1.

1: The Beginning of New Era

With the invention of the wheel in 4000 BC, mans journey on the road of mechanized transport had begun. Since then he continually sought to devise an automated, labor saving machine to replace the horse. Innumerable attempts reached conclusion in the early 1760s with the building of the first steam driven tractor by a French Captain, Nicolas Jacob Cugnot. It was however left to Karl Benz and Gottlieb Damlier to produce the first vehicles powered by the internal combustion engine in 1885. It was then that the petrol engine was introduced, which made the car a practical and safe proposition. Then onwards, it has been one big journey...on the roads.

1.2: History of Automobile Industry

Historians, who accept that early steam-powered road vehicles were automobiles, feel that Nicolas Cugnot was the inventor of the first automobile. 1880's & early 1900's

About hundred years ago -The first motor car was imported -Import duty on vehicles was introduced. -Indian Great Royal Road (Predecessor of the Grand Trunk Road) was conceived. First car brought in India by a princely ruler in 1898. Simpson & Co established in 1840. -They were the first to build a steam car and a steam bus, to attempt motor car manufacture, to build and operate petrol driven passenger service and to import American Chassis in India. In 1928 assembly of CKD Trucks and Cars was started by the wholly owned Indian subsidiary of American General Motors in Bombay and in 1930-31 by

Canadian Ford Motors in Madras, Bombay and Calcutta In 1935 the proposals of Sir M Visvesvaraya to set up an Automobile Industry were disallowed.

1942 Hindustan Motors Ltd incorporated and their first vehicle was made in 1950. In 1944 Premier Automobiles Ltd incorporated and in 1947 their first vehicle was produced. Only seven firms namely Hindustan Motors Limited, Automobile Products of India Limited, Ashok Leyland Limited, Standard Motors Products of India Limited., Premier Automobiles Limited, Mahindra & Mahindra and TELCO received approval. M&M was manufacturing jeeps. Few more companies came up later.

1960's

In sixties 2 and 3 Wheeler segment established a foothold in the industry. Escorts and Ideal Jawa entered the field in the beginning of sixties. Association of Indian Automobile Manufacturers formally established in 1960. Standard Motors Products of India Ltd. moved over to the manufacture of Light Commercial Vehicles in 1965.

1970's

During this decade there was not much change in the four wheeler industry except the entry of Sipani Automobiles in the small car market. Three other companies, namely, Kirloskar Ghatge Patil Auto Ltd, Indian Automotive Ltd and Sen & Pandit Engg products Ltd entered the market during 1971-75. They ultimately withdrew in early eighties.

1980's - The period of liberalized policy and intense competition

Lots of new Foreign Collaborations came up in the eighties. Many companies went in for Japanese collaborations. Hindustan Motors Ltd. in collaboration with Isuzu of Japan introduced the Isuzu truck in early eighties. ALL entered into collaboration with Leyland Vehicles Ltd. for development of integral buses and with Hino Motors of Japan for the manufacture of W Series of Engines. TELCO after the expiry of its contract with Daimler Benz, indigenously improved the same Benz model and introduced it in the market. Government approved four new firms in the LCV market, namely, DCM, Eicher, Swaraj and Allwyn. They had collaborations with Japanese companies namely, Toyota, Mitsubishi, Mazda and Nissan respectively. In 1983 Maruti Udyog Ltd was started in collaboration with Suzuki, a Japanese firm. Other three Car manufacturers namely, Hindustan Motors Ltd., Premier Automobiles Ltd., Standard Motor Production of India Ltd. also introduced new models in the market. At the time there were five Passenger Car manufacturers in India - Maruti Udyog Ltd., Hindustan Motors Ltd., Premier Automobiles Ltd., Standard Motor Production of India Ltd. and Sipani Automobiles. Ashok Leyland Ltd. and TELCO were strong players in the Commercial

Vehicles sector.

1990's

In 1991 new Industrial Policy was announced. It was the death of the License Raj and the Automobile Industry was allowed to expand.

The Indian Automobile market in general and Passenger Cars in particular have witnessed liberalisation. Many multinationals like Daewoo, Peugeot, General Motors, Mercedes-Benz, Honda, Hyundai, Toyota, Volvo and Fiat entered the market. TELCO has diversified in Passenger Car segment with Indica. .1.3: Preview of Automobile Industry The automobile industry, one of the core sectors, has undergone

metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the next couple of years in view of a reasonable surge in demand. The Indian automobile market is gearing towards having international standards to meet the needs of the global automobile giants and become a global hub. Indian automobile sector being a driver of product and process technologies, and has become a excellent manufacturing base for global players, because of its high machine tool capabilities, extremely capable component industry, most of the raw material locally produced, low cost manufacturing base and highly skilled manpower Not only a large number of world manufacturers have set up production bases in India but also a large number of foreign companies are collaborating with the auto component suppliers and vendors. Indian Automobile Components Industry has been making rapid strides towards achievement of world-class Quality Systems by imbibing ISO 9000/QS 9000

Quality Systems whereby the Indian Automotive industry has become more competitive in the export market due to its technological and quality advances, so much so that in quality conscious markets such as Europe and America, it is emerging as a major player, based on its performance. India today exports: Engine and engine parts, electrical parts, drive transmission & steering pats, suspension & braking parts among others. Government will encourage setting up of independent auto design firms by providing them tax breaks, concessional duty on plant/equipment imports and granting automatic approval. Allocations to automotive cess fund created for R&D of automotive industry shall be increased and the scope of activities covered under it enlarged.

1.5: Background of Automobile Industry

The automobiles industry for many years operated in a seller's market. In such a scenario the manufacturer could offer outdated models and also raise prices at will. Little or no attempt was made to control costs or to offer new products. Lack of innovation restricted the consumers options to the models offered by these companies. The number of manufacturers (domestic and foreign) increased dramatically after the de-licensing of the sector. Increased competition has forced companies to focus on cutting costs, improve technology and styling through research. It has also constrained them to limit price increases. Availability of easy credit facilities also resulted in creating demand for automobiles. The car financing market has boomed from a turnover of Rs 7,000 m in FY95 to nearly Rs 35,000 m in FY97.

Structure The Indian automobile industry can be broadly classified into: 2 /3 Wheelers Passenger Cars Commercial Vehicles (LCV/HCV/MCV) UV (Utility vehicles) Tractors

The models in the car market can be fitted to different segments as given below:

Category Models Economy segment (upto Rs 0.25mn) Maruti Omni, Maruti 800 etc. Mid-size segment (Rs 0.25-0.45 mn) Fiat Uno, Hyundai Santro, tata Indica, Maruti Alto etc. Luxury car segment (Rs 0.45- 1mn) Tata Indigo, Honda City, Mitsibushi Lancer, Ford Ikon, Opel Astra, Hyundai Accent & others Super luxury segment (above Rs Mercedes Benz & other imported 1mn) models

The economy segment has a very large foothold over the Indian automobile market as compared to the mid-size and luxury segment. Segment Economy Mid-size and luxury Source: SIAM/ Auto Car India Market Share (%) 90.2 9.8

Figure -Structure of Passenger Vehicle Market (India)

Trends in Passenger Car / Utiltity Vehicle Sales

The passenger car segment has seen rapid growth on the back of rise in disposable income, increased availability of consumer finance, and reduction in excise and
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customs duties. Post-1991, this segment has seen maximum foreign investment. There is a clear segmentation of passenger cars based on price and size. While the lower and medium range cars (Maruti, Ford, Cielo) have been moderately successful, luxury cars such as Mercedes have found the going tough.

