Project

CONTENTS
Introduction to Indian automobile industry Introduction to Performance Appraisal System Performance Appraisal in Automobile Sector Objective of Performance Appraisal Performance Factors Features of Performance Appraisal Methods of Performance Appraisal
Research Methodology
Analysis & Interpretation Findings Recommendations & Suggestions Limitations Conclusion Annexure Bibliography
INTRODUCTION TO INDIAN AUTOMOBILE INUSTRY

An automobile is a wheeled vehicle that carries its own motor. Different types of automobiles include cars, buses, trucks, jeeps, and vans, with cars being the most popular by far. The term is derived from Greek 'autos' (''self'') and Latin 'movre' (''move''), referring to the fact that it 'moves by itself'. Earlier terms for automobile include 'horseless carriage' and 'motor car'. An automobile has seats for the driver and, almost without exception, one or more passengers. In 2005 there are 500 million cars worldwide (0.07 per capita), of which 220 million in the USA alone (0.75 per capita).
Automobile Sector
Status of Indian Automotive Industry On the canvas of the Indian Economy, Auto Industry occupies a prominent place. Due to its deep forward and backward linkages with several key segments of the economy, automotive industry has a strong multiplier effect and is capable of being the driver of economic growth. A sound transportation system plays a pivotal role in the country's rapid economic and industrial development. The well-developed Indian automotive industry ably fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc. Although the automotive industry in India is nearly six decades old, until 1982, only three manufacturers - M/s. Hindustan Motors, M/s. Premier Automobiles & M/s. Standard Motors tenanted the motorcar sector. Owing to low volumes, it perpetuated obsolete technologies and was out of sync with the world industry. In 1982, Maruti Udyog Limited (MUL) came up as a Government initiative in collaboration with Suzuki of Japan to establish volume production of contemporary models. After the lifting of licensing in 1993, 17 new ventures have come up, of which 16 are for manufacture of cars. There are at present 12 manufacturer of passenger cars, 5 manufacturers of MUVs, 9 manufacturers of Commercial Vehicles, 12 of two wheelers, 4 of three wheelers and 14 of tractors besides 5 manufacturers of engine. The industry comprising of the automobile and the auto component sectors has shown great advances since deli censing and opening up of the sector to FDI in 1993. The industry has an investment of a sum exceeding Rs. 50,000 crore. During the year 2003-04 the turnover of the automotive sector was around Rs. 1,00,000 crore. The industry provides direct employment to 4.5 lakhs and generates indirect employment of 1 crore. The contribution of the automotive industry to GDP has risen from 2.77% in 1992-93 to 4% in 2003-04.
The automotive sector, comprising of the automobile and auto component sub sectors, is one of the key segments of the economy having extensive forward and backward linkage with other key segments of the economy. It contributes about 4 per cent in India's Gross Domestic Product (GDP) and 5 per cent in India's industrial production. The welldeveloped Indian automotive industry ably fulfils this catalytic role by producing a wide variety of vehicles like passenger cars, light, medium and heavy commercial vehicles, mu tractors etc. Driving the most luxurious car has been made possible by the stiff competition in the automobile industry in India, with overseas players gathering the same momentum as the domestic participants. Every other day, we have been hearing about some new launches, some low cost cars all customized in a manner such that the common man is not left behind. In 2009, the automobile industry is expected to see a growth rate of around 9%, with the disclaimer that the auto industry in India has been hit badly by the ongoing global financial crisis. The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs. The auto component industry, which is an important part of automotive sector, comprises about 500 firms in the organized sector and more than 10,000 firms in the small and unorganized sector has been one of the fastest growing segments of Indian manufacturing. It has the capability to manufacture the entire range of auto parts and has rapidly added tots capacity base. Indian auto components industry has an important place lit-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, at the global level.
Advantage India: India holds huge potential in the automobile sector including the automobile component sector owing to its technological, cost and manpower advantage. Further, India has a well
developed, globally competitive Auto Ancillary Industry and established automobile testing and R&D centers. The country enjoys natural advantage and is among the lowest cost producers of steel in the world. The Indian automobile industry today boasts of being the Second largest two wheelers manufacturers in the world, second largest tractor manufacturer in the world, fifth largest commercial vehicle manufacturer in the world and fourth largest Car market in Asia. World largest Motorcycle manufacturer is in India. India has largest three wheeler market in the world, second largest two wheeler market in the world, fourth largest passenger vehicle market in Asia, fourth largest tractor market in the world, fifth largest commercial vehicle market in the world. India became fastest growing car market in the world in 2004. Installed Capacity: The automobile industry including passenger cars, over a period of time and particularly after liberalization, has installed a robust capacity in different segments of automobile industry is as under:
Potential of the Automobile industry In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors
Turnover of Automobile Manufacturers(In USD Million)
Year 2002-03 2003-04 2004-05 2005-06 2006-07
In USD Million 14,880 16,544 20,896 27,011 34,285
The figures show that the automobile sector in India has been growing robustly. The market shares of the different types of vehicles will clearly depict the demand pattern in this sector.
Domestic Market Share for 2008-09
Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Total investment & turnover:
15.96% 3.95% 3.6% 76.49%
The automobile industry had an investment of nearly 50,000 crore in 2002-03 and it is estimated to go up to Rs. 80,000 crore by the year 2007.The turnover of this sector exceeded Rs. 144,000 crore in 2003-04 including nearly 92,500 crore of automobile industry. In 2004-05, total turnover of this sector was estimated to exceed Rs. 1,65,000 crore Geographical concentration of firms: Firms of this sector are in clusters scattered all over India. Some clusters with heavy concentration of firms are Chennai and around, National Capital Region (NCR), Pune, and Hoogli Region of West Bengal. An upcoming cluster for this sector is Rudra pur and surrounding areas in Uttarakhand. Production trend: Rising industrial and agricultural output Rising per capita income Favourable demographic distribution with rising working population and middle class Urbanisation Increasing disposable incomes in rural agri-sector Availability of a variety of vehicle models meeting diverse needs and preferences
Greater affordability of vehicles Easy finance schemes Favourable government policies Robust production
Automobile Production Trends
(Number of
Vehicles) Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Passenger 989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,593 2,351,240 Vehicles Commercial 275,040 353,703 391,083 519,982 549,006 416,870 566,608 Vehicles Three 356,223 374,445 434,423 556,126 500,660 497,020 619,093 Wheelers Two 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,419,792 10,512,889 Wheelers Grand Total 7,243,564 8,467,853 9,743,503 11,087,997 10,853,930 11,172,275 14,049,830 India's Position in World's Production Well-developed, globally competitive auto ancillary industry Established automobile testing and R&D centres Among one of the lowest cost producers of steel in the world World's second largest manufacturer of two wheeler Fifth largest manufacturer of commercial vehicles Largest manufacturers of tractors in the world Fourth largest passenger car market in Asia India is the second largest two-wheeler market in the world 11th largest passenger car market in the world Expected to be the seventh largest auto industry by 2016
Current Industrial Policy: Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, delicensed in 1993. No
industrial licence is required for setting up of any unit for manufacture of automobiles except in some special cases. The norms for Foreign Investment and import of technology have also been progressively liberalized over the years for manufacture of vehicles including passenger cars in order to make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological upgradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. The cumulative production data for AprilJanuary 2010 shows production growth of 23.07 percent over same period last year.
Auto Policy Vision To establish a globally competitive Automotive Industry in India and to double its contribution to the economy by 2010. Objectives This policy aims to promote integrated, phased, enduring and self-sustained growth of the Indian automotive industry. The objectives are to:(i) Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country; (ii) Promote a globally competitive automotive industry and emerge as a global source for auto components; (iii) Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world; (iv) Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry; (v) Conduce incessant modernization of the industry and facilitate indigenous design, research and development;
(vi) Steer India's software industry into automotive technology; (vii) Assist development of vehicles propelled by alternate energy sources; (viii) Development of domestic safety and environmental standards at par with international standards. Automotive Mission Plan 2016 To accelerate and sustain growth in the automotive sector and to steer, co-ordinate and synergies the efforts of all stakeholders, Automotive Mission Plan (AMP) 2006-2016 has been prepared in order to make India a global automotive hub. The Automotive Mission Plan (AMP) 2006-2016,aims at doubling the contribution of automotive sector in GDP by taking the turnover to USD 145 billion and providing additional employment to 25 million people by 2016 with special emphasis on export of small cars, MUVs, two and three wheelers and auto components. Foreign Direct Investment Automatic approval for foreign equity investment upto 100 per cent of manufacture of automobiles and component is permitted. The automobile industry is delicensed. Import of components is freely allowed. Major Automotive Players in India
Companies Ashok Leyland Asian Motor Works Bajaj Auto BMW India Daimler Chrysler India Eicher Motors Fiat India Force Motors Ford India
Segments LCVs, M&HCVs, buses M & HCVs Two and three wheelers Cars and MUVs Cars LCVs, M & HCVs Cars MUVs and LCVs Cars and MUVs
General Motors India Hero Honda Motors Hindustan Motors Honda Hyundai Motors Kinetic Motor Mahindra & Mahindra Maruti Suzuki Piaggio Royal Enfield Motors Skoda Auto India Suzuki Motorcycles Swaraj Mazda Ltd Tata Motors Cars Toyota Kirloskar TVS Motor Co Volvo India Volkswagen India Yamaha Motor India MUVs: Multi utility vehicles; MPVs: Multi purpose vehicles; LCV: Light commercial vehicles;
Cars & MUVs Two wheelers Cars, MUVs and LCVs Two wheelers, cars and MUVs Cars and MUVs Two wheelers Three wheelers, cars, MUVs, LCVs Cars, MUVs, MPVs Three wheelers, LCVs Two wheelers Cars Two wheelers LCVs, M & HCVSs, buses MUVs, LCVs, M&HCVs, buses Cars, MUVs Two wheelers M & HCVs, buses Cars Two wheelers
M&HCVs: Medium and heavy commercial vehicles Exim Policy: Removal of Quantitative Restrictions (QRs) from April 1, 2001 has allowed the import of vehicle, including passenger car segment freely subject to certain conditions notified by DGFT. To protect India from becoming a dumping ground for old and used vehicles produced abroad, the custom duty on the import of second hand vehicles including passenger cars has been raised to 105 per cent. The custom duty rate on new Completely Built Units (CBUs) has also been increased to level of 60 per cent to allow Indian countries to a fully competitive environment. Recent policy initiatives:
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In order to develop and realize the growth potential of this sector both at domestic and global level, and to optimize its contribution to the national economy, the Department of Heavy Industry has decided to draw up a 10 year Mission Plan for the development of Indian Automotive Sector and creation of global hub To put Indian Auto Industry at the global map, National Automotive Testing and R&D Infrastructure Project (NATRIP) at the total cost of Rs. 1718 crore has been initiated. This project principally aims to: _ Create critically needed automotive testing infrastructure to Enable the government in ushering in global vehicular safety, Emission and performance standard, - Deepen manufacturing in India, promote larger value addition and Performance standards and facilitates convergence of India's strength and IT and electronics with automotive engineering, _ Enhance India's abysmally low global outreach in this sector by debottlenecking exports, and _ provide basic product testing, validation and development infrastructure so that Indian automotive sector would not face any export obstacle in the foreign market _ In the Union Budget 2007-08, import duty on raw material had been reduced to 5- 7.5 per cent from the earlier 10 per cent. Contribution in exports: During April-January 2010, overall automobile exports registered a growth rate of 13.24 percent. Passenger Vehicles segment, Three Wheelers and Two Wheelers segments grew by 33.92 percent, 4.60 percent and 8.84 percent respectively in this period. Commercial Vehicles recorded growth of (-) 7.52 percent.
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Domestic Sales Passenger Vehicles segment during April-January 2010 grew at 25.21 percent over same period last year. Passenger Cars grew by 24.75 percent, Utility Vehicles grew by 21.95 percent and Multi Purpose Vehicles grew by 37.05 percent in this period. The overall Commercial Vehicles segment registered positive growth at 30.39 percent during April-January 2010 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered growth at 20.58 percent, Light Commercial Vehicles grew at 39.66 percent. Three Wheelers sales recorded a growth rate of 25.77 percent in April-January 2010. While Passenger Carriers grew by 32.54 percent during April-January 2010, Goods Carriers grew at 4.20 percent. Two Wheelers registered a growth of 23.74 percent during April-January 2010. Mopeds, Scooters and Motorcycles grew by 31.73 percent, 20.56 percent and 24.32 percent respectively.
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Scope of Indian Automobile Sector

