CHAPTER 1:-INTRODUCTION

Indian Automobile Industry

The automobile industry is one of the largest industries in India is the ninth largest in the world with annual production of over 2.3 million units in 2008.In 2009,India emerge as the India 4th largest exporters of automobiles, behind Japan, South Corea and Thailand as in many other countries. Indian automobile industry is involved in design, development, manufacture, marketing, and sale of motor vehicles. There are a number of global automotive giants that are upbeat about the expansion plans and collaboration with domestic companies to produce automobiles in Indi. It plays a major role in the growth of economy in India. The industry comprises automobiles and auto component sectors, which encompass passenger cars, two-wheelers, three-wheelers, tractors, commercial vehicles, multi- utility vehicles and components. Today, the Indian automobile industry is the world s largest motorcycle manufacturer, the second largest two-wheeler and tractor manufacturer, the fifth largest commercial vehicle manufacturer and the fourth largest car maker in Asia. Apart from serving the domestic market, the Indian auto sector has also become a sourcing hub for the global auto giants. The Government of India has introduced an ambitious project of setting up world-class automotive testing and R&D infrastructure to place India in the USD 6 trillion global automotive business. This book details the current status and factors influencing the growth of the Indian automobile industry; its future prospects and the success stories of some automobile giants in India. It also focuses on the future growth of the industry as a result of the newly adopted technologies and strategies. The automotive sector, comprising of the automobile and auto component sub sectors, is one of the key segments of the economy having extensive forward and backward linkages with other key segments of the economy. It contributes about 4 per cent in India's Gross Domestic Product (GDP) and 5 per cent in India's industrial production. The well-developed Indian automotive industry ably fulfils this catalytic role by producing a wide variety of vehicles like passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc. 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.

Investment Opportunities:
In India, lots of investment opportunities exist in the following areas: Establishing Research and Development Centers Establishing Engineering Centers Passenger Car Segment 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. After

liberalization of Indian Economy in general and automobile industry in particular, considerable number of Multinational Companies are operating in India either as wholly owned subsidiaries or in collaboration with their Indian partners.

Source: http://www.oppapers.com/essays/Automobile-Industrypcd-India/155453 Protectionism Early 1980s

This was the pre-1980 era where the manufacturing of automobiles especially cars was subject to strict licensing, restrictive tariff structure and limited avenues for expansion. The advent of foreign technology collaboration came with the inception of Maruti Udyog in collaboration with Suzuki of Japan in the passenger car segment. Indian roads saw the launch of Maruti 800. It was still not very easy to own a car, first was affordability and next was a long waiting period.

Liberalization 1990s
In the early 1990s, with liberalization, some more Japanese manufacturers entered the two-wheeler and the commercial vehicle segment in a collaborative arrangement. These period characterized joint ventures in India and the market started opening up. Automobile Industry was deli censed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, deli censed in 1993. The abolition of the controls led to an avalanche of demand. The era of controls and protection came to an end. Curbs on capacity were done away with, decrease in customs and excise duties meant that a vehicles started getting affordable. The entry of foreign banks with attractive auto finance schemes helped garner a huge base of middle class population. However the market was still ruled by the sellers.

Globalization 2000s
Early 2000 however saw globalization of Indian auto industry. Several policy changes were introduced with focus on boosting the auto exports. A Core Group on Automotive Research and Development (CAR) was established in 2003 for encouraging R&D activities. Foreign manufactures started looking at India for sourcing auto components. The buyers started ruling the market due to the availability of choices in the form of models, price points and brands. A vibrant economy meant an increase in the GDP and per capita income. These factors turned out to be significant contributors in pushing up the domestic demand. The vast geographic spread of India attracted foreign investments. The marquee brands from all over the world started courting Indian consumers aggressively. The mature markets in the developed countries paled in comparison to the sheer numbers and the growth phase of the Indian auto industry. For the commercial vehicles, the steady growth in Indian economy led to demand for trucks, tempos, buses etc. The IT and BPO culture that boosted exports and employment also pushed the sales of vehicles. Indian economy also witnessed rapid industrialization. Factories needed transport both for goods and for their employees. The retail boom in India saw malls, supermarket chains mushrooming all over the urban areas, pushed the demand for efficient logistics and that in turn increased the number of commercial vehicles.

