Automobiles Industry in India

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“Automobile Industry in India”

Submitted under the partial fulfillment for the award of M.B.A.
Batch (2008-10)

Submitted To: Submitted By:Prof. C. lal




Research report
Automobile Industry in India
Submitted By:
Praveer singh

In partial fulfilment of the requirement of MBA degree
U.P. technical University,Lucknow.
Session: 2008-10
Submitted To:-Prof. C.lal

Enrolment No:

Roll No:



(SHEPA) Nibia bachchaon VRM Bypass Varanasi - 11


Institute of Management
sciences (IMS) College code –


Nibia, Bachchaon,



This is to certify that Mr. Praveer singh has completed his research report entitled
“Automobile industry in India” in partial fulfillment of the requirement of Master of
Administration of U.P. Technical University, Lucknow.
The report contains the observations and opinion of the student himself .
The project report submitted by Mr. Praveer singh Roll No. 0818470029 is of
standards expected of an MBA student of UP technical University.

(Prof. C.Lal)

Nibia, Bachchaon, Mohansarai-Mughalsarai Bypass
Road, Varanasi-11
Phone No.: 0542-2230438, 3090984



I here by declare that all the information collected is
correct in accordance with the findings of research topic. It
has been prepared purely for academic purpose.

M.B.A.-(VIth sem)



Research work is a combined effort, so one should be thank all that
have helped in making report purposeful. Hence I take this opportunity to
thank all that have been instrumental in helping me to prepare this
It is great honor to be assigned this topic. First of all I would like to
thank God who shows his blessing upon me in each and every step I
am immensely grateful to Mr. A. Pandey for his continuous support and
I also want to thank Director Prof. C. Lal Sir for providing me this
I also want to thank all teachers, the staff member and library members
for their valuable advice and guidance which helped me to make this
report purposeful.
I specially wish to thank all other people directly or indirectly related
with my research and my friend as without their valuable support this
report would not have been possible.



The automobile industry has grown by leaps and bounds in past decades.
With every year new milestones have been achieved. With globalization,
technological advancement and transfer of technology has revolutionized
the sector.
This research is carried out to assess the various components of
automobile Industry. Also to analyze further opportunities and potential of
automobile sector of India.


Chapter – 1


o Industry Profile

Indian automobile industries
Growth in no. Of companies( Investment climate)
Future development expected( Out look )
Opportunities and Challenges Posed By Recent

Recent Developments and Issues Facing the Indian Automotive

SWOT Analysis
Tractor Industry - Part of Automobile Indu
List of Car Manufacturers
Car Sales Statistics India
India's auto industry comes of age
Green rating for automobile sector
Current status of Indian Automotive Industry

[Green page]
Chapter 2
o Research Methodology of the project
 Problem Formulation
 Objective of the project
 Scope of the study
 Method of Study-Whether universe or sample
 Source of information
 Statistical tools and techniques
 Limitation of the study
 Significance of study
- To the company
- To the industry
- To the consumer
- To the Govt.
- To the Academicians etc

Chapter 3
o Abstract( outcome thrugh data )

Chapter 4
o Conclusion
o Suggestion & Recommendation
Annexure – Big tables/ Rules etc



Tata Aria

Honda Small Car

Maruti R3

Toyota Etios Small

Toyota Etios

GL Class


Royal Enfield Classic

Yamaha R15

Honda Unicorn
Sports Concept

Honda CB

Concept MotorCycle






India’s automobile sector consists of the passenger cars and utility
vehicles, commercial vehicle, two wheelers and tractors segment. The
total market size of the auto sector in India is approximately Rs 540
billion and has been growing at around 8 percent per annum for the last
few years. Since the last four to five years, the two wheelers segment
has driven the overall volume growth on account of the spurt in the
sales of motorcycles. However, lately the passenger cars and commercial
vehicles segment has also seen a good growth due to high discounts,
lower financing rates and a pickup in industrial activity respectively.
The automobile industry is fairly concentrated, as in most of the
segments two to three players have cornered a major chunk of the total
sales. For instance, in passenger cars segment, MSL, Tata Motors and
Hyundai Motors control around 85 percent of the total annual sales.
Similarly, in the two wheelers segment, the sales volumes of Hero
Honda, Bajaj Auto and TVS Motors constitute around 80 percent of the
total sales and in the commercial vehicles segment, the market leader
Telco controls around 56 percent of the total annual sales. The auto
components industry on the other hand is highly fragmented, though there
are dominant players in some of the critical segments.

Investment climate
Given the high growth expectations and a liberal government policy,
the investment potential in the India auto sector is huge. CRIS INFAC is
forecasting a 12-15% annual growth in the passenger car sales, 6-8% in
commercial vehicles and around 10% in two wheelers. Several passenger
car makers have already achieved near full capacity utilization and are
expanding. Almost all the major automobile manufacturers such as GM,
Ford, DaimlerChrysler, Honda, Toyota, Hyundai, and Fiat (with the
exception of Volkswagen, which is planning to set up manufacturing
shortly) already have made significant investments in India. In the next
2-3 years, the passenger vehicle industry is expected to see investments
of more than Rs 30 billion. Similarly, two wheeler industries are
expected to attract investment amounting to Rs 10 billion.
There has also been a surge in exports of cars, utility vehicles and
two wheelers. The expected growth in domestic sales and exports of
vehicles also offers significant opportunity for investors to invest in the
auto ancillary industry. Already several international suppliers such as
Delphi, Visteon, TRW, Johnson Controls, Denso and Dana, have set up
manufacturing facilities and are expanding rapidly to serve not only the
domestic market but also to supply to their global customers. Another

attractive area of investment
design, to take advantage of
However, investment
relatively unattractive, given

for vehicle and parts makers is research and
India’s low cost advantage.
in commercial vehicle manufacturing looks
the current size and structure of the Indian



The expected rise in income levels, wide choice of models and easy
availability of finance at low interest rates will drive growth in passenger
cars segment, which is likely to be over 12 percent per annum for the next
four to five years. Two wheelers growth is likely to marginally slow down,
but still grow at an average annual growth rate of around 10 percent.
The commercial vehicles segment is likely to grow at a trend rate of 68 percent driven mainly by the Increase in industrial and economic activity
on account of the expected growth in the economy, though annual growth
rates may fluctuate widely with the cyclical ups and downs of the economy.
Tractor industry growth is likely to turnaround and post a growth in
volumes in 2004-05. However, it will post a moderate growth of around 4-5
percent annual growth rate over the medium term.

If we look into the other economies we find that
• Japan Automobile Manufacturers Association, the nation churned out a total of 859,677 cars,
trucks and buses in November 2009, up by 0.5% YoY and marking the first YoY rise in 14
• China made a sales figure 13 million units this year, including commercial vehicles.
• The China Association of Automobile Manufacturers has released a report saying that the
country’s auto exports were 40,600 units in November, up 13.43% year on year or 11.87% month
on month.
Below is the chart as on September 2009 of global auto productions.

Worldwide Car Sales September 2009
Region September 2009

Total Sales %
1.33 Million

Change from September 2008

Here also we find comfortable growth figures being posted by Asian economies in automobile
Now a question might come up in the mind of my readers that when US is struggling and have
managed to come out of the major downtrend in US auto industry then in 2010 how India and
other Asian automobile sectors will sustain.
India is now on e of the hottest destination of auto sector growth.UK and US companies are
already in the path of negotiations and various types of partnership projects with Indian
companies to enter Indian auto market. At the same time we find that across the globe every one
is coming with small car deigns and models to suit the purpose of the common mass of people of
any economy. We don’t find those days of big cars and luxury cars in the showrooms
China is among the leader to bring such car models to the world auto market. The car market is
growing at a 16% rate annually, despite the depressed first half of the fiscal. And small car
growth is the fastest. We will also find a huge amount of provision in the balance sheet of the
companies for research and development in the automobile sector. We already found that
companies like Maruti, Hyundai, Tata Motors and GM are looking to leverage their local R&D
structure. And all these companies are having their eye on Indian consumers.
Now it’s hard to say whether all these designs are coming in to play after Nano got launched.
Rising crude prices in 2007 have forced the US car makers to bring electric or bio fuel cars in the
market. We can be rest assured that in the coming days US will bring these car models if crude
prices rises again to the level of 2007 since US have less funding to pay the huge import bill of
crude. So are we going to see a new set ofautomobiles in the new decade. The ans goes without
any hesitation yes. The automobile sector is now on the path of huge revolution where the next
generation cars will travel eco friendly and for small family.
At the same time we will get to see a huge number of mergers and acquisition happening in the
global automobile sector is the comings days.
• China is focusing on improving the structure of industrial products supply.


