CERTIFICATE

This is to certify that this project has been completed

by _______ of Class XII, under my supervision &
guidance to my total satisfaction.

I further certify that this is his/her original work.

________________

(Economics Teacher)

ACKNOWLEDGEMENT
I would like to acknowledge with thanks, the help that I got from
my teacher for preparing this project. In particular, my thanks
goes to my Teacher____________, not only for the valuable
knowledge of the materials of the report, but also for
encouraging me to make this project report

NAME

CLASS XII
 LIST OF CONTENTS

INTRODUCTION
MARKET SIZE
INVESTMENTS
INDIAN AUTOMOBILE SECTOR (MEDIUM TERM)
INDIAN AUTO SECTOR (LONG TERM)
GOVERNMENT INITIATIVES
DIVISIONS OF AUTOMOBILES INDUSTRY
FACTORS DETERMINING THE GROWTH OF THE INDUSTRY
EMPLOYMENT OPPORTUNITIES
EMPLOYMENT TRENDS
FUTURE TRENDS IN THE AUTOMOBILE INDUSTRY
ROAD AHEAD
INTRODUCTION
The Indian auto industry is one of the largest in the world. The industry
accounts for 7.1 per cent of the country's Gross Domestic Product (GDP). The
Two Wheelers segment with 81 per cent market share is the leader of the
Indian Automobile market owing to a growing middle class and a young
population. Moreover, the growing interest of the companies in exploring the
rural markets further aided the growth of the sector. The overall Passenger
Vehicle (PV) segment has 13 per cent market share.

India is also a prominent auto exporter and has strong export growth
expectations for the near future. In April-March 2016, overall automobile
exports grew by 1.91 per cent. PV, Commercial Vehicles (CV), and Two
Wheelers (2W) registered a growth of 5.24 per cent, 16.97 per cent, and 0.97
per cent respectively in April-March 2016 over April-March 2015.* In addition,
several initiatives by the Government of India and the major automobile
players in the Indian market are expected to make India a leader in the 2W
and Four Wheeler (4W) market in the world by 2020.

MARKET SIZE
The sales of PVs, CVs and 2Ws grew by 9.17 per cent, 3.03 per cent and 8.29
per cent respectively, during the period April-January 2017.

INVESTMENTS
In order to keep up with the growing demand, several auto makers have
started investing heavily in various segments of the industry during the last
few months. The industry has attracted Foreign Direct Investment (FDI) worth
US$ 15.79 billion during the period April 2000 to September 2016, according
to data released by Department of Industrial Policy and Promotion (DIPP).
Some of the major investments and developments in the automobile sector in
India are as follows:
Electric car maker Tesla Inc. is likely to introduce its products in India
sometime in the summer of 2017.
South Koreas Kia Motors Corp is close to finalising a site for its first
factory in India, slated to attract US$1 billion (Rs 6,700 crore) of
investment. It is deciding between Andhra Pradesh and Maharashtra.
The target for operationalising the factory is the end of 2018 or early
2019.
Several automobile manufacturers, from global majors such as Audi to
Indian companies such as Maruti Suzuki and Mahindra & Mahindra, are
exploring the possibilities of introducing driverless self-driven cars for
India.
BMW plans to manufacture a local version of below-500 CC motorcycle,
the G310R, in TVS Motors Hosur plant in Tamil Nadu, for Indian
markets.
Honda Motorcycle and Scooter India (HMSI) has inaugurated its 900th
Honda Authorised Exclusive Dealership in India, thereby taking its total
dealership network to 4,800 across the country and further plans to
increase its network to 5,300 by end of 2016-17.
Hero MotoCorp Ltd seeks to enhance its participation in the Indian
electric vehicle (EV) space by pursuing its internal EV Programme in
addition to investing Rs 205 crore (US$ 30.75 million) to acquire around
26-30 per cent stake in Bengaluru-based technology start-up Ather
Energy Pvt Ltd.
JustRide, a self-drive car rental firm, has raised US$ 3 million in a
bridge round of funding led by a group of global investors and a trio of Y
Combinator partners, which will be utilised to amplify JustRides car
sharing platform JustConnect and Yabber, an internet of things (IoT)
device for cars that is based on the companys smart vehicle technology
(SVT).
 Ford Motor Co. plans to invest Rs 1,300 crore (US$ 195 million) to build
a global technology and business centre in Chennai, which will be
designed as a hub for product development, mobility solutions and
business services for India and other markets.
Cummins has plans to make India an export hub for the world, by
investing in top components and technologies in India.
Suzuki Motor Corporation, the Japan-based automobile manufacturer,
plans to invest Rs 2,600 crore (US$ 390 million) for setting up its
second assembly plant in India and an engine and transmission unit in
Mehsana, Gujarat.
Mr Masayoshi Son, Chief Executive Officer, SoftBank Group, has stated
that Ola Cabs may introduce a fleet of one million electric cars in
partnership with an electric vehicle maker and the Government of India,
which could help reduce pollution and thereby transform the electric
mobility sector in the country.
Chinas biggest automobile manufacturer, SAIC Motor, plans to invest
US$ 1 billion in India by 2018, and is exploring possibilities to set up
manufacturing unit in one of three states Maharashtra, Andhra
Pradesh and Tamil Nadu.
Suzuki Motorcycle India Pvt Ltd has started exports of made-in-India
flagship bike Gixxer to its home country of Japan, which will be in
addition to current exports to countries in Latin America and surrounding
countries.
General Motors plans to invest US$ 1 billion in India by 2020, mainly to
increase the capacity at the Talegaon plant in Maharashtra from
130,000 units a year to 220,000 by 2025.
FIAT Chrysler Automobiles has recently invested US$280 million in its
Ranjangaon plant to locally manufacture Jeep Compass, its new
compact SUV which will be launched in India in August 2017.
 INDIAN AUTOMOBILE SECTOR (MEDIUM TERM)