Source : http://www.india-reports.com/articles/Auto-Industry-India-Evolution-Growth.aspx

Factors contributing to the increased demand of automotives and the growth of Indian Auto sector
The convergence of government policies, economys growth, peoples purchasing power have all contributed to the phenomenal growth of Indian Auto industry. Some of the important growth drivers are explained below.
Rise in the industrial and agricultural output indirectly helps Indian Auto industry Industrial and agricultural output increase has reflected in higher GDP and overall growth of the economy which is about 9% in the last three years. Higher GDP means more purchasing power. Sales of vehicles for domestic and commercial consumption have seen high growth in these three years too. Growth in the road infrastructure increases demand for vehicles Indian highways and roads have improved a lot in quality and connectivity in the last 20 years. Projects like the Golden Quadrilateral aim to make even remote areas accessible by road. Some of the National Highways are of international standards. This has made road transport a viable, cost effective and speedy option both for goods and passenger traffic. Rise in the Per capita income increases two/four wheeler sales Industrial growth in the 70s, IT boom in the 1980s and BPO boom in the 1990s have transformed the Indian middle class. The present generation is able to earn the same levels of salary that their parents were earning after years of work. This has pushed up the demand for two and four wheelers. A rise in per capita income is also indirectly responsible for the retail boom and industrial boom for consumer durables. This has pushed up the demand for commercial vehicles to enable efficient distribution. Urbanization changes the face of Indian auto industry Joint families in towns and villages have given away to migration of the younger generation to cities in search of better opportunities. The new-age educated migrants and nuclear families (many with double income couples) have a higher purchasing power. Presently, the rate of spread of urbanization is 30% which is likely to increase by 40% in 2030 (UN). Urbanization has promoted infrastructural development and it is estimated to spread at a rate of $500 billion in the next 5-6 years Rising working class and middle class contribute to increased demand of automotives Post 1980s, a surging economy has created millions of new jobs in the private sector. This has lead to a lot of prosperity in the working class and the middle income households. They are able to provide for food, clothing and education and also are able to think of owning luxuries like vehicles. According to the Planning Commission report, between the year 2003 and 2009, 130 million people would have been added to the working population. According to a finding from McKinsey, the middle income group will grow from 50 million to 550 million by 2025.

Exhaustive range of options in price and models of automotives Indian consumer in 70s and 80s had to choose between and Premier Padmini or an Ambassador. Now there are at least 123 different models of cars from 30 odd manufacturers available. The prices of the compact cars like Tatas Nano have made the world sit up and take note of the truly unbeatable price points. Attractive Finance Schemes for purchase of automotives Most nationalized and foreign banks have very tempting finance options and low interest rates for purchase of cars and two wheelers. There are specialized companies that finance the commercial vehicles. All this has made the dream of owning a vehicle an easy reality Favorable Government Policies for the auto sector Apart from a healthy growing economy, Indian auto industry has a lot to thank the government for the amazing growth rates. The Indian government has introduced several industry specific programs. The Indian Auto Policy of 2002, introduced measures like low entry barriers and investment incentives by the local state governments. To encourage in-house research and development activities, Government has introduced policies that allow weighted tax deduction up to 150%. National Automotive Testing and R&D Infrastructure Project (NATRIP) has been set up n in Rae Bareilly, Ahmednagar, Pune, Manesar, Silchar, Indore and Chennai for strengthening the R&D infrastructure. Cost efficiencies contributing to lower production costs According to a study by KPMG in 2007, India Automotive Study, the labour cost per hour hovers around $20 in UK, USA and Germany. In India, it works out to just $1.60. Due to the huge savings in the labour cost sourcing auto components and finished cars makes a lot of business sense to the auto manufacturers who have global presence. The improved design capabilities and continuous improvement in quality has been possible only because of the availability of skilled manpower like engineers and IT professionals. The future of Indian Auto Industry According to a report from United Nations Industrial Development Organizations (UNIDO) in International Yearbook of Industrial Statistics 2008, India enjoys 12th position amongst top 15 automakers in the world. India is at the 4th position amongst the auto makers of developing countries. By 2016 the size of the Indian automobile industry is expected to grow by 13%, to reach a mark of US$ 120159 billion. Presently, India is the 2nd largest two wheeler market in the world and fourth largest commercial vehicle market worldwide. With allies in a strong economy, rising demand and financial backing, Indian auto industry is standing at the threshold of success.

