Impact on Automobile Industry Due To Recession in India

AS and A Level Business Studies

A PROJECT REPORT ON

RESEARCH METHODOLOGY

“Impact on Automobile Industry Due To Recession in India”

SUBMITTED BY: VIPUL R LOHIA

MMS-I

ROLL NO 28

SMT.K.G.MITTAL INSTITUTE OF MANAGEMENT I.T & RESEARCH

MUMBAI UNIVERSITY

2008-2010

INDEX

Acknowledgement

To make all task of great worth require contribution from many people and this project is also not exception to that.

I am thankful to Dr.C.V.Joshi, Director of Smt.K.G.Mittal Institute Of management, I.T & Research, Mumbai for allowing me permission to perform this project.

I wish to express my gratitude to those who may have contributed to this work, even though anonymously. I am thankful to all those whose name are mentioned above and even to those whose names need not be mentioned.

The last but not the least, I would like to pay my thanks to my family without who’s support and inspiration it was really hard task for me.

What is Recession?

The economy goes through different cycles. One of them is recession. It is observed when the prices start to increase, the living standard starts to fall, unemployment rises, and businesses stop expanding.

Another indicator of recession is a decreasing gross national product (GDP) of a nation. In fact, many experts consider that there is an economic recession only when a negative GDP growth has been observed over two consecutive quarters.

However, it is generally considered that a recession starts when there have been several quarters of slowing even if they have been positive.

Definition of Recession

Economic recession is defined as a significant decline in the economic activity across a country, lasting longer than a few months. Normally, the recession is visible in real GDP growth, industrial production, wholesale-retail trade, real personal income, and employment.

Recession: The Newspaper Definition

The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

This definition is unpopular with most economists for two main reasons. First, this definition does not take into consideration changes in other variables. For example this definition ignores any changes in the unemployment rate or consumer confidence. Second, by using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.

Recession: The BCDC Definition

The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it is called an expansionary period. By this definition, the average recession lasts about a year.

What Is Recession? Economic Recession

Depression

Before the Great Depression of the 1930s any downturn in economic activity was referred to as a depression. The term recession was developed in this period to differentiate periods like the 1930s from smaller economic declines that occurred in 1910 and 1913. This leads to the simple definition of a depression as a recession that lasts longer and has a larger decline in business activity.

The Difference

So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.

By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent. If we use this method then the Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. The United States hasn’t had anything even close to a depression in the post-war period. The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP fell by 4.9 percent. Countries such as Finland and Indonesia have suffered depressions in recent memory using this definition.

Now you should be able to determine the difference between a recession and a depression without resorting to the poor humor of the dismal scientists.

Recession Definition

Many professionals and experts around the world believe that a true economic recession can only be confirmed if GDP (Gross Domestic Product) growth is negative for a period of two or more consecutive quarters.

The roots of a recession and its true starting point actually rest in the several quarters of positive but slowing growth before the recession cycle really begins. Often in a mild recession the first quarter of negative growth is followed by slight positive growth, then negative growth returns and the recession trend continues.

While the "two quarter" definition is accepted globally, many economists have trouble supporting it completely as it does not consider other important economic change variables. For instance, current national unemployment rates or consumer confidence and spending levels are all a part of the economic system and must to be taken into account when defining a recession and its attributes.

The agency that is officially in charge of declaring a recession in the United States is known as the National Bureau of Economic Research, or NBER. The NBER define's a recession as a “significant decline in economic activity lasting more than a few months.”

We often do not receive official word of an economic recession until we are several months into it as NBER must take time to calculate the multitude of variables available before making their decision. While economic recessions are foreseeable, they generally are not detected until already in motion.

It is actually more common than you might realize for countries around the world to experience mild economic recessions. Recession (or contraction) is a natural result of the economic cycle and will adjust for changes in consumer spending and consumption or increasing and decreasing prices of goods and labor.

Rarely though entirely possible, experiencing can a multitude of these negative factors simultaneously lead to a deep recession or even long economic depression.

