In the era of globalization, geographical borders are getting blurred at least for the Indian automobile industry. Since the opening up of the economy in 1991, the industry has been growing by leaps and bounds. But the real momentum came in early 2000 when the government eased the FDI norms, reduced tariffs on imports, refined bank policies, and created export promotion zones. Besides these, factors like good growth rate (with a GDP of 6.9%), and improvement in living standards of the middle-class that constitutes a huge chunk of Indian population, have helped the industry and also helped the country in joining the big league of Asian carmakers. According to "Indian Automobile Industry: An Analysis (2005-2010)", a report prepared by Research and Markets, auto industry, with an output multiplier of 2.24 (for every Re. 1 invested, auto sector gives back Rs. 2.24 to the economy) is amongst the main drivers of growth of Indian economy. According to SIAM (Society of Indian Automobile Manufacturers), auto industry for the FY05, has registered a growth of 16% over the previous year. The industry rolled out 8.5 million automobiles that included 1.2 million passenger cars and MUVs (Multi-Utility Vehicles). The year also saw overseas acquisitions by Indian auto component manufacturers, spurt in exports, and the entry of several imported luxury brands into the country.
Interestingly, when compared to other developed nations, the Indian auto sector is unique in its characteristics. It has a sizeable market of two- and three-wheelers, besides a strong commercial vehicles and four-wheeler market. The two-wheeler segment leads the industry with a big share of around 80%, followed by passenger cars with a market share of 14%. Commercial vehicles and three-wheelers follow the passenger cars with a share of 4% and 3.9% respectively. The two-wheeler segment continues to dominate the auto sector due to the growing number of middle-class consumers. The growth in the two-wheeler segment is mainly driven by the growing younger generation. Price discounts, attractive and easy finance schemes, and the launch of new models at frequent intervals have all helped this segment increase its share from 77% in FY04 to 79% in FY05. Hero Honda, the market leader in the two-wheeler segment, retained its `World No. 1' tag for the fifth year in a row by selling a record number of more than 29 lakh units, registering an average growth of 24.6% over the last five-year period. Consistent innovations in product development, distribution, after-sales service and customer relationship management helped the company maintain its leadership. The company has introduced three models this yearSuper Splendor, Glamour, and Achieverand for the first time plans to enter the scooter segment with `Pleasure', which will be introduced into the market in early 2006.
|