The Indian automobile industry is going through a phase of rapid change and high growth. With new projects coming up on a regular basis, the industry is undergoing technological change. The major players are expanding their plants and focusing on mass customization, mass production,etc.
INVESTMENT IN AUTO SECTOR Nearly every automobile company is investing at a higher rate than ever before to achieve a high growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected that by the end of 2010 Indian automobile sector will be investing a huge amount a For example, Maruti Udyog has plans of investing Rs. 6,500 crores; the Tata Motors is coming up with more investment of Rs. 2,000 crores in its compact car project. Not only the Indian companies but also foreign players like Hyundai are coming up with the investment of more than Rs. 3,800 crores in India. GROWTH IN AUTO SECTOR At present the industry is enjoying a growth rate of 14-17% per annum, with domestic sales growth at 12.8%. The growth rate is predicted to double by 2015. As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-utility vehicles - in the year 2005 reached the mark of 1.06 million. The current growth rate indicates that by 2012 India will overtake Germany and Japan in sales volumes. s Rs. 30,000 crores Financing schemes have become an important factor in the growth of automobile sales. More and more financial schemes are coming up with easy installment plans to lure the
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customers. Apart from domestic production, the industry is consistently focusing on the automobile exports. The auto component segment is contributing a lot in the export arena. The liberalized policies of the government are now making the companies go for more and more exports. The automobile exports are increasing year by year. According to the Society of Indian Automobile Manufactures (SIAM) automobile exports in the last five years are as follows:
Export trend over the last five years NEW LAUNCHES : HATCHBACK SMALL CAR TOYOTA SMALL TATA NANO In India by: late 2009 Launch date: In India by: Mid 2009 NEW MAINI REVA CHEVROLET BEAT In India by: late 2009 Launch: Mid 2009 NISSAN MICRA FIAT BRAVO In India by: late 2009 Launch date: In India by: Jan 2009 FORD FIESTA / MAZDA 2 FIAT GRAND PUNTO HATCHBACK Launch: May 2009 In India by: late 2009 NEW CHEVROLET AVEO U-VA HONDA JAZZ In India by: Early 2009 Launch: June 2009 14
SUZUKI SPLASH/RITZ Launch: Early 2009 DIESEL & AUTOMATIC TRANSMISSION UPGRADES HONDA CRV DIESEL SUZUKI SX4 DIESEL In India by: Mid 2009 In India by: End 2009 TOYOTA COROLLA ALTIS DIESEL HYUNDAI VERNA AUTOMATIC In India by: Late 2009 In India by: mid 2009 HYUNDAI I20 DIESEL CHEVROLET CAPTIVA AUTOMATIC In India by: Mid 2009 In India by: Jan 2009 HONDA ACCORD V6 & DIESEL In India by: Mid-2009 SEDANS NEW TATA INDIGO NEW NISSAN TEANA In India by: March 2009 In India by: Early 2009 CHEVROLET CRUZE VOLKSWAGEN PASSAT CC In India by: 2009 In India by: Mid 2009 FIAT LINEA SKODA FABIA COMBI In India by: 14 Jan 2009 In India by: Mid 2009 NEW SKODA SUPERB RENAULT SANDERO In India by: March 2009 In India by: End 2009 NEW MITSUBUSHI LANCER In India by: Mid 2009 SUV / MPV MAHINDRA XYLO NEW NISSAN X-TRAIL In India by: Jan 2009 In India by: Early 2009 TOYOTA FORTUNER TATA INDICRUZ In India by: mid 2009 In India by: Mid-2009 FACELIFTS / VARIANTS SKODA LAURA FACELIFT TOYOTA INNOVA FACELIFT In India by: Mid 2009 In India by: Early 2009 M &M LOGAN FACELIFT In India by: Early 2009 LUXURY / PREMIUM NEW AUDI A6 FERRARI In India by: Early 09 In India by: Mid 2009 BMW 3 SERIES FACELIFT PORSCHE CAYENNE DIESEL In India by: March 09 In India by: 2009 NEW BMW 7 SERIES PORSCHE PANAMERA In India by: Jan 2009 In India by: Late 2009 LAMBORGHINI GALLARDO LP560/4 JAGUAR CARS In India by: Mid 2009 In India by: 2009 NEW MERCEDES-BENZ E-CLASS LAND ROVERS CARS In India by: late 2009 In India by: 2009 AUDI Q7 V12 VOLVO S60 Will cost: Rs 1.2 1.5 crore In India by: Late 2009 AUDI Q5 VW SCIROCCO
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In India by: March 09 BMW X6 In India by: Early 2009 NEW MERCEDES-BENZ GL-CLASS In India by: Mid 2009
In India by: Late 2009 VW BETTLE In India by: mid 2009 MINI In India by: late 2009
EMPLOYMENT IN THE SECTOR Investment is leading to the employment growth in the sector. With the emergence of new projects and introduction of technological advancements, the focus is more on the skilled and experienced human resource. The companies are looking for skilled and hard working people who can give their best to the organization.
The engineers in the automotive or electrical or mechanical field are in demand. Some of the firms going for automation, i.e. planning for CAD (Computer Aided Designs) systems, are also recruiting people with IT specializations
Career Prospects in Automobile Sector