The Indian automobile industry has seen interesting dynamics in recent times
with the effect of the global downturn, followed by recovery in domestic
demand. The future of the industry in the medium term based on current
trends, is analyzed here along two broad themes in the global automobile
industry:
Growth
Consolidation
The nature of demand in the Indian automotive industry and the associated
drivers are likely to take it along a path, which is different from the evolving
global automotive landscape.

Growth
Indias automobile market has grown steadily over the last seven to eight
years, with the exception of the previous two
years where the effects of the global downturn were felt, primarily in sales of
commercial vehicles. However, even during
the downturn, the two-wheeler and three wheeler segments, which were until
then experiencing low growth or losing volumes,
bucked the trend.

As Figure 5 shows, Indias vehicle demand is quite different from other top
automobile markets with the exception of China in that two-wheelers
constitute a significant portion of vehicle demand (more than 3/4th of the
Indian market is in two-wheelers). In the context of the unique characteristics
of the Indian automobile market, growth is expected to be driven by the
following:
Affordability
While quite a few new vehicles launched in the Indian market have been
developed locally, vehicle affordability remains a significant concern as seen in
Figure 6. Although the price of an average motorcycle in India (about USD
900) is comparable to the average per capita income, the prices of passenger
cars have a long way to go. Although the entry level car (Nano) is priced at
around USD 2,500, the passenger car market could grow multi-fold if there is
a break-through of another price level in the years to come.

Fuel Economy
The volume leaders across two-wheelers and four-wheelers in India are
companies which have been able to offer products with
the globally acknowledged best-in-class fuel economy rates, as well as
affordable total cost of ownership. For example, while the US is setting norms
for cars to achieve 35 mpg1 on petrol2 , a majority of Indian cars already offer
that much3, while the leading class bikes offer up to 200 mpg3 and more in
some cases

Alternative Fuels
Vehicles based on alternative fuels remain another area of interest for both
consumers and companies. Reva4 , a pioneer in electric cars, remains an
exception in the area of electric vehicles in India, although in twowheelers
there are multiple offerings, none of which have as yet taken off in terms of
volume. Although both commercial vehicles and passenger vehicles running
on CNG are gaining popularity among transport service providers and
consumers due to their lower cost of operation, much more needs to be done
to improve the fuelling infrastructure before CNG vehicles become more
mainstream.

Niche Products
While India remains predominantly a cost conscious market, profitable niches
are available for the products which address specific needs. One example is
the growth in the sales of gearless scooters, as seen in Figure 7. Of these,
most of the scooters are in the 75-125cc sub-segment 5, often targeted at
young people and women in particular.

INDIAN AUTO SECTOR (LONG TERM)

The nature of the long term state of the Indian automobile industry appears
fluid, given that globally evolving phenomena such as the rise of greener,
hybrid vehicles are yet to take off in India. However, the Indian automotive
industry has scripted a different story in the development of greener vehicles
with the rise of CNG as a popular option among consumers. In this context,
we discuss the following trends
Green revolution
Mobility revolution.

Green revolution
In July 2010, Toyota announced the sale of its 200,000th Prius1 in Europe, as
well as the tenth anniversary of its launch of the Prius. It is expected that
Toyota will sell 2 million Prius cars worldwide soon. The milestone is all the
more remarkable given that Toyota sold its 100,000th Prius in Europe only
about two years ago, underscoring the growing importance of electric vehicles
in the green sector.

Globally, countries which have taken the lead in developing green vehicles
(US, Germany, Israel, China, France and Brazil), have all seen significant
government involvement. Furthermore, the availability of investments in
unproven technologies, as well as clusters of support industries, have ensured
that the sector has sustained innovation. In the early years of hybrid cars in
the US, endorsements by celebrities is believed to have boosted the cars
popularity.

