RESEARCH Effects of Recession on Indian Automobile Sector

8th April, 2009 1800hrs

AUTOMOBILE SECTOR
(4 WHEELERS)

Submitted by:

Nisha Arora (72)

Debankur Adhikari (183)

SIMC 2010

MBA / Sem 2

[RESEARCH]
[Primary & Secondary research done on the ‘Effects of Recession in the 4 wheelers automobile sector. Our two
major players are Tata Motors & Maruti Suzuki.]
1

INTRODUCTION
While the other parts of the world have been excelling in automotive technology and in
specifically in the 4 wheeler sector, India is still to establish itself as a major in this
industry. The primary reason for this has been the all-pervasive regulatory atmosphere
prevailing till the opening up of the industry in the mid-1990s. The various layers of
legislative Acts sheltered the industry from external competition for a long time.
Moreover, the industry was considered low-priority as cars were thought of as
"unaffordable luxury".

Post-liberalization, the automotive sector, especially the passenger car segment, saw a
boom. The buoyancy in the sector was derived primarily from economic vibrancy,
changes in Government policies, increase in purchasing power (especially of the upper
middle class), improvement in life styles, and availability of car finance. The passenger
car industry was finally deregulated in 1993, and many companies, both Indian and
foreign (like Daewoo, Ford, General Motors, and DaimlerChrysler), entered the market.
However, the smooth sailing was suddenly disrupted in the last quarter of FY1996. The
automobile industry, which contributed substantially to industrial growth in FY1996,
failed to maintain the same momentum between FY1997 and FY1999. The overall
slowdown in the economy and the resultant slowdown in industrial production, political
uncertainty and inadequate infrastructure development were some of the factors
responsible for the slowdown experienced by the automobile industry. In FY2000, the
sector experienced a turnaround, posted positive growth rates and witnessed the launch
of many new models. But the spectacular growth in FY2000 was followed by a decline
in FY2001 and only a marginal growth of 0.5% in FY2002.

Since FY2003, industry sales have increased at a 3-year CAGR of 17.4% to 1.14 million
in FY2006. Although there was a slowdown in FY2006, after the high growth in FY2004-
05, the recent high growth has been on the strength of an increase in the disposable
income of middle-income salaried people, release of pent-up demand, and easy
availability of credit.

Low Penetration, but Rising Share of World Production
Although the Indian automobile industry has come a long way since the deregulation in
1993, India does not rank well among its global peers in many respects, viz., the
contribution of the sector to industrial output, number of cars per person, employment

by the sector as a percentage of industrial employment, number of months' income
required to purchase a car, and penetration of cars.

However, the major car manufacturers worldwide consider India a good potential market
and they foresee a large future demand here. As can be seen from the table below,
India is now a major global producer of cars, with India's share in world production
increasing from 1.6% in 2000 to 2.7% in 2005.

Two things that stunted growth of the Indian automobile industry in the past have been
low demand and lack of vision on the part of the original equipment manufacturers
(OEMs). However, the demand has picked up after the liberalization of the regulatory
environment, and global OEMs who enjoy scale economies both in terms of
manufacturing and research and development (R&D) entered the Indian market. This
has resulted in a significant shift in the way business is conducted by suppliers,
assemblers and marketers.

Spending on Vehicles and Transport
India's private final consumption expenditure (PFCE) on transport was estimated at
around Rs. 3,124 billion in FY2005, accounting for around 16.5% of total PFCE. This
comprises three categories: personal transport equipment, operation of personal
transport equipment, and purchase of transport services.

In terms of PFCE, the share of transport in total PFCE has witnessed rapid growth since
the mid-1980s. By comparison, the share remained at around 3-5% till the mid-1980s.

The motor vehicles sector is also an important source of central excise duties. Central
excise duty collections from motor vehicles were Rs. 54.70 billion during FY2005,
accounting for 6% of central excise duty collections.

Taxes on vehicles, passengers and goods also form an important component of states'
tax collections, and formed 8.7% of states' own tax collections during FY2005.

Demand Characteristics
Passenger Cars

In developed markets, engine capacity and wheel-base are the bases of segmentation
of passenger cars: price does play a role but only up to a point. Since affordability is the
most important demand driver in India, the domestic car market has until now been
segmented on the basis of vehicle price. Price-based competition takes place in a
continuum rather than in segments since nearly all the models are launched in multiple
versions at different price points. As a result, a higher-end variant may compete with a
lower-end variant of a car in a segment above it.

MUVs

The MUV segment consists of vehicles that are suited to both rural and urban areas. In
rural areas where the roads are usually bad, these vehicles are used as goods carriers
and also for public transportation. Northern and Western India account for nearly two-
thirds of the demand for MUV. Specifically, in States like Rajasthan, Madhya Pradesh,
Uttar Pradesh and Maharashtra, the demand for MUVs is the largest. There are three
segments of buyers for MUVs: the private market, Government, and the Defence. Until
the 1990s, the Government and Defence segments accounted for the largest share of
the market. The reduction in Government and defence spending since the 1990s has
substantially reduced sales to these two segments. This has pushed private sector
purchases into greater prominence.

Demand Structure
When the industry was deregulated in 1993, the global carmakers chose to operate in
the high price-high value segment. However, the strategy did not work as the market for
premium and luxury vehicles in India was not large enough. MUL was entrenched in the
low price-low value segment, and given its scale economies, it could not be dislodged.
In the latter half of the 1990s, foreign car manufacturers changed their strategy. It was
still difficult to remove MUL from its market leadership in the dominant low price-low
value segment as scale economies formed the basis of competition in this segment.
Thus, the global players changed the price-value equation by offering superior value at
a price that was still higher than that of the Maruti 800 and Omni, but significantly lower
than of the cars in the high price-high value segment. The process gained momentum in
FY2000 when the growth in the car market was led by the Compact segment.

Although the compact segment now accounts for 65% of domestic sales of passenger
cars, in recent years, the mid-size segment has captured a rising share of the market,
and since 2004, sales in the mid-size segment have exceeded sales in the mini-
segment. The growth in this segment has been led by new launches, lower prices, and
the significant success of four models - MUL's Esteem, Honda's City, HMIL's Accent,
and TML's Indigo. Introduction of stripped down versions of the vehicles in the Mid-size
segment, attractive pricing by manufacturers (who also offer sales incentives) coupled
with lower rate of interests and easy availability of finance have facilitated the growth of
this segment.