Automobile industry is witnessing a very high growth rate. With many new projects, Indian companies are entering the global arena. This has led to more and more jobs in the industry. One has to specialize in automobile/mechanical engineering to enter the industry. The Certificate Courses for employment opportunities in the industry are: a) Certificate in Engineering Mechanics b) Certificate in Applied Thermodynamics The Diploma Programmes offered are:
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a) Licentiate in Mechanical Engineering b) Post Diploma in Automobile Engineering c) Post Diploma in Robotics & Automation The Degree Programmes offered are: a) B.Tech. /B.E. Degree in Mechanical Engineering b) M.Tech. Degree in Mechanical Engineering with specialization in Machine Design c) M.Tech. Degree in Mechanical Engineering with specialization in Automobile Engineering d) M.Tech. Degree in Mechanical Engineering with specialization in CAD/CAM and Automation
Duration: The degree programmes take 4 years for completion; the duration for certification courses varies from 6 months to 1 year. Eligibility: Higher secondary (class XII) with minimum eligibility criteria in Physics, Math and Chemistry. Or Vocational course with minimum eligibility criteria in Physics, Math and Chemistry from a recognized institution. The Automobile/Mechanical engineering focuses on a range of specializations.
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EMPLOYMENT IN AUTOMOBILE SECTOR

At present Indian automobile industry comprises of more than ten million employees. With the current growth scenario, it is also expected that the industry will be employing many more people in the near future.
Present employment trend Employment Status In Indian Automobile Industry Indian economy has seen vast developments in all areas, automobile, telecommunication, textile, mining, BPO, KPO, agriculture, retail, food and beverages, etc. After succeeding various hurdles that came in the way through significant investments, dedication and hard work it has now become the fastest growing economy. Like other sectors, Indian automobile industry has also witnessed a rapid growth and technological change This has led to change in the human resource policies and practices. More and more labour is being employed, proper training is provided to the new joiners; also there. are development programs for the employees to integrate the technological change . Improved information technology and automotive developments also demand the human resource to develop and acquire the desired skills. Investment is 18
leading to the employment growth in the sector. With the emergence of new projects and introduction of technological advancements, the focus is more on the skilled and experienced human resource. The companies are looking for skilled and hard working people who can give their best to the organization. Engineers are in demand in automotive, electrical and mechanical fields. Some of the firms going for automation, i.e. planning for CAD systems, are also recruiting people with IT specializations. The automobile sector in India has provided employment to more than 7 lakh skilled workforce. The States like Maharashtra, Andhra Pradesh, Karnataka, and Haryana are having most of the automobile companies that witness many major technological developments and 15% growth in the Indian automobile sector. Given below is the employment status of the major automobile centres in the country:
GROWTH IN AUTOMOBILE SECTOR

The automobile industry has witnessed a healthy growth during the past five years. The passenger car market has grown at an annual rate of 20% between 2001-02 and 2006-07 while the pre-owned cars segment has seen an even higher growth rate of 28% during the same period. Each of these markets is estimated to add nearly 1.2-1.3 million cars every year. But November 2008 virtually brought the entire sector to a grinding halt. According to industry figures, in November 2008 overall production fell by 6.11% over November 2007; sales across all sub-segments of the passenger car market registered negative growth rates in the April-November 2008 period compared to the same period in 2007. Overall, passenger car sales grew just 0.48% during the April-November 2008 timeframe. As exports nosedived, domestic sales hit rock bottom. To make matters worse, Tata Motors, one of the leading players in the segment, posted losses of Rs 263 crore in the last quarter of 2008 .
Given that the automotive sectors contribution to GDP growth rate is 5% which was
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projected to increase to 10% by 2016 its only natural to ask the question: has the growth of the automotive sector in India hit a speed breaker? And what factors will lead to a revival of demand? Lets first take a look at how the different passenger car segments have grown over the past five years. The small or mini-car segment, characterised by the once ubiquitous Maruti 800 has registered a negative growth of 11% (CAGR) over the past five years. The compact segment (Alto, Zen, Indica, Santro) has shown a CAGR growth of 23%, the mid-size (Esteem, Indigo, Accent) of 19%. The executive segment (Honda Civic, Toyota Corolla) has had a CAGR growth rate of nearly 87%, albeit over a small base (unit sales in 2007-08 accounted for just about 6,000) and the premium segment (2007-08 sales: 189) grew by 23%. Thus, the largest contributor to sales growth has been the compact segment . Clearly, then the urban middle class has been the key driver of automobile sales in the country. The reasons for the galloping demand are well known growth in disposable income, changing lifestyles, easy financing options and introduction of new models giving a boost to aspirational buying. However, as the economic downturn puts a freeze on liquidity and finance options dry up, car sales growth is expected to be hit hard. For instance, in 2008-09 our forecast shows that car sales will be in the region of 1.37 million, i.e., a decline of 3.8% over 2007-08. The sales for the following year will be roughly the same. Only motorcycles seem to be able to recover lost ground by 2009-10. While the levels of income and expenditure are major factors in the decision-making process, consumer behaviour is also influenced by other factors. Exploring purchasing behaviour and its impact on demand growth, could provide marketers cues on how to grow sales even during tough times. A 2006 NCAER study showed that an estimated 24.4 million Indian households that owned two-wheelers were potential buyers of cars in the next three years.
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That is by 2009-10, they would be in a position to buy a car. Of these potential buyers, roughly half the households are in rural areas. With rural incomes less likely to be impacted by the economic downturn, vehicle marketers would be well advised to target potential rural consumers. Another strategy could be to tap potential buyers of a second car, or those replacing their existing cars with a new one. Our survey has shown that households that are replacing their old cars with a new one belong to relatively higher income segment having regular source of income. The downward trend of oil prices may also turn out to be a boon for auto-manufacturers. The single most important factor affecting a households car purchase decision is the maintenance and running cost. Brand, technology, comfort, performance and styling are some of the other lifestyle issues that come into play when making the decision to buy a car. Significantly, our study shows that price and fuel efficiency figure way down on the priority list of potential car buyers. For most potential car owners, cars are a symbol of social status and this is one of the key reasons of car ownership in our country. Its not surprising then that when the Nano was unveiled, it was hailed with great enthusiasm and excitement. Can the launch of the Nano give the automobile sector the demand push that it needs in these tough times?
INDIAN AUTO SECTOR REVIEW