Interestingly, in KPMGs Global Auto Executive Survey 2010, most industry

leaders seemed to agree on hybrid technologies being the most important
alternative fuel technologies, followed by battery electric power. This
consensus was almost uniform across regions, despite regional differences in
the popularity of vehicle types and segments. Source: KPMG Global Auto
Executive Survey 2010 Figure 14: Key alternative fuel technologies in the
future - percent of executives who considered it important

Mobility revolution
Globally, OEMs recognize the potential of other modes of transport to
complement traditional private vehicle use. Alternative transportation
represents another area of interest for the automobile industry, but opinion is
divided on whether it represents an opportunity or a threat.

In India, the share of public transportation (excluding quasi-public transport

like auto-rickshaws/taxi services) has declined while private vehicle ownership
has been booming, driven by growing urbanization and increased affluence. A
comparison of two studies (1994-RITES and 2008-WSA) clearly shows
(Figure 19) there has been a decline in the share of public transport across
the cities.

The alternate mobility revolution is just taking off in India. As shown below
(Figure 20), there are several alternatives to private transportation/personal
mobility that need to be closely monitored by industry players to identify
opportunities and risks.
GOVERNMENT INITIATIVES
The Government of India encourages foreign investment in the automobile
sector and allows 100 per cent FDI under the automatic route.

Some of the major initiatives taken by the Government of India are:

The Government of India plans to introduce a new Green Urban
Transport Scheme with a central assistance of about Rs 25,000 crore
(US$ 3.75 billion), aimed at boosting the growth of urban transport
along low carbon path for substantial reduction in pollution, and
providing a framework for funding urban mobility projects at National,
State and City level with minimum recourse to budgetary support by
encouraging innovative financing of projects.
Government of India aims to make automobiles manufacturing the main
driver of Make in India initiative, as it expects passenger vehicles
market to triple to 9.4 million units by 2026, as highlighted in the Auto
Mission Plan (AMP) 2016-26.
The Government plans to promote eco-friendly cars in the country i.e.
CNG based vehicle, hybrid vehicle, and electric vehicle and also made
mandatory of 5 per cent ethanol blending in petrol.
The government has formulated a Scheme for Faster Adoption and
Manufacturing of Electric and Hybrid Vehicles in India, under the
National Electric Mobility Mission 2020 to encourage the progressive
induction of reliable, affordable and efficient electric and hybrid vehicles
in the country.
DIVISIONS OF AUTOMOBILES INDUSTRY
The automobiles sector is compartmentalized in four different sectors which
are as follows:
Two-wheelers which comprise of mopeds, scooters, motorcycles and
electric two-wheelers
Passenger Vehicles which include passenger cars, utility vehicles and
multi-purpose vehicles
Commercial Vehicles that are light and medium-heavy vehicles
Three Wheelers that are passenger carriers and goods carriers.
The automobile industry is one of the key drivers that boosts the economic
growth of the country. Since the de-licensing of the sector in 1991 and the
subsequent opening up of 100 percent FDI through automatic route, Indian
automobile sector has come a long way. Today, almost every global auto
major has set up facilities in the country.

Austria based motorcycle manufacturer KTM, the established makers of

Harley Davidson from the US and Mahindra & Mahindra have set up
manufacturing bases in India. Furthermore, according to internal projections
by Mercedes Benz Cars, India is set to become Mercedes Benzs fastest-
growing market worldwide ahead of China, the US and Europe.

As per the data published by Department of Industrial Policy and Promotion

(DIPP), Ministry of Commerce, Government of India, the cumulative FDI
inflows into the Indian automobile industry during April 2000 to October 2013
was noted to be US$ 9,079 million, which amounted to 4% of the total FDI
inflows in terms of US $. The production of compact superbikes is also
expected to take place in India. The country has a mass production base of 16
million two-wheelers and the several global as well as Indian bike makers are
looking forward to use it as an advantage in order to roll out sports bikes in the
250 cc capacity.
The world standing for the Indian automobile sector, as per the Confederation
of the Indian industry is as follows:
Largest three-wheeler market
Second largest two-wheeler market
Tenth largest passenger car market
Fourth largest tractor market
Fifth largest commercial vehicle market
Fifth largest bus and truck segment

However, the year 2013-2014 has seen a decline in the industrys otherwise
smooth-running growth. High inflation, soaring interest rates, low consumer
sentiment and rising fuel prices along with economic slowdown are the major
reason for the downturn of the industry.

Except for the two-wheelers, all other segments in the industry have been
weakening. There is a negative impact on the automakers and dealers who
offered high discounts in order to push sales. To match the decline in demand,
automakers have resorted to production cuts and lay-offs, due to which
capacity utilization for most automakers remains at a dismal level.