Low Penetration Levels
Although India's 4W sales have increased in recent years, penetration levels are low at
around 0.9%. Till the last decode, the industry was considered low priority as cars were
thought of as 'unaffordable luxury', and treated as such through Government policies.
Although reduction in excise duties, favorable Government policies, and lower prices
have resulted in significant increase in penetration, India's passenger car penetration is
low by global standards-1.3% in Chino, 59% in EU, and 81% in the US. Estimates from
Notional Sample Survey 58th Round (2002) indicates that ownership of four-wheelers
(car or jeep) is restricted to about 4.4% of urban households, and 0.6% of rural
households. During 2002-03, ownership of cars/jeeps was restricted to around 0.9
million households in rural areas, and 2.57 million households in urban areas. Car
penetration is high in Chandigarh, Delhi, Goa, and Kerala. However, penetration is
extremely low in the eastern states of Bihar, West Bengal, Orissa; and central states
such as Madhya Pradesh and Chattisgarh.

Indian Automobile Industry – An Overview
Indian automobile industry has come a long way to from the era of the Ambassador car
to Maruti 800 to latest M&M Xylo. An industry is highly competitive with a number of
global and Indian companies present today. It is growing at a pace of around 18% per
annum for the last five years and is projected to be the third largest auto industry by
2030 and just behind to US & China, according to a report. The industry is estimated to
be a US$ 34 billion industry.

Indian Automobile industry can be divided into three segments i.e. two wheeler, three
wheeler & four wheeler segment. Two wheeler segments enjoys 75% market share of
automobile industry, followed by passenger vehicles with the 16% share of market.

Three wheeler segments have merely 4% share in domestic market. The domestic two-
wheeler market is dominated by Indian as well as foreign players such as Hero Honda,
Bajaj Auto, Honda Motors, TVS Motors, and Suzuki etc. Maruti Udyog and Tata Motors
are the leading passenger car manufacturers in the country. And India is considered as
strategic market by Suzuki, Yamaha, etc.

The major players have not left any stone unturned to be global. Major of the players
have got into the merger activities with their foreign counterparts. Like Maruti with
Suzuki, Hero with Honda, Tata with Fiat and latest Mahindra with Renault.

In passenger car segment, Maruti Suzuki contributes the 52% market share, with
complete monopoly over the small car segments. M&M enjoy the 42% market share in
Multi Utility Vehicle in domestic market.

Auto industry in 2008
All the major auto companies enjoyed the high growth ride till the mid 2008. But at the
end of the year, industry had to face the hard truth and witnessed the fall in sales
compared to last year. In December 2008, overall production fell by 22 % over the same
month last year. Global recession has hit the Indian auto industry, India is strong and
growing industry but the impact of recession is evident now on industry as sales &
growth of automobile companies have declined.

Passenger Vehicles segment registered negative growth. One of its supporting facts is
that the sales in December 2008 for passenger vehicles fell by 13.86% over December
2007. Maruti- the leading car manufacturer, registered 10% fall in sells (56293 units), as
compared to December’07 (62,515 units). But interestingly, Hyundai motors, the second
largest car maker of country, registered a growth in sells, with the help of export;
Hyundai Motors reported 19% growth.

Although the year 2008 saw a record launches of new products of various categories.
Maruti launched A Star, its new small segment car. Honda Motors launched the new
version of Honda city, its best selling sedan, also Civic Hybrid. Hyundai motor was not
also far behind, in the end of the year, Hyundai launched its much awaited sedan i20.

Road ahead- 2009
The Indian automobile market is expected to grow by 9%. Although the industry has
faced the brunt of recession, the sales figures of December’08 are the true indicator of
bang of global slowdown. India with growing middle class, strong economy (although
recession has hit the economy, but to be on positive side, will come over soon) and with
trained workforce has a strong future of automobile industry. All the big foreign players
are eyeing on Indian market.

MAJOR PLAYERS:
Stiff competition among the market players, domestic as well as global

 Maruti Udyog ltd.

 Hyundai Motor India Ltd.

 Hindustan Motors Ltd.

 Daewoo Motors India Ltd.

 Fiat India Ltd.

 Ford India Ltd.

TATA MOTORS LTD.
"Leading the Future"

Tata Motors is India's largest automobile company. It is the largest commercial vehicle
manufacturer in India and 2nd largest passenger car manufacturer. It is the 5th largest
medium and heavy commercial vehicle manufacturer in the world. The popular brands
of the company are Tata Indica, Tata Indigo, Tata Sumo and Tata Safari.

Quick Facts:
Founder Jamshedji Tata

Year of Establishment 1945

Industry Automotive

Business Group The Tata Group

BSE – Code: 500570

Listing & its codes NSE – Code: TELCO & TATAMOTORS

NYSE – Code: TTM

Bombay House,

24, Homi Mody Street
Corporate Office
Mumbai 400 001, India

Tel.: +(91)-(22)-56561676

Works Jhamshedpur, Pune, Lucknow, Dharwad

am@tatamotors.com
E-mail
rbc@telco.co.in (for international inquiries)

www.tatamotors.com
Website
www.tata.com/tatamotors

COMPANY PROFILE:
Tata Motors Limited is India’s largest automobile company, with revenues of Rs.
35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in
each segment, and among the top three in passenger vehicles with winning products in
the compact, midsize car and utility vehicle segments. The company is the world’s
fourth largest truck manufacturer, and the world’s second largest bus manufacturer.

The company’s 23,000 employees are guided by the vision to be “best in the manner in
which we operate, best in the products we deliver, and best in our value system and
ethics.”

Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth
of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in
1954. The company’s manufacturing base in India is spread across Jamshedpur

(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar
(Uttarakhand). Following a strategic alliance with Fiat in 2005, it has set up an industrial
joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both
Fiat and Tata cars and Fiat powertrains. The company is establishing two new plants at
Dharwad (Karnataka) and Sanand (Gujarat). The company’s dealership, sales, services
and spare parts network comprises over 3500 touch points; Tata Motors also distributes
and markets Fiat branded cars in India.