• 2 to 3 large auto enterprise groups with the production and sales volume of over 2 million sets
will be established in China auto industry.
• As well as 4 to 5 auto enterprise groups with the production and sales volume of over 1 million
sets”, there are two important activities on merger, acquisition and reorganization finished in
China’s auto industry.
In total what we get to see is that the world automobile sector is on the path of turnaround and
India is one of the hottest destinations to find the growth of the auto industry. We will also get
new series ofautomobiles which will not be dependent on crude prices.
Among all these we also found some negative shootouts for the Indian automobile sector.
• When RBI will go for a hike of interest rates cost of borrowing will affect the auto sales in
• According to the worlds most precious economist its being expected that US and UK will
emerge from the recession shadows and will find growth in economy.
• Now economic growth in these two countries will speed up the demand of crude prices, which
will carry the crude towards $100 barrell.
• So consumers will less prune to buying cars at that point of time.
• Commodity prices particularly steel prices are already on the higher tide. This will increase the
cost of production of automobiles resulting to increase in prices.
• Cost of tire is among them which have already started increasing.
• We cannot expect the Indian government to continue the stimulus package declared for
automobile sector for a longer time at the cost of rising fiscal deficit of India.
• Moreover when so many companies are focusing on India market prices competitiveness will
rise to the highest point leading less space for companies to make profit.
It can be said that in 2010 we will get many challenging situation and turn around for the Indian
automobile sector followed with US and European economies. The new decade for the
automobile sector will bring us a new set of products followed with major hiccups.
Very soon The 2010 Auto Expo will begin in New Delhi which be bigger, brighter and better
than the previous shows. The growing number of visitors indicates the rising importance of India
as a key automobile destination. One of the prime reasons for such event to become so big is
India is a fast-growing market for cars and two-wheelers. Compared with China’s 27 cars per
1,000 citizens, India has only seven car owners per 1,000 citizens.


Indian Automotive Industry: Opportunities and Challenges
Posed By Recent Developments
The Indian automobile industry is currently experiencing an unprecedented
boom in demand for all types of vehicles. This boom has been triggered
primarily by two factors:
(1) Increase in disposable incomes and standards of living of middle
class Indian families estimated to be as many as four million in
number; and
(2) the Indian government's liberalization measures such as relaxation of
the foreign exchange and equity regulations, reduction of tariffs on
imports, and banking liberalization that has fueled financing-driven
purchases. Industry observers predict that passenger vehicle sales will
triple in five years to about one million, and as the market grows and
customer's purchasing abilities rise; there will be greater demand for
higher-end models which currently constitutes only a tiny fraction of
the market. These trends have encouraged many multinational
Automakers from Japan, U. S. A., and Europe to enter the Indian
market mainly through Joint ventures with Indian firms. This report
presents an introduction to the key players in the Indian automotive
industry, a summary of the recent developments, and an analysis of
the Opportunities and challenges facing the various players (Indian and
multi-national assemblers and Component makers) in the areas of
product development, production, and distribution.
For forty years since India's independence from the British in 1947, the
Indian car market was
Dominated by two localized versions of ancient European designs -- the
Morris Oxford, known as The Ambassador, and a old Fiat. This lack of
product activity in the Indian market was mainly due to the Indian
government's complex regulatory system that effectively banned foreignowned
Operations. Within this system (referred to informally as the "license raj" ),
any Indian firm that
Wanted to import technology or products needed a license/permit from the
The difficulty of getting these licenses stifled automobile and component
imports, creating a low volume high cost car industry that was inefficient,
unprofitable, and technologically obsolete.


Two dominant products Ambassador and Fiat, although customized to the
poor road conditions in India, were based on a stale design concept (with
outdated features), and were also fuel inefficient.

1. In the early 1980's, the Indian government made limited attempts at
reforming the automotive industry, and entered into a joint venture
with Suzuki of Japan. The joint-venture, called Maruti Udyog Limited,
launched a small but fuel efficient model (called "Maruti 100" ).
Priced at about $ 5,500, the product became an instant hit. The joint
venture now produces three small-car models,
A van and a utility vehicle at a rate of more than 250,000 a year. Despite
being a late entrant, Maruti's vehicles are estimated to account for as much
as 70 per cent of India's car population.
In 1991, a newly elected Indian government took over and faced with a
balance-of-payments crisis initiated a series of economic liberalization
measures designed to open the Indian economy to foreign investment and
trade. These new measures effectively dismantled the license raj which had
made it difficult for Indian firms to import machinery and know-how, and
had disallowed equity ownerships by foreign firms. In 1993, the government
followed up its liberalization measures with significant reductions in the
import duty on automobile components. These measures have spurred the
growth of the Indian economy in general, and the automotive industry in
particular. Since 1993, the automotive industry has been experiencing growth
rates of above 25%. Data for the 1995-96 financial years is yet to be
released by all the firms, but estimates indicate that passenger vehicle sales
may reach or exceed 350,000 for the first time. ( Passenger vehicles include
cars and vans but not jeeps.) the production data of passenger vehicles for
the top four Indian assemblers. Foreign vehicle sales have been insignificant


A Brief Introduction to the Top Four Indian Assembler :
Mauriti Suzuki Limited (MSL) is the number one Indian automotive
assembler commanding more than a 70% share of the Indian passenger
vehicle market. ( It also sells a few thousand jeeps, called Gypsy .
Most recent data released by MSL reveals that it produced a total of
277,000 vehicles in 1995/96 resulting in a turnover of approximately $ 2
billion ( Rs. 6673 crore, Source: Financial Express,
March 30, 1996 ). It is also a reasonably profitable venture with after tax
profits of about $ 122 million ( a 65 % increase over the previous year ).
MUL's relatively large production volumes offer scale economies in
production and distribution, which pose formidable barriers to entry. It has
also established a solid supplier-base located around India ( most of its
assembly is concentrated in Northern India near New Delhi ). Its products
enjoy good reputation – in fact, Indian automotive industry observers credit
Maruti for the rapid improvement in quality and supplier capability advance!
) MUL' sproduct line is concentrated in the economy car segment, although
it has been moving up recently to cater to the premium market segments by
introducing the higher-end Esteem.
1 Much of the data presented in this paper has been extracted from the
annual reports published by ACMA, and from articles in the business press
and trade journals.
Occupying the second position in 1994/95 is Bombay - based Premier
Automobiles Ltd. (PAL), which edged out Calcutta – based Hindustan Motors
Ltd. ( H M ) from the second place. In fact , PAL produced the Fiat, and
HM produces the Ambassador – both products that dominated the Indian
automotive industry for decades. The advent of Maruti has resulted in the
decline of both thesefirms. Pal’s main products are the Premier Padmini ( in
the compact car segment ) and the NE118
( In the mid - size car segment ). Recently, PAL has rejuvenated itself by
entering into joint venture with Peugeot ( for the Peugeot 309 ), and with
Fiat ( for the Fiat Undo ). Its close competitor continues to produce
Ambassadors in small volumes targeted at the economy / compact car
HM also offers a higher end product called Contessa Classic, and has
entered into joint venture agreements with General Motors ( G M ) to


produce the Opal Astra, and with Mitsubishi to make the Lancer targeted at
the higher - end market.
Despite occupying the fourth position and producing passenger vehicles only
in small volumes,
Tata Engage. & Locomotive Company Ltd. (TELCO) is noteworthy, not
only because it is a part of the powerful Tata industrial family, but also
because it is one of the few firms with indigenous product development
capabilities, and has been a dominant player in the commercial vehicles
segment. ( The author, in fact, worked with TELCO for a brief period in
the late 80's in their light commercial vehicles product development group. )
TELCO holds about 70% of the heavy commercial vehicles market, and
( after entering the market late ) has also managed to fend off Japanese
competition by gaining about 50% of the light commercial vehicles segment
with its in-house product development. It entered the passenger vehicles
market only in 1991-92, and has quickly established itself in the higher end
of this segment with its Estate and Sierra models. The firm has entered into
a joint venture with Mercedes Benz to assemble the E220's, and is also said
tube planning an entry into the small / economy car segment challenging
Maruti's stronghold.
Indian Component Suppliers
Component suppliers are the backbone of an emerging automotive industry.
By all accounts, the Indian component industry, based mostly in the
southern city of Madras, is tiny. The auto component manufacturers
association of India ( ACMA ) estimates that $2.1 billion worth of carports
were produced in the financial year 1995, out of which exports amounted to
$228 million. To put this in perspective, the entire Indian industry's revenue
is roughly one-tenth that of GM'scomponent unit, Delphi automotive
systems 2 . But, the component market has been growing rapidly at about
25% a year, and is expected to quadruple in size by the year 2000. This
growth has not only been due to the growing demand for passenger
vehicles, but also due to the increasing trend by multi – national OEM's to
resort to global sourcing to improve competitiveness.
Leading automotive assemblers and component makers are increasingly
turning to India for components. One of the now widely - cited examples of
this trend is the Indian component firm, Sandarac Fasteners Limited ( SFL ),
which the author has been studying for the last year. SFLbecame GM's
largest supplier of radiator caps, and exports about 300,000 caps from its
factories in Madras to GM plants around the world. In 1992, when GM
was planning to close one of its plants in UK., SFL took advantage of the
to 2 It is also noteworthy that Delphi is in the process of setting up its

own units in India to make steering systems, Chassis and electrical systems
recognizing the needs of the fast - expanding Indian automobile market
invest heavily in quality and productivity improvements, and a tour around
SFL's suburban Madras Factory shows a world – class plant with minimal
inventory and rework. The company's workers, trained in statistical tools and
control charts, keep processes under statistical control due to which radiator
cap rejection rate is less than 1 % of annual production. The company also
has a very skilled managerial and engineering workforce, which has helped
it develop in – house product development capabilities. Using these resources
and skills, the firm is now seeking to expand its supply to other
manufacturers in Europe, US, and Asia, and also diversify into other
SFL exemplifies the Indian auto components industry, which although small
and fragmented has the competitive advantages of a skilled workforce and
low labor costs. It is estimated that components can be produced about 30
% cheaper in India than in the west. ( The top Indian assembler, Maruti, is
able to price its cars at about $5,500 because it sources 90% of its
components from Indian suppliers. ) Rapid growth and tie – ups with foreign
firms will help Indian auto components suppliers further invest in capacity
and automation and acquisition of the latest know-how, thereby closing the
productivity gap with other world - class component makers.
Shows a few other notable Indian component suppliers and their exports to


