The Indian automobile industry is one of the fastest growing automobile industries in the world. The low penetration level of cars in India coupled with rise in the disposable income of its working population has made it an attractive destination for global automobile manufacturers. This case deals with the mid-size car segment of the passenger car industry in India. In 2009-10, this segment accounted for approximately 12.7% of the total passenger cars manufactured in India and its Year-on-year (YoY) growth rate was approximately 15%. The major players in this segment include Tata Motors, Maruti Suzuki, Hyundai Motors India, Ford India, General Motors India, Honda Siel India, Mahindra-Renault and Hindustan Motors. In addition to the existing players, various new players like Volkswagen, Nissan, Fiat, etc., have either already entered in this segment or are about to enter. The case highlights various issues being faced by current as well as new entrants in this segment. The case provides exhaustive contemporary data on the mid-size car segment of the passenger car industry in India. Analysis of the case can be done using Porter's five forces model.

Automobile Industry is considered to be one of the key sectors of any economy; it is capable of being the driver of economic growth because of both its backward as well as forward linkages with other sectors of the economy. According to the Automotive Mission Plan (2006-16), India is one of the fastest growing automobile industries in the world. The sector's share in Gross Domestic Product (GDP) rose from 2.8% in fiscal year 1992-93 (April 1992-March 1993) to 5% in fiscal year 2005-06 and it has been rising every year since then. In the year 2009-10, Indian automobile industry produced more than 2 million passenger cars and more than 0.5 million commercial vehicles. According to the Eleventh Five Year Plan (2007-12), after liberalization in 1991, Indian Automotive Industry had registered a spectacular growth of 17% during five fiscal years ranging between 2000-01 and 2005-06. Till 2002-03, it had achieved an investment of INR 50,000 cr (US$10.99 bn) which went up to INR 80,000 cr in 2007 (US$17.58 bn) with a turnover of INR 165,000 cr (US$36.26 bn). Moreover, an investment worth INR 35,000 cr (US$7.69 bn) was in the pipeline. According to the Annual Report (2007-08) of Ministry of Heavy Industries and Public Enterprises, Government of India, India is the second largest two-wheeler manufacturer in the world, fifth largest commercial vehicle manufacturer in the world, largest manufacturer of tractors in the world and fourth largest passenger car market in Asia. This achievement of the Indian automotive industry could be attributed to the Indian government's decision to de-license the sector followed by up to 100% foreign direct investment through automatic route which enabled the industry to embark on a new journey since 1991. The above initiatives resulted in setting up of manufacturing facilities by major global players. It resulted in the massive enhancement of the production level of automobiles (which included passenger vehicles, commercial vehicles, two wheelers and three wheelers) from 2 million in 1991 to 11.17 million vehicles in 2008-09. The above measures taken by the Indian Government made India the new launch pad for global car manufacturers like Honda, Ford, Hyundai, General Motors, etc. Rising level of income of the Indians, availability of easy credit facility, relaxations in regulations by the Indian government in terms of import tariffs and equity regulations could be attributed as major reasons for this upsurge.

The case concentrates on the mid-size car segment in India. It analyzes the reasons for the growth of this segment and the contemporary growth trends that it shows. The important issues that the case raises are: How is the impact of various external factors shaping this segment and what would be the future of this segment?

Business Strategy Journal, Indian Automobile Industry, Car Industry, Gross Domestic Product, GDP, Public Enterprises, Commercial Vehicles, Hyundai Motors, Indian Consumers, Global Automobile Companies, Post Liberalization, Indian Economy, Indian Automotive Component Industry.