Tata Motors, the first company from India’s engineering sector to be listed in the New
York Stock Exchange (September 2004), has also emerged as an international
automobile company. Through subsidiaries and associate companies, Tata Motors has
operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land
Rover, a business comprising the two iconic British brands that was acquired in 2008. In
2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second
largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has
launched several new products in the Korean market, while also exporting these
products to several international markets. Today two-thirds of heavy commercial vehicle
exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a
21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with
an option to acquire the remaining stake as well. Hispano’s presence is being expanded
in other markets. In 2006, it formed a joint venture with the Brazil-based Marcopolo, a
global leader in body-building for buses and coaches to manufacture fully-built buses
and coaches for India and select international markets. In 2006, Tata Motors entered
into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to
manufacture and market the company’s pickup vehicles in Thailand. The new plant of
Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon
having been launched in Thailand at the Bangkok Motor Show 2008.

Tata Motors is also expanding its international footprint, established through exports
since 1961. The company’s commercial and passenger vehicles are already being
marketed in several countries in Europe, Africa, the Middle East, South East Asia,
South Asia and South America. It has franchisee/joint venture assembly operations in
Kenya, Bangladesh, Ukraine, Russia and Senegal.

The foundation of the company’s growth over the last 50 years is a deep understanding
of economic stimuli and customer needs, and the ability to translate them into customer-
desired offerings through leading edge R&D. With over 2,500 engineers and scientists,
the company’s Engineering Research Centre, established in 1966, has enabled
pioneering technologies and products. The company today has R&D centres in Pune,
Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata
Motors, which developed the first indigenously developed Light Commercial Vehicle,
India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India’s first fully

indigenous passenger car. Within two years of launch, Tata Indica became India’s
largest selling car in its segment. In 2005, Tata Motors created a new segment by
launching the Tata Ace, India’s first indigenously developed mini-truck

In January 2008, Tata Motors unveiled its People’s Car, the Tata Nano, which India and
the world have been looking forward to. A development, which signifies a first for the
global automobile industry, the Nano brings the comfort and safety of a car within the
reach of thousands of families. When launched in India later in 2008, the car will be
available in both standard and deluxe versions. The standard version has been priced
at Rs.100,000 (excluding VAT and transportation cost).

The years to come will see the introduction of several other innovative vehicles, all
rooted in emerging customer needs. Besides product development, R&D is also
focusing on environment-friendly technologies in emissions and alternative fuels.

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future

Segments & Brands:
PRODUCTS BRANDS

Indica V2 Indigo Indigo Marina

Passenger Cars Indigo SX Indigo V2 Turbo Indica V2 Xeta

Indigo XL

Utility Vehicles Safari Décor Sumo Vista

Trucks All types of Medium & Heavy Commercial Vehicles.

Starbus Globus SFC 407 Turbo
Mini-bus

LP 407 Turbo Mini-bus LP 709 E Turbo LPO 1510 CGS bus
Bus (CNG bus)
Buses LP/LPO 1510 LP/LPO 1512 TC LP/LPO 1512 TC
Turbo Bus Turbo Bus

LPO 1610 TC RE Semi LPO 1616 TC LP 1109 Bharat
Low Floor Bharat Luxury Bharat Stage II
Stage – II Bus Stage – II Bus

Tata 407 (4 x 4) Soft Tata 407 / (4 x2) Tata LPTA 713 TC
Top Troop Carrier Hard Top Troop (4 x4)
Carrier

Defence Tata LPT 709 E Hard Tata SD 1015 TC Tata LPTA 1615 TC
Top Troop Carrier (4 x4) (4 x 4)

Tata LPTA 1621 TC (6 Tata LPTA 1615
x6) TC (4 x2)

Milestones:
It has been a long and accelerated journey for Tata Motors, India's leading automobile
manufacturer. Some significant milestones in the company's journey towards excellence
and leadership:

2006 Tata Motors vehicle sales in India cross four million mark
Tata Motors unveils new long wheel base premium Indigo & X-over concept
at Auto Expo 2006
Indica V2 Xeta launched
Passenger Vehicle sales in India cross one-million mark
Tata Motors and Marcopolo, Brazil, announce joint venture to manufacture
fully built buses & coaches for India & markets abroad
Tata Motors first plant for small car to come up in West Bengal
Tata Motors extends CNG options on its hatchback and estate range
TDCV develops South Korea's first LNG-Powered Tractor- Trailer
Tata Motors and Fiat Group announce three additional cooperation
agreements
Tata Motors introduces a new Indigo range

2007 Construction of Small Car plant at Singur, West Bengal, begins on January
21
New 2007 Indica V2 range is launched
Tata Motors launches the longwheel base Indigo XL, India's first stretch
limousine
Common rail diesel (DICOR) engine extended to Indigo sedan and estate
range
Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi),
announce formation of a joint venture company in Thailand to manufacture,
assemble and market pickup trucks.
Roll out of 100,000th Ace
Tata-Fiat plant at Ranjangaon inaugurated
Launch of a new Upgraded range of its entry level utility vehicle offering, the
Tata Spacio.
CRM-DMS initiative crosses the 1000th location milestone
Launch of Magic, a comfortable, safe, four-wheeler public transportation
mode, developed on the Ace platform
Launch of Winger, India’s only maxi-van
Fiat Group and Tata Motors announce establishment of Joint Venture in
India
Launch of the Sumo Victa Turbo DI, the new upgraded range of its entry-
level utility vehicle, the Sumo Spacio
Tata Motors launches Indica V2 Turbo with dual airbags and ABS
Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L Direct
Injection Common Rail (DICOR) engine.
Rollout of the one millionth passenger car off the Indica platform.

2008 Ace plant at Pantnagar (Uttarakhand) begins production.
Indica Vista – the new generation Indica, is launched.
Tata Motors' new plant for Nano to come up in Gujarat.
Latest common rail diesel offering- the Indica V2 DICOR, launched.

Indigo CS (Compact Sedan), world’s first sub four-metre sedan, launched.
Launch of the new Sumo -- Sumo Grande, which combines the looks of an
SUV with the comforts of a family car.
Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo.
Xenon, 1-tonne pick-up truck, launched in Thailand.
Tata Motors signs definitive agreement with Ford Motor Company to
purchase Jaguar and Land Rover.
Tata Motors completes acquisition of Jaguar Land Rover.
Tata Motors introduces new Super Milo range of buses.
Tata Motors is Official Vehicle Provider to Youth Baton Relay for The III
Commonwealth Youth Games Pune 2008.
Indica Vista – the second generation Indica, is launched.
Tata Motors launches passenger cars and the new pick-up in D.R. Congo.

