ON

Submitted in partial fulfillment of

therequirement forMaster of Business
Administration (MBA) from
Dr.APJAbdulKalamTechnicalUniversity,Luckno
w
This is to certify that , a student of Master of business
administration(MBA)Programme(Batch2021-2023)

Atthisinstitutehehasconducted aminiprojecttitled
undermyguidanceduring2ndsemester.
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efrom
DrA.P.JABDULKALAMTECHNICALUNIVERSITY.Theminiprojectreportistheoriginalco
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 astudentofMasterofBusinessAdministration(MBA)ProgramatLloydIn
stitute of Management and Technology, Greater Noida here by declare that all
theinformation, facts and figures used in this Industry assignment titled
have beencollectedbyme.

I also declare that this industry assignment has been prepared by me and the
same
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orInstitute or published earlier. This information is true to the best of my
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I express my deepest sense of gratitude the God almighty
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ThankingYou.
 Theautomotiveindustryhasemergedasanimportantcon
tribution to the GDP of India. The automotive industry is
oneofthemostdynamicsectorsinIndia.Risingincomeshavein
creased the demand for cars and other vehicles, which is
themain growth engine for the automotive industry in India.
Theintroductionofdifferentfundingmechanismsandsimpler
epaymentplansalsocontributedtothegrowthoftheautomotiv
eindustry.Theautomotive sector in India, includingthe sub-
components of the automotive industry and is one of
themain economic sectors, with extensive links to
upstream anddownstream with other key sectors of the
economy. It accountsfor about 4% of India's gross
domestic product (GDP) and 5% ofindustrialproduction in
India. The Indian auto industry
employsabout13millionpeopledirectlyorindirectly,atpresent,
anumberexpectedtodoubleby2023.
Indiais amongtop 10inAuto Industryinwholeworld–

2ndintwowheeler

3rdin SmallCar
5thinCommercial Vehicle
 Turnover $73 billion

ShareinNational GDP 6%

ShareinManufacturing GDP 22%

ShareinExcise DutyCollection 21%

Employment Morethan 13.1 million

people

FDIInflow $6.96 billion

Despitetwomassivespeedbreakers2008-09,2012-
13,theindustryhasmadesignificantprogressandsuffersalot
ofincrease in price of the cars by 11%, although the
economy hasexperiencedinflationof77 percentoverthe last
decade.
The decline in demand has reduced the growth of
industryby 4.57% in the first nine months of the current
business. TheIndian auto industry expects to reach the
size of $145 billion,around 10% of the for which
“Automation Mission Plan”is announced, providing
employment to 25 million people by2016.
 In 1991, India moved away from an inward
lookingindustrializationstrategytoamore„open‟economy,an
dindustrial firms are in a need to restructure themselves to
retaincompetitiveness.Mostoftherestructuringwasrequired
inmaking in correcting inefficiency created by a secured
market.Industry of automobile played a crucial role in
industrializationrightfromthebeginningoftheplanneddevelo
pment.Therewerechangeswhichtookplaceintwostagesinth
eformofderegulations which was introduced in 1985 and
measures ofliberalization which was into effect since
1991. The
pre1985regimecanbedescribedasaperiodofstrictrulesandr
egulations.In 1985, there were some changes made
initially which eased therequirements of licensing,
selective expansion of capacity wasallowed and rules
regarding foreign collaborations were
partiallyrelaxedforcapitalgoods,rawmaterials&spares.
ButStillthesemeasuresrepresenteda"domesticLiberalizatio
n",thepolicyenvironmentcontinuedbeinggearedtowardsinve
stmentregulationsandimposingtrade,withholdingthegrowth
ofbigbusinesshousesandregulatingexchangerates.Butsinc
e 1991, there was some notable broad- based changes
inpolicywithhigherrateofimplicationsactuallycameintoexist
ence. Some of these changes dispensed with lot of
rules andregulations and also for the first
time afterindependence,
it
wasassignedcriticalroletomarketforce.
 Rightin1991,Liberalizationwasintroducedinecono
mic policies and it was oriented outward. And on the
otherhand, there was a drastic change inthe automobile
sector.
Thepolicychangesmade,hadagreaterenvironmentaltransfor
mationinwhichthecompanieswereoperatingprior.Becauseo
fthis,theindustrywitnessedtheentryofnewfirmsandadoption
ofstrategiesbythealreadyexistingfirmstointroducetechnolo
gicalchange and improve their performance. The new
players broughtin modern engineering, efficient processes
and effective shop-floor layouts. On the whole, Indian
Automotive sector grew at amuch faster rate in the post
1991 era (14.31 % per year) whencompared to (8.56 %
per year) the period of 1985-91.During thisgrowth process,
the industry experienced changes in the strategyadopted
by many firms in that efforts weremade to
build
uptechnologyacquisition,productqualitywasimprovedandin
general the industry became more competitive. Economic
policyforceshaveanimpactontheextentanddirectionoftechn
ologicalefforts of firms. While the technological efforts
during importsubstitution era were generally directed at
increasing the localcontent of products, the export-
oriented policy induced
the
firmstodirecteffortstoreducecostsandimprovequalitybyimp
lementing changes that upgrade the production process.
In1983, (which is a joint venture of the Government
ofIndiaandSuzukiMotors,Japan)enteredtheindustryanddra
maticallyaffectedthemarketshareofallfirms.Marutienjoyed
asmuchas50%ofthemarketshareduringthefirstperiodof this
study.
 Almost entire automobile industry is captured by
privateplayers with negligible government share in
manufacturing.
Thedetailsoftheexistingplayersarecoveredinthefollowingse
ctionsof this report.

