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Major trends in the domestic mid – sized car industry in India

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  1. Introduction
  2. An overview of Indian automobile industry
  3. Company profile: Daewoo Motors India
  4. Company profile: Hyundai Motors India
  5. Company profile: Ford India
  6. Company profile: Fiat India
  7. Company profile: Hindustan Motors (Mitsubishi)
  8. Company profile: General Motors India
  9. Car market dynamics
  10. Mid-size car industry
  11. Product description of Maruti Udyog
  12. Historical industry development
  13. Objective of the project
  14. Research methodology
  15. Observations
  16. Conclusion
  17. Bibliography

The global automobile industry is undergoing dramatic change in recent times. There has been enormous consolidation, both amongst vehicle manufacturers and component vendors to achieve economies of scale product synergies and strong and presence. By contrast, there has been little or no consolidation in either the vehicles or the components area in India. Size remains small by International standards and therefore economies of scale (large ? scale) cannot be attained in India for the present. The Automobile Industry in India since its inception in 1948 has faced several constraints and problems, but has resolutely bounced back to merge with growth in Indian Economy. The Industry showed a growth rate of 20% in the period from 1993-96 and thereafter from 1996, there has been a slow down in growth rate. This aggravated further in 1997-98. There has been, in the period from March 1998 to March 99 an overall growth rate of ?2%. The multi utility segment continues on a decline at a negative growth ? 16%. Three wheelers sales also dropped sharply by 10% by the year 1998-99. Only the two wheeler segment has witnessed at positive growth of 12%. The recessions in automobile Industry will not only adversely affect ?the OEMS? but also the others connected in Industry like auto components, accessories, steel etc. Due to its far-reaching forward and backward linkages, the automobile Industry has come to play an important role in the national economy in terms of contribution to GDP, revenue collection of central and state Governments, direct and indirect employment generation, Passenger and freight movement and technology spin off effect on related sectors of Industry.

[...] At the time there were five Passenger Car manufacturers in India - Maruti Udyog Ltd., Hindustan Motors Ltd., Premier Automobiles Ltd., Standard Motor Production of India Ltd., Sipani Automobiles. Ashok Leyland Ltd. and TELCO were strong players in the Commercial Vehicles sector. In 1983-84 Bajaj Tempo Ltd. entered into a collaboration with Daimler- Benz of Germany for manufacture of LCVs. Important policy changes like relaxation in MRTP and FERA, de- licensing of some ancillary products, broad banding of the products, modifications in licensing policy, concessions to private sector (both Indian and Foreign) and foreign collaboration policy etc. [...]

[...] Lancer is struggling to make any major dent into the Indian market, though the same is considered a high quality car in passenger segment. Mitsubishi has for the present ruled out any participation in to volume game through smaller car. However, they are planning to introduce bigger cars in the passenger car segment. They have put on hold their sports utility car Pajero which will be decided in full view of India's automobile policy. Mitsubishi has only seven years technical tie up with Hindustan Motors Ltd. [...]

[...] The major car giant blame rupee devaluation for their increase in prices, as the vital import content Viz. Engines, transmission and components became costlier. Interestingly, Car manufacturers have been caught between poor sales on one hand and depreciating rupee on the other adding fuel to the fire. Their troubles aggravated as they had already increased their production anticipating better sales as per market trends. Tough market conditions not withstanding, leading car financiers Kotak Mahindra, Primus India, Standard Chartered Bank, Citi Bank, GE countrywide, ICICI Bank and others hiked their interest rates owing to un-avoidable pressure of rising borrowing costs. [...]

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