Demand for utility vehicles and tractors come from rural India. These vehicles have witnessed steady demand growth over the past few years due to successive monsoons, better procurement prices, improved irrigation facilities, and availability of finance. Availability of quality components is another factor that determines smooth production without bottlenecks. High rejection rate of auto components has prompted several global majors like Ford, to get their international suppliers. 1.7: The landmarks along the way... 1928- The first imported car was seen on Indian roads 1942- Hindustan Motors incorporated 1944- Premier automobiles started 1948- First car manufactured in India 1953- The Government of India decreed that only those firms which have a manufacturing program should be allowed to operate 1955- Only seven firms, namely, Hindustan Motors Limited, Automobile Products of India Limited, Ashok Leyland Limited, Standard Motors Products of India Limited. Premier Automobiles Limited, Mahindra & Mahindra and TELCO received approval. 1960 - 1970 - The two, three wheeler industries established a foothold in the Indian scenario. 1970 - 1980 - Not much change was witnessed during this period. The major factors affecting the industry were the implementation of the MRTP Act (Monopolies
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and Restrictive Trade Practices Act), FERA (Foreign Exchange Regulation Act) and the Oil Shock of 1973 and 1979. 1980 - 1990 - The first phase of liberalization was announced by the Govt. -With the liberalization of the Government's protectionist policies, the advantages hitherto enjoyed by the Indian car manufacturers like monopoly, oligopoly, slowly began to disappear. 1991 - Under the Govt.'s new National Industrial Policy, the license raj was dispensed with, and the automobile industries were allowed to expand freely. 1993 - With the winds of liberalization sweeping the Indian car market, many multinationals like Daewoo, Peugeot, general Motors, Mercedes-Benz and Fiat came into the Indian car market. 1997 - The National Highway Policy was announced which will hopefully have a positive impact on the automobile industry. The Government also laid down the emission standards to be met by car manufacturers in India in the coming millennium. There were two successively stringent emission levels to be met by April 2000 and April 2005, respectively. These norms were benchmarked on the basis of those already adopted in Europe, hence the names Euro I (equivalent to India 2000) and the Indian equivalent of Euro II. 1999 - The Honble Supreme Court passed an order directing all car manufacturers to comply with Euro I emission norms (India 2000 norms) by the 1st of May, 1999 in National Capital Region(NCR) of Delhi. The deadline was later extended to 1st June, 1999 2004 - Tata Motors becomes the first Indian auto company to be listed on the New York Stock Exchange.

2.2: Role of Government in Automobile Industry

The government is making efforts to overcome the constraints at their research centers for automobile industry. India can also learn from countries like Japan that are already using these technologies for a wide number of applications. The Indian auto industry should launch programmes for market development and a wider acceptance of alternative energy-driven vehicles in India. It should also work in tandem with the government to make India a world leader in this area. With the growing number of vehicles, the pollution in the cities is ever increasing. Government initiated controls by notifying emission standards from the year 1992 which were further tightened under the Motor Vehicle Act. For meeting these norms, unleaded petrol was also introduced in metropolitan cities from 1995, which enabled fitments of catalytic convertors on new petrol driven vehicles..

The policy of broadbanding capacities in the eighties led to increased utilization of capacity for four-wheelers in the industry. The liberal policy on foreign participation through technical and financial collaboration in early eighties led to substantial product upgradation and introduction of new models. But it was alleged that the policy was discriminatory in favor of MUL, while others like Telco, PAL, HM were denied permission to produce cars in collaboration with Japanese companies. The GOI controls the car sector by way of framing policies on depreciation norms, import duty on cars and parts used in it, petrol prices and import duty of steel. During the era of socialist inspired controls, the government protected the car industry from new entrants by making effective use of licenses. However, after liberalization and with the consequent opening up of the auto sector in 1992-93, the license raj ceased to exist .

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The perception of a car as a luxury good lead to heavy excise duty on cars. The excise duty doubled from 25% in FY87 to 55% in FY91. Till 1987, the GOI followed a discriminatory policy so as to charge lower duty on fuel efficient car with engine capacity of less than 1000cc. This helped MUL to price its car at a lower price in comparison to others. But with lobbying from PAL and HM government withdrew the provision in 1987. In line with its treatment for luxury items import duties for car have been maintained highThe import duty on cars and components has come down in the last few years in line with general reduction in import tariffs. The import duty on catalytic converters and parts thereof has been reduced from 25% to 5%. The import duty on auto components will be a key factor in deciding the final pricing of cars as new ventures start with about 50% indigenisation levels. The reduction in import duty on steel in the last few years has helped the industry in reducing raw material costs as major steel requirement of car industry was imported. Even today, all CKD/SKD imports include metal pressed body panels.

Indian Automobile Industry

An Indian car as one which has been conceived and designed in India, has at least 85% of its components 'Made in India', by an Indian company. The official mascot of the Indian political system, the Triassic-era Ambassador has little Indian-ness in it. . The entry of Maruti Udyog Ltd, a GoI JV with Suzuki of Japan, in 1983 with a so-called "peoples" car and a more favorable policy framework resulted in a growth rate of 18.6% in car sales from FY81-FY90 Starting with the official one, i.e. Maruti, the company, since its inception has changed the automobile scene in India completely. It's has been the number one manufacturer, churning out close to 300,000 cars last year. Every year it rakes in

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multi-billion rupee profits, and, yet the company is nothing more than Suzuki India Ltd. Telco is a completely Indian carmaker with no major foreign collaborations. Their Indica was much touted as 'The Indian car', but it was styled by I.D.E.A of Italy. The engine technology had inputs from 'Moteur Modern' of France.. India is also the largest manufacturer of agricultural tractors, motor scooters and the world's fifth largest commercial vehicle manufacturer. Each of these sectors experienced rapid growth during the last three years Demand in these sectors is driven by industrial, individual and agricultural consumers respectively. The increases have resulted from improved overall economic trends in India including large doses of foreign investment a more liberalized economy and higher productivity.However, in India, price is the main factor determining the choice of car. Hence, cars are segmented on the basis of price into three segments :

Price Approximate Range Features of Market Share Segment Main Models (Rs. the segment of the 000) Segment M-800, Omni, Price, Fuel Economy < 250 Uno, 46.9% Efficiency Ambassador Zen, Uno, 118NE,Ambassador Price, 1800 ISZ, Medium 250-500 Performance, 43.1% Contessa, Diesel Option Indica, Santro, Matiz Lancer, Esteem, Status Value, 500 & Cielo, Accent, Premium Performance, 10.1% above City, Opel Astra, Features. Ikon Sources : various sources

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4.3: Indian Automobile Market

The Indian market confounds global carmakers simply because of the way it is segmented. In the West, automobiles are generally segmented according to platforms -- that is chassis-engine combinations.. In India, though, price plays the primary role in segmentation.. The Indian market, of course, is quite differently segmented. The Maruti 800 and Zen fall in a class by their own -- and are referred to as the sub-Rs 2.5-lakh cars. The next is the Rs 3-4 lakh segment -- which includes all the other cars that would normally be classified as city cars in Europe. Strictly speaking, the Tata Indica should fall in the super-mini category because of its specifications -- but because of price, it competes in the same segment. Above Rs 4 lakh and all the way up to Rs 10 lakh is the luxury car range. It is loosely divided into two halves -- with Maruti Esteem, Ford Ikon, Hyundai Accent, Daewoo Cielo, Opel Corsa and Honda City 1.3 falling in the bottom layer, and the Opel Astra, Honda City 1.5 and Ford Escort in the upper range. The last segment is of premium car segment, which includes cars like Mercedes Benz and BMW.