`The major Indian companies present in the

automobilesmarket include

TataMotorsisIndialargestautomobile
company;thecompany manufactures commercial and
passenger vehicles, andis the world fourth-largest truck
manufacturer and the second-
largestbusmanufacturer.MarutiSuzukiisIndialargestpassen
gercar company, accounting for 45% share of the Indian
car market.Hero MotoCorp is the world largest two-
wheeler
manufacturingcompanyintheworld.ItsmarketshareintheInd
iantwo-wheelersegment is 41%.Bajaj Auto isthe world
fourth-largesttwo-wheelerandthree-wheelermanufacturer.
The size and high growth potential of the Indian car
markethas attracted several foreign players, such as
Mercedes Benz,BMW, Volkswagen, Toyota, Honda, Ford,
Hyundai and GeneralMotors, among others. Several of
these players have expandedoperations in India. The
important ones are Hyundai
MercedesBenz NissanandGeneralMotors.Nissanhasdoubl
ed theproduction its small car Micra to 500 units/day and
further plansto invest USD 1 billion in its Chennai plant,
which has an
annualproductioncapacityof0.4millionunits.GMhasexpansi
onplansforitsfactoryinGujaratwhichisworthUSD250million;i
taimsto launch five newcarmodelsinIndia.
 Automobile industry offers a wide range of
employmentopportunities. With the number of vehicles
available on the roadtoday, the need and requirement for
people who can fix thesemachines is fast increasing.
Careers like automobile technician,car
or bikemechanicsare a great
option.Becomingadieselmechanic is also a significant
alternative. Diesel mechanics
areresponsibleforrepairingandservicingdieselengines.Asth
eyarealsorequiredtorepairenginesoftrucksandbuses,othert
hancars,theyare provided withheftywages.
Those who are interested in public dealing and do not
wantto get into the core technical affairs, have the
opportunity
ofbecomingasalespersonorsalesmanagerinanautomobilec
ompany.Careeropportunitiesinautomobiledesign,paintspec
ialists, job on the assembly line and insurance of vehicles
isalsoavailable.Currentlytheautomotiveindustryemploys20
0,000personsinvehiclemanufacturing,250,000incomponent
companies and 10 million at different levels of the value
chain
–boththroughbackwardandforwardlinkages.Theexpectedg
rowth in investments and output of India‟s automotive
sectorduringthenext10yearswillcreatefurtheremploymento
pportunitiesinthecountry.Additional25millionjobsarelikelyt
o be created by way of both direct and indirect
employment inautomotive companies and in other parts of
the vehicle
valuechainsuchasservicing,repairs,salesanddistributionch
ains.
 :

Unlike the advanced European and American Nations

thedistribution mechanism and sales framework is quite
different inIndia. There are considerable differences in
terms of
dealers,numberofdealers,carsupermarketsandverticalinteg
ration.Alsothere is a difference in functions of dealer,
bookings, financing,manufacturer-dealer relationship,
number of cars sold per
dealer,margins,andmarketenvironment.Forexampleifweco
nsiderthepassenger car segment, India is a country where
most of the cardealers strive to adjust to the situation
that offers wide range ofoptions and choices for the
consumer. In the current automobilemarket the typical
Indian auto dealer has
traditionally
confinedhisroletocollectingpaymentsfromcustomersands
upplyingthecar to the customer after he receives it from
the factory howeverwith the wider consumer options, auto
retailing in India is
set
tochange.Withtheentryofglobalmanufacturersintheautomo
tivesector and the enablement of the high end technology,
there hascome a revolution in the concepts of car delivery
and after
salesserviceinIndia.TheMNCsarecomingwithnumerousinn
ovativeretailingideastowincustomers.Alsoduetotheincreas
eddisposableincome,theconsumersarealsowideningtheirh
orizonsbyshiftingtomorethanjustbudgetcarsandentertainin
gtheuntraditional approaches of exploring the market such
asonline retailing of two and four wheelers. The
emerging systemof `customer pull translates to
empoweringthecustomerandcreating a genuine symbiosis
between the customer, the dealer,and the automaker.
 The competition has become very strong and with
greatercompetition, the Indian car manufacturers and
dealers are
alsolikelytoadoptadvancedcountrypractices,likelargedealer
groups,multipleoutletsperdealer,company-
owneddealers,highersalesperdealer,highermargintodealers,
changingroleofthedealer as aretailer, etc.