Causes of economic recession

An economic recession is primarily attributed to the actions taken to control the money supply in an economy. The Federal Reserve is the agency responsible for maintaining the delicate balance between money supply, interest rates, and inflation. When this delicate balance is tipped, the economy is forced to correct itself.

The Fed sometimes deals with these situations by dumping huge amounts of money supply into the money market. This helps to keep interest rates low, even as inflation rises. Inflation is the rise in the prices of goods and services over a period of time. So, if inflation is increasing, it means that goods and services are costing more now than they did before. The higher the level of inflation, the smaller the percentage of goods and services is which can be bought with a certain amount of money. There can be many contributing factors for inflation, which include but are not limited to increased costs of production, higher costs of energy, and/or the national debt.

In an environment where inflation is prevalent, people tend to cut out things like leisure spending. They also budget more, spend less on things they usually indulge in, and start saving more money than they did. As people and businesses start finding ways to cut costs and derail unneeded expenditures, the GDP begins to decline. Then, unemployment rates will rise because companies start laying off workers to cut more costs, because consumers are not spending like they were. It is these combined factors that manage to drive the economy into a state of recession.

This set of circumstances, coupled with the ability of people to get access to greater amounts of loan money due to extremely lax loan practices, creates a cycle of unsustainable economic activity that will eventually grind an economy to a near halted existence. You could also say that a recession is actually caused by factors that might stunt the growth that is available from the short term benefits to an economy that can be brought about by such things like spiking oil prices or even war. And while these are very short term in nature usually, they have been known to correct themselves quicker than the full blown recessions that have happened in the past.

Effects of economic recession

Generally, an economic recession can be spotted before it actually happens. There are ways to spot it before it actually hits by observing the changing economic landscapes in quarters that come before the actual onset. You will still see GDP growth, but it will be coupled with signs like high unemployment levels, housing price declines, stock market losses, and the absence of business expansion. When an economy sees more extended periods of economic recession, it goes beyond a recession and is declared that the economy is in a state of depression.

The only real benefit of an economic recession is that it will help to cure inflation. In fact, the delicate balancing act that the Fed struggles to pursue is to slow the growth of the economy enough so that inflation will not occur, but also so that a recession will not be triggered in the process. Now, the Fed performs this balancing act without the help of fiscal policy. Fiscal policy is usually trying to stimulate the economy as much as is possible through such things as lowering taxes, spending on programs, and ignoring account deficits.

Auto Suppliers Request $18 Billion

U.S. auto suppliers submitted a formal request to the U.S. Treasury on Friday for $18.5 billion in emergency funding to avoid a wave of bankruptcies and a deeper crisis in the auto industry.

The request, which was submitted by two industry groups, outlined three proposals for financial relief.

The proposals say the government could guarantee supplier receivables from U.S. automakers accelerate payment terms or guarantee commercial loans to parts companies.

The formal petition was filed by the Motor & Equipment Manufacturers Association and its affiliate, the Original Equipment Suppliers Association (OESA).

The submission includes a request for $10.5 billion in guarantees for receivables and accelerated payment terms, as well as $8 billion in direct loans, OESA President Neil De Koker said.

"I have been in the industry since 1962 and I have never seen anything like this," De Koker said of the current situation for suppliers.

"(What) we ...

This is a preview of the whole essay

The proposals say the government could guarantee supplier receivables from U.S. automakers accelerate payment terms or guarantee commercial loans to parts companies.

The formal petition was filed by the Motor & Equipment Manufacturers Association and its affiliate, the Original Equipment Suppliers Association (OESA).

The submission includes a request for $10.5 billion in guarantees for receivables and accelerated payment terms, as well as $8 billion in direct loans, OESA President Neil De Koker said.

"I have been in the industry since 1962 and I have never seen anything like this," De Koker said of the current situation for suppliers.

"(What) we are figuring in the next two weeks to six weeks is where the real peak of the pain will be for the suppliers because of the downturn in volume in December and the virtual shutdown of the industry in January," De Koker said.

