 Government of India decided to set up an expert committee to consider the feasibility of manufacturing a low-cost car in the range of Rs 6500 1961 Bharat Forge Ltd is one of the most innovative and exciting companies to emerge in the history of the forging industry .The Indian Automotive Industry in the 50‘s was more like the story of imported kits. Ancillaries were nominal and infrastructure was scarce and inadequate. It was then, that Bharat Forge came into existence in 1961 to meet the forging needs of the Indian Automotive Industry. 1962 Fiat 1100 launched. In 1962, the third generation Fiat 1100 was introduced. Changes and redesigns continued until 1969, when the Fiat 1100 was finally replaced by the new middle-class Fiat 128. 1977 Tata motor‘s R&D center was started at Pune in 1966 to support automobile research which produced the first commercial vehicle in 1977. Tata Motors began the production and sale of heavy commercial vehicles by 1983 1980 1. Maruti Udyog launch set up by Sanjay Gandhi revived through a Joint Venture with Suzuki Motor Corporation. 2. From this point the decline of Hindustan Motors and Premier Automobiles began. 3. Major trend could be seen when the Japanese automakers started teaming up with Indian motorcycle and car and commercial vehicle factories. 1982

License and Joint Venture Agreement(JVA) signed between Maruti Udyog Ltd. and SMC of Japan

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4. The collaborative phase with the foreign players started in early 1980s through a joint venture between Maruti (a government of India Undertaking) and Suzuki Motor Corporation, a Japanese corporation to manufacture four wheelers. But, during that period even the industry was subject to control and excess of regulations. 5. Component manufacturer by Bharat Forge started expanding overseas by forming Joint Venture with European and US firms. 1983 1. Maruti 800 was launched 2. DCM- Joint ventured with Toyota motors to manufacture and assemble commercial vehicles. 1990 1. Liberalization policy allows passenger car to be produced without license. 2. Maruti Udyog became the leading manufacturer in the automobile industry. 3. Foreign car manufacturers entered India. 4. Advanced technology was also introduced. 5. Stringent environment and safety guidelines came into enforcement. 6. Auto financing came up. 7. Technology upgraded. Maruti launched 3 box car with 1000 cc engine. 1994 Tata launched Sumo and entered Joint Venture with Mercedes Benz for cars in India. 1995 South Korea‘s Hyundai Motor Company entered India and established wholly owned subsidiary. They launched their first car Santro.

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1998 Technology up gradation – Tata launched the first indigenously designed car- Safari and Indica. 2001 The first electric car REVA was launched. 2005 Tata launched India‘s first mini truck the ace and rolled out 500,000 passenger cars from its factory in Pune. The company also acquired 21% in Spanish bus maker Hispano Carrocerra and launched the Novus range of medium- duty trucks in India. 2008 Tata signed a bond with the Gujarat government for setting up Nano manufacturing plant. Tata acquired Jaguar Land Rover from Ford motors. It was the first Indian company to acquire foreign brand. 2009 Nano the cheapest car was launched by Tata motors.

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Indian Automobile Sector – Growth
 India is the second fastest growing automobile market in the world after China.  Over 2 million passenger vehicles were produced from April 2009 to Feb 2010, representing growth of nearly 25%.  India is emerging as a major production base for small cars, with output expected to reach 3 million units by 2016. The country is building a reputation in designing and manufacturing low cost cars.  Production of trucks and buses increased more than 35% between April 2009 and Feb 2010. An expanding highway network and overall economic growth is pushing up demand.  India is the second largest market for motorcycles worldwide. Output of nearly 10 million units was registered during April 2009 – Feb 2010, marking growth of nearly 25%.  The auto parts industry is also scaling up, as global car manufacturers are increasing their component sourcing from India, due to cost and engineering competencies.  Competition is set to intensify as more global firms enter the market.

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Indian Automobile Sector - Case Study
MAHINDRA & MAHINDRA AND RENAULT JOINT VENTURE

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In February 2005, Mahindra & Mahindra and Renault decided to join forces to produce and commercialize the Logan in India. The joint venture was a 51:49 partnership between Mahindra & Mahindra and Renault. The state-of-the-art Logan facility in Nasik offered a body shop, stamping shop, a paint shop with a top quality pre-treatment and an assembly line specific for the Logan. Logan was launched in India in 2007 with the concept to challenge the ―price Value‖ equation existing in the midsize car category. Soon it became one of the most successful car in the midsize category and now is synonymous to comfort and performance. The Logan drives in loads of refinement in comfort, style and technology. Built around the Renault‘s famous Space Optimization Design, it redefines space and luxury. With the widest backseat, maximum legroom and 3 separate headrests, it makes sure even the third passenger enjoys the drive as much. Logan is one of the safest drives on the road. It‘s geared to protect you with a honeycomb dashboard and the front unit that‘s designed to resist even a head-on impact. Logan failed to attract consumers due to its length of fractionally — more than 4 meters — that required a factory gate duty of 22% compared to 10% for the lessthan-4 meter cars. The sedan‘s sales plummeted to 5,332 units in the last fiscal year ended March 31, 2009. Consequently, the JV lost about INR5 billion ($110 million) during the fiscal year. In an interview Anand Mahindra said ―He will 'never again' go for a JV 'where we don't control changes in the product‖ Mahindra wanted engineering changes made to the under-performing Logan, but these were refused by Renault.

