Evolution Of Automobile Industry

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The Indian Automobile industry has evolved significantly in past few years and witnessed very high growth. India has placed itself as one of the preferred country for sourcing for automotive components, setting up of production sites and engineering services and also as a hub for small car development. India is 2nd largest market of two wheelers in world, after China. Also it is the 3rd largest large truck manufacturer and 6th largest passenger car manufacturer in the world. Industry has grown at a rate of 15% over last 10 years, attracting majority of global auto manufactures in India. While the short term growth rate is tested by current economic scenario, however long term prospects affirms high potential due to strong fundamental drivers…show more content…
For a long time the car market had just two models to offer - Ambassador from Hindustan Motors (HM) and Fiat from Premier Automobiles (PA). No other domestic or foreign car manufacturer was allowed to enter the Indian car industry leading to poor technology abilities, high prices and inferior quality. India de-licensed auto sector in 1991 which allowed foreign auto giants to set up their production facilities in the country. The main factors that attracted global auto manufacturers were India’s large middle class population, growing earning potential, strong technical capability and availability of trained manpower raw material at low cost. 1.2.1 Entry Strategies Even after de-licensing by government, restrictions on FDI of over 51% and requirement of case by case approval by FIPB still presented hurdles for foreign players. They adopted the strategy of entering into joint ventures with Indian companies as their preferred mode of entry…show more content…
1.3 Current Industry Structure Automobile Industry can be divided into 4 major segments. Each segment is dominated by 2-3 major players. 1.3.1 Passenger Vehicles Passenger vehicles constitute about 15.96% of total automobile sales in India. Sales of passenger cars has grown at CAGR 13% during the period 2008-12 and further is expected to grow at the rate of 12% for next 10 years. Also exports are anticipated to grow at similar rate. Realising huge potential in this segment many domestic and foreign automobile companies are formulising significant capacity expansion strategies. The segment is dominated by Maruti Suzuki India followed by Hyundai Motors and Tata Motors. 1.3.2 Commercial Vehicles Commercial vehicles segment constitutes 3.95% in automobile sales. The sector has witnessed a CAGR growth rate of 10.5% for period 2008-2012. The segment is dominated by Tata motors followed by Mahindra and Mahindra and Ashok Leyland. After-Sales Services and Price are the most key important deciding factors in this

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