Recent Developments and Issues Facing the Indian Automotive
Industry :
In the past two years, more than a dozen multi - national firms have
announced plans to enter the Indian market. Most of them have formed
joint ventures with Indian firms, while there are exceptions such as Hyundai
which plan to form fully - owned units. Exhibit 2 displays most of these
firms and their products planned for the Indian market 3. Despite the large
growth potential of the Indian market ( analysts expect the growth to triple
in the next five years ), no one expects the industry to sustain the
fragmentation caused by more than a dozen suppliers. Many of these new
firms will not enjoy the scale economies and relationships with suppliers
that Maruti does, so they have decided not to challenge Maruti at its price
of $ 5,500 in the smaller car segment. Most are planning to produce
between 20,000 and 50,000 higher - end vehicles. The stiffest competition is
building up in the mid – sized car range ( 1,300 cc and above ), where
several of these multi – national
And Indian companies are planning to go head – to - head. Although this
newly announced vehicle sat $12,000 or above remain expensive by Indian
standards planned capacity exceeds projected demand, new entrants are
betting on the rising incomes of middle – class families. Notably,
Daewoo's new product Cello, priced at about $ 15,000 in a joint venture
with the Indian firm DCM, drew 76,000 advance bookings last year –
reflecting the pent - up demand in the market.
Amongst the many issues facing the Indian automotive industry, the biggest
by far is the poor road infrastructure. India's road network, comprising of a
modest national highway system ( that is only 2% or less of the total
roadway length ) is woefully inadequate and dilapidated, and can barely
keep pace with the auto industry's rapid growth. Most roads are single – lane
roads built in the 1950's and 60's, and are crowded with two - wheelers,
bullock carts, and even pedestrian humans and cows.
Traffic laws are not well enforced leading to one of the highest per – capita
accident rates in the world. It is to be expected that the introduction of
bigger and more powerful vehicles will only worsen the situation. Upgrading
the existing highway system is itself expected to cost $30 billion
Or more, and resource and land constraints prevent the building of new
highways. The Indian 3Conspicuous by its absence from this list of new
entrants is Toyota, which initially had an arrangement with the Hinduja
group that was called off in March, 1996. Toyota is said to be adopting a


wait – and – see attitude. Government’s approach to solving this problem is
to privatize the road infrastructure, by having
Private firms build and operate toll ways. However, it is unclear if this
alone will be able to solve this infrastructure problem of enormous
proportions, which can severely bottleneck future growth.
The significant ( about 50 % ) tariffs imposed on import products and
components combined with the vagaries of currency exchange rates make
localization an important imperative for foreign companies entering the
Indian market. Firms are already making a major effort to localize rapidly;
The Daewoo - DCM venture is expected to raise its local content to 90 %
by the decade's end.
GM's Astra will start with 40 % labor content, and go up to 75 % within
three years. One challenge to localization is a shortage of component
suppliers with size and sophistication.
Another major uncertainty facing the Indian market is the government's
policies toward foreign investments and joint ventures. As Amsden and Kang
[95] note 4, governments play a key role in shaping the growth of the auto
industry in emerging economies ( as compared with developed countries ).
Although many observers say the economic reforms initiated by the ruling
Congress party are not reversible, the difficulties experienced by Enron
Corp. in its investments in the power sector under the hands of the
opposition Bharatiya Janta Party ( B. J. P. ) do not bode well for other
foreign investors. With elections in mid - 1996 expected to return a coalition
group to power, it will be hard for the new government to push the reform
measures with the same vigor and paces the previous government did. It is
even unclear if the group in power will be as positively inclined to foreign
investments and trade as the current governed

New Decade of Auto Sector
Jan 4, 2010 Finance
The Indian automobile industry is performing with a consistency cap on its head. It has again
plucked off another feather to decorate its growth hat. The automobile sector in India
surprisingly did well and outperformed our expectations in terms of sales growth during
2009.When the western economies were struggling to survive their big auto giant’s Indian
economy propelled to the path of growth on strong growth of auto sector in India.


The prominent two reasons that turned the growth wheel of automobile sector of India in 2009
• Introduction of stimulus packages
• Reduction in prices by auto manufacturers
• Lower bank interest
• Cheap prices of steel and other commodities have also helped the cost of production of
automobiles very much cheap resulting to higher sales and higher profits.
• Lower crude prices also added fuel among the buyers to buy cars and enjoy the cheap ride.
• Festive season was among the most important factor which changed the prospect of the
automobile sector.
So in all it can be said that automobile sector had more reasons to smile while others were busy
in wiping out the cry.
Production of automobiles increased from about 60,000 units in 2008 to approximately about
80,000 units in 2009.It reveals two stories at the same time one is that Indian auto sector not only
managed to maintain the sales figure of 2008 but improved its growth by 33.33%.


Strengths and Weaknesses of the Various Players:
To analyze the strengths and weaknesses of the various players in the
Indian automotive industry, It is useful to classify them into the following
four categories:
(1) Indian Assemblers,
(2) Multinational Assemblers
(3) Indian Component Makers, and
(4) Multi-national Component Makers.
Presents the strengths and weaknesses of each of these groups.
The Indian assemblers, typified by Maruti, have built a formidable
distribution and after – sales network. They also have an established supplier
base, which gives them cost and delivery time advantages, especially in
light of import tariffs and currency exchange rate fluctuations / devaluations.
Their biggest weakness, with the exception of TELCO, is the lack of
product design capability. In the coming years, they should focus on
acquiring product design and lean production know – how ( as the Korean
firms did in the eighties and early nineties [ Amsden and Kang 95 ]).
They could acquire know - how with help from their joint – venture partners,
and also with investments in research and development which at present are
at extremely low levels.
Multi – national assemblers could really benefit from their lean production
capabilities in India, where production runs are expected to be small due to
the large number of players entering the Indian market. They could also set
themselves apart by incorporating safety and comfort features not currently
included in Indian – assembled products. These include seat restraints,
airbags, andante - lock brakes, and comfort features such as power windows,
and central locks. U. S. assemblers have a reputation of safety, which they
could leverage to their advantage. Close cooperation with 4 Amsden, A. H. ,
and J. Kang, " Learning to Be Lean in an Emerging Economy: The Case of
South Korea ", IMVP
Sponsors Meeting, Toronto, 1995. The joint - venture partners can overcome
the lack of experience with the Indian market, but the small size of the
component supplier base will pose a challenge to their need to localize
Group Strengths Weaknesses


Indian Assemblers
• Established distribution and After - sales networks, and Supplier base.
• Understanding of the Indian market and ability to liaison With the
• Lack of product developmenand PAL. Multi - national Assemblers
• Lean production capability
• Ability to design products with differentiating features
• Deep pockets, brand image.
• Lack of experience with Indian market, industry, and government.
• Small component supplier base and high import tariffs.
Indian Component Suppliers
• Low cost, skilled workforce
• Learning From exports
• Small Size, Fragmentation
• Lack of know – how in carat areas. Multi – national Component Suppliers
• Size, Deep pockets
• Experience and Know - how in technology.
• Import tariffs, currency exchange rate fluctuations.
• Inexperience with India workforce.

As mentioned earlier, the Indian component industry is small and
fragmented, but is growing and learning fast due to exports. It is also

estimated to hold a 20 – 40 % cost advantage over multinational component
suppliers who are much larger and are themselves opening up units in India
to take advantage of the lower - cost, skilled workforce. The Indian
component industry needs to invest in capacity and research and
development to stay abreast of competition, when the wage gap closes over
time. It is likely that some of the multi - national assemblers or component
makers might buy some of the small but niche component makers with a
reputation for quality.


Tractor Industry - Part of Automobile Industry
Company aims to become the market leader of the tractor segment by 2010.
ITL is the third largest tractor selling company in India and the number one
company in Nepal. These tractors are also exported to various other
countries also including France, South Africa, Australia, Zimbabwe, Sri
Lanka, Canada, Nepal, and Bangladesh etc.
The Company has entered into Technical Collaboration Agreement with MG
Rover of UK. With the technical know – how from MG Rover, UK, the
Company has manufactured MUV with the name of RHINO & the same
MUV would boast of Rover engines. At present it is using Japanese Isuzu
engine. The Company is developing its own Common Rail Direct injection
(CRDi) engines.