CHAPTER 2:- RESEARCH METHODOLOGY

 Research Statement: To study the Future fore casting and trend analysis of automobile industries

 Objective of Study:y To study the demand forecasting of automobile industries.

y To find out the present and future trend of the automobile industries. y To compression between the automobile industries future trend data and our
calculated data.

 Variables :y y Dependent variable is automobile sales. Independent variables are performance, style, company image.

 Research Method:a)

Descriptive Method

Data Collection: To study the Forecasting and trend analysis we have collected the secondary data from various sources.  In the present study we have taken the sales data for last Seven years. (2003-04 2009-10)  And the past event the information has been taken from various websites.

b) Analysis:
To find out the Demand forecasting and trend analysis of automobile sector, we have run the Simple Moving average and trend analysis with the help of Excel.

 Limitations of the Study:y Period for the data collection is limited for the study only for the Seven year data.

CHAPTER 3:- DATA ANALYSIS

Demand Forecasting of Automobile Industries using Simple Moving Average.
We calculate the moving averages for two, three and up to 6 Years.
The following table is showing the different errors for the Simple moving averages.

 Errors from Total Production Total Production Moving AVG Error (AVG/n) MA-2 9.19E+10 MA-3 1.97E+13 MA-4 1.09E+14 MA-5 3.43E14 MA-6 9.39E+14 Minimum (MA-4) = 1.09E+14

According to that we came to know that MA-4 which is moving average for four Years has the minimum error From Total Production. So we took the MA- 4 to forecast the value of Total Production of Automobile industries.

 Errors from Total Passenger vehicles Passenger vehicles Moving AVG Error (AVG/n) MA-2 2.93E+09 MA-3 4.38E+11 MA-4 2.47E+12 MA-5 8.03E+12 MA-6 2.29E+13 Minimum ( MA-6) = 2.29E+13
According to that we came to know that MA-6 which is moving average for six Years has the minimum error From Total Passenger vehicles Production. So we took the MA- 6 to forecast the value of Passenger vehicles of Automobile industries.

 Errors from Total Commercial vehicles Commercial vehicle Moving AVG Error (AVG/n) MA-2 4.25E+08 MA-3 3.83E+10 MA-4 2.11E+11 MA-5 6.76E+11 MA-6 1.82E+12 Minimum ( MA-6) = 1.82E+12
According to that we came to know that MA-6 which is moving average for six Years has the minimum error From Total Commercial vehicle Production. So we took the MA- 6 to forecast the value of Commercial vehicle of Automobile industries.

 Errors from Total Three wheeler vehicles Three wheeler Moving AVG Error (AVG/n) MA-2 2.22E+08 MA-3 4.23E+10 MA-4 2.33E+11 MA-5 7.38E+11 MA-6 1.98E+12 Minimum ( MA-6) = 1.98E+12
According to that we came to know that MA-6 which is moving average for six Years has the minimum error From Total Three wheeler Production. So we took the MA- 6 to forecast the value of Three Wheeler vehicle of Automobile industries.

 Errors from Total Two wheeler vehicles Two wheeler Moving AVG Error (AVG/n) MA-2 5.09E+10 MA-3 1.14E+13 MA-4 6.27E+13 MA-5 1.96E+14 MA-6 5.34E+14 Minimum ( MA-3) = 1.14E+13
According to that we came to know that MA-3 which is moving average for Three Years has the minimum error From Total Two wheeler Production. So we took the MA- 3 to forecast the value of Two Wheeler vehicle of Automobile industries.

