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Chapter III
An overview of car industry
“Automobile industry is the industry of industries.”
Peter Drucker
3.1 Introduction
An automobile, autocar, motorcar or car is wheeled motor vehicle used for
transporting passengers; it also carries its own engine or motor. Most definitions of the
term specify that automobiles are designed to run primarily on roads, to have seating for
one to eight people, to typically have four wheels, and to be constructed principally for
the transport of people rather than goods.
3.2 Etymology
The word automobile comes, via the French automobile, from the Ancient Greek
word αὐτός (autós, “self”) and the Latin mobilis (“movable”); meaning a vehicle that
moves itself, rather than being pulled or pushed by a separate animal or another vehicle.
The alternative name car is believed to originate from the Latin word carrus
or carrum (“wheeled vehicle”), or the Middle English word carre (“cart”) (from Old
North French), or from the Gaulish word karros (a Gallic Chariot).
3.3 History of automobiles
The birth of the car occurred over a period of years. It was only in 1885 that the
first real car rolled down on to streets. The earlier attempts, though successful, were
steam powered road-vehicles.
The first self-propelled car was built by Nicolas Cugnot in 1769 which could
attain a speed of up to 6 kms/ hour. In 1771 he again designed another steam-driven
engine which ran so fast that it rammed into a wall, recording the world‟s first accident.
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In 1807 Francois Isaac de Rivaz designed the first internal combustion engine.
This was subsequently used by him to develop the world‟s first vehicle to run on such an
engine, one that used a mixture of hydrogen and oxygen to generate energy.
This spawned the birth of a number of designs based on the internal combustion
engine in the early nineteenth century with little or no degree of commercial success.
In 1860 thereafter, Jean Joseph Etienne Lenoir built the first successful two-stroke gas
driven engine. In 1862 he again built an experimental vehicle driven by his gas-engine,
which ran at a speed of 3 kilometers per hour. These cars became popular and by 1865
could be frequently espied on the roads.
The next major leap forward occurred in 1885 when the four stroke engine was
devised. Gottileb Damlier and Nicolas Otto worked together on the mission till they fell
apart. Daimler created his own engines which he used both for cars and for the first four
wheel horseless carriage. In the meanwhile, unknown to them, Karl Benz, was in the
process of creating his own advanced tri-cycle which proved to be the first true car.
This car first saw the light of the day in 1886.
The season of experiments continued across the seas in the United States where
Henry Ford began work on a horseless carriage in 1890. He went several steps forward
and in 1896, completed his first car, the Quadricycle in 1896. This was an automobile
powered by a two cylinder gasoline engine. The Ford Motor Company was launched in
1903 and in 1908 he catapulted his vehicle, Model T Ford to the pinnacle of fame.
Continuing with his innovations, he produced this model on a moving assembly line, thus
introducing the modern mass production techniques of the automobile industry. The modern
car therefore comes from a long list of venerated ancestors.
3.4 Automotive industry in India
The automotive industry in India is one of the largest in the world and one of the
fastest growing globally. India manufactures over 17.5 million vehicles (including
2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's
second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in
2009. India's passenger car and commercial vehicle manufacturing industry is the seventh
largest in the world, with an annual production of more than 3.7 million units in 2010.
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According to recent reports, India is set to overtake Brazil to become the sixth largest
passenger vehicle producer in the world, growing 16-18 per cent to sell around three
million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest
exporter of passenger cars, behind Japan, South Korea, and Thailand.
As of 2010, India is home to forty million passenger vehicles and more than
3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%),
making the country the second fastest growing automobile market in the world. According to
the Society of Indian Automobile Manufacturers, annual car sales are projected to increase
up to five million vehicles by 2015 and more than nine million by 2020. By 2050, the
country is expected to top the world in car volumes with approximately six hundred and
eleven million vehicles on the nation's roads.
3.4.1 Overview
The Indian automobile industry is manufacturing over eleven million vehicles and
exporting about 1.5 million every year. The dominant products of the industry are two
wheelers with a market share of over 75% and passenger cars with a market share of
about 16%. Commercial vehicles and three wheelers share about 9% of the market
between them. About 91% of the vehicles sold are used by households and only about 9%
for commercial purposes. The industry has attained a turnover of more than USD thirty
five billion.
3.4.2 History
The first car ran on India's roads in 1897. Until the 1930s, cars were imported
directly, but in very small numbers. Embryonic automotive industry emerged in India in
the 1940s. Mahindra and Mahindra was established by two brothers as a trading company
in 1945, and began an assembly of Jeep CJ-3A utility vehicles under license from Willys.
The company soon branched out into the manufacture of light commercial vehicles
(LCVs) and agricultural tractors.
Following the independence in 1947, the Government of India and private sectors
made efforts to create an automotive component manufacturing industry to supply to the
automobile industry. However, the growth was relatively slow in the 1950s and 1960s
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due to nationalisation and the license raj which hampered the Indian private sector. After
1970, the automotive industry started to grow, but the growth was mainly driven by tractors,
commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers
entered the Indian market ultimately leading to the establishment of Maruti Suzuki
Udyog. A number of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for
building motorcycles and light commercial-vehicles. It was at this time that the Indian
government chose Suzuki for its joint-venture to manufacture small cars. Following the
economic liberalisation in 1991 and the gradual weakening of the license raj, a number of
Indian and multi-national car companies launched operations. Since then, automotive
component and automobile manufacturing growth has accelerated to meet domestic and
export demands.
Following economic liberalisation in India in 1991, the Indian automotive industry
demonstrated a sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki
and Mahindra and Mahindra expanded their domestic and international operations. India's
robust economic growth led to the furt