Over August, two-wheeler growth slowed to 3.5% while passenger vehicle (cars and UVs) growth was higher at 13.5%. Both these categories, however, suffered due to a higher base effect (sales in August 2005 were strong as July 2005 was affected by floods). Notably, Hero Honda - the market leader in the two-wheeler segment - showed negative growth due to high inventory build-up at the dealer channel, which is presumably being corrected.
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Driven by the Supreme Court order on overloading, commercial vehicle sales showed robust growth (+29%), even though the growth rate declined QoQ. The MHCV segment grew at close to 40%, while LCVs (ex-Ace) showed signs of slowing. Three-wheeler sales, buoyed by demand in the passenger segment, grew by 17%.
Medium & Heavy Commercial Vehicles - Solid Growth Continues MHCV continued to grow strongly with sales up about 40% y-o-y. The goods segment, buoyed by strong industrial growth and the Supreme Court order ban on overloading, was up by 40% y-o-y. Bus sales were strong, even though growth has moderated.
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August saw bus sales for Ashok Leyland decline by 11 % y-o-y. YTD sales for ALL are down 21%. Tata Motors, on the other hand, has seen bus sales more than double (though off a low base). We believe the new range of Starbus/Globus series is also making an impact, albeit gradually. Light Commercial Vehicles - ACE Continues to Sizzle LCV sales grew by 16% y-o-y - strong but somewhat lower than that in previous months. The growth-largely triggered by the success of the sub-ton ACE - has seen Tata Motors gain market share over the past year. However, with the base effect now coming into play, future growth rates might taper downward. Excluding the ACE, sales in the LCV segment have been flat y-o-y with the higher tonnage LCVs showing a decline. This reflects the advent of the hub-and-spoke model.
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The effect of the ACE is clearly reflected in the steadily rising market share of Tata Motors, which now stands at 70% vs 64% in FY06. Cars - Sales of Compact Cars Continue to Grow Overall car sales rose about 14% y-o-y; while domestic sales were up 17%, export growth disappointed at 3%. Exports now form about 22% of total car sales - thus underlining their importance. The key compact car segment (B Segment) was up by 16% - despite the base effect of the Swift coming into play.
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The small car segment - essentially the M-800 (from Maruti's stable) - continued its downward trend. The cut in excise duties does not seem to have benefited the segment as the shift toward the compact segment (notably the Alto) continues.
Utility Vehicles - M&M Whizzes Past Maruti Overall UV sales rose 15% y-o-y. After a brief dip in June and July, M&M has gained 26
130bps market share (currently 31 %) as volumes of the Scorpio and Bolero increased. We believe this is a healthy trend, given that M&M's soft tops are facing a secure decline as consumer preferences shift. Maruti is the other leading player (28% market share in August) in this segment. After a blip in January (labour strike impacted production), Toyota's market share has also recovered.
AUTO SECTOR ENTERS NEW ERA OF GROWTH

When the auto production and sales volumes in China respectively reach to 8.88 million and 8.79 million in 2007, people were once very sure about that the auto production and sales volumes in China will both break 10 million in 2008. However, as a series of influencing factors appear in 2008 and thus the sales drop since April, people become uncertain about the future of the national auto market. The statistics show that the national auto market is still in the increasing trend now, but 27
the speed is slowing down to some extent. According to the statistics of China Association of Automobile Manufacturers, the auto production and sales volumes respectively reach to 5,932,100 and 5,849,000 from January to July this year, with 16 percent and 16.66 percent growths over the same time last year, of which the passenger vehicle to 4,196,900 and 4,099,300, with 15.71 percent and 15.79 percent growths over the same time last year; the commercial vehicle to 1,735,200 and 1,749,700, with 16.69 percent and 18.76 percent growths over the same time last year. On the Post-Olympic Auto Market Forum held by Beijing Asian Games Village Automobile Exchange at August 28, the representatives of vehicle manufacturers and distributors show the caution about the future trend of the auto market, but most of them are still full of confidence on the national auto market this year. They all think that the basic aspect of the auto market keeping increasing will not change, our national auto market will still be in the increasing period in 2008, but the increased range may float. After all the domestic average vehicle holding is still very limited, and as the living levels of people increase, the auto purchase has been one important aspect of increasing the life quality, which means the huge auto purchasing demand still exists. At the same time, the consumer group that bought cars in the past several years is now stepping into the phase of replacing the car. All these needs will promote a new round of auto sales increase. Su Hui, General Manager of Beijing Asian Games Village Automobile Exchange, also think that the auto market will soon go into a new phase after a series of challenges and baptisms. The year of 2008 will become the historical year of China Automobile Industry, and a year with obvious challenges and opportunities for the automobile industry. BYD introduced the first type of small car FO at September 2, and aroused much amazing voices. And BYD movement has almost been the common behavior of many auto manufacturers in the market in the latter half year. In the last four months of 2008, the auto market will once again meet the hot tide of new styles coming into the market after that in the beginning of this year. According to the statistics, nearly 40 new styles will appear in the auto market in the latter half year.
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European and American brand auto manufacturers will issue 5 new styles, which are mostly Class A and Class A0, and among these ChangAn Ford New Fiesta, Shanghai Volkswagon Skoda Fabia, First Auto Volkswagon New Bora, New First Auto Mazda 6 and Dongfeng Citroen C-quatre are the focus arousing the consumers' attention. The new cars introduced by Japan and Korean brand auto manufacturers are mostly the old ones with the style changed and some equipment added. Our self-owned brands, including BYD, will also introduce several new styles in the latter half year, such as Cherry A3, Wagon Touring, LF 620, ChangAn Auto ChangAn V101 wagon, Great Wall Florid, V3 Ling Yue to be introduced by Southeast and a type of Cross style, etc. Meanwhile, on the aspect of imported vehicles, two styles of large SUV Buick Enclave and KIA Borrego will be imported into China at the end of this year, Infinite and Acura will introduce two styles of new products to China, and Mitsubishi will bring the Japanmade Lancer and Generation 10 EVO, the Mitsubishi star sport car. Although the auto industry is still full of confidence about the future of the national auto market, the oil price rises from the beginning of this year have influenced the auto market, which promotes the auto circle to begin thinking about the future developing direction, and the auto manufactures to face the industry updating and adjusting problem again. Li Daokui, Professor of School of Economics and Management, Tsinghua University, indicates that with Chinese economy merging into the world and taking an increasingly larger part in the world economy, China economy will inevitably be affected by the international economic changes. Meanwhile, the statistics show that the rude oil demand of the oil market increases about 1.5 percent per year averagely in the past 5 years, but the oil production capacity increases only 0.7 percent per year averagely in the past 5 years, the rude oil price is rocketing, and the oil shortage has become a structural problem and the world has entered the time of high oil prices. He brings forward that China auto
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industry must transform as soon as possible, to develop toward the low energyconsumption and environment-friendly direction, only thus we can depend less on the oil. In some extent, this involves the state energy strategy. Wang Xiaoming, Deputy Researcher of Development Research Center of the State Council, high oil prices may be a long-term and persistent phase, China auto must make the strategy for this, raise the production efficiency and develop the new energy technologies. The adjusted auto consumer tax, beginning to implement formally from September 1, is "to restrain the large and develop the small" on the policy level, promoting the auto consumption to adjust in the energy-saving and environmental protection direction. Among the new styles introduced by the domestic and overseas auto brands this year, we can see the auto manufacturers has already been walking towards the energy-saving and miniaturization direction, such as Mazda 2, New Aveo, New Vios, Yaris, New Fit and Fiesta to be introduced in this year. According to the statistics of China Association of Automobile Manufacturers, in the first half year of 2008, among the sales of the major domestic wagon brands, 1L to 1.6L exhaust ones occupy 55.92 percent of the market, rising 3 percent over the same time of last year; and the sale drops of those of 1L or less exhaust obviously slow down, and the sales volume adds up to 129,100 in the first half year, and the divergent state has mitigated in some extent. At the same time, the new energy auto is developing stably. The price of Eco-Hybrid LaCROSSE freshly introduced by Shanghai GM is only 20,000 Yuan more than the general; and Dongfeng Honda will also introduce the Eco-Hybrid Civic; Volkswagon issued several models of environmentally friendly vehicles by the Olympic platform; the self-owned brands also devote much to the new energy vehicles. Facing the international economic situation and energy shortage, the auto manufacturers has already felt the body-cutting pain, and once the challenge changed into the opportunity, the domestic auto market will welcome a new developing phase. Automobile sector posts negative growth in exports
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Leading automobile manufacturers including Maruti Udyog, Telco, Hero Honda and Bajaj posted negative growth in exports during the first half of the current fiscal against the export performance in the same period last year. During April-September of the current fiscal, all the segments of the automobiles sector including passenger cars, two-wheelers and commercial vehicles witnessed a fall in exports, according to the data compiled by Society of Indian Automobiles Manufacturers (SIAM). Foreign forays THE ANNOUNCEMENT BY the Tata group of plans to invest in a steel and mining project in Iran is but part of a broader trend of Indian enterprises aggressively acquiring old assets or creating new ones abroad. The amounts involved, for now, may not be very large. But they are growing (it more than doubled to $1.5 billion in 2003-04 from $750 million three years ago) and, what is more, are catching up with investments flowing into the country from abroad if the numbers of the third quarter of the last fiscal, the latest period for which official data is available, are anything to go by. Clearly India Inc. is looking at opportunities abroad with as much fervour as foreigners are in India. This is just as well. Indian businesses have for long had an inward orientation that may have had its roots in the insular outlook of Indian society itself but was also largely shaped by the industrial policy that the nation had adopted as its development model, postIndependence. The seeds of this shift lay in opening up its market to external competition, after 1991. The removal of licensing and other constraints in domestic fresh capacity creation, too, was a logical offshoot of this policy of liberalisation on the external front. Once Indian enterprises realised that with vastly scaled up operations, they could handle external competition in the domestic market, it was only a matter of time before they took the battle to other markets. As it happened they found in the backyard of their Western competitors victims of similar bruising wars, units ripe for the picking. But not all of this hunt overseas can be attributed to the inter-play of global market forces. Some of it can also be attributed to woeful shortages of critical raw materials such as crude oil, coal, electricity and, non-ferrous metal ores, forcing local enterprises to look to
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overseas investments as a means of securing reliable supplies. That India, despite its image as a nation richly endowed with industrial raw material, should be looking tosource supplies from elsewhere is an ironic twist to the phenomenon of India Inc.'s outward orientation. The crisis is of India's own making. A regressive domestic policy environment and an indifferent political authority have combined to raise hurdles to creating new capacities within the country, as in the case of the failure to augment production of coal for power generation. The logic of globalisation and the domestic backlash that must inevitably follow dictate that production capacities be created in the markets that are meant to be served. While barriers to trade (both real and potential) in most economies are formidable, capital flows are still largely free. Viewed thus, Indian enterprises setting up production capacities to cater to the local markets that they hope to serve, is only to be expected. But India is still to acquire a positive image or a position of authority in international affairs commensurate with its potential if not current achievements. Till then Indian investments will always be vulnerable to hostile action by host nation
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PERFORMACE APPRAISAL SYSTEM