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DAEWOO BANKRUPTCY STORY Daewoo or the Daewoo Group was a major South Korean chaebol (conglomerate). It was founded on 22 March 1967 as Daewoo Industrial and was dismantled by the Korean government in 1999. Prior to the Asian financial crisis of 1998, Daewoo was the second largest conglomerate in Korea after Hyundai Group, followed by LG Group and Samsung Group. There were about 20 divisions under the Daewoo Group, some of which survive today as independent companies. CRISIS AND COLLAPS Daewoo Group ran into deep financial trouble in 1998 due to the Asian financial crisis, increasingly thin relationships with the Korean government under

President Kim Dae Jung, and its own poor financial management. With the Korean government in deficit, traditional reliance on access to cheap and nearly unlimited credit was severely restricted. In 1998, when the economic crisis forced most of the chaebol to cut back, Daewoo brazenly added 14 new firms to its existing 275 subsidiaries, in a year where the group lost a total of 550 billion won ($458 million) on sales of 62 trillion won ($51 billion). At the end of 1997, South Korea‘s four biggest chaebol had a debt of nearly five times their equity. While LG and Samsung cut back in the midst of the economic crisis, Daewoo took on 40% more debt." By 1999, Daewoo, the second largest conglomerate in South Korea with interests in about 100 countries, went bankrupt, with debts of about 80 billion won ($84.3 million). Factors that affected Daewoo's performance


Government intervention: Government policy served as a double edged sword: it protected the chaebol, providing them with massive subsidies, unlimited cheap credit, and protection against foreign competition. However, the price for these services was total loyalty to the government. Chaebol were forced to take over industries against their will. The government was constantly involved in their businesses and stifled their creativity.
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Labor market: The traditional work ethic that helped Korea reach economic prosperity has been threatened as workers have begun increasingly violent protests against years of long hours and low pay. Daewoo shipbuilding suffered heavy losses due to workers' demands for pay raises.



Operating in a global economy: International demand for free trade is forcing the Korean government to open its market. The chaebol will lose its protectionist import controls. Most recently, the North American Free Trade Agreement and the European Economic Community imposed trade limitations.



Product quality from Korea: Korean products were considered to be of low quality.



By the 1990s, Daewoo Group was heavily leveraged, major markets were stagnant, expenditures on R&D were increasing, labor unrest was continuing, and government policy was turning against the company.



Kim was most recently charged with allegedly paying campaign contributions to former president Roh Tae Woo in exchange for a large government contract to build a submarine base.

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SINGUR CONTROVERSY The delay in the launch of Tata Nano was caused largely due to the Singur controversy. Singur is present in the state of West Bengal and about 997 acres had been allotted to Tata Motors for building the Nano. The construction for this factory on which the Nano was supposed to be coming up started in the month of July 2007 but soon faced opposition from a political party. The Trinamool congress led by Mamata Banerjee protested against the manufacture of the car and the plant saying that the land was to be used for agrarian purposes and was wrongfully allotted to Tata Motors for making the Nano. There were protests all over the state and even in the capital city of New Delhi. Activists of the Trinamool congress stood outside the main gate of the plant and protested against any work in the plant. On 2nd October 2008, Tata Sons Chairman Ratan Tata officially announced that Tata Motors would be pulling out of Singur for the security of their officers was of paramount importance to them and the states of Karnataka, Maharashtra as well as Gujarat were being looked at as viable options for the setting up of the Tata motors factory. Finally Gujarat was taken up as the apt place for building a new factory

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Indian Automobile Sector - Financial Growth
Eye-Catching FDI Destination - INDIA India is on the peak of the Foreign Direct Investment wave. FDI flows into India trebled from $6 billion in 2004-05 to $19 billion in 2006-07 and are expected to quadruple to $25 billion in 2007-08. By AT Kearney's FDI Confidence Index 2006, India is the second most attractive FDI destination after China, pushing the US to the third position. It is commonly believed that soon India will catch up with China. This may also happen as China attempts to cool the economy and its protectionism measures that are eclipsing the Middle Kingdom's attractiveness. With rising wages and high land prices in the eastern regions, China may be losing its edge as a lowcost manufacturing hub. India seems to be the natural choice. India is up-and-coming a significant manufacturer, especially of electrical and electronic equipment, automobiles and auto-parts. During 2000-2005 of the total FDI inflow, electrical and electronic (including computer software) and automobile accounted for 13.7 per cent and 8.4 per cent respectively. In services sectors, the lead players are the US, Singapore and the UK. During 2000-2005, the total investment from these three countries accounted for about 40 per cent of the FDI in the services sector. In automobiles, the key player is Japan. During 2000-2005, Japan accounted for about 41 per cent of the total FDI in automobile, surpassing all its competitors by a big margin. India's vast domestic market and the large pool of technically skilled manpower were the magnetism for the foreign investors. Hitherto, known for knowledge-based industries, India is emerging a powerhouse of conventional manufacturing too. The manufacturing sector in the Index for Industrial Production has grown at an annual rate of over 9 per cent over the last three years. Korean auto-makers think India is a better destination than China. Though China provides a bigger market for automobiles, India offers a potential for higher growth. Clearly, manufacturing and service-led growth and the increasing consumerisation make India one of the most important destinations for FDI.