U.S. auto suppliers, through industry groups, have been in discussions with the U.S. Treasury in recent weeks.

The requests come as General Motors Corp (GM.N) and Chrysler LLC race to meet a February 17 deadline to show U.S. officials they can be made viable after receiving $17.4 billion in aid.

Bob McKenna, president of the Motor & Equipment Manufacturers Association, which represents some 400 suppliers, warned that without government action, auto suppliers will be forced to shutter facilities or close entire operations in March and April.

"This would devastate the domestic auto industry and deepen the economic crisis," he said in a statement.

The proposal said more than 40 major suppliers filed for Chapter 11 restructuring in 2008, with industry surveys indicating about one-third of all suppliers are in imminent financial distress.

Auto parts suppliers have come under intense pressure from tight credit conditions and from plant shutdowns by major automakers at the end of last year and the beginning of 2009.

Projections from parts suppliers show payments to the companies are on track to drop to just $2 billion to $3 billion in March because of the near total shutdown in auto production at the start of the year, according to MEMA data. Suppliers had been receiving between $8 billion and $9 billion per month.

Indian Automobile History

During the 1920s, cars exhibited design refinements such as balloon tires, pressed-steel wheels, and four-wheel brakes.

In Brief

The origin of automobile is not certain. In this section of automobile history, we will only discuss about the phases of automobile in the development and modernization process since the first car was shipped to India. We will start automotive history from this point of time.

The has changed the way people live and work. The earliest of modern cars was manufactured in the year 1895. Shortly the first appearance of the car followed in India. As the century turned, three cars were imported in Mumbai (India). Within decade there were total of 1025 cars in the city.

The dawn of automobile actually goes back to 4000 years when the first wheel was used for transportation in India. In the beginning of 15th century Portuguese arrived in China and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power. By 1600s small steam-powered engine models was developed, but it took another century before a full-sized engine-powered vehicle was created.

The actual horseless carriage was introduced in the year 1893 by brothers Charles and Frank Duryea. It was the first internal-combustion motor car of America, and it was followed by Henry Ford's first experimental car that same year.

One of the highest-rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that featured a quiet 6-cylinder engine, leather interior, folding windscreens and hood, and an aluminum body. It was usually driven by chauffeurs and emphasis was on comfort and style rather than speed.

During the 1920s, the cars exhibited design refinements such as balloon tires, pressed-steel wheels, and four-wheel brakes. Graham Paige DC Phaeton of 1929 featured an 8-cylinder engine and an aluminum body.

The 1937 Pontiac De Luxe sedan had roomy interior and rear-hinged back door that suited more to the needs of families. In 1930s, vehicles were less boxy and more streamlined than their predecessors. The 1940s saw features like automatic transmission, sealed-beam headlights, and tubeless tires.

The year 1957 brought powerful high-performance cars such as Mercedes-Benz 300SL. It was built on compact and stylized lines, and was capable of 230 kmh (144 mph).

This was the Indian automobile history, and today modern cars are generally light, aerodynamically shaped, and compact.

Are recessions good for the economy?

Question from Reader E-mail: I have come to believe that a recession is good for an economy because it culls away weak businesses and teaches the strong to survive by cutting the fat that is not needed. I was wondering, though, do you think a depression is good for an economy and why?

A: I don't agree that even recessions are good for the economy. Joseph Schumpeter passionately argued in his 1942 book Capitalism, Socialism and Democracy that recessions are a necessary evil in capitalist societies. The idea that recessions are a necessary evil is still around today. Mark Rostenko, the editor of the Sovereign Strategist wrote the following in an editorial titled The Dips Don't See a "Double-Dip":

The "job" of a recession is to clean the "fat" out of the system, mop up excess, and pave the way for the next expansion. Until that process is complete, there isn't much from which a legitimate expansion can arise.