2009 Tata Marcopolo Motors' Dharwad plant begins production

Effects of Recession:
1. Tata Motors has finally launched Tata Nano, the ultra-low-cost car, on March 23, 2009.
Had things gone according to the plan, Tata Motors would have launched Nano six
months earlier. Tata Motors was
supposed to build its Tata Nano
manufacturing facility in West
Bengal. Due to political pressure, the
project was scrapped and replaced
in the industry friendly Gujarat
province. Tata Nano which costs Rs.
100,000 ($2050) is the cheapest car
in the world. The snub nosed car is
10.2 feet long. It comes with a
windshield wiper, a 623cc rear
engine and diminutive trunk. There are no extra-safety or comfort features. The car
does not have any air bags, anti-lock brakes, air-conditioning, radio, or power steering.
If buyers want to have these features, they would have to pay extra money.

Now, the million dollar question is: Will Tata Nano see the face of profit? Had Tata Nano
released the car six months earlier, the question could be answered with a positive note
but now, the gloom of economic recession is hanging over India and stalled its
economic growth.

Like many other companies Tata Motors is also facing the heat of the recession. Only
two years ago, Tata was on the path of unprecedented growth. Last year, it bought
Jaguar/Landrover from Ford for $2.3 billion. The company took huge loan to buy the two
brands. Now, everything has changed for Tata Motors. In the economic recession,
commercial vehicles which make up Tata’s core business had been badly hit. The
company registered a loss of $54 million in the last October-December quarter.

2. Due to competition, Tata motors have cut down on its production, shift hours. The
decision has also affected our working, our shift hours. Some temporary workers have
been laid off. The problem is going to remain for some time.

Tata Motors Ltd, India's largest vehicle maker, is closing two of its commercial vehicle
plants for six days later this month to avoid inventory build-up.

Its commercial vehicle plant in Pune, in the western state of Maharashtra, will be shut
from Nov. 21-26, while its commercial vehicle plant in Lucknow will be shut from
Nov.10-15. The cost cutting measures of the car plant has also affected the prospects
of the ancillary units.

3. Looks like Tata Motors is on a tie-up spree to
offer the best of financing to their customers.
After a list of tie-ups with various banks, Tata
Motors adds on two more banks to its tie-up
list so that they can offer help in financing of
their range of passenger vehicles.

The latest tie-up of the carmaker is with
Bank of Baroda and Dena Bank, who will
lend help and assistance in the financing
sector. Even in this periods of recession, Tata Motors seems to be banking on their
customers by offering them a rich experience and best customer service.

With all these various tie-ups with financial institutions, the company aims at offering a
single window for both cars as well as car loans, thus offering comfort and convenience
to the customer.

4. Tata Motors enters into tie-up with United bank of India for financing its range of
passenger vehicles

In order to provide an added facility of car finance to its customers, Tata Motors has
entered into an understanding with United Bank of India for financing its range of
passenger vehicles.

5. Commercial Vehicles

The company’s sales of commercial vehicles in November 2008 in the domestic market
were 16,229 nos., a decline of 40% compared to 26,895 vehicles sold in November last
year. M&HCV sales stood at 5,792 nos., a decline of 60% over November 2007, while
LCV sales were 10,437 nos., a decline of 16% over November2007.

Cumulative sales of commercial vehicles in the domestic market for the fiscal were
1,81,123 nos., a decline of 3% over 1,86,859 nos. last year. Cumulative M&HCV sales
stood at 81,909 nos., a decline of 16% over last year, while LCV sales for the fiscal
were 99,214 nos., a growth of 11% over last year.

Passenger Vehicles

The company’s sales of passenger vehicles in November 2008 in the domestic market
were 14,327 nos., a decline of 12% compared to 16,322 vehicles sold in November last
year. The Indica range sales at 9,039 nos. declined by 13.8% over last November
despite orders in hand which could not be converted into sales due to lack of financing
in the market, but held close to October 2008 level of 9,484 nos. The Indigo range with
sales of 3,477 nos., reported a 73% growth over November 2007. Car sales of 12,516
nos. between the Indica and the Indigo range in the month of November 2008 are
marginally up, compared to car sales of 12,502 nos. in November 2007, continuing the
growth uptrend registered for the first time this fiscal in October 2008. The Sumo and
Safari accounted for sales of 1,811 nos., a decline of 52.6% compared to November
2007. The UV/SUV segment in the industry continues to be under pressure in the
market since the July ad hoc imposition of an additional element of excise duty on
vehicles having engine displacement of over 1.5 litre.

Cumulative sales of passenger vehicles in the domestic market for the fiscal were
1,29,246 nos., a decline of 5.5% over 1,36,820 nos. in the same period last year.
Cumulative sales of the Indica at 68,078 nos., reported a decline of 25%, with de-growth
having been controlled from a peak of 32.2% in July 2008 to 13.8% in November 2008,
since the launch of the Indica Vista. Cumulative sales of the Indigo family were 34,759
nos., a growth of 86%. Cumulative sales of Sumo and Safari at 26,409 nos. went into a
decline of 4% for the first time this fiscal arising from a slowing down of the segment
since July.

Exports
The Company’s sales from exports at 2,140 vehicles in November 2008 declined by
43% compared to 3,730 vehicles in November 2007. The cumulative sales from exports
for the fiscal at 27,741 nos. declined by 22% over 35,562 nos. in the same period last
year.

Tata Motors’ announcement on price reduction
Tata Motors had confirmed earlier that the company would pass on the benefit of the
reduction in CENVAT to customers, for both passenger vehicles and commercial
vehicles.

Effective December 8, the cut in prices are as follows:

PASSENGER VEHICLES

Passenger Cars (Indica and Indigo family): Between Rs. 12,000/- to Rs. 23,000/-
depending on the model.

Utility Vehicles (Safari and Sumo family): Between Rs. 16000/- to Rs. 36000/-,
depending on the model.

The new prices along with the Schemes as applicable are available at all Tata Motors
outlets, across the country.

COMMERCIAL VEHICLES

Light Commercial Vehicles: Between Rs. 17,000/- to Rs. 23,000/-.

Medium &Heavy Commercial Vehicles: Between Rs. 30,000/- to Rs. 60,000/-.

MARUTI UDYOG LIMITED

Established in 1981, Maruti Udyog Limited (MUL) is a subsidiary of Suzuki Motor
Corporation of Japan.