5.1: Strengths of the Automobile Industry

Low labor cost:

India enjoys a comparative cost advantage in labour as compared to western countries.

Skilled Manpower:

India has vast pool of skilled manpower and qualified engineers among the largest in the world. On a scale of 1-10, 1 = low, 10 = high.
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Availability of Skilled labour. Sr No 1 2 3 4 5 Country India Brazil US Germany Mexico Points. 8.5 7.5 7.4 6.6 6.6

Availability of Qualified Engineers. Sr No 1 2 3 4 5 Country Germany India US Brazil Mexico Points. 7.5 7.4 7.2 6.4 6.3

Reference: Competitiveness of Indian automotive industry Feb 2004. 5.2: Weaknesses of the Automobile Industry
Low labor productivity:

Cost advantage in labor wages is nullified by the fact that we have lower labor productivity.
Defect rates high:

We have a higher defect rate about 10 times the world average. Low Investment in R & D:

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The Industry has a very low investment in R & D as compared to their foreign counterparts which will their sustainability in the future.
Not reached critical mass:

Indian companies are in nascent stage and hence not able to cater to the requirements of OEMs. Our auto- ancillary industry is of 2.4 bn $ while Fords outsourcing budget is 86 bn $.

5.3: Opportunities for the Automobile Industry

Global automobile companies are setting up manufacturing facilities in India.. The year 2002-03 has already seen a significant 65% increase in export volumes during the period April to March. This trend is expected to continue with more global OEMs sourcing vehicles from their Indian plants. Additionally, the introduction of newer technologies such as Electronic Diesel Control Systems to reduce emission levels, safety devices such as Air Bags, Anti-lock Braking Systems, etc. augur well for the Company and the automotive sector as a whole. These technologies not only offer increased safety for drivers and passengers, but also result in greater comfort and better drivability.

5.4: Challenges for the Indian automobile industry

As we move into the new millennium, the Indian Automobile Industry faces some tremendous opportunities and also great challenges. The growth in automobile sales has been impressive for the past ten years since liberalization began. However, with liberalization, the Indian customer has been presented with a wide range of choices in automobiles, to suit every requirement and budget. The market has turned into a buyers market where the customer is being wooed by the manufacturers and the dealers with a range of freebies unheard of before in India. Financing has become so easy that an automobile is within every aspirant's reach.

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To add to the problems, come April 2001, under the WTO agreement, India will have to permit import of fully built automobiles, which hitherto was not permitted. The challenge before the industry is to figure out the strategy for survival and growth. One way to achieve this will be to go for exports in a big way. Maruti is already exporting vehicles, as are Mahindra, Telco, Daimler Chrysler and more recently Daewoo. The second opportunity is to become contract manufacturers for overseas companies. Hindustan Motors is said to be considering this option. The third opportunity is to overcome the vulnerability of the automobile market to oil prices by designing vehicles, which can offer lower fuel consumption. . The inadequacy of road infrastructure in India is well known. This is compounded by the fact that traffic management is very poor or non-existent and the drivers are mostly ill trained and in disciplined. As more vehicles come on the road, this will become a major bottleneck. The industry will need take initiatives firstly to train all drivers in safe driving and proper road discipline and manners. They will also need to assist government agencies in better road design and in building of multilevel parking lots. 8: Different players in the Indian Automobile industry

1: Maruti Udyog Ltd.

Maruti Suzuki Sales in April 2012 Car market leader Maruti Suzuki India Limited sold a total of 100,415 units in April 2012 a growth of 3.4 per cent. This includes 10,160 units for export, a growth of 1.5 per cent. The Company had sold a total of 97,155 units in April 2011. The sales figures for April 2012 are given below:

Category : Sub-

Models

April 2012

April'11 16

Segment Passenger Vehicles Mini Compact Super Compact Mid-Size Executive M800, Alto, AStar,WagonR Swift,Estilo,Ritz Dzire SX4 Kizashi Gypsy, Grand Vitara, Ertiga* Omni, Eeco

2012

2011

% Change

March'12

30720 26072 15510 634 3 72939 5593 11723 90255 10160 100415

41744 18227 11797 2102 35 73905 217 13022 87144 10011 97155

-26.4 % 43.0% 31.5% -69.8% --1.3% --% -10.0% 3.6% 1.5% 3.4%

491389 235754 110132 17997 458 855730 6525 144061 1006316 127379 1133695

Total A: Passenger Vehicles B: Utility Vehicles C: Vans

Total Domestic Sales Total Export Sales Total Sales (Domestic + Export) Models of MUL Alto Maruti 800 Zen Wagon R Omni Esteem Baleno

2: Tata Motors JLR Sales for April 2012

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JLR sales for the month of April 2012 came in at 25,143 units which is 29.4% YoY growth. But it is down 31% QoQ. In March Company sold 36,471 units. This sales number is a huge disappointment as it is 9% lower than the Sep 2011 sales figures of 27,639 units, which was the first month of Evoque launch. If we exclude Evoque sales figure of 8,300 units, sales are down by 13% YoY to 16,843 units in April 2012. China which account for 25% of the sales did well with wholesale volumes growing 150% YoY. US sales were a bit disappointing as retail volumes grew by 3% YoY. Jaguar sales grew 17% YoY to 3,603 units in April 2012. MoM it declined 33%. Land Rover sales grew 31.7% YoY to 21,540 units in April 2012. MoM it declined 31%. Chery Automobile Co. Ltd. has applied for government approval to establish a joint venture with Jaguar Land Rover in China. China requires environmental reviews before allowing automakers to build new assembly plants.