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Automotive Mission Plan 2016 The bumper-to-bumper traffic of global automobile biggies on the passage to India has finally made government sit up and take notice. In a bid to drive greater investments into the sector, ministry of heavy industries has decided to put together a 10-year mission plan to make India a global hub for automotive industry. "The ten year mission plan will also set the roadmap for budgetary fiscal incentives" The Government of India is drawing up an Automotive Mission Plan 2016 that aims to make India a global automotive hub. The idea is to draw an innovative plan of action with full participation of the stakeholders and to implement it in mission mode to meet the challenges coming in the way of growth of industry. Through this Automotive Mission Plan, Government also wants to provide a level playing field to the players in the sector and to lay a predictable future direction of growth to enable the manufacturers in making a more informed investment decision. Major players in the automobile sector are: o Tata o Mahindra o Ashok Leyland o Bajaj o Hero Honda o Daimler Chrysler o Suzuki o Ford o Fiat o Hyundai o General Motors o Volvo o Yamaha o Mazda Foreign Companies in the Indian auto-sector Until the mid-1990s, automobile industry in India consisted of just a handful of local companies with small capacities and obsolete technologies. Nevertheless, after the sector was thrown open to foreign direct investment in 1996, some of the global majors moved in and, by 2002, Hyundai, Honda, Toyota, General Motors, Ford and Mitsubishi set up their manufacturing bases. Over the past four to five years, the country has seen the launch of several domestic and foreign models of passenger cars, multi-utility vehicles (MUVs), commercial vehicles and two-wheelers and a robust growth in the production of all kinds of vehicles. Moreover, owing to its low-cost, high-quality manufacturing, India has also emerged as a significant outsourcing hub for auto components and auto engineering design, rivaling Thailand. German auto-maker Volkswagen AG, too, is looking to enter India.

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India is expected to be the small car hub for Japanese major Toyota. The car, a hot hatch like the Swift or Getz is likely to be exported to markets like Brazil and other 43 Asian countries. This global car is crucial for Toyota, which is looking to improve its sales in the BRIC (Brazil, Russia, India and China) markets. Two multi-national car majors -- Suzuki Motor Corporation of Japan and Hyundai Motor Company of Korea -- have indicated that their manufacturing facilities will be used as a global source for small cars. The spurt in in-house product development skills and the uniquely high concentration of small cars will influence the country's ability to become a sourcing hub for sub-compact cars. A heartening feature of the changing automobile scene in India over the past five years is the newfound success and confidence of domestic manufacturers. They are no longer afraid of competition from the international auto majors. For instance, today, Tata Motor's Indigo leads the popular customer category, while its Indica is neck-to-neck with Hyundai's Santro in the race for the top-slot in the B category. Meanwhile M&M's Scorpio has beaten back the challenge from Toyota's Qualis to lead the SUV segment. Similarly, a few Indian winners have emerged in the motorbike market -- the 150 and 180 cc Pulsar from Bajaj and 110 cc Victor from the TVS stable. The 93 cc Bike from Bajaj and 110 cc Freedom bike from LML have also emerged as winners. Evidently, Indian players have learnt from past mistakes and developed the skills to build cheaper automobiles using `appropriate' technologies. TVS, for instance, paid an overseas source $100,000 to fine-tune home-grown engines rather than $1.5 million to import the entire engine. Similarly, M&M adapted available systems and off-the-shelf components from global suppliers to keep costs down and go for aggressive pricing. True, Indian players are still lacking in scale of operation. While economies of scale no doubt play an important role in the auto sector, a few Indian manufacturers relied on innovation rather than scale of operation for competitive advantage. For instance, Sundram Fasteners was able to achieve the feat of directly supplying radiator caps to General Motors purely on the strength of innovation in product quality. The domestic tooling industry bagged the order for the Toyota Kirloskar transmission plant in the face of stiff competition from multinational corporations. The cost of the entire job turned out to be only a fraction of the original estimate. As the automobile industry has matured over the past decade, the auto components industry has also grown at a rapid pace and is fast achieving global competitiveness both in terms of cost and quality. In fact, industry observers believe that while the automobile market will grow at a measured pace, the components industry is poised for a take-off. For it is among the handful of industries where India has a distinct competitive advantage. International automobile majors, such as Hyundai, Ford, Toyota and GM, which set up their bases in India in the 1990s, persuaded some of their overseas component suppliers to set up manufacturing facilities in India.

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Consequently, the value of cumulative output of the auto components industry rose rapidly to Rs 30,640 crore at end-2003-04 from just Rs 11,475 crore in 1996-97. 44 Foreign companies such as Delphi, which followed General Motors in 1995, and Visteon, that followed Ford Motors in 1998, soon realised the substantial cost advantage of manufacturing components in India. Finding the cost lower by about 30 per cent, they began exploring the possibility of exporting back these low-cost, high-quality components to their global factories and, thus, reducing their overall costs. Not surprisingly, the industry's exports registered a more than four-fold jump to Rs 4,800 crore in 2003-04 from just Rs 1,033 crore in 1996-97. Automobile majors such as Maruti Udyog, Toyota, Hyundai have now finalised their plans to invest in some of the critical auto components. According to the Automotive Component Manufacturers Association of India (ACMA) officials, auto component manufacturers are expected to invest about Rs 10,000 crore over the next five years at the rate of Rs 2,000 crore per annum. According to analysts, the auto component industry could emerge as the next success story after software, pharmaceuticals, BPO and textiles. The size of the global auto component industry is estimated at $1 trillion and is set to grow further. Against this backdrop, McKinsey's latest report has estimated that the sector has the potential of increasing its exports to $25 billion by 2015 from $1.1 billion in 2004.