Background and History Of The SONALIKA GROUP:
Sonalika group is one of the most prominent agriculture equipment
manufacturers in India. Sonalika Group is contributing to green revolution in
India Since 1969. Initially it started with Farm Equipments and Machinery.
Brand name of the group products is " SONALIKA ". Market share in Farm
Equipments is 80 % in India. Group turnover is 220 Million USD (INR
1000 Crores). Sonalika Group is one of the top five tractor manufacturers in
An average growth rate of 30 % makes it one of the fastest growing
corporate in India. It also happens to be one of the very few debt free
companies in the world. It employs about 2500 people including some of
the renowned names in the industry. The company works on the maxims of
low production cost and clean and safe environment. Such efforts have

fetched the company the accreditations like ISO 9001 : 2000 and ISO

Sonalika is also an environmentally responsible corporate citizen and has
developed in - house, the vehicle engines that confirm to Bharat II Norms. It
is now in the process of developing the Bharat III engines for its advanced
products. No wonder Sonalika products have created a niche for themselves
not only in India but also in foreign markets including France, Zimbabwe
and many of the South – Asian countries.
The company's marketing efforts are promoted by the network of 600
Dealers , 400 Sub dealers and 50 Stockiest supervised by various regional
sales offices. Such a networking has enabled the company to grow like a
well – knit family whose roots lie in its customers, who have been providing
constant feedback and support to allow the company to turn their dreams
into products.
Apart from tractors its product line includes multi utility vehicles, three
wheelers, engines , Hydraulic Systems , Casting , Forging , Brake System ,
Automotive components manufacturing and various farm equipments and
implements. Sonalika group since the inception has tried to understand
customers need to be able to facilitate them with its value for money
products. The company has a state of art manufacturing facilities, spread in
acres, located in the pollution free suburbs of Punjab and Himachal Pradesh.

There are mainly four business unit of the brand name Sonalika. They are
mainly as follows
International Tractors Limited
International Cars & Motors Limited
Sonalika Three Wheelers
Sonalika Agro.


International Tractors Limited was incorporated on October 17, 1995 for the
manufacture of Tractors and has since then built a distinct position for itself
in the Tractor industry. ITL is manufacturing various Tractors of Sonalika
brand between 30 HP to 75 HP, and CERES brand between 60 HP to 90HP.
The Tractors manufactured by the company have secured a reputation of
performance, quality and reliability in the market because of their maximum
pulling power, minimum fuel consumption and Emission. All this makes ITL
the fifth largest tractor selling company in India (third now) and the number
one company in Nepal. These tractors are also exported to various other
countries also including France, South Africa, Australia, Zimbabwe, Sri
Lanka, Canada, Nepal, and Bangladesh etc.
They are also the first Tractor manufacturers in the country producing 50 &
60 HP Tractors fitted with diesel engines manufactured In - House, meeting
Bharat II norms of Smoke & Mass Emission. These engines have been
tested and certified by ARAI, Pune.
United States Environmental Norms Agency, Washington DC has also
certified our Engines. These certifications enabled SONALIKA Tractors to
enter into World Market. All the models of Tractors and Combines
Harvesters manufactured by us are tested & approved by Central Farm
Machinery and Tractors Training & Testing Institute, Budni (MP) India, (the
Government of India institute authorized for issuing test reports ).
Recently SONALIKA Tractors have been awarded " The Best Quality Award
( 2002 – 03 ) " by the Government of India. Sonalika International Tractors
have also been approved for subsidy under various schemes by Ministry of
Agriculture, Govt. of INDIA. A number of banks have approved Sonalika
Tractor for financing and entering into a tie Up for easy financing.


The ITL have launched there tractors in number of segment which are
classified according to there specifications. ITL is manufacturing various
Tractors of Sonalika brand between 30 HP to 75 HP, and CERES brand
between 60 HP to 90 HP.
Sonalika D I 732 III
Sonalika DI-740
Sonalika DI 735
Sonalika DI 745 III
Sonalika D I 750
Sonalika DI 750 III
Sonalika D I 60 Senior

- 34 HP
- 36 HP
- 38 HP
- 45 HP
– 50 HP
- 50 HP
- 60 HP

These tractors range from 30 to 75 HP. ITL is also producing tractors under
CERES Brand and exporting them to countries like
Sri Lanka
South East Asia
Indian Subcontinent
North America
Western Europe


ITL’s market share increased to 11% (Approx.) as on 31.03.2006.
The company maintained 3rd Rank in the tractor industry in terms of
volume and market share. It surpassed Eicher & HMT ( old Players ), John
Deere , New Holland and Escorts ( Multinationals having long international
standing ).
The company has developed a diesel engine which is almost smoke free &
has been approved by US Environment Protection Agency, Washington D. C.

Sales of ITL from 96 to 2005

Growth pattern of ITL vs. Industry growth


ITL has many
cut throat competition
competitors are as
Mahindera Tractors
Punjab Tractors Limited
New Holland Tractors
Tafe Tractors
John Deere

competitors. There is
between them. There


But in Punjab, Mahindra & Mahindra and Punjab Tractor Limited ( PTL,
brand name Swaraj ) are Sonalika’s main rival.
Mahindra & Mahindra
The origins of M & M's Farm Equipment Sector lie in the formation of a
joint venture in 1963 between the Company, International Harvester Inc.,
and Voltas Limited, christened the International Tractor Company of India
(ITCI). This enterprise was a shot in the arm for the green revolution then
beginning to sweep the country. The launch of high – performance tractors
played a vital role in the mechanization of Indian agriculture.
In 1977, ITCI merged with M & M and became its Tractor Division. M &
M's Farm Equipment Sector is the largest manufacturer of tractors in India
with sustained market leadership of over 19 years.
The Farm Equipment Sector is the first Tractor Company in the world to
win the Deming Application Prize ( given for total quality management ).
Also, it is the fourth company in India and the 10th in the world, outside
Japan, to win this prize. It designs, develops, manufactures and markets
tractors as well as implements which are used in conjunction with tractors.
The tractor industry in India is segmented by horsepower into the lower
segment of 25 HP, mid - segment of 35 HP and higher segment of 45 HP
and above. The Company's Farm Equipment Sector has a presence in all
these segments across all states.
M&M has two main tractor manufacturing plants located at Mumbai and
Nagpur in Maharashtra. Both these plants have been certified for ISO 9001,
QS - 9000 and ISO 14001. Apart from these two main manufacturing units,
the Farm Equipment Sector has satellite plants located at Rudrapur in
Uttarachal and Jaipur in Rajasthan.
M&M tractors have earned goodwill and trust of more than 8, 00,000
customers and the ' Mahindra ' tractor has come to be recognised as a
powerful symbol of productivity and performance.

265 DI
265 DI
275 DI
275 DI
475 DI
475 DI

TU Sarpanch
TU Bhoomiputra

– 30 HP
– 30 HP
– 30 HP
- 39 HP
– 39 HP
– 40 HP
– 40 HP


Arjun 445 DI
575 DI Bhoomiputra
575 DI Sarpanch
585 DI Sarpanch
Arjun 555 DI

– 42 HP
– 45 HP
– 45 HP
– 50 HP
– 52 HP

Indian Component Suppliers and Their Exports to OEM's
Sundaram Fasteners: Supplies radiator caps to GM, Caterpillar, and others.
Wheels India: Supplies wheels to heavy vehicle and automotive
manufacturers in Europe.
Eicher Goodearth: Supplies machined castings to Mitsubishi and other
major automotive firms.


Sona Steering: Supplies steering systems to Japanese component makers.
Brakes India: Castings and rubber components to Lucas Industries, Germany.
Source: ACMA Annual report and India Today (March 93)
Exhibit 2: New Entrants to the Indian Automotive Industry as of March
Company Joint Venture Partner Planned Products (Ave. Price)
Audi (Volkswagen) Franchise (Imported car) Audi - A4 ($85,000)
Daewoo (Korea) DCM Cielo ($15K)
Fiat Premier Automobiles (PAL) Fiat Uno 1000 cc ($10,000)
Ford Motor Company Mahindra & Mahindra Ford Escort, Festiva ($12K)
General Motors Corp. (GM) Hindustan Motors (HM) Opel Astra ($22K
Honda Shriram Industries Civic ($18K)
Hyundai (Korea) Wholly - owned subsidiary Accent
Mercedes - Benz TELCO Mercedes E220 ($70K)
Mitsubishi Hindustan Motors (HM) Lancer ($15K)
Peugeot Premier Automobiles (PAL) Peugeot 309 ($15K)
Volkswagen Eicher Ltd. Golf ($20K)
Source: Press Reports From India
List of Car Manufacturers

Mahindra & Mahindra

Audi India

BMW India

Hindustan Motors

Hyundai Motors

Honda India


Nissan Motors

Skoda Auto India

Tata Motors

Toyota India

Fiat India

Ford Motors

Fiat India

Maruti India

General Motors


% Chg from
% Chg from
Dec 2009 Dec'08
YTD 2009 YTD 2008





































Midsize SUV




Light-duty trucks




Large SUV




Small SUV




Luxury SUV




Total SUV/Cross-over




Total SUV




Total Cross-over






Car Sales Statistics India

India is fast emerging as an important market for cars. In
terms of its car market, India ranks third in Asia having
recently displaced South Korea from the position. The car
sales India have almost doubled in a span of 4 years from
2001-02 to 2005-06.
The following chart explains the growth of India Car Sale
during the aforementioned period.