The first ever Indian company to manufacture low cost cars, in collaboration with Suzuki
of Japan, Maruti is considered to be the largest automobile company in India. The
company is known for producing high quality, fuel-efficient cars with Japanese
technology, but adaptive to Indian roads. The company has attained the annual
production mark of 3,20,000, which is a trend setter for any Indian company

Maruti delivers a variety of passenger vehicles- compact cars to luxury cars. Its product
range includes Maruti 800, Omni, Maruti Zen, Estillo, Alto, Wagon R, Gypsy, Esteem,
Baleno, Versa, Swift and Grand Vitara XL7. Maruti has also introduced upgraded
versions of Wagon R, Zen and Esteem with the motive of becoming R&D hub for Suzuki
Motor Corporation. At present Maruti has a 55% market share, and is planning to invest
Rs. 6500crores

Car market leader Maruti Suzuki sold 792,167 vehicles in 2008-09. This marks a growth
of 3.6 per cent over last year. The annual sales in 2008-09 is the highest ever by the
company, in its 25 year history. The previous highest annual sales were 764,842 units
in 2007-08.

The company's sales included exports of 70,023 units in 2008-09, up by 32.1 per cent
over sales of 53,024 recorded in 2007-08. The 2008-09 export numbers, the highest
ever by the company was led by A-star, the fuel efficient compact car launched in
Europe during the year. The export tally includes around 19,000 units of A-star exported
to Europe including United Kingdom, France, Germany, Italy, Netherlands, Denmark
and Switzerland.

2008-09 marked Maruti Suzuki's Silver Jubilee year in India. Over these 25 years the
company has sold over 7 million (70 lakh) cars in the domestic market. Additionally,
over half a million cars made by Maruti Suzuki have been exported world-over.

During the year, the company continued its focus on long term initiatives, despite the
challenging market situation. These include:

 Focus on R&D: Manpower strength to 730 engineers from 460 in end March
2008. Company plans 1,000 engineers in R&D by 2010.

 New technology engine: Brand new facility for K10B engine launched on
schedule.

 Launching new models: A-star launched. Introduced Maruti 800 Duo ¿ an
alternate fuel option that runs on LPG and petrol.

 Capacity to manufacture expanded from 800,000 to a million units (Gurgaon plus
Manesar plants) annually.

 Reached out to new segments of customers through innovative programs:
among government employees and rural customers

 Export of A star (as Alto) to Europe commenced as per schedule.

 Dedicated export port facilities for cars at Mundra completed, used for A-star
shipment.

Network expansion:
Sales: from 600 sales outlets (in 393 cities) last year to 681 outlets (in 454 cities);

Service: from 2628 service outlets (1220 cities) last year to 2767 (in 1314 cities);

True Value: from 265 outlets (in 166 cities) last year to 315 outlets (181 cities).

Increased Pre-owned car sales from 1.01 lakh units in 2007-08 to 1.23 lakh units in
2008-09.

National Road Safety Mission launched - a nation-wide Social responsibility (CSR)
initiative to train 500,000 people in safe driving in three years.

The network of Maruti Driving Schools further expanded and crossed 50 schools.

Accolades : During the year, the company, its products and services received many
awards and accolades instituted by independent expert groups, media houses and
research agencies. These include:

 A-star as the "Car of the year"

 A-star as the "Best small car of the year"

 K10B Engine as the "Automotive technology of the year"

 Maruti Suzuki as the "Manufacturer of the year"

The company was rated No. 1 for a record 9th consecutive year in the JD Power
Customer Satisfaction Index Study

Sustainability at Maruti Suzuki refers to sum total of all the actions and initiatives
undertaken by the company for its long-term survival and growth.

To achieve long-term sustainability and prosperity the company has nurtured a socially
responsible behaviour towards its various stakeholders.

Since inception, the company has proactively taken care of the needs and sustainable
growth of its stakeholders and they in turn, have supported the company in achieving its
vision and business results year after year. As a result, sustainability has become an
integral part of the company's approach to business and decision making.

Milestones:
2009 – MSIL adopts voluntary Fuel Disclosure

1st shipment of A-star leaves Mundra port – Jan 10
A-star bags, Zigwheels “car of the year award”
A-star rated best small car of the year Autocar – UTVi

2008 – World premiere of concept A-star at 9th Auto expo, New Delhi

2007 – Swift diesel launched
New car plant and the diesel engine facility commences operations during
2006-2007 at Manesar, Haryana
SX4-Luxury Sedan launched with the tag line “Men are Back”
Maruti launches Grand Vitara

2006 – Awards & achievements (2005)

J. D. Power Survey award for the 6th year
MSIL has changed its EMS 4m ISO 14001:1996 to ISO 14001:2004 version
w.e.f. 1st July 05
MSIL was recertified in 2005 as per ISO 14001:2004 standards

2005 – Swift launched first ever world strategic model from Suzuki Motors Corporations

March Till March
Segment Models
% %
2009 2008 2008-09 2007-08
Change Change

A1 M800 2430 6353 -61.8% 49383 69553 -29.0%

C Omni, Versa 6021 8041 -25.1% 77948 89729 -13.1%

Alto, Wagon-R,
A2 55415 41869 32.4% 511396 499280 2.4%
Zen, Swift, A-star

A3 SX4, Dzire 8595 7536 14.1% 75928 493335 53.9%

Total Passenger Cars 72461 63799 13.6% 714655 707897 1.0%

MUV Gypsy, Vitara 1394 622 124.1% 7489 3921 91.0%

Domestic 73855 64421 14.6% 722144 711818 1.5%

Export 11814 5875 101.1% 70023 53024 32.1%

Total Sales 85669 70296 21.9% 792167 764842 3.6%

Maruti Suzuki India Limited achieved its highest ever domestic and total sales in
January 2009. In January 2009, the company sold 67,005 units, in the domestic market,
up 5.6% over corresponding month last fiscal. The previous highest monthly domestic
sales were 65,216 units in November 2007.

In January 2009, the company exported 4774 units.In all, the company sold 71,779
vehicles in January 2009, up 5.4% over corresponding month last fiscal. The previous
highest Total Sales were registered in March 2007 (71,772 units)

Contributing to the bulk of sales will be the strong performances of the Swift, A-Star,
Dzire and the evergreen Alto. The Sx4 will receive a huge boost if it gets the brilliant
90bhp 1.3 Multijet which has not found its way under the Sx4’s bonnet yet. Expect a
premium edge when the Kizashi comes in later this year or in 2010.

