Study on the Impact of

Recession on Automobile
(4Wheeler) Sector
 Indian Automobile Sector
• It is the 9th Largest among the automobile Industry
• It has an annual production of 2.3 million units
• 11th largest Passenger Cars producers.
• It contributes 4% in India’s GDP & 5% in India’s
Industrial Production
• India enjoys natural advantage and is among the
lowest cost producers of steel in the world
• The four major segments : economy, mid-range,
premium and luxury
 Impact of Recession
• According to data released by SIAM today confirmed
that the auto industry is in a recession
• The Sale of passenger cars dipped by 49.52 per cent
in November 08, the worst ever decline in the past
eight years.
• Total vehicle sales in the domestic market stood at
7,11,281 units in November as against 8,67,243 units
in the same month last year.

Source- Society of Indian Automobile Manufacturers (SIAM).

 The Silver Lining
• Despite economic slowdown that has affected the
automobile industry, production and exports of the
sector went up last fiscal, said the Economic Survey
2008-09
• Passenger car sales is growing by 0.31% in FY09 ,
various tax relief policies, easy accessibility of
finance, launch of new models and exciting discount
offers for the growth in car sales in the last one year.
 Asper the study
• There was not a marked impact of recession
• Sales of automobiles fluctuate across the year
• The Mid size & Premium segment were affected
• The decline in sales were in the range of 15%-20%
• Now the market have recovered with a sales increase of 20%
• Banks are not in the lending mood
• Interest rate increased to 18% from initial 10-12%
• Earlier banks used to provide finance upto 95%
• Recession was a media hype in india
• The Small car segment or Economy segment showed
consistent sales as those people who prefer these
segments were either purchasing because of need
• The Mid Sized Segment showed a drop as the
customers for these segments are those who actually
have a car for their utility and are looking for a new
car that will satisfy their status requirement. At the
point of recession people began to rethink, weather it
is wise to spend money on luxury
• Luxury segment showed no drop as customers of this
segment are those who have money and are capable
of spending.
 Fighting Recession
• Focus On Customers
– Price Cuts
– Better Service
– Low EMI Option
– Free Insurance
• Focus on Industry
– Hyundai Motors has to keep its factory closed for a day every
week to rationalize production costs
– TATA Motors laid off 3,000 temporary jobs at its Pune factory
 Strategies Of Others
• Maruti Suzuki Ltd, and Hindustan Motors resorted to
Price cuts
• Targeting the government employees & Rural Market
By Maruthi
• New Product Launches by Maruti – A-Star, Ritz
• Cutting Promotional Costs by resorting to cost
effective channels
– Internet
– Social Network & Promotional Events
– Video Sharing Services
• Mahindra Renault, a joint venture between Nissan
Renault and auto manufacturer Mahindra &
Mahindra had delayed the production by three days
• M&M was involved in eliminating 900 jobs in India
and international operations.
• Toyota and Honda has cut on their sales projections,
• Toyota slashing its production by 30 percent since
November by halted production for eight days a
month at its plant. .
 Suggestions
• Automotive manufacturer should look at exploring new markets
in Southeast Asia and South America, to boost revenues.
• Following 5c’s
– Character
– Commitment
– Courtesy
– Conviction
– Courage
• Easy Lending Policy
• Fuel Efficient Cars