Passengers Vehicles (PVS) From AprilNovember

Maruti Udyog


From April- Total Market The Net Total number
November Share (in %)
of exports in
between the April 05-06
(in %)




Hyundai Motors India Ltd. 89,075

1,07, 066




Tata Motors






HondaSiel cars India Ltd. 23,186





Ford India Pvt. Ltd











Toyota KirloskarMotorPvt 24,404





Tata Motors Ltd





General Motors India Pvt 7,008





Maruti Udyog Ltd .













Utility Vehicles
Mahindra and Mahindra



Hyundai Motor India Ltd. 255
Multi-Purpose Vehicles
Maruti Udyog Ltd.



Mahindra & Mahindra Ltd 13





Medium and Heavy
Commercial Vehicles
Tata Motors






Ashok Leyland






Eicher Motors






Swaraj Mazda






Tata Motors






Mahindra and Mahindra






Swaraj Mazda






Force motors Ltd.






Tata Motors






Mahindra and Mahindra






Swaraj Mazda






Eicher Motors






Light Commercial Vehicles
Passenger Carriers

Goods Carriers


Car Statistics
The Indian automotive industry is the 2nd fastest growing in
the world. About 8 million vehicles are produced annually in
this country toady. During 2005-2006, India has emerged as
the 3 rd largest market in the Asia Pacific Region. With
various car manufacturing companies setting up their units in
different parts of the country, the production of the cars will
increase at a very fast rate. The car reports indicate that
India will soon become one of the top 10 car manufacturing
countries , leaving behind the U.K. Car statistics also show
that by the end of the fiscal year 2006-2007, the car
production capacity in India will exceed the mark of 2
million. Thus, the production of cars will increase by 70%

The Indian automotive industry is the 2nd fastest growing in the world. About 8 million vehicles
are produced annually in this country toady. During 2005-2006, India has emerged as the 3 rd
largest market in the Asia Pacific Region.
With various car manufacturing companies setting up their units in different parts of the country,
the production of the cars will increase at a very fast rate. The car statistics indicate that India
will soon become one of the top 10 car manufacturing countries , leaving behind the U.K. Car
statistics also show that by the end of the fiscal year 2006-2007, the car production capacity in
India will exceed the mark of 2 million. Thus, the production of cars will increase by 70% from
the present capacity of 1.2 million.
The domestic sale of passenger cars have increased significantly over the years. A graphical
representation of the domestic sale of cars will give you an insight about the present market
situation prevailing in the country:


In the recent years, India has emerged as one of the major bases for manufacturing small
passenger cars. At In the recent years, India has emerged as one of the major bases for
manufacturing small passenger cars. At present the Indian automotive industry boasts of being
the 3 rd largest manufacturer of small cars . According to the car statistics almost 70 % of the
cars sold in this country come under the segment of small cars. A number of car manufacturers
like: Maruti Udyog, Tata Motors, Hyundai, Honda, Ford, Hindustan Motors, Fiat, General
Motors etc offer various new model of cars now and then. It is expected that the various
automobile manufacturers will be investing about $ 5 billion in India, between 2005-2010. Some
important statistics about cars also include car insurance statistics, auto insurance statistics, auto
accident statistics and car crash statistics. All these data and statistics help in framing the state
policies and issuing the guidelines to different auto manufacturers and dealers. As per the car
reports , export of passenger cars from India have also grown considerably over the last decade.
A graphical representation of car export trend will help you to make an in-depth analysis of the


present status of the Indian automotive industry:

With new strategies being implemented and more investments being made in Indian automotive
industry the production as well as the domestic sale and exports will increase substantially.

A graphical representation of the total sale trend of passenger cars (including the domestic sale
and exports) is given below:


To know more about car statistics and matters related to automobiles, do browse through the
pages of

SALES TREND (No. of Vehicles)







Passenger Vehicles



Commercial Vehicles



Two Wheelers

4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,248,589

Grand Total

5,710,006 6,526,459 7,589,767 8,546,508 9,720,078 9,283,391

1,061,572 1,143,076 1,379,979 1,547,985






Audi AG
Daewoo Motors
Fiat India Pvt Ltd
Force Motor
Ford Motor Co.
General Motors

Honda Motor Co.
Hyundai Motor Co.
Maruti Suzuki India Ltd
Mahindra & Mahindra

Mercedes Benz
Mitsubishi Motors
Nissan Motor Co. Ltd

Tata Motors
Toyota Kirloskar Motors

Hindustan Motors


Volkswagen Cars


Reva Electric Car Co.
Rolls-Royce Motor
San Motors
Skoda Auto India Pvt


A lot of interesting surveys and researches are conducted in the field of automobiles. The
emergence of global automobile biggies to India has made the government to take notice and sit
up so as to drive more investments into this sector. The ministry of heavy industries has recently
announced a 10-year mission plan (Automotive
Mission Plan 2016) to make India a global hub for automotive industry.


India's auto industry comes of age

Not long ago, India's auto industry was a laughing stock. Its two best known cars were a 1940s Morris model called the Ambassador and a
1960s Suzuki – derived model called the Maruti 800. But that was then.
Today, for instance, the Mumbai – based Dilip Chhabria Design Pvt Ltd
( DC Design ) is seeking to take on Pininfarina and Bertone, the Italian
standard in international car design, by designing and building concept
cars, prototypes and limited – production runs. Nor is DC Design alone.
"There can be few more improbable automotive stories than the yarn
about the Indian designers creating bespoke concept and prototype cars, "
said the United Kingdom's auto magazine Autocar in a recent issue. "
Yet the hottest ideas in car design are happening right now in the back
streets of Mumbai. " India is now the ninth country in the world to
design a vehicle on its own.
In fact, the Indian auto industry is fast becoming an outsourcing hub for
automobile companies worldwide, as zooming automobile exports from
the country indicate. Surinder Kapur, the chairman of Sona Koyo
Steering, which exports car steering assemblies, says, "Car makers over
the world have realized that India can design a car on its own and
make it globally acceptable. "
Passenger car exports have nearly trebled in four years, from 28,122
units in 1998 - 99 to 71,653 vehicles in 2002-3. The industry expects
this to gather steam further ahead because car exports in the first
quarter of 2003 - 4 leapt by 87 percent over the same period in 2002 3. The two – wheeler segment is booming, too, with exports zooming
from 100,004 units last year to 179,000 units in 2002 - 3. By 2005, the
industry expects 400,000 two – wheelers on foreign shores.


Sectoral Performance
Is the Indian automobile sector as environmentally conscious as best in the
world ?
NO! Automobile sector has fared badly. Under the project rating scale we
were to award five leaves award to the best company. But sadly no auto
company deserved this honour. The best company gets less than 45 per
cent marks getting a mere three leaves award. But the sector as a whole
gets even lesser, scoring 31.4 per cent, deserving only two leaves award.
The passenger car segment leads the way among the entire automobile
segment and is the only segment which gets three leaves. Mass transport
vehicle segment comes second. The two and three wheeler segment, with
two leaves, lags behind even the mass transport vehicles, which has
performed better due to introduction of CNG fuelled vehicles.

In terms of overall performance, the three companies, which top the
environmental rating, are Daewoo Motor India Ltd., Hyundai Motors India
Ltd. And General Motors India. All these three companies have performed
well in product usage phase.
The companies, which are at the bottom of the pile, are the three non –
participating companies, Bajaj Tempo Ltd., Yamaha Motor Escort Ltd. and
Swaraj Mazda Ltd.
Maximum of the companies in top ten are passenger car manufacturers
while most of the two and three wheeler manufacturers have shown a poor
performance trailing behind in the ratings. However, there is an exception,
Hero Honda Motors, which has not only achieved three leaves rating but
also ranks fifth in overall rating.
The other two and three wheeler companies lag very far behind. Though
Bajaj Auto Ltd. and TVS Suzuki follow Hero Honda Motors as the 2nd and
3rd in the segment but in the overall rating they fare poorly.
As far as individual products are concerned, Daewoo's small car Matiz, has
been judged as the most environment friendly vehicle overall, scoring high
in terms of vehicle and engine design, and also performing well in other
aspects such as pollution control equipment installed and emissions.
Maruti's most popular vehicle in the country Maruti - 800 ( Euro II model )
is the second most eco – friendly vehicle. It scores less than Matiz in
terms of design but scores more in the emissions. The third most eco friendly vehicle is Hyundai's Santro, which also has the highest fuel
Small is beautiful – All the top three eco – friendly vehicles are small cars
and have inherent advantages over the larger ones in the sense that they

emit less pollution and consume less fuel compared to larger vehicles.
They also use lesser material during manufacturing stages.
Honda City 1.5V - tech gets the recognition of being the most
technologically advanced and least polluting vehicle in India with emission
as low as 85 per cent lower than the Euro II norms.
The vehicle with the worst performance environmentally is Mahindra &
Mahindra's Armada, which comes last in the passenger car segment. It has
scored very low in all criteria.
Among the two and three wheelers, both selected models of Hero Honda
(Splendor and CD 100) are the most eco friendly two wheelers. They have
scored above average in vehicle and engine design and are one of the very
few four - stroke two wheeler fitted with any kind of pollution control
Bajaj boxer, the latest model of Bajaj Auto that ranks third, has scored
well in vehicle and engine design but lacks in emission control equipment
and comparatively poorer emission.
The best performing two – stroke model ranks fourth amongst the two
wheelers. The lowest score has been obtained by Kinetic Safari moped,
which obtained average scores in design and emissions and very poor
scores in pollution control equipment and emissions.
Among the mass transport vehicles Ashok - Leyland's Viking compressed
natural gas (CNG) bus scored above average in design and very high in
emissions due to inherent advantages of CNG vehicle making it the best
performer in this section. The second position is also taken by another
CNG fuelled vehicle, that is, Telco LPO CGS bus. Interestingly, the worst
performers in this segment are Ashok Leyland's diesel fuelled Comet 1611
and Tusker Turbo tractor.
A total number of 29 automobile manufacturers were selected for the
project of which 26 companies participated voluntarily ( 90 per cent
participation ). The three companies which refused to participate and chose
to continue being non - transparent are Bajaj Tempo Ltd. , Yamaha Escorts
Motor Ltd. and Swaraj Mazda Ltd.