Despite the comprehensive market being under extreme burden, the luxury
car market has observed a robust double-digit hike during the year 2013-
2014, as a result of rewarding new launches at compelling lower price points.
Further, with the measured increases in the price of diesel, the overall market
continues to shift towards petrol-fuelled cars. This has lead to the growth in
sales of the 'Mini' segment of the PV market by of 5.5%
FACTORS DETERMINING THE GROWTH OF THE INDUSTRY
Fuel economy and demand for greater fuel efficiency is a major factor
that affects consumer purchase decision that will bring leading
companies across two-wheeler and four-wheeler segment to focus on
delivering performance-oriented products.
Sturdy legal and banking infrastructure
Increased affordability, heightened demand in the small car segment
and the surging income of the Indian population
India is the third largest investor base in the world
The Government technology modernization fund is concentrating on
establishing India as an auto-manufacturing hub.
Availability of inexpensive skilled workers
Industry is perusing to elevate sales by knocking on doors of women,
youth, rural and luxury segments
Market segmentation and product innovation

EMPLOYMENT OPPORTUNITIES
There are a wide range of jobs available in the automobile industry in 2016.
With the number of vehicles available on the road today, the need and
requirement for people who can fix these machines is fast increasing. Careers
like automobile technician, car or bike mechanics are a great option.
Becoming a diesel mechanic is also a significant alternative. Diesel mechanics
are responsible for repairing and servicing diesel engines. As they are also
required to repair engines of trucks and buses, other than cars, they are
provided with hefty wages.

If communication with people instead of repairing cars is what interests you,

then you have the opportunity of becoming a salesperson or sales manager in
an automobile company. Career opportunities in automobile design, paint
specialists, job on the assembly line and insurance of vehicles is also
available.
EMPLOYMENT TRENDS
The Automotive Mission Plan for the period of 2006-2016 aims to make India
emerge as a global automative hub. The idea is to make India as the
destination choice for design and manufacture of automobiles and auto
components, with outputs soaring to reach US$ 145 billion which is basically
accounting for more than 10% of the GDP. This would also provide further
employment to over 25 million people by 2016 making the automobile the
sunrise sector of the economy.

According to the Confederation of Indian Industry, the automobile sector

currently employs over 80 lac people. An extension in production in the
automobile industry is forecasted, it is likely to rise to Rs. 600000 crore by
2016.

FUTURE TRENDS IN THE AUTOMOBILE INDUSTRY

As the auto-shows starts in February 2016, the industry promised a blend of
technology and automotives. With the recession trend breaking its leashes
form the past two years, 2016 is expected to get back on track with the sales
of automobiles in the country.
Almost Self-governing cars are predicted to be on the streets by 2020
More than half the cars on the streets are going to be powered by diesel
by 2020
Industry watcher Gartner indicates that 30 percent of motorists want
parking info. The facility is likely to come up after glitches in the
infrastructure catch up.
High Performance Hybrid cars are likely to gain greater popularity
among consumers.

The Indian automobile industry has a prominent future in India. Apart from
meeting the advancing domestic demands, it is penetrating the international
market too. Favoured with various benefits such as globally competitive auto-
ancillary industry; production of steel at lowest cost; inexpensive and high skill
manpower; entrenched testing and R & D centres etc., the industry provide
immense investment and employment opportunities.

ROAD AHEAD
Indias automotive industry is one of the most competitive in the world. It does
not cover 100 per cent of technology or components required to make a car
but it is giving a good 97 per cent, as highlighted by Mr Vicent Cobee,
Corporate Vice-President, Nissan Motors Datsun.

Leading auto maker Maruti Suzuki expects Indian passenger car market to
reach four million units by 2020, up from 1.97 million units in 2014-15.

Mr Young Key Koo, Managing Director, Hyundai Motor India Ltd, has stated
that India is a key market for the company, not only in terms of volumes but
also as a hub of small products for exports to 92 countries.

Mr Joachim Drees, Global CEO, MAN Trucks & Bus AG, has stated that India
has the potential to be among the top five markets, outside of Europe, by 2020
for the company, which is reflected in the appointment of its most experienced
managers to India for increasing volumes and exports out of India.

The Indian automotive aftermarket is estimated to grow at around 10-15 per

cent to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It
has the potential to generate up to US$ 300 billion in annual revenue by 2026,
create 65 million additional jobs and contribute over 12 per cent to Indias
Gross Domestic Product#.
According to Mr Guillaume Sicard, president, Nissan India Operations, the
income tax rate cut from 10 per cent to 5 per cent for individual tax payers
earning under Rs 5 lakh (US$ 7,472) per annum will create a positive
sentiment among likely first time buyers for entry level and small cars.
P