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3: Telco-The HomeGrown Challenger Telco did not boast a great reputation for developing even world-class commercial vehicles, forget passenger cars. When the Indica hit the market, the consensus opinion was that Telco had goofed up again.. The Indica was riddled with quality problems. A year down the line, almost everyone grudgingly admits that the Indica has been a success. The Telco formula of pushing the biggest small car with a rugged diesel engine has been a major hit in the semi-urban and rural markets. The Indica cost $400 million from start to finish whereas the Hyundai Accent is said to have cost $1.6 billion to develop. But the flip side is that all global giants can amortise the costs of development by selling the same car across different world markets, Telco can't afford to capture.At the moment though, the Telco strategy is to tap the niches first. The Indica, with the diesel engines being pushed hard, was clearly aimed at a segment none of the rivals was addressing. Similarly, the new car Magna it is planning to launch is again expected to be a niche car addressing a particular need in the Rs 12-16 lakh car segment. And in the SUV market, Telco has already introduced the premium Safari, which again focuses on a small niche. It is a smart strategy as it avoids taking any of the big guns head on. But in the long run, Telco knows it has to take on its rivals in the mainstream markets as well. It is ramping up capacity to 160,000 from the current 120,000 cars
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anticipating that it will get the demand. But Telco is also the weakest player in the small car market -- and unless it keeps springing surprises, it could be the first casualty in this round of the car battles. 4: Hindustan Motors Hindustan Motors Ltd (HML) is the oldest passenger car manufacturer in the country. It also has a small presence in the multi-utility vehicle and the heavy commercial vehicle segments. The later is generally manufactured for exports. Other than the automotive sector, the company has diversified into earth moving equipments and power products. In the passenger car segment, the company has the well known Ambassador and Contessa models. It has recently tied with Mitsubishi of Japan for manufacturing the Lancer range of cars. At present, the company has a market share of 4.2% in the car segment. HML, incorporated in 1942, is the flagship company of the C.K. Birla group of companies The company became the first manufacturer of cars in India when it set up its plant at Port Okha in Gujarat. In 1948, it shifted its activities in Uttarpara near Calcutta and set up facilities to manufacture cars and trucks. Over the years, HML has diversified into heavy engineering equipment like excavators, cranes, presses and steel products under the heavy engineering division (HED). With the division becoming a loss making one, it was hived off to Hyderabad Industries Ltd, a group company, in FY92. In 1971, HML further diversified its activities to include earthmoving equipment such as dumpers, front-end loaders etc by setting up a plant near Chennai. In 1985, HML set up a plant at Hosur in Tamil Nadu for manufacturing heavy-duty transmission required for earth moving equipments. In 1986, a project was undertaken to produce HCVs at Vadodara. A part of the assets was later sold to a JV between GM and HML, General Motors India Ltd. In 1987, HML commenced the production of petrol engines in collaboration with Isuzu Motor Company, Japan. Recently, the company has entered into a technical collaboration with Mitsubishi of Japan for the manufacture of the Lancer car. Commercial production of the car started in October 1998. HML also entered into collaboration with OKA Motor Company of Australia to produce custom-designed rural transport vehicle. Models of Hindustan Motors
Ambassador 1800 ISZ Ambassador 2000 DSL

Ambassador Nova Diesel Contessa motors

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5: Mahindra & Mahindra

India's largest sports utility vehicles manufacturer Mahindra & Mahindra yesterday reported 27 percent increase in sales at 40,719 units for April, 2012 in contrast with 32,090 units in the year ago period. Mahindra had sold 39,299 vehicles in the domestic market, registering 29 percent increase in sales, in comparison with 30,558 units sold in the year ago period. Total sales of passenger vehicles, including Mahindra Scorpio, Mahindra XUV500, Mahindra Xylo, Mahindra Bolero and Mahindra Verito were 20,558 units last month, as against 15,459 units in April 2011, up 33 percent. The company, however, said sales of its three-wheelers stood at 4,659 units, up from 4,411 units during the same month last year.

6: Premier

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Fiat India and Premier have signed a three-year agreement for the supply of Fiats 1.3 litre Multijet diesel engine to be used in Premiers compact SUV Rio. Initially, Fiat will supply 28,000 engines to Premier, although this volume may rise further with increased demand for the Rio.

The engines will be made at Fiats facility in Ranjangaon and will be supplied to Premiers factory at Chichwad, Pune, which is located 60 kilometres away from Fiat's plant. Fiats 1.3 litre Multijet diesel engine will enhance the Rios power from 64.8PS to 76PS and fuel efficiency from 16kmpl to 18 kmpl, according to an official release from Premier. Commenting on Premiers decision to opt for Fiats 1.3 litre Multijet engine to power its new Rio model, Maitreya Doshi, Premiers Chairman and MD said, Premier greatly values its past association with Fiat. We are delighted to once again have commercial ties with them. The engine supply will also enable Premier to sell its SUVs in cities that require the vehicle to be Bharat Stage 4 compliant. So far, the sales have been confined to Tier II and Tier III cities. According to industry sources, the Rio with the Bharat Stage 4
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engine will be costlier by Rs 45,000, although we are yet to receive a final word on this from the company. Priced at Rs 5.35 lakh, (ex-showroom, Pune) the Rio currently sports a Peugeot TUD5 diesel engine. Deliveries of the Rio with Fiats 1.3 litre Multijet engines are likely to begin in August. Premier currently sells the model through a network of 60 outlets across India. It aims towards increasing the number of its dealerships to 100 by December 2012.

Apart from this there are several others players in Indian automobile industry: 1: Hyundai: Can The Dream Run Continue?
South Korea's largest and the world's sixth biggest automobile company, Hyundai was initially founded as a construction company by Chung Ju-yung in 1947. The company entered India market with Santro in 1998 and met with huge success with the product. With the launch of Sonata and Accent the company . South Korea's largest and the world's sixth biggest automobile company, Hyundai was initially founded as a construction company by Chung Ju-yung in 1947. The company entered India market with Santro in 1998 and met with huge success with the product. With the launch of Sonata and Accent the company established itself firmly in the Indian market. The company has come up with new products like Terracan, Elantra, Getz Prime and Verna for the Indian market.

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2: Honda Honda Siel Cars India Ltd. (HSCI), one of the leading premium car manufacturer in India posted a tremendous growth of 252 per cent in April 2012. The company registered sales of 7,075 units in the month of April 2012 against 2,012 units in the previous year. The Honda cars sold 71 per cent more during the January-April 2012 period of 2012 with 16,789 units sold against the 28,731 units sold last year.

Model wise break-up of sales: Brio 3590 Jazz 1300 City 2092 Civic 51 Accord 25 CRV 17

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3: Nissan Nissan Evalia which was unveiled at the Auto Expo, 2012 will barge in the market by August, 2012, as confirmed by industry sources. Earlier the van was popular with the name Nissan NV200, however, the Japanese car manufacturer has christened it as Evalia now. Now Renault-Nissan plans to expand their vehicle-cum-engine manufacturing factory with a second production line at their Oragadam plant near Chennai. Since the manufacturing of Evalia will be localized at Nissans factory near Chennai, the company will be able to price it competitively near its arch rival-Innova. Nissan Evalia price will be no less than Rs lakh. Built on Nissans B-platform, the Evalia is a seven-seater with a 2+3+2 configuration and will also compete with up coming Maruti Ertiga.

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Chevrolet:
Chevrolet Enjoy MPV was unveiled at the Auto Expo 2012. The MPV has been tailored for local market conditions and would be priced at about Rs 7 lakh. Manufactured with the collaboration of it Chinese partner-SAIC, Chevrolet Enjoy which is better known as Hong Guang in China, will hit Indian market in second quarter of 2012. The car was shown at the Auto show with nameplate Chevrolet MPV and numerous tests will be done on the new car so that it comes out as perfect rival of Innova like Maruti Ertiga, Nissan Evalia etc. The seven seater-Chevrolet Enjoy will be suitable for those seeking style and space.