The Green Rating of Indian Industry project was started by the Centre for
Science and Environment ( C S E ) in 1996 to address an array of
environmental issues facing all segments of Indian industries. The project is
supported by the United Nations Development Programme ( U N D P ) and
the Ministry of Environment and Forest ( MoEF ). The first sectoral rating
undertaken under the pilot phase of the project was pulp and paper
sectoral rating, which was a highly successful exercise and was rated as
the best environmental audit project in last 25 years in Asia by ' Asia
Week '.
Spanning over a period of two years, Green Rating of automobile sector
was a great challenge owing to diversity between companies in their
production processes as well as the products manufactured. Participation of
all the major automobile companies in the exercise makes it a unique
effort to assess the environmental health of the sector. The project has
covered 35 production facilities spread in nine states and almost 80 per
cent of the products currently running on Indian roads.

The rating methodology for automobile sector has been developed keeping
in mind the life cycle impact of the automobile industry. Thus, the
weightages were allotted accordingly with 80 per cent of the score devoted
to life cycle analysis (LCA) and remaining 20 per cent for corporate
The life cycle assessment included determining the environmental impacts
at various steps of the production process right from sourcing of raw
materials, to the manufacturing and assembly process, to the pollution
caused by use of the vehicle, and finally the impact caused by its disposal.
Of the 80 per cent on the life cycle assessment, the highest weightage ( 56

per cent ) was allotted to the product use phase based on the conclusion
arrived at by the project that maximum pollution occurs during use phase.
"Vehicle are the core of the automobile industry since they alone generate
about 80 per cent of the total life cycle pollution, " says Chandra Bhushan,
Coordinator, Green Rating Project, CSE. " In order to assess the
environmental performance of the product, a combination of engine design,
pollution control equipment fitted and the emission test data supplied by
the test agencies were considered, making this exercise the most
comprehensive ever taken anywhere in the world. Even the green
automobile ratings done in the US and in Europe only consider emissions
and fuel consumption data to rank the vehicles. Green rating project has
taken a quantum leap over the existing automobile rating methodology " he
Robustness of the Rating methodology
'Engine design analysis should represent the emissions from the vehicles, '
was the main focus for arriving at the robustness of the product rating
criteria, developed by GRP, since the engine and vehicle rating was given
by the project and the emissions rating was given on the basis of the test
data of certified test agencies. Therefore, the litmus test for GRP was to
correlate the ratings given by two separate institutions with no interaction
between them. This was very well reflected in high coefficient of
correlation found between the scores obtained in engine design and
pollution control equipment, and the score obtained in emission. For
example, in petrol passenger cars in 78 per cent cases the engine design
did represent the emission characteristics of the vehicles.
Testing the effectiveness of the rating methodology in replicating the life
cycle analysis, the test undertaken by the project was to correlate the
overall rating with the vehicle's rating. Since, as per life cycle analysis, a
company with poor product should get poor results, however good it may
be on other aspects. This too was very well established in the rating with
product rating having a very high correlation ( 97 per cent ) with the
overall rating. However, the analysis brought out the fact that the other
criteria were as important and were seen to have high degree of correlation
with the overall ratings.
Green rating project findings draw its process on the principle that root of

the cure of any disease lies in the proper diagnosis rather than just
More miles per litre
A fuel – efficient car would be the cheapest vehicle in the long run and an
important consideration for the customer as well. The Hyundai Santro was
judged the most fuel - efficient petrol passenger vehicle followed by Fiat
Uno and Maruti - 800 Euro – II model. In case of diesel passenger car,
Mitsubishi Lancer was judged the most fuel – efficient and Toyota Qualis
Euro – I model was most fuel - efficient multi –utility vehicle.
Clean fuel, clean vehicle
We did a comparative analysis of impact of fuels on emissions.
Study based on analysis of three diesel –fuelled mass transport vehicles and
two CNG fuelled mass transport vehicles clearly showed that CNG fuelled
vehicles are far better in terms of tail pipe emissions than the diesel
fuelled mass transport vehicles. CNG –fuelled vehicles have as much as
five times lower particulates and overall 73 per cent lower emissions than
their diesel counterparts.
Overall petrol vehicles show an inherent advantage over the diesel –fuelled
vehicles with all the top 14 cars being petrol ones. The best diesel car,
which is Mercedes E 220, ranks as low as 15. While the best multi –utility
vehicle, Toyota Qualis Euro II model ranks a dismal 20th among all the 31

Are MNCs better than Indian Companies?
Green rating project reveals that contrary to the prevalent belief there is
hardly any difference in the overall performance of Indian companies and
MNCs. Both of them meet the same environmental standards in each and
every aspect. A double standard was perceptible in the business pattern of
MNCs as they were following a practice of dumping obsolete products on
the pretext of poor fuel and existing regulatory norm in the Indian market.
Other than corporate environmental governance and pro –active initiatives,


Indian companies are at par with the MNCs.
Does cleanliness make business sense?
Yes it does. A fairly tangible correlation was observed between the
environmental performance and economic performance of companies in the
automobile sector. On an average, in total automobile segments it was
found that about 67 per cent of time there was direct relation between the
environmental rating and profit of company. That is, if a company is good
on the environment front, it is also sound in its balance sheet. In specific
vehicle segment, this correlation was very high, as high as 81 per cent in
two and three wheeler companies.
Consumer awareness
Although, insufficiently informed consumers contribute to 80 per cent of
the pollution generated by automobile companies on road. Yet the sector in
itself or through its dealers has not taken any proactive effort to educate
these consumers. Two and three wheeler companies are the worst in
consumer awareness raising initiatives. Except for giving free servicing not
much has been done to educate people.
Maintenance of the vehicles
The project found that though the maintenance of the vehicle plays a
major role in the overall environmental performance during the vehicle use,
the strategy adopted by the automobile companies do not provide enough
incentive to the consumers to go to the authorised service
stations/workshops. The cost of maintenance at authorised service stations
were found to be as high as 50 to 100 per cent than the unauthorised
stations, and this was the main reason why consumers avoided going to
the authorised stations once their vehicle became a bit old. Automobile
companies need to work on economy of scale and provide enough
incentive to the consumer to use authorised service stations. This will not
only reduce the pollution load but will also improve company's bottom
line. Companies need to think in terms of annual maintenance contract to
facilitate this recommends green rating project.
Impact of fuel quality
GRP analysis on Indian automobile segment clearly shows that the
companies are holding fuel quality responsible for pollution. Whereas, the
truth is that current engine design in India is at least a decade old

compared to similar type of vehicles manufactured in western countries.
Basic initiative towards improving the engine design is lacking. Use of
alternative fuels over conventional fuels is yet to take its start in major
way and their needs to be a big boost in the development of this concept
in India.
The automobile sector in general has not taken much effort to establish the
impact of fuel quality on emissions. Some studies undertaken by companies
have shown that there is hardly any consistent trend to show that the fuels
are mainly responsible for the poor emission quality. Role of age factor on
the effectiveness of catalytic converters too needs a comprehensive study to
establish a relation as it plays a great role in determining the pollution
scenario on roads.
Impact of various parameters on fuel efficiency
Impact of various design parameters of vehicles on the tail pipe emission
and fuel efficiency was carried out by the project. Weight of the vehicle
and its engine size was found to have inverse relationship with fuel
efficiency, though compression ratio had a direct relationship.
The project also found that a Indian passenger car switching over to multi
point fuel injection system from the carburetor system can expect a
reduction in the tail pipe emission in the range of 25 per cent to 40 per
Another interesting finding was that majority of the petrol passenger cars
running on the Indian roads are using catalytic converters which does not
suit their engine design.
Which is better ? Two stroke or Four Stroke.
On the comparative performance undertaken for two–stroke and four–stroke
two wheelers, the outcome clearly established that four stroke two–wheelers
are better that two stroke two-wheelers with respect to both emission and
fuel efficiency. The carbon monoxide (CO) and hydrocarbons and nitrogen
oxides (HC+NOx) emitted by two–stroke two–wheelers (with catalytic
converter ) are 23 per cent and 38 per cent, respectively higher than their
equivalent four–stroke two –wheelers without catalytic converter.