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Threat to the Dream India's expedition to become a global auto manufacturing hub could be seriously challenged by its inability to uphold its low-cost production base. A survey conducted by the research, KMPMG firm reveals that the Indian auto component manufacturers are increasingly becoming skeptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising. The survey said many executives believe that India's cost advantage is grinding down fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult. Increased presence of global automotive companies in the country was cited as one of the reasons for the high erosion rate. Indian auto businesses will only flourish if they boost investments in automation. In the longer term, cost advantage will only be retained if Indian capital can be used to develop low-cost automation in manufacturing. This is the way to preserve our low cost. Global auto majors are also cynical about India's low cost manufacturing base. India taxation remains a big disadvantage. This is not about tax rates it is just about unnecessary complexity. But some companies also believe there is scope for reducing the cost of doing business. In spite of this there are opportunities to exploit lower costs right across the board. It's true that labour costs are definitely increasing but they are still five per cent of the total operational costs. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. Low-cost base can never last long. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model now.

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Factors contributing to the increased demand of automotives and the growth of Indian Auto sector The convergence of government policies, economy‘s growth, people‘s purchasing power have all contributed to the phenomenal growth of Indian Auto industry. Some of the important growth drivers are explained below. Rise in the industrial and agricultural output indirectly helps Indian Auto industry Industrial and agricultural output increase has reflected in higher GDP and overall growth of the economy which is about 9% in the last three years. Higher GDP means more purchasing power. Sales of vehicles for domestic and commercial consumption have seen high growth in these three years too. Growth in the road infrastructure increases demand for vehicles Indian highways and roads have improved a lot in quality and connectivity in the last 20 years. Projects like the Golden Quadrilateral aim to make even remote areas accessible by road. Some of the National Highways are of international standards. This has made road transport a viable, cost effective and speedy option both for goods and passenger traffic. Rise in the Per capita income increases two/four wheeler sales Industrial growth in the 70s, IT boom in the 1980s and BPO boom in the 1990s have transformed the Indian middle class. The present generation is able to earn the same levels of salary that their parents were earning after years of work. This has pushed up the demand for two and four wheelers. A rise in per capita income is also indirectly responsible for the retail boom and industrial boom for consumer durables. This has pushed up the demand for commercial vehicles to enable efficient distribution. Urbanization changes the face of Indian auto industry Joint families in towns and villages have given away to migration of the younger generation to cities in search of better opportunities. The new-age educated migrants and nuclear families (many with double income couples) have a higher purchasing power. Presently, the rate of spread of urbanization is 30% which is likely to increase by 40% in 2030 (UN). Urbanization has promoted infrastructural development and it is estimated to spread at a rate of $500 billion in the next 5-6 years

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Rising working class and middle class contribute to increased demand of automotives Post 1980s, a surging economy has created millions of new jobs in the private sector. This has lead to a lot of prosperity in the working class and the middle income households. They are able to provide for food, clothing and education and also are able to think of owning luxuries like vehicles. According to the Planning Commission report, between the year 2003 and 2009, 130 million people would have been added to the working population. According to a finding from McKinsey, the middle income group will grow from 50 million to 550 million by 2025. Exhaustive range of options in price and models of automotives Indian consumer in 70s and 80s had to choose between and Premier Padmini or an Ambassador. Now there are at least 123 different models of cars from 30 odd manufacturers available. The prices of the compact cars like Tata‘s Nano has made the world sit up and take note of the truly unbeatable price points. Attractive Finance Schemes for purchase of automotives Most nationalized and foreign banks have very tempting finance options and low interest rates for purchase of cars and two wheelers. There are specialized companies that finance the commercial vehicles. All this has made the dream of owning a vehicle an easy reality

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Indian Automobile Sector - Recent Development
VW Polo’s long waiting period affecting sales The average monthly demand for the Volkswagen Polo stands at approximately 2,500 units – something that the German company did not anticipate when it launched the car in February 2010. Also, the company had not foreseen the relatively higher demand for the car‘s top-end variant. VW‘s inability to meet the high demand for the Polo has now stretched the car‘s waiting period to 4 months, forcing potential customers to settle for alternative options like the Ford Figo and the Hyundai i10, thus affecting the Polo‘s sales. Fifty-five percent of the Polo‘s components are sourced locally, and, with the company looking to ramp up production, vendors are under pressure to increase supply. This has also led to some quality concerns, especially regarding components that are manufactured in India, such as tyres. In spite of production constraints, VW has decided to launch a new 1.6-litre petrol variant of the small car. It is also getting ready to launch the Vento – which is a sedan built on the Polo‘s platform. The Vento will be available in both petrol and diesel versions.