TOYOTA:
If you are looking for a good Toyota car, Toyota Corolla Altis Diesel Cars will really amaze you with its quality performance and comfort. It is a best Toyota car stuffed with the features and great mileage. Toyota Corolla Altis Diesel cars are huge in demand. If you are sure to buy this Toyota Corolla Altis Diesel car in India, check out the available Toyota Corolla Altis Diesel car models, their list of features and detailed specifications. If you buy Toyota Corolla Altis Diesel car, you will never regret your decision of buying a Toyota car.

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Mercedes :
The Mercedes-Class C200 CGI BlueEfficiency (the cheapest C-Class) costs Rs 28.44lakh (ex-showroom, Mumbai) which is a little expensive considering its overall features, but let us not forget that this is also your passport into the elite ThreePointed Star club. The C200 CGI is the most basic Mercedes-Benz sold in India. It is a perfect car for those wanting it merely to enhance their status in society. In India, Mercedes-Benz is considered to one of the biggest luxury car makers and has a better resale value than most its competition. If a chauffer drives you to work during the day and you are a boy racer by night, this is undoubtedly the Mercedes for you at this price tag.

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Skoda:
Price Rs 1,800,000* - 2,576,383*

If you are looking for a good Skoda car, Skoda Superb Cars will really amaze you with its quality performance and comfort. It is a best Skoda car stuffed with the features and great mileage. Skoda Superb cars are huge in demand. If you are sure to buy this Skoda Superb car in India, check out the available Skoda Superb car models, their list of features and detailed specifications. If you buy Skoda Superb car, you will never regret your decision of buying a Skoda car.

Audi:
Price Rs 3,894,000* - 4,494,000* If you are looking for a good Audi car, Audi Q5 Cars will really amaze you with its quality performance and comfort. It is a best Audi car stuffed with the features and great mileage. Audi Q5 cars are huge in demand. If you are sure to buy this Audi Q5 car in India, check out the available Audi Q5 car models, their list of features and detailed specifications.If you buy Audi Q5 car, you will never regret your decision of buying a Audi car.

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Mitsubishi Lancer Cars :

Price Rs 733,000* - 1,050,000* If you are looking for a good Mitsubishi car, Mitsubishi Lancer Cars will really amaze you with its quality performance and comfort. It is a best Mitsubishi car stuffed with the features and great mileage. Mitsubishi Lancer cars are huge in demand. If you are sure to buy this Mitsubishi Lancer car in India, check out the available Mitsubishi Lancer car models, their list of features and detailed specifications. If you buy Mitsubishi Lancer car, you will never regret your decision of buying a Mitsubishi car.

Rolls-Royce Ghost :
Rolls-Royce Ghost - one of the models of cars manufactured by RollsRoyce. Rolls-Royce Ghost received many good reviews of car owners for their consumer qualities

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Land Rover:
The Range Rover Sport Supercharged is packaged as the ultimate road-going Land Rover that doesn't lose any of the brand's legendary off-road capability. Powered by a 390-horsepower supercharged 4.2-liter V8 engine, 6-speed automatic transmission and permanent all-wheel drive, the Ranger Rover Sport Supercharged is as quick as a nearly 3-ton vehicle can be, with the signature supercharger whine on tap with each dip into the throttle. While not exactly nimble, the Range Rover Sport Supercharged is tuned for the street, with electronic air suspension, Brembo front brake calipers and 20-inch wheels and tires. The interior features all the luxury expected from a Land Rover, with leather sport seats, Harman Kardon Logic7 surround sound, heated windshield and heated front and rear seats.

Upcoming cars in India 2012 and 2013:

S. No. 1 Audi 2 Audi Make A3 A5 Model Expected Body Style Launch Expected Price (mm-yy) Hatchback Jun-11 Rs. 25 lakh Coupe Jun-11 Rs. 39 lakh

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3 Audi 4 Audi 5 Audi 6 Audi 7 Audi 8 BMW 9 Chevrolet 10 Chevrolet 11 Chevrolet 12 13 14 15 16 17 18 100 101 19 20 21 22 23 102 24 110 108 25 26 27 Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Chevrolet Dacia Fiat Fiat Fiat Fiat Fiat Fiat Ford Ford Ford Ford

A7 Q1 RS5 S5 A8 W12 Mini Baojun Beat Diesel Camaro Corvette Lumina M300 New Tavera Orlando Sail Sonic Spark 800 Volt Agile Duster Alfa Romeo Linea 1.6 Multijet Mio Palio CNG Uno Bravo Fiesta (Hatchback) Focus Kuga New Fiesta SAIC-Wuling Hong Guang SAIC-Wuling Sunshine

Sedan SUV Sedan Coupe Sedan Hatchback Sedan Hatchback Coupe Coupe Sedan Hatchback SUV Minivan Sedan Sedan Hatchback Sedan Hatchback SUV Coupe Sedan Hatchback Hatchback Hatchback Hatchback Hatchback Hatchback SUV Sedan MUV MUV

May-11 Jul-11 Jun-11

Rs. 60 lakh Rs. 28 lakh Rs. 45 lakh Rs. 40 to 45 May-11 lakh Oct-11 Rs. 1.1 crore Jan-12 Rs. 20 lakh Oct-11 Rs. 6 to 8 lakh Rs. 4.5 to 5.5 Early 2011 lakh Rs. 20 to 25 May-11 lakh Apr-11 Rs. 50 lakh Jul-11 Rs. 16 lakh Dec-11 Unknown Early 2011 Rs. 5 to 6 lakh Apr-11 Rs. 10 lakh End 2011 Rs. 6 to 7.5 lakh Feb-12 Rs. 7 lakh Nov-11 Rs. 3 lakh May-11 Unknown Nov-11 Unknown Jun-11 Unknown Late 2011 Rs. 25 Lakh Late 2011 Rs. 11 lakh Dec-12 Unknown May-11 Rs. 4.5 lakh Early 2012 Rs. 3 to 5 Lakh Mid 2011 Rs. 15 lakh End 2011 Rs. 6.5 lakh Jul-11 Rs. 11 lakh May-11 Rs. 15 Lakh End of 2011 Rs. 6.5 to 9 lakh Mid 2011 Mid 2011 Rs. 7 to 9 Lakh Rs. 4 to 5 Lakh

28 GM 29 GM

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30 Honda 31 Honda 32 Honda 103 Honda 33 Honda 34 Honda 35 Hyundai 36 Hyundai 104 37 38 39 105 40 Hyundai Hyundai Hyundai Hyundai Hyundai Hyundai

41 Hyundai 42 Hyundai 43 Hyundai 44 45 46 47 48 49 50 51 52 53 54 55 111 Kia Kia Kia Land Rover Lexus Lexus Lexus Lexus Lexus Lexus Lexus Mahindra Mahindra Mahindra 56 Renault