Meeting of regulations
While some Indian vehicles are meeting Euro II equivalent norms in the
national capital region of Delhi and Euro I equivalent norms in the rest of
the country, it was found that overall, automobiles in all the segments are
meeting the regulatory norms well. However, GRP found that this is not
enough as there are companies that can go much beyond the minimum
regulatory requirement but absence of incentives from government
discourages them. Government should come out with some incentive
mechanism to differentiate between just a good performer and excellent
Supply Chain Management
Green rating project closely scrutinized the practice of outsourcing by
Indian automobile companies and found that majority of pollution during
automobile production takes place at the supplier and vendor's site, most of
them being small and medium scale companies. Overall automobile
companies had a very poor performance on this aspect. The project found
a clear trend of transferring of pollution by automobile companies to its
supply chain. Companies urgently need to adopt a green procurement
policy and green up their supply chain.
Importance of ISO 14001
Almost half of the automobile sector has adopted environment management
systems (EMS) standards. However ISO 14001 adopted by automobile
companies is not the actual reflection of their environment management as
these companies are just assembly plants. Most of their processes are
outsourced and the major pollution happens at vendor's site and during
product use and disposal. Thus, ISO 14001 only takes care of very small
percent of pollution generated by the companies. The project has
recommended automobile sector to adopt an environment management
system, which reflects the environmental aspects of automobile business
and not to use the existing system, which is production centric.


Some other findings related to production process:
1) The entire sector uses paints that contain heavy metals and are based
on solvents. No company uses water based paints
2) The regulatory standards for wastewater characteristic applicable to the
automobile sector are lax as well as irrational
" Business Planning but with the ingredients of Social, Environmental and
above all Ethical consideration imbibed in it will define the future of
Indian Automobile Sector ", says Sunita Narian, Director, CSE. " We
recommend a coherent approach to be adopted by automobile industry,
government and consumers. Once the consumer starts including environment
in their buying decisions, which they should because environment in
automobile actually means economy and savings, companies will be pushed
to improve, " adds Chandra Bhushan, coordinator of Green Rating Project.
Companies cannot afford to loose their market given the kind of cutthroat
competition existing in India today. Consumers need to build on the
research outcome of green rating project, and ask for emission and fuel
efficiency performance of automobiles as their buying criterion along with
Government on its part should come out with economic instruments as its
major tool to regulate automobile companies. Pollution control body too
needs a complete rethinking of its regulatory approach to this sector.
Wastewater characteristics, solid/hazardous waste management, paint sludge
incineration, dioxin and furans are some major aspects of automobile
pollution during manufacturing process-regulations for which are either
weak or non-existent. Downstream pollution checks and supply chain
management are also some issues where regulatory bodies will have to do
some soul searching.
Automobile companies need to do a lot of rethinking. Extensive research
and development, option of alternate fuels, clean technologies and quality
control to oversee adherence to product conformance will shape the future
of automobile sector in India.


Companies must come forward and be more active in shouldering their
responsibilities in educating consumers regarding good and bad features of
Proactive dialogue between this sector and society in general could pave
the way for long-term solution to the various pollutions caused by the
automobile sector. All stakeholders need to come together to improve the
environmental performance of this sector. We have just made a start, a lot
more needs to be done.

Current status of Indian Automotive Industry
On the canvas of the Indian Economy, Auto Industry occupies a prominent
place. Due to its deep forward and backward linkages with several key
segments of the economy, automotive industry has a strong multiplier effect
and is capable of being the driver of economic growth. A sound
transportation system plays a pivotal role in the country's rapid economic
and industrial development. The well–developed Indian automotive industry

ably fulfils this catalytic role by producing a wide variety of vehicles:
passenger cars, light, medium and heavy commercial vehicles, multi –utility
vehicles such as Muv’s, scooters, motorcycles, mopeds, three wheelers,
tractors etc.
Although the automotive industry in India
is nearly six decades old, until 1982, only
three manufacturers - M/s. Hindustan
Motors, M/s. Premier Automobiles & M/s.
Standard Motors tenanted the motorcar
sector. Owing to low volumes, it
perpetuated obsolete technologies and was
out of sync with the world industry. In
1982, Maruti Udyog Limited (M U L )
came up as a Government initiative in collaboration with Suzuki of Japan
to establish volume production of contemporary models. After the lifting of
licensing in 1993, 17 new ventures have come up, of which 16 are for
manufacture of cars. There are at present 12 manufacturers of passenger
cars, 5 manufacturers of MUVs, 9 manufacturers of Commercial Vehicles,
12 of two wheelers, 4 of three wheelers and 14 of tractors besides 5
manufacturers of engine.
The industry comprising of the automobile and the auto component sectors
has shown great advances since deli censing and opening up of the sector
to FDI in 1993. The industry has an investment of a sum exceeding Rs.
50,000 crore. During the year 2003-04 the turnover of the automotive sector
was around Rs. 1,00,000 crore. The industry provides direct employment to
4.5 lakhs and generates indirect employment of 1 crore. The contribution of
the automotive industry to GDP has risen from 2.77% in 1992-93 to 4% in

Installed capacity
The Automobile Manufacturers have put up a robust manufacturing capacity
of 95 lakh plus vehicles per annum since 1993. Today India is the world's
second largest manufacturer of two wheelers, fifth largest manufacturer of
commercial vehicles and manufactures largest number of tractors in the
world. The country offers fourth largest passenger car market in Asia today.


A supplier driven market, having no more than a handful of vehicular
models two decades ago, now offers more than 150 models and variants by
way of customer options. The installed capacity of the automobile sector
during the year 2003-04 was as under:
One of the largest industries in India, automotive industry has been
witnessing impressive growth during the last two decades. Abolition of
licensing in 1991, permitting automatic approval and successive liberalization
of the sector over the years have led to all round development of this
industry. The freeing of the industry from restrictive environment has, on
the one hand, helped it to restructure, absorb newer technologies, align itself
to the global developments and realize its potential and on the other hand,
this has significantly increased industry's contribution to overall industrial
growth in the country. Overall automobile sector bagged a growth of
15.12% in 2003-04. During the year 2004- 05 (upto April-Sept 2004) the
Industry has registered a growth rate of 15.06%. The details of actual
production during 2003- 04 and 2004-05 ( upto April-Sept.2004 ) are given
In no.s
S. No. Name of the Sector


No. of units Production
(April-Sept. 04)
Commercial Vehicles 9
275224 156815
842437 465983
Multi-Utility Vehicles 5
146103 114739
5624950 3023805
340729 177554
7229443 3938896

Automotive industry of India is now finding increasing recognition
worldwide and a beginning has been made in exports of vehicles as well as

components. The automobile industry along with the component industry is
also contributing to the export effort of the country. During the year 200506 the export of automobile industry had registered a growth rate of
65.35% while it was 55.98% during the year 2006-07. The details of
exports during 2005-06 and 2006-07 ( upto April-Sept. 2007 ) are given
below:(in Nos.)
Commercial vehicles
Passenger cars
Multi- Utility Vehicles

2005-06 2006-07(April-Sept. 07)


Auto Components Industry
Surge in automobile industry since the nineties has led to robust growth of
the auto component sector in the country. Responding to emerging scenario,
Indian auto component sector has shown great advances in recent years in
terms of growth, spread, absorption of newer technologies and flexibility,
despite multiplicity of technology platforms and low volumes. India's
reasonably priced skilled workforce, large population of technology workers
coupled with strengths gained by the country in IT and electronics all build
up an environment for significant leap in component industry.
The Indian auto component sector is being written up as the next industry,
after software that has the potential of becoming globally competitive. Indian
Auto Component Industry, with a turn over of an approx Rs. 36,300 crore
(2004-05,prov.) and manufacturing all the key components required for
vehicle manufacturing, is an important sector of the Automotive industry.
The phased Manufacturing Policy (PMP) followed in the 1980s enabled the
component industry to induct new technologies, new products and a much
higher level of quality in their operations that enabled quick and effective
localization of the component base. The Indian auto component industry
over the years has played a key role in the growth and development of the

country's automotive industry. The Indian auto component sector today has
420 key players who contribute more than 85% of the output of this sector.
The vital statistics of the auto component sector during 2005-06 and 200607 are as under:




Rs. 12,500 crore


Rs. 24,500 crore


Rs. 3,800 crore


5,00,000 persons

Rs. 13,400 crore
Rs. 30,640 crore
Rs. 4,550 crore
5,00,000 persons

Indian auto component industry has seen major growth with the arrival of
world vehicle manufacturers from Japan, Korea, US & Europe. Due to
diversities in the technological profiles of these OEMs, the sector today
produces large variety of components. Today, India is emerging as one of
the key auto components center in Asia and expected to play a significant
role in the global automotive supply chain in the near future.

Ashok Leyland
Audi AG
Bajaj Auto

HMT Tractors
Honda Motors Co.
Hyundai Motors

Royal Enfield
San Motors
Scooters India Ltd


Indofarm Tractors
Kinetic Motor Co.

Skoda Auto India


Suzuki Motors
Swaraj Mazda Ltd.