The sales figures for January 2009 are given below
January Till January

% April’07 -
Segment Models 2009 2008 Change 2008-09 2007-08 % Change March’08

A1 M800 5571 5470 1.8% 42878 57455 - 25.4% 69553

C Omni, Versa 7759 8861 - 12.4% 64286 74420 - 13.6% 89729

Alto, Wagon-R,
A2 Zen, Swift, A-star 46899 45957 2.0% 405650 413352 - 1.9% 499280

SX4, Esteem,
A3 Dzire 6590 2939 124.2% 59290 39841 48.8% 49335

Total Passenger Cars 66819 63227 5.7% 572104 585068 - 2.2% 707897

MUV Gypsy, Vitara 186 232 - 19.8% 5560 3024 83.9% 3921

Domestic 67005 63459 5.6% 577664 588092 - 1.8% 711818

Export 4774 4648 2.7% 49644 42638 16.4% 53024

Total Sales 71779 68107 5.4% 627308 630730 - 0.5% 764842

Marketing strategy prior to recession:
 Undisputed leader until 1998

 In response to the liberalization – it redesigned and introduced new models,
shifted focus to customers

 Covers all price points – caters to every passenger car customers

 One stop shop , different revenue stream

 Brand facelifts

 Cost leadership , operational efficiency and productivity

Market segment analysis:
Based on the economic strata, the Indian auto consumer segment can be sub divided
into 5 categories:

 Economy

 Mid range

 Luxury

 Premium

 Super premium

Segment Wise market share in 2008

Impact of recession:
 Severe impact on C segment and A2 segment. Banks are reluctant to finance car
purchases in the wake of sub-prime crisis.

 Partial impact on A1 segment ( sales of M800 has been declining for the past few
years on account of other reasons as well)

 Very less or no impact on A3 segment cars

 SX4 lauched in May 2007 and DZire in March 08. Both the cars are runaway
success ever since they have been launched in India and they have kept the A3
segment unaffected.

 Overall, recession has adversely impacted the passenger car segment as A2
category comprises a significant part of the passenger car segment.

Response to recession by Maruti:
 Deferred buying by customers

 Focus on untapped potential of rural market

 Provision of discounted purchase

 Targeting the government employees

General changes in marketing practices across the sector:
 More emphasis on rural market

 Financial assistance

 After sales services

Some more measures in recession:
 1 component 1gram

 Tapping export market – launch of A star model

 Cost effective channels of marketing:

 Internet (b) social network & promotional event (c) video sharing services

Maruti now plans to tap the rural market, 60 per cent of which runs on cash.
Worldwide, sales in the car industry have reduced by 40 per cent. But the Indian market
is still performing well. The rural market has a lot of potential. Maruti has appointed

2,000 sales executives to target customers in the rural areas and started special
schemes for village panchayats, rural teachers and rural officers.

A mobile van has been put on standby to provide car servicing at the villagers’ doorstep.

Also, the company is offering discounts ranging from Rs 3,000 to 8,000 on various
models in the rural market.

Besides, the car manufacturer also plans to provide several incentives to the urban
market

BANK LOAN SCHEMES:
Oriental Bank of Commerce(OBC), one of the leading PSU banks in India,
has signed a memorandum of understanding(MOU) with India's leading

car manufacturer Maruti Suzuki India Ltd. to publicize the loan scheme
offered by Oriental Bank of Commerce.

As per MOU, the exclusive car dealers of Maruti Suzuki will publicize the loan scheme
among the prospective car buyers and link them to the Bank for credit support for
hassle-free process

CONCLUSION:
Indian car industry is one of the most promising car industries across the globe. It has
gradually strengthened its foothold in the international arena as well. The country is
dealing with many car manufacturers, dealers, and associations in various different
countries including U.S. From some countries, India imports cars and car components
and to some India exports. With this, the global recession is obvious to have its impact
on the Indian car industry.

Though India has witnessed a growing customer base, it has not inoculated them from
the global crisis. The crippling liquidity and high interest rates have slowed down the
vehicle demand. However, the fall down started in July with a decline of 1.9% and
thereafter the industry saw a major slowdown in October 2008.

Business Analysts reported that Indian car market had recorded a continuous growth of
about 17.2% over the last few years but this year the recession has brought the growth
to about 7-8%. Be it Tata Motors or Maruti Suzuki or even Mercedes-Benz, the car
market has gone down to a tremendously negative terrain.

In the recent months, banks and car financers have disbursed the approved loan
because of the cash crunch. Payments from the OEMs (Original Equipment
Manufacturer) have also been delayed and in most cases banks have deferred or
disbursed the approved loan. OEMs take this loan from banks and financers for
establishments, capacity expansions, or even for the requirement of high-end
equipments for car designing and production.

In addition, the uncertain exchange rate and a sudden increase in dollar value against
Indian Rupee have contributed to the slowdown. Increasing dollar value has raised the
landed cost of imported machine tools and even raw materials required for production
by about 14%. Alloy and steel prices have also not shown any reduction in their prices
and this high price has actually forced the car manufacturers to hike the car prices. To
make the matter worse, it is believed that steel manufacturers across the country are
looking for re-imposition of custom duty on steel. Increased cost of raw materials
directly affects the cost of the car rolled out, eventually tagging a particular car model
with a higher price tag.

The conclusion is that the present global recession has hit hard on the Indian car
industry.

BIBLIOGRAPHY:
 Newspapers

 www.tatamotors.com

 www.marutisuzuki.com

 Blogs

 Personal Contacts

 SIAM (Society of Indian Automobile Manufactureres)

INTERVIEWS ATTACHED:
Questionnaire 
Personal Information:

Name : Mr. Sudhish Chatterjee

Company : Tata Motors

Designation : Product Development Manager

E-mail : http://toostep.com/profile/sudhish_chatterjee

Address : India, Pune

1. How was the growth before the recession set in? How exactly has the recession hit
the automobile market? What change have you personally seen over the past 14-18
months?

Before recession Indian Automobile Industry had tremendous growth like 6-7 years
straight it had seen growth, so the recession has not impacted very badly as it is in the
case of US and European Countries. The Indian automobile industry declined 4.7% to
96.48 lakh units in 2007-08 against 1.01 crore units in the previous financial year. Not
only recession the automobile industry was also plagued by high interest rates affecting
local consumer demand, credit squeeze and rising input costs, but interestingly it reported
a robust growth in exports.

According to figures released by the Society of Indian Automobile Manufacturers (Siam),
the total production also declined 2.29% to 1.08 crore units against 1.11 crore units as
demand remained low.

