Indian automobile industry is highly driven by enhanced demand for new models and variants in domestic and international markets. Rise in disposable income, favourable demographics and supportive business environment are certain factors that are attracting automobile giants from all over the world to the Indian landscape. Even domestic manufacturers are executing changes in their production patterns to meet the international standards and deliver the best quality in their offerings.
Hybrid and electronic vehicles are new developments on the automobile canvas and India is one of the key markets for them. Price sensitive Indian customers are showing positive bent of outlook towards green technologies and are migrating towards new vehicle technologies. Thus, global and Indian manufacturers are focussing their efforts to develop innovative products, technologies and supply chains.
Automakers are having high hopes with sedans as there seems to be a good demand for them in domestic and international markets. After the small car segment (which accounts for 60 per cent of the domestic passenger vehicle market), the mid-size vehicles segment is the second largest by volume (accounts for 15 per cent of the overall volume). Launch of strong diesel models and robust demand from international markets are major factors that are driving the growth of mid-size vehicles like Swift Dzire, Hyundai Verna, Toyota Etios and Nissan Sunny. Car exports reported a healthy growth of 14 per cent in 2011-12 of which sedans remained the second-largest category.
Utility vehicles are also on a rage in Indian markets these days. Automakers are proactively lining up new models to attract consumers who are highly enthusiastic about multi-utility vehicles (MUVs). With large number of players and variants, the market for MUVs is getting competitive day-by-day. Mahindra & Mahindra (M&M) is the market leader with 49.31 per cent of the share, followed by Toyota Kirloskar Motor India Pvt with 20.08 per cent, Maruti Suzuki India Ltd (MSIL) with 16.7 per cent and Tata Motors with 7.87 per cent of the pie (at the end of May 2012).
According to the recent data released by the Society of Indian Automobile Manufacturers (SIAM),
Gujarat has been one of the most proactive states in terms of investor-friendly policies and environment. MSIL has recently signed a state support agreement (SSA) with the State Government for the purchase of land to set up its third manufacturing facility. The company plans to infuse about Rs 4,000 crore (US$ 723.17 million) in the initial phase of the project and equivalent amount would be invested by the company's ancillary suppliers to set up a vendor park near the facility. The new unit is expected to commence operations by 2015-16.
The Government is also contemplating on a mandatory recall policy. A high-level meeting is expected to be conducted in this regard which would include officials of the department of heavy industries, the Ministry of Road Transport and Highways, and SIAM representatives.
In a bid to improve safety features of vehicles, the Government has asked automobile manufacturers to develop a gadget which would be similar to the 'black box' installed in planes. The owner would not be able to turn the instrument off or on and the snapshot could be viewed by legal bodies, insurance companies and automakers. Mr C P Joshi, Minister of Road Transport and Highways, has asked manufacturers to contemplate on the option of fixing such IT-enabled instrument to improve safety and security of the vehicles.
According to the forecasts made by the Center for Monitoring Indian Economy (CMIE), overall automobile production would expand by 9.6 per cent in 2012-13 wherein commercial vehicle production is expected to clock a healthy growth rate of 8.5 per cent. The report predicts that the medium and heavy commercial vehicle production would grow by 2.4 per cent while passenger vehicle production may enhance by 9.7 per cent. Multi-utility vehicles are expected to grow faster at 19.7 per cent while two-wheeler production is anticipated to grow by 9.7 per cent.
Exchange Rate Used: INR 1 = US$ 0.01807 as on July 21, 2012
References: Media Reports, Press Releases, Society of Indian Automobile Manufacturers (SIAM) publications