Trend analysis of Automobile Industries

[Comparision Between Industries data and Our Calculated Data]
Industrial Data Calculated Data Potential Vehicles Sales in India (2015-16) Million Units
25 20 15 10 5 0 pass vehic com vehic three whe two whe total prod 3.486 0.83 0.829 13.96 19.105

Hear, we compare the both chart and conclude the following things. y y y y y Potential Vehicles Sales in India (2015-16) of cars in industrial data is 2.65 Million Units and Calculated data is 3.48 Million Units. Our calculated data is 0.83 more compare to the Industrial data. Commercial Vehical Sales in Industrial data is 0.64 and our calculated data is 0.83, Our calculated data is 0.17 more compare to the Industrial data. Three Wheeler Sales in Industrial data is 0.87 and our calculated data is 0.82, Our calculated data is 0.05 less compare to the Industrial data. Two Wheeler Sales in Industrial data is 0.87 and our calculated data is 0.82, Our calculated data is 0.05 less compare to the Industrial data. Total Production Sales in Industrial data is 31.96 and our calculated data is 19.10, Our calculated data is 12.86 less compare to the Industrial data.

Industrial Data

Calculated Data Projection for Production in the India Four Wheeler Industries (Million Units)
4 3.5 3 2.5 2 1.5 1 0.5 0 2.64 2.85 3.06 3.27 3.48

Cars
0.65 0.7 0.74 0.78 0.83

M util Vehic

2011-12

2012-13

2013-14

2014-15

2015-16

Hear, we compare the both chart and conclude the following things. y Projection for Production in the India Four Wheeler Industries, Year 2011-12 is Potential Vehicles Sales in India of cars is 1.85 Million Units and Multi Utility Vehicals sales industrial data is 0.32Million Units and our Calculated data is 2.64 Million Units and Multi Utility Vehicals sales is 0.65,our calculated data of cars 0.79 more compare to the Industrial data and calculated data of Multi Utility Vehicals is 0.33 more compare to the Industrial data.

Year 2012-13 is Potential Vehicles Sales in India of cars is 1.93 Million Units and Multi Utility Vehicals sales industrial data is 0.35Million Units and our Calculated data is 2.85 Million Units and Multi Utility Vehicals sales is 0.70,our calculated data of cars 0.92 more compare to the Industrial data and calculated data of Multi Utility Vehicals is 0.35 more compare to the Industrial data.

Year 2013-14 is Potential Vehicles Sales in India of cars is 2.17 Million Units and Multi Utility Vehicals sales industrial data is 0.38Million Units and our Calculated data is 3.06 Million Units and Multi Utility Vehicals sales is 0.74,our calculated data of cars 0.99 more compare to the Industrial data and calculated data of Multi Utility Vehicals is 0.36 more compare to the Industrial data.

Year 2014-15 is Potential Vehicles Sales in India of cars is 2.29 Million Units and Multi Utility Vehicals sales industrial data is 0.41Million Units and our Calculated data is 3.27 Million Units and Multi Utility Vehicals sales is 0.78,our calculated data of cars 0.98 more compare to the Industrial data and calculated data of Multi Utility Vehicals is 0.37 more compare to the Industrial data.

Year 2015-16 is Potential Vehicles Sales in India of cars is 2.57 Million Units and Multi Utility Vehicals sales industrial data is 0.47 Million Units and our Calculated data is 3.48 Million Units and Multi Utility Vehicals sales is 0.83,our calculated data of cars 0.91 more compare to the Industrial data and calculated data of Multi Utility Vehicals is 0.36 more compare to the Industrial data.

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Conclusion
Moving averages can be effective tools to identify Demand forecasting. On the basis of Moving Average Calculation we can identify the future demand of Automobiles, and its saws that the demand of automobile is increase on the all segment, and the total production is also increase. In the trend analysis, we compare the automobile industrial data and our calculated data and most of the result is our calculated data is more than the industrial data. In this comparison we are not consider any other factor to comparison thats why our calculated data is more than the industrial data.

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BIBLIOGRAPHY

 Book
1. Managerial Economics by Dominic Salvatore 4th edition (page no 80-83)

 Website 1. http://www.oppapers.com/essays/Automobile-Industrypcd-India/155453
(Date-11-10-2010)

2. http://www.india-reports.com/articles/Auto-Industry-India-Evolution-Growth.aspx
(Date-11-10-2010)

3. http://india-reports.in/transitions/india%E2%80%99s-position-in-the-global-autoindustry/ (Date-12-10-2010)

4. 5.

http://www.siamindia.com/scripts/production-trend.aspx (Date- 5-10-2010) http://www.siamindia.com/scripts/export-trend.aspx (Date- 5-10-2010)

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