But in the recent reports suggests that in India, there is increase due to the stimulus
packages, and with cheap fuel available, one is seeing rise in sales, where Maruti,
Hyundai and Mahindra have increased sales in both India and overseas. And with Nano
coming up with Automobile sector fighting in the price range to woo the consumers one
may see the growth in the coming quarters.

2. Being one of the market leaders how do you look forward to doing things in the
short and long term keeping in mind the current market scenario?

The Cost of new vehicle has to come down for markets, with less delivered price.
Professional has to work with lean management and cost effective sources.

Vehicle manufacturers have to work to sell out vehicles, with aligned sources and
concepts.

Moreover, automotive manufacturer should look at exploring new markets in Southeast
Asia and South America, to boost revenues. There is a huge demand of fuel efficient cars.

3. Recession would must have slowed down all processes including sales, how
important is branding at such times?

"Well bribe them, her I mean to say: give them a discount coupon for free service
or discount on service after free service....

Give them complimentary hotel stays etc... Bribe and Sell Cars. :)"

The cost of new cars should be reduced in order to increase the sales. In this current
scenario, in the marketing field instead of innovation realistic processes are required ,
peoples always like a traditional thing & also peoples wants to co-relate the things that
touches their hearts.

4. According to you, how can automobile industries can beat recession?

"I feel Automotive manufacturer should look at exploring new markets in Southeast Asia
and South America, to boost revenues.

There is a huge demand of fuel efficient cars...."

In times like this an industry need to be flexible enough to quickly change their strategies
to meet the customer expectations. One way for automobile industry to combat recession
is to reduce the prices of their cars


Tata Motors is introducing Air Car - the next big thing. Tata Motors is taking giant
strides and making history for itself. First the Land rover-Jaguar deal, then the world’s
cheapest car and now it is also set to introduce the car that runs on access card. It is
scheduled to hit the Indian Street in 2009 – 2010

Questionnaire 

Name : Mr. Komal Saini

Company : Maruti

Designation : Product Development Manager

E-mail : http://toostep.com/profile/komal_saini

Address : India, New Delhi / NCR

1. What’s the current size of the automobile sector in India?

The current size of the automobile sector in India is 5% of the GDP.

2. How much is the value of this sector?

Value is approximately $45 billion taking in account the whole Indian market.

3. It is not uniformly spread over the nation, what are the high and low sale areas?
Which areas do you think would see a change?

High sales areas are the metropolitan cities and other townships. To be more specific the
urban areas are the areas where the sales are usually high. Low sales areas are the rural
market and suburbs are as.

4. How was the growth before the recession set in?

In India it has increased from 9.3 lakh units in 02-03 to 23lakh units in 07-08 reporting a
CAGR of 20%. Over the last five years, LCV & M/HCV segment have grown at CAGR
of 27% & 17%.

5. How exactly has the recession hit the automobile market? Examples

The overall sales have slowed down and people are looking for cheaper and smaller cars.
After recession people are much more sensitive and skeptical about the vehicles they are

going to buy. Most of the people withdraw themselves from investing their money into
automobile. As a result the sell takes a plunge down.

6. What change have you personally seen over the past 14-18 months?

Data released by SIAM confirmation that the auto industry is in a recession with
passenger cars dipping by 19.38 per cent and commercial vehicles recording a sales
slump of 49.52 per cent in November that is when the recession hit hard on every sector
and this was mostly due to the wayward lending of loans from banks, so this was the
unknown demand created by the banks for the consumers with all those loans and when
the recession hit it was the worst ever decline in the past eight years.

Car market leader Maruti Suzuki India sales saw a decline of 24.84 per cent, whereas
Hyundai Motor India Ltd (HMIL), the country's second largest carmaker also witnessed a
fall of 23.32 per cent in its sales.

Two-wheeler sales slipped by 14.68 per cent at 5, 67,502 units from 6,65,181 units in the
same period last year, with motorcycle sales declining 20.24 per cent at 4,31,171 units as
against 5,40,553 units in the corresponding month a year ago. Market leader Hero Honda
registered a 1.41 per cent decline in bike sales at 2, 67,424 units in November as
compared with 2,71,251 units in the year-ago period.

While Bajaj Auto's sales plummeted by 52.96 per cent at 82,283 units against 1,74,936
units in the corresponding month last year, SIAM said. The government on Sunday had
announced a major fiscal stimulus package to boost exports, Small and Medium
Enterprises, housing and infrastructure projects, while slashing CENVAT rate by four
percentage points across the board and providing for an additional spending of Rs 20,000
crores in the current fiscal.

7. How does communication ‘play a major role in your business? What are the
strategies and patterns?

It’s the backbone of any business. Communication among members, staffs, employees
are just the most vital part of my business. It helps me to maintain a transparency &
healthy working environment in my business.


It is important. The better you brand or market your business or product the better you
enjoy the advantages over your competition.

9. Your views on the immediate future of the 4 wheeler automobile sector in India.

Electronics media, Print media, Internet etc.


In times like this an industry need to be flexible enough to quickly change their strategies
to meet the customer expectations. One way for automobile industry to combat recession
is to reduce the prices of their cars and TATA and many other companies have already
taken the initiative. They should think from the customer's perspective and change
accordingly. But reducing the price will definitely reduce the additional features a
company provides in their car, and then will the customers accept this?

11. What are the challenges faced by the sector in the future?

Largest challenges facing the auto manufacturing industry is to produce vehicles which
are lightweight (use of higher strength steels, Aluminium, magnesium and titanium), fuel
efficient (Hybrid technology), cheap and desirable (multitude of choice).The business
model which is based mostly on volume is sound if you can produce cars for the third
world consumers, however the first world countries are spoiled for choice - thus lower
the number of models and derivatives on the market - limit choice, reduce cost on tooling
and manufacturing. Automation of manufacturing has to increase even more.

12. What are the current issues of concern in the automobile industries?

Global meltdown, emission norms imposed by govt. inventing new technology and
advanced frugal engine, hybrid-battery driven cars, -fuel and other pollution free cars to
introduce in the market.

Questionnaire 

Name : Ms. Bhavya Doshi

Company : Dobro Toyota / Dobro Suzuki

Designation : Chief Executive Officer (C.E.O)

E-mail : bhavya@doshimotors.com


32% of GDP


Around 9000 crores


High sale AREAS remain with Metros and Capital Cities and low sale areas are District
level markets. Currently the district markets are showing good trend in sales as per latest
R.T.O records recently published in all newspapers.

