Pillai institute of management studies and research

Recent trends in Automobile Industry in India

Subject: Research Methodology

Submitted by: Submitted to:

Rohit U. Jadhav : 21 Prof. Farha Hassan

Naazma Khan : 30 Research Methodologies

Aditya Kumar Singh : 01

Trupti Nayak : 26

Binoop Balakrishnan : 09

Executive Summary

The automotive industry in India is one of the largest in the world and one of the fastest growing

globally. India's passenger car and commercial vehicle manufacturing industry is the seventh largest

in the world, with an annual production of more than 3.7 million units in 2010. According to recent

reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the

world, growing 16-18 per cent to sell around three million units in the course of 2011-12. As of 2010,

India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were

produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing

automobile market in the world.

Though the automotive industry is booming in present date, due to the steep petrol hike graph in India

since mid 2009, sales of passenger vehicles with petrol have been declining. Petrol price hike did not

affect the consumer much in the fiscal yr 2010-11 when the price was below Rs.60/-. As soon as the

price rose above Rs 60 the consumer buying behavior started changing and as soon as the price

reached the Rs. 70 mark, the consumer switched on to Diesel cars rather than buying a petrol car.

This report will mainly focus on developments in Indian automotive industry; the auto hubs India;

hike in petrol price and its affect on the sales of automobiles in India. The research to be done is a

causal research where consumer buying behavior will be studied because of the petrol price hike in

India. In relation to the problem statement desired hypothesis will be formulated and their testing will

be carried out based upon the data obtained.

Research Problem

The automotive industry in India is booming at an alarming rate due to the increase in

purchasing power of individuals. Even though the sales of automobiles are increasing, sales

of Petrol engine based has been declining and those with diesel engines have been

increasing.

The research will seek to find out a reason of decline in sales and the consumer buying

behavior in today’s date.

Research Objectives

To find out sales of automobiles in India and ratio of Petrol to Diesel engine based car

sales.

To collect data from local people to what are their views on buying behavior of consumers.

To study buying behavior of automobile users.

To find and study the reason for change in consumer buying behavior.

To interpret the data and frame a conclusion for the problem.

Hypothesis

a) Ho: There is no relation between sales of automobiles and purchasing power of

people.

Ha: There is relation between sales of automobiles and purchasing power of people.

b) Ho: There is no relation between price hike of petrol and fall in sales of petrol engine

cars.

Ha: There is relation between price hike of petrol and fall in sales of petrol engine

cars.

c) Ho: There is no relation between consumer buying behavior for cars and petrol price.

Ha: There is relation between consumer buying behavior for cars and petrol price.

Introduction

India’s automobile industries history can be traced back to 1897 when first car ran on Indian roads.

Until the 1930s, cars were imported directly, but in very small numbers. Embryonic automotive

industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a

trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from

Willys. The company soon branched out into the manufacture of light commercial vehicles (LCVs)

and agricultural tractors. Following economic liberalization in India in 1991, the Indian automotive

industry has demonstrated sustained growth as a result of increased competitiveness and relaxed

restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and

Mahindra and Mahindra, expanded their domestic and international operations.

As of 2010, India is home to 40 million passenger

vehicles. More than 3.7 million automotive vehicles

were produced in India in 2010 (an increase of 33.9%),

making the country the second fastest growing

automobile market in the world. According to the

Society of Indian Automobile Manufacturers, annual

vehicle sales are projected to increase to 5 million by

2015 and more than 9 million by 2020. By 2050, the

country is expected to top the world in car volumes

with approximately 611 million vehicles on the nation's

roads.

About Auto Industry

This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines.

Products and Services

The primary activities of this industry are:

Motor cars manufacturing

Motor vehicle engine manufacturing

The major products and services in this industry are:

Passenger motor vehicle manufacturing segment (Passenger Cars, Utility Vehicles & Multi

Purpose Vehicles)

Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles)

Two Wheelers

Three Wheelers

Oil Price rise

International price of crude oil has crossed US$ 125 per barrel and is rising at an alarming

rate. The forecast of market experts that the crude oil price will plateau around US$ 100 per

barrel has been proved wrong. The skyrocketing crude oil price rise will affect the economic

growth of most of the nations of the world including India. The prospects of India and China

of becoming economic superpower will be seriously affected. Also, the rise in oil prices will

impact the growth of global automotive industry. Unless the use of alternative fuels

increases, it is very unlikely that the situation will change for the better.