Performance Appraisal is the step where the management finds out how effective it has been at hiring and placing employees. An effective use of material, money, machine and human resources is essential to achieve a higher level of productivity in an industry. While other source have limitations, the most vibrant & active human resource has unlimited potential. Hence, for optimization of human resource, measuring its performance continuously is of paramount importance. Performance Appraisal may be defined as:It is the process of evaluating the performance & qualification of employees in terms of requirements of the job for which he is employed, for purposes of administration including placement, selection, for promotions, providing financial rewards & other actions which require different treatment among the members of a group as distinguished from actions affecting all members equally. There are two types of appraisal process: The Organization The Individual who is being apprised. The appraisal system must generate adequate, relevant, timely & clearly information & the result in action program that would be helpful to both the parties. The appraisal should lead up to improve organizational health, viability & growth through optimal utilization of HR in service of organization. It should also be instrumental in motivating the appraisee towards giving his best to the organization. The criteria for an effective appraisal system may be explained as: Appraisal system must be job related, performance based, uniform, fair & equitable. The performance requirements of the organizations must be fully reflected in appraisal criteria. Appraisal system must generate relevant sufficient, timely and representative information. 34
All appraises must be trained in the use of appraisal system and in techniques of performance counseling. There should be provision for appeals of appraisals to ensure confidence of employees and their association/unions. Appraisal system should lead to problem solving rather than fact finding, i.e. it must be development rather than judgmental. The appraisal program must result in clearly defined recommendations regarding recognitions, rewards, improvement training, promotions, etc. The appraise must be evaluated on the basis of determinants of present performance & his major strengths & weakness. The performance Appraisal should be periodically reviewed in terms of its relevance, reliability, usefulness, effectiveness & acceptability.
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PERFORMANCE APPRAISAL IN AUTOMOBILE INDUSTRY

Performance Appraisal is an important component of the information & control system. People are selected & recruited for effective job performance in the organization. Therefore, it is necessary for organization to develop performance analysis & review system which: Define the specific job criteria against which performance will be measured. Objectively & accurately measure past job performance. Determine rewards based on performance. Develop programs to enhance performance in the current job & prepare & realize the potential for future responsibilities. OBJECTIVES The performance appraisal system is designed to be forward looking & development in its application. As against appraising an individual employees performance in retrospect without planning, the performance appraisal requires that the performance of each employee be planned ahead of time, expected results agreed to at the outset & performance assessed on the basis of these plans & agreements. This is considered a dynamic & ongoing process in which continuous dialogue between the employee and his reporting officer is critical.
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OBJECTIVES OF PERFORMANCE APPRAISAL

Objectives can be discussed under four heads:1. WORK RELATED OBJECTIVE: To provide a control for work done To improve efficiency To carry out job evaluation To help in assigning work & plan future assignments. 2. CAREER DEVELOPMENT OBJECTIVE: To identify strong & weak points and provide training To determine career potential To plan development assignment To plan career goals. 3. COMMUNICATION: To provide adequate feedback. To establish goals Clearly To provide counseling & job satisfaction To let employees assess themselves. 4. ADMINISTRATION: Basis for promotion Basis for allocating incentives Basis for determining transfers Basis for determination.
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PERFORMANCE FACTORS
The present appraisal system in automobile sector for workers & staff used to assess the performance of workmen & staff members. The appraisee is being assessed on ten main performance factors:-
1. A) Quantity Of Work B) Quality of Work 2. A) Attendance & Punctuality B) Use of Working Time 3. Initiative & Acceptance of Responsibility 4. Ability to Learn 5. Ability to Work with Others. 6. Safety on the Job 7. Conduct on the Job 8. Care & Use of Co-Property 9. Dependability 10. Knowledge of Work
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DEFINITION OF EACH FACTOR

QUALITY OF WORK Consider accuracy, thoroughness of his/her work. QUANTITY OF WORK Consider the amount of work & promptness with which completed. ATTENDANCE & PUNCTUALITY Frequency of leave & sense of punctuality. USE OF WORKING TIME Tendency to use working time in the right manner. INITIATIVE & ACCEPTANCE OF RESPONSIBILITY Ability to go ahead without being told. ABILITY TO LEARN Knowledge & understanding. ABILITY TO WORK WITH OTHERS Co-operation & ability to get along with others. SAFETY OF THE JOB Abide by all safety rules & regulations. CONDUCT ON THE JOB Effect on others including discipline, behavior & aggressiveness. CARE & USE OF CO-PROPERTY Care for tools & equipments.
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DEPENDABILITY Compliance with instruments & how reliable & trustworthy when given an assignment. KNOWLEDGE OF WORK Knowledge & understanding of all his jobs and matter related to jobs.
FEATURES OF PERFORMANCE APPRAISAL SYSTEM

The existing performance appraisal system in automobile sector has the following main features:-
PERFORMANCE PLANNING:The plan is being worked out in terms of results expected performance standards, performance measures and target dates for a period of one year.
PROMOTION:The performance appraisal system is being linked with the promotion is being given on the basis of the performance of the employees. Each employee is being categorized under different grade. There are different grade for workmen & staff cadre each. After promotion employee is being transferred to upper level of grade.
TRAINING & DEVELOPMENT:It has become a powerful instrument for analyzing training needs analysis. The training needs are being accessed by matching
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the skills of the employee at present level with the skills required by the employee at his work place.
INCREMENTS:Increments are being given on the basis of the performance Of each employee. Employees are being rated on the basis as how much marks they got in performance appraisal form.
CAREER PLANNING & SUCCESSION PLANNING:It is one of The Significant instruments for making decision regarding career planning and succession planning. Each cadre is being divided in to different grade on the basis of qualification & experience required for each grade. One can easily access where he or she actually stands & where he or she had to reach. Thus grading helps in career planning & succession planning.
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METHODS OF PERFORMANCE APPRAISAL