Escorts Ltd.
Fiat India Pvt Ltd

LML India
Mahindra &
Mahindra Ltd.
Maruti Suzuki India
Mercedes Benz
Mitsubishi Motors

Force Motor

Monto Motors

Ford Motors
General Motors
Hero Honda
Hindustan Motors

Nissan Motors
Reva Electric Co.
Rolls-Royce Motor

Bentley Motors
Daewoo Motors
Eicher Motors

Sonalika Tractors

Tafe Tractors
Tata Motors
Terex Vectra
Toyota Kirloskar
TVS Motor Co.
Yamaha Motor

These are the companies that bring to us our dream machines. This
is where it all starts from; the bourgeoisie Maruti 800, the upmarket
Astra, the stately Mercedes, the 'Indian' Indica, the racy Hero
Honda, the Tata truck and the rest.
Wend your way through the automobile companies, their history
and product lines. Find out hitherto unknown facts about the
vehicles you use. Did you know that the Hindustan Motors was the
first vehicle manufacturing company to be set up in India? And it
is the same Hindustan Motors which manufactures both the sturdy
Ambassador and the elegant Lancer, in association with Mitsubishi

Indian auto component industry is wide (over 420 firms in the organized
sector producing practically all components and more than 10,000 firms in
small unorganized sector, in tierized format) and has been one of the fastest
growing segments of automotive industry, growing by over 28%, in nominal
terms, between 1995-98. During the year 2003-04, the sector has recorded a

growth of 25.06% by recording a production of the order of Rs. 30,640
crore. During the year 2004-05, the output of the Auto Component Industry
is expected to be around Rs. 36,300 crore.
Component exports in the year 2003-04 have already crossed US $ 1 billion.
however, represents only about 0.8% of global component trade currently
estimated at around US $1.2 trillion. This is reflective of significant
opportunities that lie ahead.
Several export units have reached rejection rate below 5 parts per million
(PPM) with many of them touching a zero PPM. On export front, auto
component industry has registered a growth of 29% in the year 2003-04
which is expected to be around 30% in the year 2004-05. During the year
2003-04, total export was of the order of Rs. 4550 crore as compared to
Rs. 3497 crore during the year 2002-03. up in the current year with the
reduction in the excise duty and improvement in the credit delivery system
for the sector.

Research Design:

Descriptive and Analytical Research


o Continuous increase in the demmand of automobile beyond
level of normal demmand.
o There








capacity and design of automobile.
o Different norms regarding pollution are

imposed by govt.

day to day.


 To analyze



of Automobile Industry of

 To analyze the various dimensions of automobile industry
such as production, environmental effects and its
 To analyze the pattern and trends of Indian automobile
industry and its future perspectives.
 To analyze the Opportunities and Challenges Posed by Recent
Developments of Indian Automotive Industry.
 To know strengths and weaknesses of the different groups in the
Indian Auto Industry.


o Examines the production, sales, and export growth
rates of the sector, along with a mention of the
major manufacturers.
o Identification of the opportunities for foreign
companies in terms of exports, technology transfers,
strategic alliances, financial collaborations and JVs,
in the Indian vehicle sector.
o To find the growth in automobile sales.
o To see the market trend in automotive sector.
o To find out role of different foreign
manufacturers in India.


- Comparison of prices of new and pre-owned

o – Examines the production, sales, and export
growth rates of the sector, along with a
mention of the major manufacturers.
- Identification of the opportunities for foreign
companies in terms of exports, technology
transfers , strategic alliances, financial
collaborations and JV’s, in the Indian vehicle
- The component-wise share of production is
- Assessment of the implications of vehicle
- Demand forecasts till 2010.
- An overview of the major changes occurring in
the Indian market
- A study of the market access strategies for
- An insight into the profiles of big players of
the Indian automotive sector

Method of study
Univers study

Sources of data

Secondary Data:
The secondary data are those, which have already being
collected by others for their own purpose.
 Data has been collected from various websites as well
various books & magazines .


Research Tool
 Analysis of collected data.
 Comparison of collected data.
 Drawing conclusions & inference from analysis

o Graphical presentation
o Tabulation of data



Data of automobile sector is quite large.

Various manufacturers and there large no of models .

Taste of customers changing quite frequently.

Study is based on secondary data.









on automobile sector .

Abstract( Outcomes of data )

The Indian automotive industry has flourished like never
before in the recent years. This extra-ordinary growth that the


Indian automotive industry has witnessed, is a result of a two major
factors namely, the improvement in the living standards of the
middle class, and an increase in their disposable incomes.
Moreover, the liberalization steps, such as, relaxation of the foreign
exchange and equity regulations, reduction of tariffs on imports,
and refining the banking policies, initiated by the Government of
India, have played an equally important role in bringing the Indian
Automotive industry to great heights. It is estimated that the sale of
passenger cars have tripled compared to their sale in the last five
years. Thus, the sale of cars has reached a figure of 1 million users
and is expected to increase further. Its also to be noted that the
demand for luxurious models, SUVs, and mini-cars for family
owners, have shot up, largely due to increase in the consumers
buying capacity.
The increased demand for Indian automobiles has resulted in a
large number of multi-national auto companies, especially from
Japan, U. S. A., and Europe, entering the Indian market and
working in collaboration with the Indian firms. Also, the
institutionalization of automobile finance has further paved the way
to sustain a long-term high growth for the industry.
The basic objective of this market research report "Indian
Automobile Industry--Recent Trends" is to estimate the demand for
automobiles from 2005 till 2012. The increasing role of auto finance
is also scrutinized by proving a series of surveys conducted across
the country covering all categories of private and commercial
vehicles finance. The report also examines the region-wise demand
and growth trends for the selected vehicles, and how they
influenced Indias GDP growth.


Examines the production, sales, and export growth rates of
the sector, along with a mention of the major manufacturers.
Identification of the opportunities for foreign companies in
terms of exports, technology transfers, strategic alliances,
financial collaborations and JVs, in the Indian vehicle sector.
The component-wise share of production is assessed.
Assessment of the implications of vehicle emissions.
Interpretation of the impact of the Union Budget on the Indian
auto industry.
Demand forecasts till 2010.
An overview of the major changes occurring in the Indian
A study of the market access strategies for companies.
An insight into the profiles of big players of the Indian
automotive sector.


Significance of study
To the industry:
The Industry would be able to trac the changes occurong in
the Environment.
To the consumer:
Quality which the company provides to them
To the Govt.:

Ability of company to generate revenue & its contribution in

economic development of country

To the Academicians etc :

This study will enhance knowledge of academicians that how relation can
be formulated in an efficient economic growth & automobile industry




The Indian automotive industry, although growing rapidly, is
in a state of flux. The production capacities planned by the
new joint ventures currently exceed most projections, and
unless import tariffs come down quickly and the economy
grows remarkably, a shake-out may be expected from the
current 20 firms to about half a dozen major firms turning
out finished products by the end of the decade.
However, if multi-national firms decide to use India as a
production base from which vehicles are exported to the
rest of the world, more than half a dozen firms may be able
to remain profitable in India. Suzuki has already begun to
use its Maruti joint-venture production to export a few
thousand cars to the Middle East and Europe. However, the
production capacities of other emerging economies such as
Korea and China is also predicted to grow significantly in
the coming
years, so exports may also face a highly
competitive market situation.
In this dissertation, I have presented a brief introduction to
the Indian assemblers and component suppliers. We noted
that Indian assemblers have a tight hold over the small-car
market due to their low cost supplier base and the tariffs
levied on import components. Maruti with its production
volumes of over 250,000 enjoys scale economies in
production, distribution, and service that are hard to
Production volumes do confer several advantages to a firm.
However, new entrants can set themselves apart by offering
new safety and comfort features that are not currently
offered in the Indian market.
They can also leverage their low production run (lean)
capabilities to stay profitable despite the low production
volumes. Further, they can combine their reputation with the


Indian industry's lower production costs to produce cars and
export them to the global markets. Many multinationals
are already said to be planning such an approach.
For Indian component makers and assemblers, product
development capability is key, in order to rejuvenate their
product lines, enhance their reputation, and export their
products to the markets in developed countries. The author
is currently pursuing a study of product development and
production systems in the Indian component industry.
Since the plants located in India are very far from the
developed markets of the USA, Europe, and Japan,
component suppliers incur significant transportation and
inventory carrying costs in exporting products to global
markets. Their situation is worsened by the poor Indian
infrastructure, which leads to frequent power interruptions
and long delays in supply. These companies are adopting
innovative techniques to cope with these uncertainties, which
will be a topic of another paper.
The Indian automotive industry, as a whole, is also severely
bottlenecked by the woefully inadequate road infrastructure.
Privatization of the road infrastructure, even if started
immediately, can take years to solve this problem. India also
experiences an extraordinarily high number of traffic
fatalities, and faces severe pollution problems. As of April 1,
1996, the ministry of surface transport has set emission
norms (that are modest by international standards), which
local automakers say are hard to meet. Multi-national firms
can bring their experience and know-how to bear in these
areas, and enhance their reputation as well as attract
customers who are safety conscious and environmentally
aware. This will also result in the gradual reduction of the
auto related facilities and pollution ( due to the diffusion of
these practices ) , thereby contributing to the further growth
of the Indian automotive industry.


-Domestic PV sales forecasts
- Small cars to drive domestic PC sales growth
- Nano scores favourable both on first year as well as recurring annual costs
- Owning a new Nano is comparable to owning a pre-owned 800
- Recurring costs would lead to households refraining from replacing twowheelers with Nano
- Expected launches by various OEM in next few months
- Upcoming capacities in next 2 – 3 years in the PC industry
- Player-wise sales and market share in costlier car sub-segments




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 Economic times

 Books


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