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Maruti, Volkswagen discuss synergies in manufacturing, product design Officials from auto companies Maruti Suzuki and Volkswagen India met recently to explore the possibility of a tie-up in production and vehicle design. German car maker Volkswagen had bought a 20 percent stake in Japan‘s Suzuki Motor in 2009. Industry analysts say that VW may now employ Maruti‘s low-cost manufacturing expertise in its own projects, and also work with it in areas such as product design and testing. The two companies, however, will not share distribution networks, and will continue to compete with each other in the retail market. Media reports say that Maruti Suzuki‘s top officials were present at the meeting, as were senior officials from VW headed by VW India President Joerg Mueller. The German carmaker can gain a lot from a tie-up with Maruti in India. While the former is yet to make its mark in the country, the latter leads the auto industry with a 50 percent-plus market share even at a time when the country if flooded with global car companies. A Maruti Suzuki India (MSI) spokesperson told reporters that the issue was being handled by its parent company, Suzuki Motor, and that MSI could not comment on it.
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Bajaj-Renault to launch ultra low cost car in 2012 Carlos Ghosn, chief executive of French car maker Renault and Japan's Nissan Motor Co. said on Tuesday an agreement had been signed with India's Bajaj Auto for a low-cost car which would come to India in 2012. Nissan Renault CEO Carlos Ghosn met Bajaj Auto MD Rajiv Bajaj Monday evening to settle issues relating to branding and the basic concept of the car that were delaying the project. The design, manufacturing and sourcing for the car would be done by Bajaj, and Renault-Nissan will look after marketing in India and overseas, Ghosn told reporters at a media conference in New Delhi. Bajaj and Renault-Nissan had announced the formation of a joint venture in May 2008, to develop, produce and market a car code-named ULC. The project ran into hiccups over branding, product detail and concept issues. This summer Rajiv Bajaj went on record to say he had asked for all the work done on the project to be scrapped. He wanted major modifications on design, positioning and other details. The new concept that the team came up with has now met with Mr Ghosn‘s approval as well. Nissan has a joint venture with Ashok Leyland for light trucks and Renault with Mahindra & Mahindra for the Logan sedan. Both these joint ventures are facing problems and Mr Ghosn had last month said it was possible that his group would end up with only one partner in India. Mr Ghosn‘s India strategy has come under pressure lately because of the poor performance of the Logan sedan which Renault makes and markets in India in partnership with Mahindra & Mahindra. Relations between Renault and M&M became strained with the Indian partner unhappy over its lack of control on product design. His other JV between Nissan and Ashok Leyland will also see a significant reduction in investment from the earlier announced $500 million. At the ongoing World Economic Forum summit, Mr Ghosn admitted that there were problems with his partnerships in India but added that he was gung ho about the $2500 car which will compete with the Rs 1 lakh Tata Nano when it rolls out in 2011. He told ET Now on Sunday that Renault, which had earlier frozen overseas investments during the financial crisis, will now resume its investments in India including its share of the $1 billion new factory in Chennai which it will share with Nissan. "We had suspended the second phase of Chennai investment until we could see where the global car market would end up," Mr Ghosn had said. "Now that the estimate is that the year will end with around 60 million units, up from around 55
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million last year, we seem to have hit a plateau. So all plans of expansion can be resumed with a more solid understanding of the future. The Chennai plant will be 50 inaugurated early 2010 and I will be there for it."

Toyota's small car to be 10% more fuel efficient than Maruti, Hyundai The world's biggest carmaker by sales, Toyota Motor Corp, is developing a 10 per cent more fuel-efficient small car for launch in India by early 2011 to beat market leaders Maruti Suzuki and Hyundai. "For our upcoming small car we have set the benchmark with Maruti's Swift and Hyundai's i20. We are targeting to develop the car with 10 per cent more fuel efficiency than the Swift and i20," Toyota Motor Corporation Chief Engineer (Product Planning for Passenger Vehicle) Yoshinori Noritake told a group of visiting Indian journalists here. The company would introduce the car with a four-cylinder engine that will be Bharat Stage IV emission norm compliant. Asked about engine specifications, Noritake said: "Though we have not decided, we are finalising the engine capacity to make it suitable for enjoying the excise duty benefits for the small car." Currently, small cars -- 1.2 litre for petrol and 1.5 litre for diesel engine -- are charged only 8 per cent excise duty compared with 20 per cent for bigger cars in the Indian market. He said besides fuel efficiency, pricing is a big challenge that Toyota is trying to overcome to be successful in the price-sensitive Indian market. "Pricing is very important. Toyota is looking very positively with this small car to mark a strong presence in the country," Noritake said. In order to reduce cost of production, he said the company is looking at sharing components from other models with the proposed compact car. "It is very important to reduce the cost. Commonalisation of components of various models is helpful and now we are assessing this aspect," he said, adding a major portion of the components will be sourced locally. "But we are also considering to supply parts from the ASEAN countries such as Thailand and Indonesia to bring down the cost of the car," he said. The company is planning to launch both the hatchback and sedan versions of the car. The base model of the car will also have options to select various high-end safety features like ABS (anti braking system).