Recessions put weak companies out of business. In so doing, resources (skilled workers, capital) are freed up to be deployed more efficiently elsewhere. For example, Wall Street analysts who touted bankrupt Internet stocks are redeployed at local fast food restaurants to serve people in a capacity for which they are much better suited.

Stronger businesses that have used the contraction to firm up their bottom lines and grow more efficient are able to take advantage of these resources during the ensuing expansion. The economy emerges from a recession leaner, more efficient and in good shape for the next wave of growth and progress.

While the logic seems sound, it doesn't seem to match the data. If recessions were necessary to "clean the fat out of the system", we'd expect there to be a lot of bankruptcies and firm closures during recessions and little during booms. The data, however, does not support this as you can see in the table on the bottom of the page.

I have data for five different years, 1990, 1995, 2000, 2001 and 2002. The only year in the chart that overlaps with a recession is 1990, as the National Bureau for Economic Research indicates that the United States had a recession from July 1990 until March 1991. For the five years here, the GDP growth rate was positive in each year, from a high of 3.8% in 2000 to 0.3% in 2001.

Notice how little firm closures differ between these five years. We do not see great differences in firm closures between periods of high growth and periods of low growth. While 1995 was the beginning of a period of exceptional growth, almost 500,000 firm’s closed shop. The year 2001 saw almost no growth in the economy, but we only had 14% more business closures than in 1995 and fewer businesses filed for bankruptcy in 2001 than 1995.

Rostenko is correct when he claims that firm closures are a necessary part of capitalism since it allows "resources (skilled workers, capital) [to be] freed up to be deployed more efficiently elsewhere." When we look at the data, though, we see that we do not need recessions for this to occur; firms do not close that much more frequently in busts than in booms. So at least in this regard, recessions are not necessary at all.

Automobile Industry

The history of the automobile industry in India actually began about 4,000 years ago when the first wheel was used for transportation. In the early 15th century, the Portuguese arrived in China and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power. By the 1600s, small steam-powered engine models were developed, but it was another century before a full-sized engine-powered automobile was created. The dream a carriage that moved on its own was realized only in the 18th century when the first car rolled on the streets. Steam, petroleum gas, electricity and petrol started to be used in these cars. The automobile, as it progressed, was a product of many hands, of revolutionary concepts, and of simple, almost unnoticed upgrading. India's transport network is developing at a fast pace and the automobile industry is growing too. The automobile industry also provides employment to a large section of the population. Thus the role of automobile industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the automobile industry. It includes the manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into the car manufacturing, two-wheeler manufacturing and heavy vehicle-manufacturing units. The major car manufacturers in India are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd., Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name just a few.

Car Manufacturers in India

The reason behind the immense growth of the India Car Industry can be attributed to the availability of car loans, affordable rates of interest, smooth repayment facilities and the deductions offered to the customers by the retailers.

The constant changes in the existing car models with regard to design, innovation, technology, and colors, have led to a fiercely competitive market. Now that technology and innovation are not alien concepts for Indian car makers, Indian cars are becoming increasingly sleek, stylish, and luxurious.

Major players in the Indian Car Industry:

Fierce competition among the major car players can be witnessed in the Indian Car industry. The India car industry is being dominated by the following major players:

Car Manufacturers in India

The latest developments in the car market in India:

In Nashik, a car manufacture plant has been established as a result of a joint venture of Renault and Mahindra & Mahindra to manufacture a comparatively cheap cars (at US$ 9,700), mainly targeting the Indian middle classes, the youth, and the affluent classes in rural India. Tata Motors has plans to launch a luxury car with an engine of 33 horsepower. The recent reduction in the excise duty of the small cars from 24% to 16% will definitely prove to be a boon for the India car industry.