4. How was the growth before the recession set in?(Sales figure/charts)

Growth before recession is-17.2 % and after recession is between 7-8 %

5. How exactly has the recession hit the automobile market? Examples.

Almost 50 % down in terms of sales and service. The international car brands are
planning, to introduce small budget cars by 2010, itself is an example.


In terms of sales – The market went as low as it can till Feb-2009 and slight improvement
noticed in the month of March-2009, in spite of the credit squeeze existing to continue.

In Terms of Service- Since most of the transport service providers jobs are cut especially
in outsourcing and other IT industries, no of vehicles coming for service reduced to
almost to 60 %

Advantage to Employers, the manpower market is twisting, favoring currently the
“Employers Bargaining”, since many qualified who found heaven in IT sector are now
coming for jobs at lesser C.T.C


1. Plan for maintaining existing business through customer retention programs and follow
customer first principle vigorously with multiple brands availability including the
associated product /service facilities.

2. ADOPT policy of “Saving a rupee is also profit”, without affecting the needed customer
relationship, which is vital for long-term trust, quality and reliability.

3. More inputs for focused concentration on any brand assuring short-term goals.

(Reduction of Wastage at all levels and improves upon express maintenance facilities).


All efforts to retain mouth-mouth promo by customers will be maintained and all
communications to reach the target customers closely monitored with improved
strategies. “More Benefits, Less Cost, Speedy Services and choice to choose reliable
brands at one point will be designed and promoted.


Basically this type of recession do not affect Upper segments of society to such an extent,
the main segment (middle Class) are affected. SO branded products if made available at
affordable price may improve sales to considerable extent to retain the business flow
required for survival, rather than pressurizing customers as their confidence in branded
products help them for positive Buying decisions when compared to new ventures
catering same needs.

10. What are different media tools used for branding & advertisement? How successful
has it been in comparison to the past (before recession)?

Today, approaching buyers through suitable media “Television” is the choice with reality
shows that can kindle emotions to rely brands associated with the endorsed products.
Announcing special discounts suitable to occasions using newspaper media and FM
media are the other choices as the next positive option.


Positive aspects are the 10th Automotive Mission Plan introduced by Government
including the reduction of obstacles in the way of competition, to bring down the cost of
fuel and price (which accounts for 6 % of the manufacturing cost in the auto sector),
Captive power generation must be encouraged to enable industry to achieve cost effective
plans.


By introducing small cars like NANO at affordable price with maximum features,
making today’s customer to feel proud about the association with “Quality Ownership
Experience” providing automobile brand, in all respects.

13. What are the measures taken to eliminate or minimize risk?

Through well-planned strategies, implementation of the same with focused promotional
strategies, reaching buyers (decision) in the best possible manner confirming reliability,
quality and durability, with provision of inputs wherever necessary to retain customers is
the solution for anytime, irrespective any recession as recessions are temporary and
caused many times by inflation of market for short term goals.
14. How do you monitor and review control measures?

Follow P.D.C.A and should go by systems with necessary corrections required, without
bending to temporary obligations and attractions for profits.

15. What are the current issues of concern in the automobile industries?

People in all levels take advantage of recession including those not much affected.
Mainly the credit squeeze that affects sales & service from originally buying segments is
one of concern needs attention. And Most of the supporting plans for automobile industry
by the government also require speedy approval and implementation for providing cost
effective vehicles for affordability.

Questionnaire 

Name : Rajeev Singh

Age : 32 Sex: Male

Company : Sings automobile sales

Designation : Director

Contact : 093393 71250

E-mail : rajv_ta@hotmail.comc

Address : 28D, Alm Avenue, Kolkata – 700 019


Growing


Can’t put the amount exactly


The middle and upper middle class


Steady


Everything has got affected, then how can the vehicle industry remain aloof. The motor
vehicle industry mirrors the slowdown in the economy. Taking you all thought the facts,

between 2006-07 and 2007-08, growth in sales of passenger cars came down from 22 to
12 per cent. Car sales are stimulated by people abandoning two-wheelers and buying
safer four-wheel vehicles. But obviously, the decline in overall growth hurt the fortunes
of the upward-mobile middle class.

Yes, the effects of recession has already been seen in Indian Automobile Industry, with
sales figures dropping down even in the months of October when Indians consider the
best time to buy new cars...Also the layoffs happening due to decline in production units


Steady


Reaching out to the consumers through an effective ad campaign and media plan.


The relevance of any brand is in its presence and visibility to directly connect.


Growing and getting better



concepts.

Questionnaire 

Name : Ritesh Janee

Age : 29 Sex: Male

Company : P. J. Janee & Co. Ltd

Designation : Owner

Contact : 093393 71250

E-mail : ritesh.janee@gmail.com

Address : Asansol

1. What’s the current size of the automobile sector in India? How much is the value of
this sector?

The industry is estimated to be a US$ 34 billion industry.


There was tremendous growth prior to the recession for almost 6 – 7years.


Though recession has affected Indian economy somehow but still there is some stability
in Indian economy compared to European or American economy. We Indians like to do
more saving than spend money for purchasing anything which we do not need. We know
the difference between "nice to have" and "need to have". We do not shop till we drop.
There is a great potential market for automobiles in India (No of consumers is increasing
steadily thanks to the economic growth). The great automobile companies are heading for
Indian market.

Indian car market had recorded a continuous growth of about 17.2% over the last few
years but this year the recession has brought the growth to about 7-8%.


The fall down started in July with a decline of 1.9% and thereafter the industry saw a
major slowdown in October 2008.


Aggressive Campaigning by offering Special offers/Discounts


It is very important. Use of internet, social networking & proper marketing can help a lot.



concepts.

8. What are the challenges faced by this sector in future?

Automotive industry undergoes significant structural changes in an uncertain world
economic climate, manufacturers face a new set of challenges to their business models
and cost structures, despite the fact that the automotive sector is growing

Largest challenges facing the auto manufacturing industry is to produce vehicles which
are lightweight (use of higher strength steels, Aluminium, magnesium and titanium), fuel
efficient (Hybrid technology), cheap and desirable (multitude of choice).The business
model which is based mostly on volume is sound if you can produce cars for the third
world consumers, however the first world countries are spoiled for choice - thus lower
the number of models and derivatives on the market - limit choice, reduce cost on tooling
and manufacturing. Automation of manufacturing has to increase even more.

RESEARCH Effects of Recession on Indian Automobile Sector

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