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First Tata Nano to roll out of Sanand on June 2nd Tata Nano's production plant at Sanand, Gujarat would roll out its first product on June 2nd. The plant at Sanand is Tata Motor's unbroached project in Gujarat after facing severe land disputes in West-Bengal. There have been speculations going on in the automobile industry from quite some time now regarding the inauguration of this plant, which finally would be concluded on June 2nd 2010. The inauguration ceremony would take place in the esteem presence of Gujarat's chief minister Narendra Modi and Tata group's chairman Mr. Ratan Tata, the soul behind Nano. Immediately after the plant is inaugurated the delivery of cars that have already been booked would commence, company sources informed. Tata Nano has received unprecedented response since the launch its launch was announced. The commercial production had already started at the plant and the inauguration would take the plunge to the next level that is car delivery. The plant at Sanand has a production capacity of 250,000 units annually, and can be expanded to approximately five lakh units per annum, a company statement said. The investment drawn by this plant is close to Rs 2,000 cr. The company had announced in 2009 that the first 100,000 deliveries of Nano would be achieved by December 2010 and with this news hovering around, the announcement seems close to completion.

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Indian Automobile Sector – Innovations
Going Green Ideas The rising number of automobiles has one negative fallout: air pollution, however on a positive note one must add that the emission in motor vehicles has seen a steady decrease over the years. According to SIAM (Society of automobile Manufacturers in India) the country has seen an 86% reduction in pollution levels over the last decade or so. It has to be noted that India has some of the stringent standards for twowheeler prevalent anywhere in the world. With the introduction of Euro III (Bharat III in the Indian context) in select cities and the rest of the country moving to Euro II standards, Indians could breathe easy and breathe cleaner air. All car manufacturers have already started phasing out Euro I cars because they won't be allowed to be sold in the country because of these new emission norms. The emission norms in India came into force from 1991 for Petrol vehicles and in the following year it was extended to Diesel vehicles that were playing in the country. From the year 1995 it was made mandatory for all petrol vehicles in the four metros to use catalytic converters. Unleaded petrol was also made available to these four cities then, which was later extended to other parts of the country by the year 2000. The Central Pollution Control Board (CPCB) has taken some steps to reduce air pollution in the country
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Establishment of Ambient air quality monitoring throughout the country. Notification of Ambient air quality standards under the Environment Protection Act. Notification of Air pollution norms Improving the fuel quality Introduction of cars that run on alternative fuel like CNG/LPG etc. Improvement of public transport system Phasing out old and polluting commercial vehicles Creating awareness and public campaigns In the wake of making the country pollution free various car companies have taken steps to improve the situation. Maruti Suzuki which is one of the oldest car manufacturers in the country organizes free pollution check camps and is also pushing aggressively for CNG kits for its cars. Recently it has launched a Wagon R which comes fitted with LPG kit; it also has a LPG version of its popular car OMNI in its kitty. Hyundai Motor Company globally has been in the forefront of innovating environmental friendly vehicles like Hybrid Electric Vehicle and Fuel Cell Electric Vehicles. Companies like Tata Motors and Mahindra and Mahindra are also working hard to meet the stringent Bharat III or the Euro III standards in their diesel engines. It has been able to meet the standard with a conventional diesel engine; however it is also
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working on a CRDI engine to stay in the competition. Mahindra on the other hand 53 has straightway introduced a CRDI version of its flagship vehicle Scorpio. Not to be left behind the two-wheeler manufacturers have already taking steps to meet the strict emission standards that are prevalent in the country. Hero Honda which is one of the largest two wheeler manufacturer in the country has a philosophy of continuously innovating new products to improve environmental compatibility. Similarly automobile users have a key role to play to keep the environment pollution free, they should maintain their vehicles and drive responsibly to make the country a better place to drive about. It is just unimaginable how things have changed around us in a matter of a decade or less. Let‘s speak here on the advent of the Electric vehicles in the Indian context. The concept for Electric Vehicles was impossible about a couple of years ago. The scene in India changed after Maini Reva, the first Indian electric car maker put up a bold face and entered the Indian market. Yes, the going was certainly tough for Reva initially, thanks to the overly priced car which was limited only to the city use. It seemed highly impractical when the car was first launched in India. But those were the days and now these are the days. Times do change. Reva surely set up as a pioneer in safeguarding the environment with its non-polluter electric cars. Picking up the cues, even bigger and environment-conscious car makers also joined the fray in a big way after the great recession of 08-09. This was a decisive moment as the mindset of billions of people suddenly started changing in the wake of Copenhagen summit. India almost suddenly became a hot spot for the car manufactures to try out their new electric wares and cars that spat less smoke. This year‘s Auto Expo certainly will be serving as a launch pad for more and more electric vehicles to hit India. This could prove a hit provided the practicality issues are sorted out soon. At the Auto Expo, almost all the car manufactures are showcasing their electric car portfolio. Staring from General Motors‘s EV‘s, Electric vehicles like that of Honda EVN, Renault Twizy ZE and Toyota‘s Prius Hybrid will be showcased. Toyota has been making this hybrid since 1997 but India will see the third generation version of Prius on the roads pretty soon which will have a 1.5 litre petrol engine mated with an electric motor and will give around 20 kilometers a litre. GM will have the concept Chevy Volt and the Chevy Spark Electric prototype at the show. The Chevy Spark Electric will have the same look at the petrol version but the engine will be replaced by an electric motor. The electric power train will be sourced from REVA. It must be recalled that GM and Reva Electric had signed an agreement recently to develop electric cars for the Indian market. The car is expected to debut commercially this year. The Chevrolet Volt is an electric vehicle with extended-range capability. It is said to be designed to drive up to 40 miles on electricity without using gasoline or producing tail-pipe emissions. Tata Motors in the meanwhile is not lagging behind and we are anticipating that Tata showcases an electric/hybrid version of its Nano and also an electric version of its Indica, which has been in development in Norway. Tata had bought Norway-based electric vehicle maker Miljo Grenland/Innovasjon in 2008.
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The Norwegian firm will manufacture super polymer lithium ion batteries and electric 54 vehicles based on Tata Motors‘ range of products as well as conduct research and development in allied technologies. Tata Motors will soon roll out its Rs 160 crore electric car project in Norway and later scale it up for other Scandinavian markets. The Indica Vista EV has been designed and developed by Tata Motors' UK subsidiary, Tata Motors European Technical Centre. India‘s largest car maker Maruti Suzuki is displaying its hybrid sedan amongst other concept cars at the Auto Expo 2010. The company is working on clean fuel technologies as part of a public-private partnership ahead of the Commonwealth Games, 2010. Reva, which is India‘s first electric car, showed off its NXR and NXG range of small EVs at the Frankfurt Auto Show last year. Though these cars will not be showcased at the Auto Expo, the India launch is expected soon. Hyundai too has joined the EV bandwagon and will be showcasing an i10 EV at the Auto Expo. The launch though will be at a later date. Mahindra is not falling behind of the schedule and has a couple of EVs which is all set to be unveiled at the show.