Technical advancements in the Indian Car Industry:

The latest technical advancements in the car market in India include the following features

Power Steering
Radial Tires
Anti-lock Breaking Systems
Tip-tronic Transmission

The varied car markets in India:

The market for small cars now occupies a substantial share of 70% out of the annual production of 1 million cars in India. Maruti Udyog, with its legendary Maruti -800 is the leader in the small car market. A number of manufacturing plants are coming up for advancements in the field of small cars. The recent launches in the small car market in India are:

Getz Prime by Hyundai Motor Co.
Tata Magic by Tata Motors Tata Magic
Palio Stile byFiat India Pvt. Ltd

Mid-sized cars are normally cars ranging from Rs. 3-8 lakh and generally meant to be 4 seaters. The mid-sized car section has recently moved beyond the 1 lakh target. The recent launches in the mid-size car market in India are:

1.4 SXI Duratorq by Ford Motor Co.
Indigo XL by Tata Motors

Luxury cars and premium cars are quite expensive and they are purchased for their design, innovation, and technology. They are usually priced over Rs. 20 lakh and have many takers in India. The recent launches in the premium car market in India and the luxury car market in India are:

Sonata Embera H-Matic by Hyundai Motor Co.
Nissan Teana by Nissan Motor Co. Ltd

Sports Utility Vehicles (SUVs) have also become very popular in India as they are considered advantageous due to their ability to accommodate more passengers. They are ideal for trips with the whole family. The Sport Utility Vehicle market in India is the most booming market in India presently and SUVs have become the fastest selling cars of India.

For more information on the India Car Industry, please search through the following links:

Sport Utility Vehicle Market in India

Automobile Industry

In India there are 100 people per vehicle, while this figure is 82 in China. It is expected that Indian automobile industry will achieve mass motorization status by 2014.

Industry Overview

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax reliefs by the Govt. of India in recent years have made remarkable impacts on Indian Automobile Industry. Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and Ford.

A well developed transportation system plays a key role in the development of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the 'canvas' of Indian economy.

Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles.

Snippets

The first automobile in India rolled in 1897 in Bombay.
India is being recognized as potential emerging auto market.
Foreign players are adding to their investments in Indian auto industry.
Within two-wheelers, motorcycles contribute 80% of the segment size.
Unlike the USA, the Indian passenger vehicle market is dominated by cars (79%).
Tata Motors dominates over 60% of the Indian commercial vehicle market.
2/3rd of auto component production is consumed directly by OEMs.
India is the largest three-wheeler market in the world.
India is the largest two-wheeler manufacturer in the world.
India is the second largest tractor manufacturer in the world.
India is the fifth largest commercial vehicle manufacturer in the world.
The number one global motorcycle manufacturer is in India.
India is the fourth largest car market in Asia - recently crossed the 1 million mark.

Segment Knowhow

Among the two-wheeler segment, motorcycles have major share in the market. contributes 50% motorcycles to the market. In it Honda holds 46% share in scooter and makes 82% of the mopeds in the country.

40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share. Among the passenger transport, is the leader by making 68% of the three-wheelers.

Cars dominate the passenger vehicle market by 79%. has 52% share in passenger cars and is a complete monopoly in multipurpose vehicles. In utility vehicles holds 42% share.

In commercial vehicle, dominates the market with more than 60% share. Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer.

Miscellaneous

Hyderabad, the Hi-Tech City, is going to come up with the first automobile mall of the country by the second half of 2008. It would be set up by city-based Prajay Engineers Syndicate in area of more than 35 acres. This 'Autopolis' would have facilities for automobile financing institutions and insurance services to create a complete range of services required for both and customers. It will also have a multi-purpose convention centre for auto fairs and product launches.

Cars by Price Range

Industry Investment

According to Commerce Minister Kamal Nath, India is an attractive destination for global auto giants like BMW, General Motors, Ford and Hyundai who were setting base in India, despite the absence of specific trade agreements.

Current Scenario

On the cost front of Indian automobile industry, OEMs are eyeing India in a big way, investing to source products and components at significant discounts to home market.
On the revenue side, OEMs are active in the booming passenger car market in India.

