Indian Automobile Industry

Acknowledgement

The skeleton of this project was in the mind based on the study of various publications but it gained this shape by the proper and timely guidance of our teacher and colleagues.

We feel great pleasure to express my sense of gratitude to Ms. Meghna Sharma for the available guidance and keen interest which took in the completion of the project.

Last but not the least we are grateful to all the other people who co-operated with us in giving their valuable and precious opinion and time.

Research Methodolgy

Data has been collected from reputed magazines and various websites.

For analysis purpose, statistical methods have been used like: Demand and Supply analysis, Sales analysis.

The Indian Car Industry

The Indian car industry can be classified on the basis of price, into lower end small car or economy segment, higher end of the economy segment (Rs0.25-0.45mn) mid-size segment (Rs0.45-0.8mn), luxury/premium car segment (above Rs0.8mn). The lower end of the economy segment includes cars like Maruti 800, Maruti Omni and Premier Padmini. The higher end will include models like Maruti Zen, Matiz, Hyundai Santro and Telco Indica. The mid-sized segment currently includes models like Ford Ikon, Hyundai Accent, Maruti Esteem, Cielo and Honda City. The luxury segment of the car market includes such models as Mitsubishi Lancer and Mercedes E220.

The demand for passenger cars can be segmented on the basis of the user segment as taxi operators, government, non-government institutions, and individual buyers. A major portion of the demand in India accrues mainly from personal vehicle owners. Lately, the Indian car market has seen a lot of action with a number of new entrants wanting a share of the pie. With individual incomes on the rise and finance being easily available, aspirations have also grown to include a car among a family’s prized possessions. With the Indian buyer still being price conscious, all these factors have contributed to the rising sales graph in the small car market.

The multi-utility vehicle (MUV) is used in transporting smaller loads over medium and small distances, providing low fixed and operating costs in comparison to LCVs. It can be used for transporting both goods and passengers. Apart from these it can be converted into an ambulance, a minivan, a pickup van or leisure vehicle. The MUV per se is a rugged vehicle. The high steel body, tough parts and brave interiors make it amenable to rough handling. The high ground clearance and high power delivery make it suitable for driving over rough terrain places, hilly regions, deserts etc. Till the early nineties, the Government of India was the largest MUV buyer and continues to be the single largest segment. It is used in police, paramilitary, defense, Public and Works Department (PWD), public sector organizations etc

The boom of 2004 can be surpassed in 2005 if the government introduces VAT and lowers excise.

Its been a landmark year for the Indian auto industry. For the first time, total sales (exports and domestic) of passenger vehicles вЂ" cars, utility vehicles and multi-purpose vehicles вЂ" in the country exceeded the 1-million mark. Sales grew 32.20 per cent in 2003-04 to around 1.03 million units. This comprised 9,00,752 units in domestic sales and 129,316 units of exports (source: Society of Indian Automobile Manufacturers {SIAM})

Market Structure

Market Structure (also known as market form) describes the state of a market with respect to competition.

Perfect competition, in which the market consists of a very large number of firms producing a homogeneous product.

Monopolistic competition, also called competitive market, where there are a large number of independent firms which have a very small proportion of the market share.

Oligopoly, in which a market is dominated by a small number of firms which own more than 40% of the market share.

Monopoly, where there is only one provider of a product or service.

Type of Market Structure influences how a firm behaves:

Pricing

Supply

Barriers to Entry

Efficiency

Competition

Determinants of Market Structure

Freedom of entry and exit

Nature of the product вЂ" homogenous (identical), differentiated?

Control over supply/output

Control over price

Barriers to entry

Types Of Market Structure

Perfect competition

Perfect competition is an economic model that describes a hypothetical market form in which no producer or consumer has the market power to influence prices. According to the standard economical definition of efficiency (Pareto efficiency), perfect competition would lead to a completely efficient outcome. The analysis of perfectly competitive markets provides the foundation of the theory of supply and demand.

Examples

Some agricultural markets, with numerous suppliers and almost perfectly substitutable products have been suggested as approximations for the perfect-competition model. The extent of its applicability may be dependent on the market in question. Agricultural policies in many countries undermine the requirements for complete Pareto efficiency to apply.

Perhaps the closest thing to a perfectly competitive market would be a large auction of identical