Rs. 20 to 25 lakh Brio Hatchback Sep-11 Rs. 5 lakh City Diesel Sedan Mid 2011 Rs. 10 Lakh CR-V Diesel SUV Apr-11 Rs. 24 lakh Rs. 7.2o to 7.7 Jazz 1.5 Hatchback Jul-11 lakh TIF Hatchback Jan-12 Rs. 5 lakh Avante Sedan Jun-11 Rs. 11 Lakh Rs. 11 to 14 Elantra Sedan Late 2011 lakh Genesis Sedan Mid 2011 Rs. 35 lakh H800 Hatchback End of 2011 Rs. 1.6 lakh Ha Hatchback Mid 2011 Rs. 2 to 3 lakh i10 Diesel Hatchback Jun-11 Rs. 3.5 to 6 lakh i30 Hatchback Mid 2011 Rs. 7.5 lakh i40 Hatchback Dec-11 Rs. 18 lakh Rs. 35 to 53 ix35 SUV Mid 2011 lakh Santro Xing Diesel Hatchback Apr-11 Rs. 2.8 to 4 lakh Rs. 6.7 to 9.4 Verna RB Sedan Early 2011 lakh Picanto Hatchback Late 2011 Rs. 4 to 5 lakh Proceed Hatchback Late 2011 Rs. 5 to 7 lakh Sorento SUV Late 2011 Rs. 11 Lakh Range Rover Evoque SUV Dec-11 Rs. 35 lakh ES Sedan Dec-12 Rs. 35 lakh GS Sedan Dec-12 Rs. 45 lakh GX SUV Dec-12 Rs. 45 lakh IS Sedan Dec-12 Rs. 35 lakh LS Sedan Dec-12 Rs. 50 lakh LX SUV Dec-12 Rs. 78 lakh RX SUV Dec-12 Rs. 28 lakh Mini-Xylo Hatchback Mid-2011 Rs 4 to 5 lakh Xylo mHAWK MPV 3rd qtr 2011 Rs. 8 lakh Accord Diesel Sedan Unknown Sandero Hatchback Nov-11 Rs. 5 lakh

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57 Maruti 58 Maruti 59 Maruti

APV Cervo

Minivan Jul-11 Hatchback May-11 Aug-11

Grand Vitara Diesel SUV

60 Maruti Jimny 61 Maruti XL7 62 Maruti Suzuki RIII 63 Maruti Suzuki Swift 2011 64 65 112 66 67 Mercedes-Benz Mini Mitsubishi Mitsubishi Mitsubishi A-Class Cooper Colt Grandis New Pajero Sport RVR GTR Juke Leaf Murano NV200 Vanette Pixo Qashqai Serena Sunny Ultra Low Car ( ULC) Fluence Koleos Laguna Yeni Megane NXR Ghost Fabia Combi

SUV Aug-11 SUV Aug-11 Hatchback Mid 2012 Hatchback Mid-2011 Hatchback Hatchback Hatchback MUV SUV SUV Coupe Hatchback Hatchback SUV MUV Hatchback SUV Minivan Sedan Late 2012 Early 2011 Mid 2011 Sep-11 Late 2010 Jun-11 Jun-11 Mid 2011 Aug-12 May-11 Apr-11 Aug-11 Apr-11 Dec-11 May-11

68 Mitsubishi 69 Nissan 70 71 109 72 73 Nissan Nissan Nissan Nissan Nissan

74 Nissan 75 Nissan 76 Nissan 118 Nissan 77 Renault 78 Renault 79 Renault 80 81 82 83 114 Renault Renault Reva Rolls Royce Skoda

Rs. 4 lakh Rs. 1.5 lakh Rs. 17 to 19 lakh Rs. 7.5 lakh Rs. 20 lakh Rs. 7 to 8 Lakh Rs. 4.5 to 6.5 lakh Rs. 15 lakhs Rs. 20 lakh Rs. 4.5 lakh Rs. 15 lakh Rs. 20 lakh Rs. 14 to 16 lakh Rs. 65 to 70 lakh Rs. 8 to 10 lakh Unknown Rs. 40 lakh Rs. 5 to 8 lakh Rs. 3 to 4 lakh Rs. 21 to 23 lakh Unknown Rs. 7 lakh Rs. 1.5 lakh Rs. 12 lakh Rs. 19 lakh Rs. 19 to 20 lakh Rs. 1.5 laks Rs. 8 to 9 Lakh Rs. 16 lakh Rs. 2.5 crore Rs. 10 lakh
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Hatchback Mar-12 Sedan SUV Sedan Hatchback MUV Hatchback Sedan Hatchback Jul-11 Jun-11 May-11 Jun-12 Early 2011 Apr-11 Jun-11 Jul-11

84 Skoda 85 Skoda 106 Skoda 86 116 113 87 Skoda Skoda Tata Tata

Fabia Scout Joyster Roomster SK215 Small Car Indicruz Nano Hybrid Prima New Safari Avanza Etios Diesel Etios Liva Yaris (hatchback) Golf Jetta 2011 Rocktan Scirocco Tiguan UP C70 S90 XC30

SUV Concept MPV Hatchback Hatchback MUV Hatchback Sedan SUV MUV Sedan

End 2011 End 2011 Unknown Sep-11 Jan-12 Unknown Apr-11 Oct-11 Mid-2011 Oct-11 Mid-2011

88 Tata 89 Tata 90 Toyota 91 Toyota 92 Toyota 107 Toyota 93 Volkswagen 94 Volkswagen 95 Volkswagen 96 97 117 115 98 Volkswagen Volkswagen Volkswagen Volvo Volvo

Hatchback Apr-11 Hatchback Unknown Hatchback Apr-11 Sedan Apr-11 SUV Apr-11

Hatchback Jul-11 SUV Oct-11 Hatchback Sep-11 Convertible Aug-11 Sedan Jul-11 SUV Oct-12

99 Volvo

Rs. 6 to 9 lakh Rs. 3 to 4 lakh Rs. 14 to 16 lakh Rs. 8 to 10 lakh Rs. 4 lakh Rs. 11 lakh Rs. 1.2 to 2 lakh Rs. 12 to 15 lakh Rs. 7 to 11 lakh Rs. 6 to 9 lakh Rs. 6.2 lakh Rs. 4.2 to 5.5 lakh Unknown Rs. 6 to 7 lakh Rs. 15 to18 lakh Rs. 12 to 14 lakh Rs. 30 Lakh Rs. 22 lakh Rs. 3.5 lakh Rs. 35 lakh Rs. 35 lakh Rs. 25 to 30 lakh

9.2: Innovation in Automobile Industry Innovation has brought about a sea change in the Indian automotive sector, where slick styling, technology and new models have become the formula for success. These very factors led to the instantaneous success of Suzuki when it first rolled out the technologically superior Maruti 800 into the traditional Indian market. Even today it is the technology and a high degree of indigenisation, which have helped

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MUL attain a price barrier, which is very difficult for competition to penetrate. This coupled with governmental support have perhaps been the clinchers for MUL's progress, despite recent competition from the likes of global players like Daewoo, Hyundai, General Motors Ford and the indigenously designed Tata - Indica. However, what auto companies need to do is develop ergonomic products, with slick styling, at an affordable price for the quality conscious Indian market. This can easily be done by commissioning any international design house. Indian auto companies need to take corrective measures to counter balance the shift in demands from motorcycles to cars. This is where Indian companies which do not have joint ventures with international automotive majors might well lag behind. Especially since, the development of fuel-efficient cars in-house is a long and arduous task, involving huge financial and manpower investments. It is in this department that foreign companies are already miles ahead. Thus one option, which might well become quite popular for Indian auto companies, is the joint venture route with an international major. The projected growth factors in an anticipated export thrust, as product quality and cost efficiencies go up in the auto industry. 9.3: Market trends Emerging Market Trends The automotive industry is the barometer of Indian economy. The sign of recovery are most visible in the growing demand for automobiles. The aspirations of Indian consumer are rising with the growing demand. The cumulative effect of growing customer demand, increased competition, technology upgradations along with the traits are likely to be observed in the following trends.