Overview

Snippets

By 2010, India is expected to witness over Rs 30,000 crore of investment.
has set up the second car with an investment of Rs 6,500 crore.
will bring in more than Rs 3,800 crore to India.
will be investing Rs 2,000 crore in its small car project.
will be investing Rs 100 crore and Ford about Rs 350 crore.
Ashok Leyland and Tata Motors have each announced over Rs 1,000 crore of investment.

Why India?

The economy of India is emerging. The following table show the ranking of India in the past four years.

Twin Advantages:

Scaling costs
Optimising resources

Note: Excellent source for IT based engineering solutions - for products & process integration.

Facts & Figures

The in India is on an investment overdrive. Be it passenger car or two-wheeler manufacturers, commercial vehicle makers or three-wheeler companies - everyone appears to be in a scramble to hike production capacities. The country is expected to witness over Rs 30,000 crore of investment by 2010.

Over the next one year, some 20 new cars will be seen on Indian roads. Take note of this, is coming up with new Zen and the diesel version of Swift during the next few months. will also be unmasking the Verna and a brand new diesel car. will be launching a mini and may be a compact car.

Most of the companies have made their intentions clear. Maruti Udyog has set up the second car plant with a manufacturing capacity of 2.5 lakh units per annum for an investment of Rs 6,500 crore (Rs 3,200 crore for diesel engines and Rs 2,718 crore for the car plant itself). Hyundai and have announced plans for investing a similar amount over the next 3 years. Hyundai will bring in more than Rs 3,800 crore to India, Tata Motors will be investing Rs 2,000 crore in its small car project.

General Motors will be investing Rs 100 crore, about Rs 350 crore and announced modest expansion plans even as Honda Siel has earmarked Rs 3,000 crore over the next decade for India - a sizeable chunk of this should come by 2010 since the company is also looking to enter the lucrative small car segment.

Some new entrants will also taste the water. They are the big names in passenger cars like Citroen, Volkswagen AG, Nissan (separately, apart from its tie-up with ), Alfa Romeo, Maserati, Land Rover and Aston Martin.

Talking about the commercial vehicle segment, Ashok Leyland and Tata Motors have each announced well over Rs 1,000 crore of investment. 's joint venture with International Trucks is expected to see an infusion of at least Rs 500 crore.

In two-wheelers segment, Chinese bike major Lifan and the iconic US brand Harley-Davidson are expected to enter India soon. is about to establish its fourth manufacturing plant. and are moving to the excise-free zones of Himachal Pradesh and Uttaranchal for putting up new capacity.

Auto Export India

In auto export, passenger vehicle exports have grown over five times from the start of the decade and two-wheeler exports have reached more than double.

Current Scenario

Foreign auto makers, including , , Honda Motor Co. Ltd., , DaimlerChrysler AG and , are looking to increase their presence in India and use it as an export hub.
Exports of auto components, whose manufacturing costs are 30-40 per cent lower than in the West, have grown at 25% a year between 2000 to 2005.

Overview

Snippets

In 2003-04 the export of the industry was 55.98%.
Two-wheelers are mostly exported from India.
The reason behind the export is cost competitiveness in terms of labor and raw material.
The export of auto components has grown to 19% from the start of the decade.

Facts & Figures

The Indian automotive export industry presently is finding a good recognition globally. The auto industry along with the component industry is contributing to the export effort of the country. In 2002-03, the export of the had registered a growth rate of 65.35%. In 2003-04, it was 55.98%. The following table briefs about the 2003-04 and 2004-05 (up to April-Dec. 2004) automobile export in numbers.

Export of Auto Components:

Investments in the auto ancillary sector are rising rapidly. In 1997, the size of the auto component industry was US$ 2.4 billion and now in 2004-05 it has become US$ 8.7 billion industry. The export of auto components has grown at a compounded growth rate of 19 per cent over the past six years.

Jai Parabolic Springs (JPSL) is a leading manufacturer of parabolic springs in India and has bagged two major orders from international auto majors, (GE) and .

