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  • http://www.iaeme.com/IJMET/index.asp 916 [email protected]

    International Journal of Mechanical Engineering and Technology (IJMET)

    Volume 9, Issue 7, July 2018, pp. 916–931, Article ID: IJMET_09_07_099

    Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=7

    ISSN Print: 0976-6340 and ISSN Online: 0976-6359

    © IAEME Publication Scopus Indexed

    EMERGENCE OF AUTOMOBILE INDUSTRY IN

    INDIAN CONTEXT - A CONCEPTUAL STUDY

    Krishna Reddy

    Research Scholar, K L Business School, K L deemed to be University, KLEF

    Guntur, Andhra Pradesh, India

    P V Vijay Kumar Reddy

    Assistant Professor, K L Business School, K L deemed to be University, KLEF, Guntur,

    Andhra Pradesh, India

    ABSTRACT

    Automobile Industry today is one of the Profitable Industry. India is one of the

    fastest growing economies in the world. Automobile industry had seen many ups and

    downs in India prior to liberalization. The liberalization of Indian economy enabled

    India to advance itself in many sectors. Automobile is one such sector wherein India

    has seen tremendous improvements. The Indian auto industry is one of the largest in

    the world. The industry accounts for 7.1 per cent of the country's Gross Domestic

    Product (GDP).

    Keywords: Automobile industry and Indian economy

    Cite this Article: Krishna Reddy and P V Vijay Kumar Reddy, Emergence of

    Automobile Industry in Indian Context - A Conceptual Study, International Journal of

    Mechanical Engineering and Technology, 9(7), 2018, pp. 916–931.

    http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=9&IType=7

    1. INTRODUCTION

    Automobile Industry today is one of the Profitable Industry. India is one of the fastest

    growing economies in the world. Automobile industry had seen many ups and downs in India

    prior to liberalization. The liberalization of Indian economy enabled India to advance itself in

    many sectors. Automobile is one such sector wherein India has seen tremendous

    improvements. The Indian auto industry is one of the largest in the world. The industry

    accounts for 7.1 per cent of the country's Gross Domestic Product (GDP). The overall

    Passenger Vehicle (PV) segment has 14 per cent market share. The Indian Automobile market

    owing to a growing middle class and a young population. Moreover, the growing interest of

    the companies in exploring the rural markets further aided the growth of the sector (1)

    .[https://www.ibef.org]

    By 2026 the Indian automotive industry will be among the top three of the world in

    engineering, manufacturing and export of vehicles and auto components and will encompass

  • Emergence of Automobile Industry in Indian Context - A Conceptual Study

    http://www.iaeme.com/IJMET/index.asp 917 [email protected]

    safe, efficient and environment friendly conditions for affordable mobility of people and

    transportation of goods in India Comparable with global standards, growing in value to over

    12% of India’s GDP and generating an additional 65 million jobs (2) [Automotive Mission

    Plan 2016-26 ]

    1.1. Passenger car sales Domestic/Export sales

    Figure 1 Passenger Car Penetration

    Source: SIAM,,May 2018

    2. AUTOMOTIVE PROFILE

    Automobile industry, the business of producing and selling self-powered vehicles, including

    passenger cars, trucks, farm equipment, and other commercial vehicles. By allowing

    consumers to commute long distances for work, shopping, and entertainment, the auto

    industry has encouraged the development of an extensive road system, made possible the

    growth of suburbs and shopping centers around major cities, and played a key role in the

    growth of ancillary industries, such as the oil and travel businesses. The auto industry has

    become one of the largest purchasers of many key industrial products, such as steel. The large

    number of people the industry employs has made it a key determinant of economic growth.

    Automobile is self-propelled vehicle which is used for the transportation of passenger and

    good upon the ground. A vehicle is machine which is used for the transportation of passengers

    and goods. Car, bus truck, jeep, tractor, scooter, motor cycles are the example of automobiles.

    2.1. Auto Mobile Overview

    The Automotive Industry is comprised primarily of the world’s largest passenger automobile

    and light truck manufacturers. Through broad dealership networks, most members of the

    industry sell vehicles in the global market, covering developed and emerging countries.