International companies like Hyundai, Honda, Toyota, etc. are gaining market share. Technological up gradation will be primary requisite for success in the market.
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With the entry of new models, medium sized cars segment is further divided into low prestige and high prestige cars. Customers are upgrading from entry level small cars to sophisticated small cars and from sophisticated small cars to prestige car segment. Stricter Pollution norms are likely to force vehicle manufacturers to adopt latest technology in maintaining emission standards. This is likely to curtail the average life span of vehicle on road while the maintenance cost and the genuine parts consumption per vehicle is expected to increase. Due to free imports local industry is expected to face increased competition from international automotive companies. With the increasing number of vehicle population the two wheeler owners will have viable option of used cars. The vehicle with higher resale value and good service network is likely to dominate the market.

All the trends derived out of present dynamics of the Indian automotive vehicle market are indicators of internationalization of this market. India has become focus of international growth seeking companies as not only a cost competitive sourcing base but also a growing high potential market. In the near future the competition will be prominent in all the functions of business and only the companies with global standards are likely to survive. Indian manufacturers are gearing up for the challenge but surely the current scenario is apparently in favor of international players. The early movers are likely to secure a position to command the global competition Local market trends

Sales, particularly in the small car segment, will drive passenger car sales in the near term. However, within the next two years, capacity is expected to be twice the total demand for cars.

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With developments in the small car segment acquiring a degree of stability in terms of price competition, the action is shifting to the mid-size car segment. Sales in this segment will pick up as new models come in and income levels rise but it is still some time till it comes anywhere close to the economy sized segment. What will also drive car sales is the wide availability of finance schemes by a variety of banks and FI's. Sales in the used car market is also expected to do well as more and more older models get replaced by newer ones at a faster pace. The coming in of Euro III and IV norms will also increase scrap page rates. In view of expected surplus in the domestic market, India will emerge as one of the leading car sourcing point in the Indian subcontinent. Consumers will be the beneficiaries as a result of marketing war, as they will be offered technologically superior products at better prices and terms and conditions. But the customer has a risk of model discontinuation as a result of shake-out expected in the industry.

10.1: A Study of Motor Industries Company Motor Industries Company (MICO) held its 51st Annual General Meeting on 8th May, 2003 at Bangalore. MICO is India's largest auto-ancillary company. German-based Robert Bosch group hold 60.5% after the company brought back its shares in February 2002. The company is the pioneer of automotive Spark Plugs and Diesel Fuel Injection Equipment in India. It had been bearing the brunt of the recession in the tractor and commercial vehicle (CV) segment in the past few years. However the, sharp recovery in sales of CV in FY 2002 has compensated for the continued fall in tractor sales. For the full year ended Dec. 2002, the company had registered a growth of 7% in sales to Rs 1550.71 crore. This was achieved mainly due to the better performance

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in the quarter ended June 2002 and Sept. 2002. Net profit after adjusting for EO expenses rose 64% stood at Rs 134.06 crore. Very recently, Andreas Nobis, managing director of the company has taken over new responsibility in Robert Bosch GmbH with effect from 1st May 2003 to oversee the recent acquisition and integration of Buderus AG and hence could not attend the AGM. Robert Bosch has entered into an agreement to buy 30.2% of the share capital of Buderus AG in addition to 17% already held by the company. The successor to Andreas Nobis is expected to be known at a later date. MICO registered a 104% jump in bottom line to Rs 52.29 crore for the first quarter ended March 2003. Net sales during the quarter rose 17% to 432.08 crore. In continuation of the strategy to boost exports, focused efforts were made to get additional business from Robert Bosch, Germany. This led to a significant 29% growth in exports during the year, accounting for 16% of total turnover. From this, MICO expects to touch 20% in three years. Its spark plug business is growing in the US and expects an increase in turnover from new products, from the common rail system and the Electronic control units, which are based on the Euro II norms and potential navigation systems from Blaupunkt. The Union Budget 2003-04 is also positive for the sector as it has increased its thrust on infrastructure (especially roadway) projects, which is sure to usher in increased demand for the CV sector especially in the multi-axle segment. Performance of the Company The recovery in the automotive sector, led by the strong growth in commercial vehicles segment has enabled the Companys sales turnover to rebound in 2002. The overall sales turnover of the Company grew by around 7%. Despite sales declining by 7% in the 1st quarter 2002 over the 1st quarter 2001, quarter 2 and quarter 3 showed an increase of 21% and 14% respectively. This, together with a steady 4th quarter, enabled the Company to post the 7% growth in sales for the entire year.

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Sales to OEMs, which constitute nearly 45% of the total sales, increased by 6.8%. This growth was mainly due to increase in volumes of Multi Cylinder Pumps, Nozzle Holder Assemblies, Starters and Alternators. The general decline in the service business of the transport sector led to a fall in demand for fuel injection components in the Aftermarket. In spite of all counter measures, overall sales in this area declined by 3.6% as compared to 2001. In continuation of our strategy to boost exports, focused efforts were made to get additional business from Robert Bosch, Germany. This has led to a significant 29% growth in exports during the year, accounting for 16% of total turnover. The non-automotive businesses comprising of Power Tools and Packaging Machines, grew by 18% due to a strategic marketing thrust and introduction of new products such as "Marble Cutters" and "Terra 25" packaging machines. Cost cutting has now become integral to staying competitive. During the year, cost reduction measures such as strict control on additions to fixed assets, programs for rationalization and reduction of asset base, reduction in material cost through import substitution, rationalization of supplier base, improvement in labour productivity, budgetary control on overheads, etc. were further intensified. This has significantly contributed to an improvement in operational efficiency. As a result of growth in sales accompanied by the various cost reduction initiatives, the Profit Before Tax increased by more than 50% and stood at Rs. 200.5 crore. The Profit After Tax also increased by more than 60%. After taking into account the proposed dividend and transfer to capital redemption reserve, an amount of Rs. 90 crore is proposed to be transferred to general reserve, retaining a balance of Rs. 29.3 crore in the Profit & Loss Account. In 2002, the investments in fixed assets amounted to Rs. 94 crore, accounting for 6.1% of sales, as compared to Rs. 1,13.3 crore in 2001, which accounted for 7.8% of sales. 94% of the total investments made in 2002 are in Plant and Machinery. Of this 34% is for new products, 26% for quality improvement, 9% for R&D activities and the balance 31% for auxiliary and other services.
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Future Outlook of the company As automobile manufacturers in India are increasingly tapping export potential there is a need to upgrade technology in order to meet the safety and legal requirements. This will inevitably lead to an increased demand for newer products such as Electronic Diesel Control systems, Anti-lock braking systems, Air bags, etc. In order to secure business in these areas the Company is closely working with all major automobile manufacturers in India for development and application of these systems. Despite the poor agricultural output in the financial year 2002-03, the growth in industrial production has been quite good at 6.1% in the period Apr-March 2003 as opposed to 3.3% posted during the same period a year ago. In addition, the trends in most macro-economic variables such as inflation, interest rates, development of the rupee against the US dollar, foreign exchange reserves position, are all positive. These strong fundamentals will help the Indian economy to post a GDP growth of over 5.5% in the financial year 2003-04 as against 4.4% achieved in the previous year. On the other hand there are some key risk factors such as: (i) the continuing problems in the Middle East; (ii) tension between India and Pakistan; and (iii) a second consecutive monsoon failure, which may endanger the achievement of the 5.5% GDP growth in the current fiscal year, forecasted at this point of time. In the automobile sector, the commercial vehicles and passenger car segments maintained the growth momentum at 34% and 3.6% respectively, in the first quarter of 2003. However, the slump in the tractor segment continues and is a cause for concern also this year. Overall, the Company recorded a sales turnover of Rs. 576.4 crore for the period Jan-Apr 2003, which accounts for an increase of 18% over the same period in the previous year. Considering this positive performance but also the uncertainties prevailing in the global economy and its adverse impact on our exports as well as the uncertainties
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in the domestic market, the underlying sales in 2003 are expected to grow by around 7% only. On the cost front, recent spurt witnessed in the prices of steel, aluminium, crude oil, fuel and power will exert severe pressure on the profitability of the Company. The Company will, of course, further intensify its cost reduction measures and pursue other initiatives to counter the adverse impact of the rise in input costs and to maintain its profitability. In the automotive aftermarket the focus areas include aggressive marketing and promotional initiatives to increase sales turnover, strengthening of 4-wheeler dealer network, increasing the number of 2-wheeler dealers, expanding the product range through introduction of Bosch branded products and further intensification of anti-spurious activities. Exports continue to be a strategic thrust area for the Company. Continuous and vigorous efforts are being made to increase the share of exports to 20% of the overall sales turnover of the Company by 2005. This would mean that the Company must be in a position to continuously offer state-of-the-art products of international quality at a competitive price. In the Power tools business, our focus will be on gaining additional market share through expansion of product range, superior service levels and offering value for money products. In the Packaging machines business, the Company plans to further consolidate its position after the successful launch of "Terra 25" packaging machine.