Robert Bosch, auto parts maker of Germany has relocated manufacture of certain products to MICO, India. Crosslink International Wheels, Malaysia's leading automobile security provider Wheels Electronic SDN, is setting up its manufacturing unit at Baddi to make India the export hub for the SAARC region.

PSA Peugeot Citroën, French automobile group has placed orders for components worth US$ 10 million with Indian companies.

exported components worth US$ 8.3 million in 2004-05 to its operations in South Africa. GKN Driveline and Dubai based auto ancilliary major Parts International plans for an investment in India.

Analysis of Indian Exports:

Export Imperatives:

Internal Factors:

Attaining high quality for global standards.
Continuous cost reduction for global competitiveness.
Supply chain management (logistics).
Attaining economies of scale & scope.

External Factors:

Improve infrastructure (ports, roads, etc).
Improve EXIM regulations.

Vehicle Distribution in India

Maharashtra has maximum number of registered vehicles in India.

Overview

In this section we will discuss about distribution of vehicles in Indian States and Union Territories. If we look at the graph of vehicle distribution by area, we will learn that in Maharashtra, maximum number of vehicles ply. Check yourself from the following details:

Non-Transport Vehicles in States

Maharashtra has the most number of vehicles followed by Tamil Nadu and Gujarat The figures are are 8133837, 8004982 and 6508397 units respectively.
In cars , Maharashtra leads the path with 831261 registerd cars and next to it is Tamil Nadu and Gujarat haveing 690271 and 504801 registered units respectively.
In two-wheelers, Tamil Nadu has registered the maximum units, 6260093.

Transport Vehicles in States

Maharashtra is the leader once again with a total of 1066610 registered vehicles.
In Light Motor Vehicles for goods Maharashtra has registered 228157 vehicles; Tamil Nadu with 195069 vehicles holds the second position.
In Light Motor Vehicles for passengers, Maharashtra tops by having 463550 units and Kerala follows with 276244 units.
Most number of taxis ply is Tamil Nadu which is followed by Kerala and then by Maharashtra. The figures are 110080, 108503 and 94920 units respectively.

Non Transport Vehicles in Union Territories

Total non-transport vehicles in the Indian Union Territories are 4669433.
Delhi has the maximum registered non-transport vehicles plying, 3751582. Next is Chandigarh with 548790 and Pondicherry with 275422 registered vehicles.

Transport Vehicles in Union Territories

Total number of transport vehicles in the Indian Union Territories is 6999998.
Delhi has the maximum registered transport vehicles plying, 219288. Next is Pondicherry with 17054 and Chandigarh with 12985 registered vehicles.

Transport in State

Total transport vehicles in the Indian states are 6735291. Among them Maharashtra has the maximum registered transport vehicles plying. Next is Tamil Nadu with 786568 and Gujarat with 719479 registered vehicles. The following pie-chart and table will give you a complete picture of transport vehicles in different states of the country.

Source: Department of Road Transport and Highways, Ministry of Shipping, Road Transport and Highways, Government of India

Transport in UT

Total transport vehicles in the Indian Union Territories are 6999998. Among them Delhi has the maximum registered transport vehicles plying. Next is Pondicherry with 17054 and Chandigarh with 12985 registered vehicles. The following pie-chart and table will give you a complete picture of transport vehicles in different Union Territories of the country.

Source: Department of Road Transport and Highways, Ministry of Shipping, Road Transport and Highways, Government of India

Non Transport Vehicle in Indian States

Total non-transport vehicles in the Indian states are 55363601. Among them Tamil Nadu has the maximum registered non-transport vehicles plying. Next is Maharashtra with 7067227 and Gujarat with 5788891 registered vehicles. The following pie-chart and table will give you a complete picture of transport vehicles in different states of the country.

Source: Department of Road Transport and Highways, Ministry of Shipping, Road Transport and Highways, Government of India

Non Transport in UT

Total non transport vehicles in the Indian Union Territories are 4669433 in numbers. Among these Union Territories, Delhi has the maximum registered non-transport vehicles plying. Next is Chandigarh with 548790 and Pondicherry with 275422 registered vehicles. The following pie-chart and table will give you a complete picture of transport vehicles in different Union Territories of the country.