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Bharat Forge India unveil retrofit REVOLO hybrid kits; on sale in India in six months

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In what seems to be one of the best inventions of recent times, Bharat Forge and KPIT Cummins (a new JV has been formed) claim to have developed a retrofit hybrid system that can be installed in vehicles in under six hours with an 80% boost in fuel economy. This is the first of its kind ever in the world where we do very well know the difficulties of ‗Hybrid‘sing a car. Somehow, Bharat Forge and KPIT Cummins seem to have found a solution to take hybrid to the masses. The JV says that that system is similar to a retrofit CNG kit and that al the required mechanicals and electrical are included in the package. The best part about the innovation is that both petrol and diesel vehicles can be hybridized using this kit within a short span of time. While those are tall claims, the two firms have gone as far as filing 15 patents for its ‗ReVOLO‘ hybrid drive system. The system has undergone trials at ARAI who have confirmed a 40% improvement in fuel efficiency (60% improvement in city cycle) and 30% reduction in green house gases. Add some electronics and you have a parallel hybrid system for cars and ultra light LCVs. The company is bullish about the kit‘s prospects in India that will hit markets within six months after being approved by the government. According to the deal, KPIT will license the tech to Bharat Forge who will manufacture them. The company is working aggressively to bring down costs further as well as find a partner in the OEM segment in order to offer this new product at a reasonable rate. The company also intends on offering this technology as an aftermarket solution.

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ADVANTAGES OF CNG KIT

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Due to the absence of any lead or benzene content in CNG, the lead fouling of spark plugs is eliminated. CNG-powered vehicles have lower maintenance costs when compared with other fuel-powered vehicles. CNG fuel systems are sealed, which prevents any spill or evaporation losses. Another practical advantage observed is the increased life of lubricating oils, as CNG does not contaminate and dilute the crankcase oil. CNG mixes easily and evenly in air being a gaseous fuel. CNG is less likely to auto-ignite on hot surfaces, since it has a high auto-ignition temperature (540 °C) and a narrow range (5%-15%) of flammability of pollutants like carbon oxides, sulphur oxides

CNG produces significantly lesser emissions dioxide, hydrocarbons, carbon monoxide, nitrogen and particulate matter (PM), as compared to petrol.

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Indian Automobile Sector – Opportunity
Underlying many of the responses from our interviews is the idea that the success of the Indian automotive industry depends on the strong partnership of India‘s government with India‘s automobile manufacturers, suppliers,and dealers. There are challenges that the industry can solve, others that only the government can solve, and some they can solve only by working together. Build India’s domestic vehicle market To meet India‘s ambitious goals for its domestic automotive industry, India‘s government needs to build more and better roads to support future not just current growth, and hasten the vehicle friendliness of India‘s cities including wider roads and more parking spaces. Improved air quality is also critical. At the same time, the automotive manufacturers and suppliers need to understand and capture the small car segment of the domestic market, improve India‘s automotive supply base, and raise quality levels across all suppliers while keeping costs low.