    Automotive manufacturers offer a variety of makes and models, though there tends to be

    limited brand integration at the marketing, advertising, and dealership levels. The bulk of

    these companies operate production facilities in multiple geographic regions.

    The price of gasoline (and diesel fuel) is an important factor influencing customer

    demand. Indeed, the rise and fall of gas prices since the 1970s has caused buyers to place

    varying degrees of emphasis on vehicle fuel efficiency, durability, engine power, and quality.

    Accordingly, market categories and product lineups evolve to meet customer preferences.

    Examples are crossovers, which combine the features of an SUV and the traditional car, and

    hybrids, utilizing the benefits of gasoline and alternative power (electric) sources. In order to

    stay profitable, manufacturers and dealers must properly gauge demand and carry the optimal

    mix of autos for each period in the business cycle. To assist customers with purchases, and

    support sales, many companies offer low-rate financing programs and attractive incentives,

    such as discounts and cash back. Warranties, covering defects and repairs, are another means

    to lure drivers into showrooms. The auto industry is both capital and labor-intensive. These

  • Krishna Reddy and P V Vijay Kumar Reddy

    http://www.iaeme.com/IJMET/index.asp 918 [email protected]

    companies have to manage numerous costs and expenses associated with facilities, materials,

    parts, equipment, product development, and employment. At times, the prices of key raw

    materials, such as steel, can surge to record levels, requiring a nimble hedging strategy.

    Research & development and marketing and advertising expenses will have a discernible

    impact on the cost budget, as well. Too, given the seasonal nature of demand and new product

    launches, effective working capital management is crucial in supporting sales and controlling

    costs and expenses.

    The Automotive Industry is an important segment of the global economy, and its

    performance often tracks that of the broader business cycle. Investors seeking above-average

    price appreciation need to accurately time that cycle when taking a stake in this industry.

    Some of the group’s stocks offer a modest dividend to support investor loyalty. According

    value line.com caution that many of these equities carry low marks for Stock Price Stability

    and Earnings Predictability (3).

    www.valueline.com/tocks/Industries/Industry_Analysis__Automotive) Dated September

    11, 2015.

    2.2. Car Segments

    Car segments as per SIAM (Society of Indian Automobile Manufacturers) Common people

    like me always confuse between the car type and car segment. It has always been a difficult

    situation to identify a car type and to guess which segment it falls in. Following are the

    specific categories of all vehicles sold in India as outlined by the Society of Indian

    Automobile Manufacturers (SIAM). Using the SIAM classification ensures that no vehicle

    type will slip through the net. These classifications help consumers to compare and identify

    similar vehicles and makes car buying process as easy as possible. It also helps identify other

    similar vehicles for consumers to compare against, to help make the car-buying process much

    easier (4).

    The classification of segment is done on the basis of the length of the vehicle (Passenger

    car segment)

    Table 1 Car Segments and Classifications

    Segment Classification & Length Car Models

    A1 Segment Mini – Up to 3400mm M800, Nano

    A2 Segment Compact – 3401mm~4000mm Alto, wagon r, Zen,i10,A-star,Swift,i20,palio,indica etc

    A3 Segment Midsize : 4001 to 4500mm City, Sx4, Dzire, Logan, Accent, Fiesta, Verna etc)

    A4 Segment Executive : 4501 to 4700mm Corolla, civic, C class, Optra, Octavia etc)

    A5 Segment Premium : 4701 to 5000mm Camry, E class, Accord, Sonata, Laura, Superb etc)

    A6 Segment Luxury : Above 5000mm Mercedes S class, 5 series etc

    B1 Segment Van : Omni, Versa, Magic etc Omni, Versa, Magic etc

    B2 Segment MUV/MPV Innova, Tavera, Sumo etc

    SUV Segment

    SUV CRV, Vitara etc

    Source: Society of Indian Automobile Manufacturers (SIAM). 2018

    2.3. Classification of Cars based on body shape

    2.3.1. According SIAM Classification of Cars based on body Shape describe as below

    1. Box (Van/Mpv) – It means Engine area, Passenger area & luggage area all in one box. There wont be separate compartment. For eg. Omni, Ace Magic, Versa

    2. Two Box (Hatchbac