Source: Department of Road Transport and Highways, Ministry of Shipping, Road Transport and Highways, Government of India

Indian Auto Associations

Different associations serve different purpose. Automobile association looks after the different phase of automobile industry. Some checks the wellness of automobile associates in different regions where as other keeps the auto component industry healthy. Following are the contact details of few automobile associations in India.

C-8 Institutional Area

South of IIT, New Delhi – 110016

Tel.: + (91)-(11)-26965397, 26852052, 26611034, 26852032

Fax: + (91)-(11)-26866302

E-mail: [email protected],

Website:

Affiliated to Min. of Heavy Industries & Public Enterprise, Govt. of India

Regd. Office

S. No. 102, Vetal Hill, Off Paud Rd., Kothrud

Pune- 411038, (Maharashtra), India

Postal Address

P.O. Box No. 832

Pune-411004, India

Tel.: + (91)-(20)-25431284

Fax: + (91)-(20)-25434190

E-mail:

Website:

AASI Centre, 187, Anna Salai

Post Box No. 729, Chennai 600 006

Tel.: + (91)-(44)-28521162, 28524061

Fax: + (91)-(44)-28511548

E-mail: [email protected],

Website:

Core 4-B, 5th Floor, India Habitat Centre

Lodhi Road, New Delhi - 110 003

Tel.: + (91)-(11)-24647810 -12

Fax: + (91)-(11)-24648222

E-mail:

Website:

Lalji Naranji Memorial Bldg.

76, Veer Nariman Road, Churchgate

Mumbai - 400 020

Tel.: + (91)-(22)-22041085, 22880407, 22047032, 22041271

Fax: + (91)-(22)-22041382

E-mail: [email protected],

Website:

6th Floor The Capital Court

Ol of Palme Marg, Munirka

New Delhi 110 067

Tel.: + (91)-(11)-2660315, 26175873, 26184479

Fax: + (91)-(11)-26160317

E-mail: [email protected],

Website:

MARVARI VIDYALAYA SANCHALIT

(Approved by Govt. of Maharashtra and AICTE, New Delhi)

Affiliated to UNIVERSITY OF MUMBAI

______________________________________________________________________________

Bhandarwada, Malad-(west), Mumbai-400 064.

Tel.: 28831674 / 28831787

Ref. No.______________ Date:

CERTIFICATE

This is to certify that Mr. Vipul R. Lohia , Roll no. 28 have submitted this project report entitled “Impact on Automobile Industry due to recession In India” in fulfillment of the requirements for the II-semester of M.M.S(Master of Management Studies) course during the academic year 2008-2010.

Teacher I/C/Guide Director

Signature

(Intern Examiner)

Date:

Impact on Automobile Industry Due To Recession in India

To make all task of great worth require contribution from many people and this project is also not exception to that.

I am thankful to Dr.C.V.Joshi, Director of Smt.K.G.Mittal Institute Of management, I.T & Research, Mumbai for allowing me permission to perform this project.

I wish to express my gratitude to those who may have contributed to this work, even though anonymously. I am thankful to all those whose name are mentioned above and even to those whose names need not be mentioned.

The last but not the least, I would like to pay my thanks to my family without who’s support and inspiration it was really hard task for me.

Definition of Recession

Recession: The Newspaper Definition

Recession: The BCDC Definition

What Is Recession? Economic Recession

Depression

The Difference

Recession Definition

Effects of economic recession

Auto Suppliers Request $18 Billion

This is a preview of the whole essay

Question from Reader E-mail: I have come to believe that a recession is good for an economy because it culls away weak businesses and teaches the strong to survive by cutting the fat that is not needed. I was wondering, though, do you think a depression is good for an economy and why?

Industry Overview

Snippets

Segment Knowhow

Miscellaneous

Current Scenario

Overview

Current Scenario

Overview

Overview

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