A number of methods of performance appraisal are available are available. Infect each organization has its own method of appraising their employees. These represent variations of one or the other of following methods. RATING SCALES This is the most commonly used method of performance appraisal under this method, factors be rated are : employee characteristics include qualities such as initiative, leadership, cooperativeness, dependability, industry attitude, enthusiasm, loyalty, creative ability, decisiveness, analytical , ability, emotional ability and coordination. Employee contribution includes quality and quantity of work, responsibility assumed, and specific goals achieved regularity of attendance, leadership offered, attitude towards superiors and associates, versatility. The degree id usually measured on a scale that can vary from 3 points (good, average and poor) to several points. The anchor points in most cases are labeled excellent-poor, high- low or never- always, depending on the format. If traits are merely to be listed, then first two dimensions will be the most appropriate. On the other had, if a statement such as can he be depended upon, describes a traits, then never-always dimensions are more appropriate. Scales can be presented in 3 ways: 1) A point scale with anchors defined e.g creative3 ability Excellent--------------------------------------Poor
5 upon:
2)A point scale with both anchors and scales points defined e.g. can be relied
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Always often sometimes seldom Never 3) A point scale with the characteristics e.g. initiative ness and a definition of scale points always, seldom, never etc.
To some extent it overcomes the abstractness of numerical scales. These ratings need to be validated against other methods of evaluation. Human behavior is complex and traits such as job knowledge, experience, ability to get things done etc. are hardly independent of each other. Besides, each may be a composite of similar traits. The validity of rating also depends on raters characteristics. The rating method may permit two employees to have the same total rating, though on specific traits they might get different ratings. for example, employees A and B have a total score of 20, but their distribution on specific characteristics may vary. Lets look at the distribution given below : Characteristics Knowledge of job Ability to get work done Sociability Personal Responsibility Co-operation Total Employee A 3 2 5 4 1 5 20 B 5 4 2 3 4 5 20
If one were to act only on total score, recommendations for A should be similar to those for B: yet A is poor in work related aspects but strong on interpersonal behavior while reverse is true for B. the solution for this problem may be to assign weight age to various characteristics according to their importance to the organizations.
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RANKING METHOD It is the oldest and simplest method of measuring performance, by which the man and his performance are considered as an entity by the rater. No attempt is made to fractionalize the rate or his performance: the whole man is compared with the whole man : that is , the ranking of a man in a work group is done against that of another. The relative position of each man is tested in terms of his numerical rank. Ranking a person n his job performance against that of another member of a competitive grou0p by placing him as member one may also do it or two or three in total group : persons are tested in order of merit and placed in a simple grouping. This is the simplest method of separating the most efficient from the least efficient and relatively easy to develop and use. But in practice it is very difficult to compare a single individual with human beings having varying behavior traits task of ranking individual becomes difficult when a large number of persons are to be rated. PAIRED COMPARISON METHOD In this method, each employee is compared every trait with all the other persons in pairs one at a time. The number of times each individual is compared with another ills tallied on a piece of paper. These numbers yield the rank order of entire group. The supervisor is provided with a bunch of slips each containing a pair of names. The rater puts a tick mark against the individual whom he considers the better of two and final ranking is determined if by number of times that individual is judged better than the others. the maximum number of pairs is indicated by the formula N(N1)/2, where N is the total number of employee to be evaluated. For example if five employees- A, B,,C,D and E are to be evaluated, then above formula 5(5-1)/2 give 10 pairs, which are :A with B: A with C, A with D:
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A with E, B with C, B with D; B with E, C with D, C with E and D with E.
The number of times a worker is considered better than others yields his score. Such scores are determined for each employee and are ranked/ordered according to his score. The main disadvantage of this method is that in a large group of employees, the number of permutations and combination increases requiring more time and efforts from evaluators.
CRITICAL INCIDENT METHOD The essence of this system is that it attempts to measure workers performance in terms of certain events or episodes that occur in performance or rate job. These events are known as critical incidents. This technique involves three steps . a test of noteworthy on the job behavior, usually of specific instances is prepared. A group of experts ten assigns scale values to them, depending upon degree of desirability of the job. Last step is constructing a check list that includes which defines good and bad workers. The supervisors use these lists for evaluating the workers. This method helps to identify key areas in which employees are weak or strong. It emphasis rating on objective evidence rather that on objective evidence rather than on subjective evaluation of traits, finally, the supervisors finds counseling easier since he knows subordinates weakness.
FORCED DISTRIBUTION MEHTOD In this method, the rater is forced to distributed his subordinate into performance categories such as good, poor etc. the individuals rated are distributed along one or more scales and fixed percentages of employees are assigned to the best and worst
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ends of the scale and to the middle bracket. A five point scale for job performance is used. One end of the scale represents best job performance whereas other end poorest job performance. The supervisor is asked to allocate approximately (10:20:40:20:10) 10 percent of his men to he best end of the scale, 20 percent in next category, 40 percent in middle category, 20 percent in the bracket next to low end and 10 percent in low bracket : 10% poorest 20% poorer than average 40% average 20% better than average 10% best
FIELD REVIEW METHOD Under this method, a trainer employee from personnel department interviews line supervisors to evaluate their respective subordinates. The appraiser is fully equipped with definite test questions, usually memorized in advance, which he puts to the supervisor. The superior is required to give his opinion about the progress of his subordinates, the level of performance of each subordinate, his weaknesses, good points, outstanding ability, promo ability and the possible plans of actions in cases requiring further consideration . The questions are asked and answered verbally. The appraiser takes detailed notes of the answers, which are then approved buy supervisor and placed in employees personal folder. The success of this system depends upon competence of the interviewer. He can contribute significantly to a reasonably accurate appraisal. He keeps the supervisor on his toes by this evaluation and minimizes bias and prejudice on his part. ANNUAL CONFIDNETIAL REPORTS In most of the government departments and public enterprises in India, performance appraisal is done through annual confidential reports. These reports differ from department to department and from level to level. A
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very casual attitude is found among raters while filling confidential reports of employees working under them. Confidential reports combine different techniques of ratings. The confidential report is written for a unit of one year and relates to performance, ability and character of the person during that year. The most important factor on which the success of confidential reports is to put an officer on proper line by pointing out the defect. Irremediable defects touching integrity and morality are not to be continued. Confidential character roll recorded by reporting officers is to be countersigned by superior authorities. The countersigning authority may take as view different from that reporting officer. Until countersigning authority gives his remarks, the character roll is not complete and is not to be acted upon. Representation against adverse remarks will not ordinarily be entertained as the very purpose of such communication is to enable the officer to know his failing to rectify them and the officer should profit by it. The communication should not be taken as a matter of argument to enter in to controversy. Confidential reports have a far-reaching influence on the career of employees since there future prospects depend on such reports and, therefore these should be handled scientifically.
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MODERN METHODS
MANAGEMENT BY OBJECTIVE Its a goal directed approach to performance appraisal in which workers and their supervisors set goals together for the upcoming evaluation period. The rating then consists of deciding two what extent the goals have been met. This approach provides clear and unambiguous criteria by which workers performance can be judged. It also eliminates subjectivity and the potential for errors and bias that goes along with it . with an MBO approach, a workers objectives can easily be adjudged at the beginning of a new evaluation period. Although the system being totally objective, this measure still contains certain disadvantages, the major on is that outcome measure may give a seriously deficient and distorted view of workers performance levels. Secondly, in some situations human judgment is more relevant than objective measure. So this approach is not fit for every situation that may occur in any organization. Another potential difficulty with outcome based performance based measure is the development of a results at any cost mentality.
360-DEGREE FEEDBACK It is the combination of peer, subordinates and self-appraisal system. This system is rising rapidly: one of the rezones being is the trend of fewer management layers. With so many more employees reporting to one supervisor, its just not possible for the supervisor to gauge every ones work accurately. Another reason is that the old system where the supervisor alone reviews performance is out of system with todays emphasis on teamwork and participate management.
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This system helps both the supervisor and the worker to go over the list and isolate the caused of any performance difficulty. Self review helps worker to gain insight in to the cause of performance problems. The peers and the subordinates judgment helps the supervisor to know whether he is aware of or sensitive to the impact of certain factor on the workers performance. The timing and culture of the organization have to be right for the introduction of these feedbacks processes. The adoption of a full 360-degree approach needs to stem from a steady evolution in appraisal and development practices. Many organization have for some years included a few very mild gesture in this direction e.g. heading on the appraises preparation form, inviting them to identify the things that management could do to help them improve performance. It is very unlikely that a 360degree scheme would be accepted where there has been little or no history of appraisal of any king : it would represent too radical a step. ASSESSMENT CENTRE METHOD It is a group of employees drawn from different work units. These employees work together on an assignment similar to the onethey would be handling when promoted. Evaluators observe and rank the performance of all the participant. Experienced managers proven ability serve as evaluators. This group evaluate all employees both individually and collectively by using simulation techniques like role playing, business games and in basket exercises .Employees are evaluated on job related characteristics considered important for job success. An assessment centre generally measures interpersonal skills, communicating ability, ability to plan and organize. Personal interviews and projective tests are used to assess work motivation, career orientation and dependence on others. Paper and pencil tests are used to measure intellectual capacity. Assessment centres are not only a method of appraisal but help to determine training and development needs of employees and provide data for human resource planning.
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This is a time consuming method and expensive method. Further the candidates who receive a negative report from the assessment centre may feel demoralized. HUMAN RESOURCE ACCOUNTING METHOD Human resources are valuable asset of any organization. This asset can be valued in terms of money. When competent and well trained employees leave an organization the human asset is decreased and vice versa. Under this method the performance is judged in terms of costs and contributions of employees. Costs of human resource consist of expenditure on human resource planning, recruitment, selection , induction, training, compensation etc. This method is still in the transitionary stage and is therefore not popular at present. BEHAVIOURALLY ANCHORED RATING SCALES This method combines graphic ratings scales with critical incidents method. BARS are descriptions of various degrees of behaviour related to specific performance dimensions. Critical areas of job performance and the most effective behavior for getting results are determined in advance. The steps involved in constructing BARS are as follows: 1. Identify critical incidents 2. select performance dimensions 3. retranslate the incidents 4. assign scales to incidents 5. develop final instrument
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RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
Research is a parlance refers to search of knowledge. Infect one can define the research as scientific & systematic search for pertinent information on specific topic. Research comprises defining and redefining the problem, formulating hypothesis, suggest solutions, collecting, organizing and evaluating data, reaching at a specific conclusion and at the same time careful evolution of the conclusion Marketing research is a systematic and objective process of identifying and formulating the market problem, setting research objectives and method for collecting, editing, tabulating, evaluating, analyzing, interpreting and preventing data in order to find justified solutions for these problems.
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OBJECTIVES OF THE STUDY
To evaluate effectiveness of Performance Appraisal System in Automobile Industry. To study the perception of employees towards the existing performance appraisal in automobile sector. To measure the satisfaction level of the employees in their current job. To know the factors which help in getting a good result in the performance appraisal rating.
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Rationale of Research
Rationale of study or research means what are the core benefits of research to the various parties like researcher, respondents. There are following benefits to various parties: 1. Benefits to researcher : The main benefit to the researcher is that he knows about the market of automobiles and effectiveness of Performance Appraisal Concept in it. 2. Benefit to the Respondents : The main benefit to the Respondents is that they can send their suggestions related to existing Performance Appraisal System of the organization.