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Become a global player To become major players in the global automotive industry, India‘s manufacturers and suppliers need to accelerate the perception that ―quality vehicles‖ and ―quality automotive components‖ come from India, and find their niches in the world vehicle market (perhaps small, inexpensive cars), and manage their businesses on a worldwide scale, which includes global logistics, sales, and distribution. In addition, India‘s government needs to expand the country‘s port capabilities even faster. As India‘s auto companies continue to grow, they need to increase their scale while remaining financially strong – strong enough, for example, to withstand a global recall. Furthermore, the automotive industry and the government need to work in partnership to boost skilled labor availability and strengthen India‘s own R&D capabilities. The automotive executives and experts we interviewed are optimistic about India‘s ability to reach its goals. Recent growth has been impressive. Some manufacturers and suppliers are already reaching global levels of quality, and the government seems committed to supporting the industry. However, India‘s domestic market is still relatively small; India‘s manufacturers and suppliers are not yet universally recognized as strong global players; and India‘s
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government has yet to complete its domestic infrastructure of roadways and ports. Despite these challenges, the recent industry growth and development, along with the government‘s commitment of support, are strong reasons for optimism about India‘s future automotive success. The auto industry is a highly concentrated one. About 10 global automakers account for over 77% of the production worldwide. Among them, Toyota Motors leads with a 13.3% market share, while its domestic rivals including Nissan and its alliance with Renault account for 8.4% of the auto market, Honda Motor 5.6% and Suzuki 3.8%. Among the Detroit automakers, General Motors holds 11.9% of the auto market, Ford 7.8% and Chrysler-Fiat 6.4% of the auto industry. The recent economic crisis has provided an impetus to a massive structural change in the auto industry, setting the stage for growth over the next decade. Given the high barriers to entry and need for scale economies (in operations, supply chain and marketing), the global auto industry landscape is expected to be ruled by global automakers and suppliers based in the six major auto markets of China, India, Japan, Korea, Western Europe and the U.S. To remain competitive, automakers will need to design vehicles that will meet the requirements of consumers in both mature and emerging markets. Automakers will focus on more user-friendly and low-cost vehicles that are also the most advanced technologically. The automakers will continue to shift their production facilities from high-cost regions such as North America and the European Union to lower-cost regions such as China, India and South America. For example, Greater China and South America is projected to represent more than 50% of growth in global light vehicle production in the auto industry from 2008 to 2015. There are two underlying factors behind this location shift in the auto industry. The first is the cost factor. The cost of labor in emerging auto markets continues to be a fraction of that in the developed world. The second is the demand factor. Many low cost regions, including the emerging auto markets, have high potential for growth. Thus, the shift in auto industry production facilities will lead to a localization of the
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manufacturing base that will bring down transportation costs. The emergence of trading blocs is also giving this process a push in the auto market. It is likely that over time there will be fewer car imports from outside a trade zone. Further, automakers have started to reduce the number of technological platforms with a greater diversity of models produced from each platform in order to remain cost competitive in the auto industry. For example, Honda, with its flexible common platform, has developed three dimensionally distinct versions of the Accord, allowing for designs where 60% of the components are common. Ford aims to build 680,000 vehicles per core global platform within five years, up from current levels of 345,000 units. After emerging from its bankruptcy, General Motors has started focusing solely on four core brands – Chevrolet, Cadillac, Buick and GMC. Higher fuel prices and concerns over global warming have pooled attention on the auto industry that either rely less on traditional fossil fuels or use renewable sources of less expensive energy. Thus, ―green‖ alternatives such as fuel-efficient electric vehicles (EVs) and hybrids will attract consumers in the wealthier countries while flex-fuels such as ethanol and natural gas will be highly sought-after in the emerging auto markets where the local climate or resource base favors their usage by automakers over petroleum. Consequently, there will be a variety of powertrain technologies in the auto industry by the next decade. It is likely that ―green‖ cars will represent up to a third of total global sales in developed auto markets and up to 20% in urban areas of emerging auto markets by 2020. Some of the ―green‖ cars have already generated a huge response in the auto industry. These include the Ford Focus, GM Volt, Daimler Smart, Nissan Leaf and Toyota Prius. The role of governments must not be overlooked. Governments in all major countries have become active auto industry players. Their investments through emergency loans and incentive packages, such as ―Cash for Clunkers‖ in the U.S., are a good example of this. Moreover, governments‘ energy and environmental policies will be highly responsible in molding the auto industry in the coming years.

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REFERENCES
 Mint 28 August'2010 Saturday- Article " India- From Amby to Jaguar"

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http://en.wikipedia.org/wiki/Daewoo http://www.tatanano.in/tata-nano-singur-controversy.html http://www.mahindra.com/OurBusinesses/mahindra-renault.html http://www.dailymarkets.com/stocks/2010/04/19/renault-and-mahindra-break-up/ http://en.wikipedia.org/wiki/Premier_Automobiles_Limited
http://india-reports.in/transitions/indian-auto-industry-–-joint-ventures/ http://economictimes.indiatimes.com/Toyotas-new-small-car-to-be-the-most-fuelefficient/articleshow/5148235.cms


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http://www.driveinside.com/News/Headlines/5BYAAZ/Maruti-Volkswagen-discuss-synergiesin-manufacturing-product-design.aspx http://economictimes.indiatimes.com/articleshow/5214939.cms http://www.driveinside.com/News/Headlines/4F9DUP/VW-Polo%E2%80%99s-long-waitingperiod-affecting-sales.aspx http://www.jama-english.jp/publications/MIJ2010.pdf http://www.fas.org/sgp/crs/misc/R41154.pdf http://www.clevelandfed.org/research/trends/2009/0309/02ecoact.cfm http://www.acea.be http://www.acea.be/index.php/collection/statistics

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