Automobile Industry in India
Chennai accounts for 60% of the country’s automotive exports. In tune with global requirements to minimize car pollution, the main government unveiled the requirements entitled ‘India 2000’ in 2000 with later updated guidelines as ‘Bharat Stage’. These standards are rather similar to the more stringent European requirements and have actually been traditionally carried out in a phased manner, with the newest upgrade getting carried out in 13 cities and later, in the remainder of the nation.
The Automotive Market has thrived in Pune Area in Maharashtra, What were the unique conditions were there for this advancement. Still Indian automobiles are not considered as a class in itself compared to European cars.
India’s strong engineering base and proficiency in the manufacturing of low-cost, fuel-efficient automobiles has led to the growth of manufacturing facilities of a number of vehicle companies like Hyundai, Nissan, Toyota, Volkswagen and Maruti Suzuki In the last few years, India has actually emerged as a leading center for the manufacture of small vehicles. Indian brand names: AMW(Asian motor works- Commersial vehicles), Eicher Motors(tractors, Buses, components), Force(Bajaj Pace), Hindustan motors(Birla, Ambassador cars and truck, Joint venture with Mitsubishi), Premier(Padmini, Moved from Mumbai to Pune), Tata, Mahindra, BharatBenz.
Per capita penetration at around nine vehicles per thousand individuals is amongst the least expensive on the planet. While the industry is extremely capital intensive in nature in case of four-wheelers, capital strength is a lot less for two-wheelers. Though three-wheelers and tractors have low barriers to entry in terms of technology, 4 wheelers is technology extensive. Costs included in branding, circulation network and spare parts accessibility increase entry barriers. With the Indian market moving towards abiding by worldwide requirements, capital expense will increase to take into consideration future safety guidelines.
Automobile majors increase profitability by selling more units. As number of units sold increases, average cost of selling an incremental unit comes down. This is because the industry has a high fixed cost component. This is the key reason why operating efficiency through increased localization of components and maximizing output per employee is of significance. Maruti Suzuki, which is the market leader in PVs, had to deal with labour strikes at its plant at Manesar as a result of which production was severely hit.
As petrol prices firmed up, the differential between petrol and diesel widened. Thus, there was a surge in demand for diesel cars. Most companies faced pressure at the operating level as margins declined due to rise in input costs. Steep depreciation of the rupee also took its toll. Tractors: While good monsoon is a positive for the sector, given the fact that non-farm incomes have continued to climb up, volumes should still hold up well in the longer run despite a year or two of poor monsoons. privatisation of select state transport undertakings bodes well for the bus segment.