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Research Process
In planning and designing a specific research project, it is necessary to anticipate all the steps that must be undertaken if the project is to be successful in collecting valid and reliable information. For successful completion of any project, there should be some steps which are necessary to be taken out. This step by step process is called research process. Now if I cluster the various steps according to major activities, we can overview the marketing research process for the very particular topic which is Relationship of Brand recall and consumer preference. Consists of the following steps: Formulating the problem or research objectives Research design Sources of data Designing the data collection form Sample size determination Area of research Organizing and carrying out the field work Analyzing the collected data Reporting the findings or preparing research report.
1. Formulating the research problemFormulating the research problem means defining the research objectives in the specific way. The objective of the research should be clear and specific. It includes the who, when, where, what. In this project: Here,
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Who- Employees of Automobile Industry Where Gurgaon What Effectiveness of Performance Appraisal System.
2. Research design Research design tells us about which tools and techniques are used to find the results in a better way. Research designs have three types: Exploratory research: In this research type we explore the ideas .It could conduct a study of secondary source of information, get expert opinions or resort to case study analysis. Descriptive research: It is used to describe marketing phenomenon while trying to determine the association among variables. Mainly in this research we need primary data. The research objectives in this type of research are generally describing the characteristics of a consumer segment i.e. they are demographic, socioeconomic, geographic, psychographics and benefits sought. We have gone for descriptive research in this research project. Experimental research or causal research: In this, the common sense view holds that single event (the cause) always results in the event (the effect) occurring. 3. Sources of data Mainly there are two types of sources of data which are:
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Primary data Secondary data
In this research project we used both primary as well as secondary data, but mainly research is based on the primary data. Primary data is that data which is fresh or first time is used for the results and secondary data is that data which is already been used by some researchers or other experts. For secondary data we find some guideline regarding to research. 4. Designing the data collection form Observational method Survey method For this project, researcher is going for survey method (questionnaire method). In this we will fill up a questionnaire from the various people which gives us the results for the project. Questions in the questionnaire are well organized and specific.
5. Determination of sample size: Sample is the part of universe which having same or almost same characteristics which are being used to find out the results or respondents. Sample size for the research project will be 100 respondents. 6. Area of research: Area of research is Gurgaon. Research has been conducted in this zone of industrial area. These zones will provide me with the respondents, which will be used for the findings.
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7. Organizing and carrying out the field work: Fieldwork includes selecting, training, controlling, and evaluating the members, of the field force. The method used in the field are very important, for they usually involve a substantial part of the research budget and are a potential source of error through lack of both validity and reliability. Field work methods are dictated largely by the method of collecting data, sampling requirements and the kinds of information that must be obtained. Fieldwork may be carried out in good manner by the dedication of field force towards his/her project. Field work or data collection is mainly based on field force and they require more consciousness for the research project. 8. Analyzing the collected Data: After all surveys and observation have been made, the completed data-collection forms must be processed in a way that will yield the information the project was designed to obtain. Firstly see that all collected data are consistent and logical. Then data must be prepared for tabulation. This means the data must be assigned to categories and then coded so that data can be put into the computer.
9. Reporting the findings: After tabulating and analyzing we must prepare a report on the findings. Report is clear and concise which shows the whole results in the research project. It also shows that the findings are clear to its objectives and results are clearly mentioned.
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ANALYSIS &
INTERPRETATION
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In this survey I try to find the level of effectiveness of performance appraisal in automobiles industry .
Level of Satisfaction More than 75 % 50- 70 % 25-50 % Less than 25 %
No of Respondent 30 50 16 4
N o of Respondent
In above graph, level of satisfaction from performance appraisal system is under consideration, that is the more than 30 respondents are satisfy up to 75%, 50 respondents are in between 50 to 70 % other are 16 and 4 respondents are in other category.
50 60 50 40 30 30 N o of R espondent 16 20 4 10 0 M o r e5 0 - 7 25 5 - 5 0L e s s t h a n 7% 5 % th a n 2 5 % %
Bias Carried More than 75 % 50- 75 % 25-50 % Less than 25 %
No. of Respondents 20 35 30 15
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N o .o f R e s p o n d e n ts
This graphs, show that what amount of bias carried by the appraiser. 35 respondents are
15
20
M o re th a n 7 5 % 50- 75 %
satisfy more than 75%, 30 respondents are in b/w 50 % 70% other as shown. No. of Respondents 55 25 14 6
30
2 5 -5 0 % Responses Les Yes, Always s t h a n 2 5 % 3 5 Sometimes Rarely No, Never
This graph, show does the appraiser want his/her appraise to do personal favors for him/her , 55 respondents always, no never. said yes 25 are saying
60 50 40 30 20 10 0
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N o . o f R e s p o n d e n ts
25
14
Yes, Always
Response Domestic Official Both None
Sometimes
In this graph, I asked to the respondents what kind of favor does your officer
20
No,Never
sometimes, 14 rarely and 6
Rarely
10
D o m e s t ic O ff i c i a l B o th
61
65
N one
expect out of you, 65 respondents are saying official, 20 are saying both, 10 domestic and 5 none.
Response Performance only Personal Relation Both
No. of Respondents 18 23 59
In this graph, question is asked to the workers that the assessment is made on what basis. 18 are saying performance only, 23 are saying personal affect. relation and 59 respondents are saying both factor
N o .o f R e s p o n d e n ts 80 60 40 20 0 59 18 23 N o .o f R e s p o n d e n ts
Response Hard Work Personnel Relation Political Push Trade union influence All above
Respondents 16 25 8 3 48
Performanc e only
Personal Relation
R e s p o n d e n ts H a rd W o rk 16 48 25 P e rs o n n e l R e la t io n P o lit ic a l P u s h T ra d e u n io n i n fl u e n c e A l l a b o ve 3 8
The above figure describes the factors which help in getting a good score in the performance appraisal rating. Out of all 16 say that Hard Work,25 say personal 62
Both
relations,8 say political push,3 say Trade union and 48 say that all above factors are helpful in getting good score in performance appraisal rating . Response Next Superior External Agency No. of Respondents 93 7
This graph, is related to that question in which asked, should the next superior conduct the performance appraisal process or an external agency is hired for it. 93 respondents are said next superior and rest are saying external agency.
93 100 80 60 N o .o f R e s p o n d e n ts 40 7 20 0 N e x t S uEp xe trei or nr a l A gency
Response Serious Approach Casual Approach B/w Both
No. of Respondents 36 27 37
In this graph, respondents are asked that the performance appraisal process seriously taken into consideration by your superior or a casual approach. 36 respondents are saying its a serious approach, 27 are saying its
37
36
S e rio u s A p p ro a c h C asual A p p ro a c h B /w B o th
27
63
casual approach and rest is saying its a something in b/w a serious approach and casual one.
Response Whole Period Latest Instances
No. of Respondents 78 22
This graph shows the appraiser recalls instances typical of the employee work and working during the whole period or just takes into consideration the latest instances. 78 respondents are saying this is a whole period and rest is saying latest instances are recalled.
N o .o f R e s p o n d e n ts 100 78 80 60 N o .o f R e s p o n d e n ts 40 22 20 0 W h o l e P L ea r ti e sd t o In s t a n c e s
Response Superiority Complex Inferiority Complex Jealously Positive Motivation
This graph, explain the final rating score induce any of the following factor in you. 28 are saying they feel
N o .o f R e s p o n d e n ts S u p e r io r t y C o m p le x In fe r i o r i t y C o m p le x J e a lo u s l y 13
64
28 47
12
P o s it iv e M o t i va t io n
superiority complex, 13 say its inferiority complex, 12 feel jealously and rest are feeling positive motivation.
Response Excellent Good Average Below Average
This graph, rate show that of how their workers appraisal the performance
system
organization. 52 are saying its good, 21 are saying its excellent, 27 are saying its average and no one is say its below than average.
52 60 50 40 27 30 21 20 0 10 0 Good Average Below Average
Excellent
65
FINDINGS
66
Most of the employees in the automobile industry are satisfied by the performance appraisal system. The employees show positive response towards their performance appraisal because it shows their current job as well as future career potential. The employees suggest that the appraisal should be done by the immediate supervisor and by the HR head also. While doing performance appraisal, the whole career of the employee is taken into consideration.
67
RECOMMENDATIONS & SUGGESTIONS
Performance appraisal system is a continuous activity. It is a principal medium through which given talent in an organization may be utilized most effectively. Primary purpose
68
of the performance appraisal is to help each individual handle his current job better. It is a system whereby the employee is also assessed so that he may take higher responsibilities in future. It facilitates developing and organizational climate of mutuality, openers and collabrations, it includes assessment and review of his present performance considering his skills, talents, abilities and behavioural aspect. Before suggestion are recommended, it has been kept in mind the inhibitor factor factors for the incorporation of the same in the universal applicability through the company levels are the following circumstances and considerations:Organisation has a long hierarchal structure Many of the jobs performance can be measured because of routine functions and simultaneously much job performance cant be measured where the assignment change time to time. Jobs and functions at the same level which varies from function to function and unit to unit. As is relevant from the finding majority of the staff personal who have doubts in their minds regarding the performance appraisal system can be removed if the performance appraisal and appraise. There should be more seriousness and sincerity in implementing the system . Though from the findings it is clear that as such no change is required in performance appraisal system but it is an old saying that the thing which remains constant in the world is change required than that change should be group appraisal which will be beneficial to both workers and labours. To have an effective performance appraisal system in the organization the managers should adopt measures in order to introduce performance appraisal system twice in a year so that December effect may be eliminated.
69
LIMITATIONS
Sample size is small; it may not give the clear picture of the whole automobile industry.
70
Sample area chosen by researcher is Gurgaon, thus the respondents is only from the area of Gurgaon.
Time is also very limited. Some respondents were also not interested to give the information to the researcher.
71
CONCLUSION
In conclusion this section keeping in account the observations, their analysis and the inferences drawn it may be stated although the overall attitude of the system is extremely promising but still there are certain drawbacks present in the system, which needs to be corrected in order to make the system more acceptable and beneficial for every employee of the organization effective performance management is the driving force in successful organization which ensures that the individual and teamwork together to achieve continued performance improvement appraising and managing total performance involves the certain of a working environment within which development and recognition of achievements happen on a continuous basis. The study also reveals expect more judicious and objective way of evaluating their performance. The perception of employees in automobile sector towards the existing performance appraisal is positive. They are very much satisfied towards their job.
72
ANNEXUR E
73
QUESTIONNAIRE I am VIKAS DAHIYA doing MBA from RIMT and this survey is did for my project and all information taken in this project is kept secured and not use for any other purposes. Q.1 Name of the person and organization ___________ , _________ Q.2 Department ____________________ Designation ____________________. Q.3 Level of satisfaction from Performance appraisal system ? More than 75 % 25%-50 % Q.4 Amount of bias carried by the appraiser More than 75% 25%-50% 50%-75% less than 25% 50%-75 % less than 25%
Q.5 Does the appraiser want his /her appraise to do personal favors for him/her? Yes , Always Rarely Sometimes No, Never 74
Q.6 What kind of favor does your officer expect out of you ? Domestic Both Official None
Q.7 Most of the assessment is made on the basis of Performance only Both the factors Q.8 What are the factors which help in getting a good score in the performance appraisal rating Hard work Political push All above Q.9 Should the next superior conduct the Performance appraisal process or an external agency is hired for it ? Next Superior External Agency your Personnel Relation Trade union influence Personal relation only
Q.10 The Performance appraisal process seriously taken into consideration by superior or a casual approach is followed ? A serious approach a casual approach
75
Something in b/w a serious Approach and a casual one Q.11 The appraiser recall instances typical of the employee work and working whole period or just take into consideration the latest instances ? The whole period The latest instances during the
Q.12 Does the final rating score induce any of the following factors in you ? Superiority complex Jealously Inferiority complex Positive Motivation
If any other Please specify____________________________ Q.13 How do you rate the Performance Appraisal system of your organization ? Excellent Average Good Below Average effectiveness
Q. 14 What changes would you like to suggest for improvement the of the Performance appraisal system of your reputed __________________________________________ organization ?
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BIBLIOGRAPHY
GOOGLE(www. google.com) DHI(www.dhi.nic.in) EARIC(www.earic.com) FINDSID(www.findsid.com) INDIAN BUSINESS(www.indianbusiness.nic.in) SIAM(www.siamindia.com) Research Methodology by C.R. Kothari Personnel Management by C.B. Memoria Human Resource management by C.B Gupta
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CONTENTS

