Automobile Industry Essay

1028 Words5 Pages
In India, till early eighties, consumers had very limited options for passenger cars. The Automobile Industry has been in the booming phase for the past 10 years, on the strength of the Indian Government’s liberalized economy policy and freedom from the License Raj. Globalization and liberalization, with the entry of many prominent foreign manufacturers, changed the automobile scenario in India, since early 1990‟s. The Government of India allowed Foreign Joint Venture in the industry since early 1990, which saw many automobile giants entering the Indian market with their models, readily available, without much waiting time for the delivery. Sudden interest of major global players has made Indian auto industry very competitive, as India provides twin benefit of ready market and low cost manufacturing base for them. Manufacturers such as Ford, General Motors, Honda, Toyota, Suzuki, Hyundai, Renault, Mitsubishi, Benz, BMW, Volkswagen and Nissan set up their manufacturing units in India in joint venture with their Indian counterpart companies, by making use of the Foreign Direct Investment policy of the Government of India, These manufacturers started capturing the hearts of Indian car customers with their choice of technological and innovative product features, with quality and reliability. Customers have started thinking to change over to the new models of cars, with related ease than before, to suit their changing life styles. With the multiplicity of choices available to the Indian passenger car buyers, it drastically changed the way the car purchase scenario in India. This transformed the automobile scene from a sellers‟ market to buyers‟ market. Car customers started developing their own personal preferences and purchasing patte... ... middle of paper ... ...flation has a cascading effect on the Indian automobile industry. The rise in inflation will have adverse impact on the industry that will not only see interest rates getting further hardened but also a drop in demand due to the squeeze in purchasing power. The margins of the auto manufacturers who have been selling products at lower price and absorbing the burden will be hit. The industry is struggling hard in the unfavorable economic conditions including rise in fuel prices, input costs and contraction of vehicle financing. The manufacturers had undertaken revision in prices of vehicles and launching CNG/LPG variants. To spoil the game further, the finance ministry announced the introduction of a specific rate of excise duty ranging from Rs 15,000 to Rs 20,000 on cars with engine specifications of 1500 cc and above, in addition to the existing 24% excise duty.

More about Automobile Industry Essay

Open Document