11.1: Automobile industry at a glance Key Positives

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Increasing affluence of the Indian middle class and introduction of better quality cars has led to strong growth in the industry in terms of both market size and production capacities. Exports buoyancy: On account of its low cost technical manpower and ever increasing focus on quality, the auto industry has emerged as an export hub, especially for the compact car segment. Exports of passenger cars from the country have increased at a healthy CAGR of nearly 38% during the past five years and increasingly more and more auto majors are lining up to set up their production bases in the country. Infrastructure thrust: Improvement in road infrastructure has led to increased movement of goods through roadways. Low interest rate regime: Close to 80% of the new cars being purchased in the country are financed, thus underlying the importance of a low interest rate regime to the fortunes of the industry Environment led benefits: Any implementation of pollution norms in metros, whereby vehicles beyond certain age need to be phased out could further translate into higher volume growth for all vehicles, courtesy the replacement demand India is poised to become the manufacturing hub for the world with cheap and skilled labor. Maruti Udyog is aiming to become the R&D hub for its parent Suzukis Asia operations Key Negatives Concerning income growth: The per capita income in the country has been growing at a slow rate. Since the auto industry growth has a strong correlation with the same, the momentum has to continue to ensure robust automobiles demand. Reforms need to be accelerated.

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Competition from imports: With India coming under the WTO purview, competition is expected to rise multifold. Indian companies also have to contend with imports in the future. Already a number of companies are introducing vehicles in the CKD route. Taxation anomalies: Duties on some select and key raw materials including steel and components are still pretty high and are thus hurting profit margins of the companies. Also, multiple tax rules that exist in different states are eroding the comparative advantage of a large domestic market thus making it important to implement VAT (Value Added Tax) as soon as possible. India: A value-adding automotive and manufacturing hub The future of manufacturing in India, including the automobile sector, would undoubtedly be affected by the outcome of the Non-Agricultural Market Access (Nama) discussions. The challenge is to get an agreement that would make India a value-adding automotive and manufacturing hub. The manufacturing sector is going through a period of revival, growth and investment. The automobile sector is set to grow from a projected 7.5 million this year to over 10m in the year 2007. Investment in this sector is over Rs 65,000 crore. The turnover of the component industry is set to double over the current level of Rs 25,000 crore. By 2012, their combined output would exceed Rs 2,00,000 crore. Indian industry has been able to acquire, assimilate and develop technology. It is this capability, production capacity, value addition and employment potential that should be kept in mind during trade negotiations. For some sectors, including the automotive sector, the treatment for completely built products and SKD kits would be critical. 11.2: Future Outlook

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The passenger car segment has continued to report a strong 30%+ growth in the first month of FY04, partly due to low base effect. The transporters strike had impacted volumes in April 2003. The car segment is likely to grow by 20-22% during the current year. Commercial vehicle segment is expected to grow at a higher pace on the low base of the previous year and accelerated GDP growth in the current year. Growth in the short term is likely to be higher following increased consumer spending (improved economic performance) and launch of new models. The midsize segment is expected to record the highest growth followed by the premium and economy segments. In the economy and medium segments, it is estimated that total capacity is expected to more or less match the expected demand by 2003-04. The premium segment of the industry is however expected to witness acute over-capacity. The premium segment is likely to emerge as the largest segment over the very long term as people graduate to more expensive models. It is worth mentioning that the car production capacity has increased significantly in the last three years.

The prospective buyer will be the main beneficiary of the marketing war in the industry not only in terms of prices but also better technology.. India would have the largest young population of the world in next 20 years - If India is to achieve a sustainable 7-8% GDP growth and 9-10% growth of industrial production, This defines the future vehicle owners of the country. Based on SIAM analysis, it is estimated that we should have a healthy growth of sales (including exports) in the automobile sector in 2004-05. Segment wise growth expectations, provided the Government takes necessary steps that promote growth are:

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 Passenger vehicles

: 10 15% : 12 15% : 10 15% : 10 15%

Commercial vehicles Two wheelers

Three wheelers

Firstly, the international car market is growing by around 2% pa and this set to continue for the next few years.. Analysts from EIU state that this saturation level may give the recent trend of carmakers to increase the vehicles useful life. Secondly, the South-East Asian crises has been a dampener to the collective fortunes of various carmakers worldwide. Thirdly, the global domination by the large automotive players has slowly abated with local manufacturers getting hold over the market.

11.3: Conclusion Automobiles have become an indispensable part of our lives, an extension of the human body that provides us faster, cheaper and more convenient mobility every passing day. Behind this betterment go the efforts of those in the industry, in the form of improvement through technological research.
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What actually lie behind this betterment of the automobiles are the opinions, requirements, likes and dislikes of those who use these vehicles. These wheeled machines affect our lives in ways more than one. Numerous surveys and research are conducted throughout the world every now and then to reveal one or the other aspect of automobiles, be it about the pollution caused due to vehicle population in cities, or rising motor accidents and causes, vehicular technology, alternative medicine and so on. This section keeps you updated on the latest and the most interesting researches conducted in the field of automobiles, and help you draw the right conclusion. Bibliography Websites
www.altavista.com

www.askjeeva.com
www.google.com www.aol.com www.hindustan.com

www.projecthubs.com Newspapers Times of India

The Economic Times.

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