INTRODUCTION TO INDIAN AUTOMOBILE INUSTRY

Turnover of Automobile Manufacturers(In USD Million)

Year 2002-03 2003-04 2004-05 2005-06 2006-07

In USD Million 14,880 16,544 20,896 27,011 34,285

15.96% 3.95% 3.6% 76.49%

Automobile Production Trends

Scope of Indian Automobile Sector

Career Prospects in Automobile Sector

EMPLOYMENT IN AUTOMOBILE SECTOR

GROWTH IN AUTOMOBILE SECTOR

INDIAN AUTO SECTOR REVIEW

AUTO SECTOR ENTERS NEW ERA OF GROWTH

PERFORMACE APPRAISAL SYSTEM

PERFORMANCE APPRAISAL IN AUTOMOBILE INDUSTRY

OBJECTIVES OF PERFORMANCE APPRAISAL

DEFINITION OF EACH FACTOR

FEATURES OF PERFORMANCE APPRAISAL SYSTEM

METHODS OF PERFORMANCE APPRAISAL

A with E, B with C, B with D; B with E, C with D, C with E and D with E.

OBJECTIVES OF THE STUDY

Primary data Secondary data

Level of Satisfaction More than 75 % 50- 70 % 25-50 % Less than 25 %

Bias Carried More than 75 % 50- 75 % 25-50 % Less than 25 %

2 5 -5 0 % Responses Les Yes, Always s t h a n 2 5 % 3 5 Sometimes Rarely No, Never

Response Domestic Official Both None

sometimes, 14 rarely and 6

Response Performance only Personal Relation Both

93 100 80 60 N o .o f R e s p o n d e n ts 40 7 20 0 N e x t S uEp xe trei or nr a l A gency

Response Serious Approach Casual Approach B/w Both

Response Whole Period Latest Instances

Response Superiority Complex Inferiority Complex Jealously Positive Motivation

Response Excellent Good Average Below Average

52 60 50 40 27 30 21 20 0 10 0 Good Average Below Average

RECOMMENDATIONS & SUGGESTIONS

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