This necessarily means that more and more investments should be directed towards R&D,

establishing mechanisms to translate R&D results into products and their efficient

manufacturing. This will also require radical redesigning of engines.

Challenges faced by Indian Automotive Industry in the new age

The Indian automotive industry has been facing new challenges due to the rapid changes taking place

during the last decade.

The Indian auto industry is changing rapidly. During the last decade, many international auto

manufacturers, either by themselves or in partnership with Indian companies, have started

manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of

production in small- and medium-scale industries has improved to such an extent that they started

exporting products to international manufacturers. The major breakthrough of recent years is the

unveiling of "Nano" by Tata Motors during the auto expo 2007. This has received worldwide

attention and proved that India can not only design an automobile of international standards but also

execute the project at a much lower cost through innovative choice of components, materials, engine

design etc.

These developments in the auto sector have given new confidence to everyone related to the auto

industry and specifically to the government which resulted in the announcement of the Auto Policy

2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector

is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every

year two to three million people are expected to purchase new vehicles. Several million vehicles and

components are expected to be exported to both developed and developing nations. To achieve these

goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to

remain at the same level for the next 8-10 years. The government is also giving some concessions to

the auto industry. To realize the above growth predictions, it is important to overcome various

challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of

fuel and the paucity of highly skilled manpower.

The majority of India's car manufacturing industry is based around three clusters in the south, west

and north. The southern cluster near Chennai is the biggest with 35% of the revenue share. The

western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with

32%. Chennai, is also referred to as the "Detroit of India"

with the India operations of Ford, Hyundai,

Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts.

Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana

form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The

Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors,

Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and

Force Motors having assembly plants in the area. Aurangabad with Audi, Skoda and Volkswagen also

forms part of the western cluster. Another emerging cluster is in the state of Gujarat with

manufacturing facility of General Motors in Halol and further planned for Tata Nano at Sanand. Ford,

Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkatta with Hindustan

Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive

manufacturing regions around the country.

The above figure itself says how rapidly the automobile industry is growing in India. Also many big

foreign giants have come forward and invested in India for expansion of their firm. This in turn also

tells us that India is been awarded with a status of ‘Country of Opportunity’ for growth by foreign

firms.

RESEARCH DESIGN

To conduct the market research first of all it is necessary to create a research design. A research

design is basically a blue print of how a research is to be conducted, it may include;

1. Choosing the approach

2. Determining the types of data needed.

3. Locating the source of data.

4. Choosing a method of data.

Basically there are 3 types of approaches used during the any research:-

1. Exploratory.

2. Descriptive.

3. Causal.

During this research Descriptive and Exploratory approach is taken into consideration because of the

availability of relevant information to describe the relationships between the marketing problem and

the available information.

Significance to the industry:

This is a limited study which takes into consideration the responses of 108 people. This data can be

explorated to take in the trends across the industry. The significance for the industry lies in studying

these trends that emerge from the study. It is a rapidly changing and evolving sector. People are only

beginning to wake up to its vast possibilities. A study like this can attempt to guide the future of the

industry based on current trends.

Research Design

Exploratory

Collecting data

Conclusion

Descriptive

Observation

(Secondary data)

Survey Experiment

Causal

Secondary Data

Survey

Significance for the researcher:

To facilitate and provide all the useful information of the study, the company, the automobile industry

and bring out the consumer buying behavior of today’s consumer.

Data source

Research included gathering both primary and secondary data.

Primary data is the first hand data, which are selected a fresh and thus happen to be original in

character. Primary Data was crucial to know various customers and past consumer views about bikes

and to calculate the market share of this brand in regards to other brands.

Primary data is collected during the survey with the help of questionnaires

Secondary data are those which have been collected by someone else and which already have been

passed through statistical process.

Secondary data has been taken from internet, newspaper, magazines and companies web sites.