The rural sector, particularly in terms of two wheelers

hasattractedmanymanufacturerstoextendthedealershipthe
reunlikeadecadeagowhen
automobilemarkethadtheurbantargetsmajorly.
 The FDI in Indian Automobile Industry has opened up
newrevenueforthedevelopmentofthisimportantandvaluable
sectorofIndianindustries.Theliberalizationofgovt.policiesre
gardingFDI in the Automobile Industries of India has
increase the scopeand tendency of these Industries.
The first and important FDIplayerin
theIndianAutomobileIndustrywas Suzuki.
TheautomobileindustryisoneofIndia‟smajorandvaluabl
esector, by accounting for 22% of the country‟s
manufacturingGDP. According to Honorable Ministry of
Heavy Industry andPublic Enterprises, the total turnover of
theIndian
automobileindustrywasestimatedatUSD73billionandexport
wereestimatedtobeUSD11billionintheyear2010-
2011.TheIndiangovt. tries to encourage foreign investment
in the automobilesector and allows 100% FDI under the
automatic route.
Apartfromthedifferentpoliciesintroducedbythegovt.forthea
uto

industry, another positive and important step taken by

theGovt.ofIndiahasbeenthetaxreliefprovidedinthe2012bud
get.According to new tax laws, excise duty on specified
parts ofhybridvehicles has been reduced to 6% from 10%
which
attractinvestor,lithiumionbatterypackforsupplytoelectricve
hiclehasbeenreducedto6%from10%whichisimportantpartfo
rinvestment.
The onslaught of the pandemic manifested in the form of
massiveproductionhalts,givenintensesocialdistancingprotocolsand
nationwide lockdowns. Governments the world over enforced
healthandsafetyregulations,makingmanufacturingshutdownsoneoft
hemost significant challenges of the automotive market. The
virusoutbreak presented a huge question pertaining to whether
normalproduction would ever resume; in response, 2021 witnessed
Chinareturningtoproduction,althoughnotwiththesamerigorasbefore.The
United States and Europe, however, are still struggling to get back
toregular vehicle production. Recent studies depict that in April
2020,vehiclesalesinEuropefellby84%asopposedtoApril2019.

Manufacturing shutdowns accentuated the already existing

automotiveindustry challenges of excess production and resource
shortage. Theyalso led to massive financial losses, directly
impacting GDP. Even afterproduction commenced in 2021, the
sales graph remained linear. Tothat end, automotive companies
will now have to alter their approachtocar-
making–embracingindustry4.0forefficiencyandmanufacturingresili
encetakesthecakehere.
In addition, experts opine that manufacturing shutdowns
may continueto remain one of the critical challenges facing the
automotive industryduringCOVID-
19.Thisindicatesthatgovernmentswillnowhavetoeaseemissionlawstoin
centivize batteryelectricvehicleadoption.Automakers will also have to
speed up the technology shift in theautomotive sector to move
away from conventional manufacturingstandardsandprocesses.
Reduced car sales emerged as one of critical challenges facing
theautomotive industry during COVID-19. According to reliable
estimates,pre-
pandemicnumbersforautosalesintheUnitedStatesalonewasforecast
tobebetween16-17millionunitsin2020.Theonsetofthepandemic
brought forth a spate of financial losses due to
statewidelockdowns,socialdistancingregulations,andshutdownofm
anufacturing units. At the time, the prospect of a possible
vaccineseemed dim enough; and what with added restrictions, car
saleswitnessed an all-time low.

Thisofcoursedoesnotcomeasasurprise;intheeventofapandemic,purcha
sing a vehicle would be the least priority for consumers.
Despitetheanticipation,thenumbersareprettyshocking–accordingtot
heSociety of Motoring Manufacturers and Traders, the
UK automotiveindustry lost GBP 1.3 billion in sales in 2020.
Lack of sales have led
toexcessinventory,highlevelsofdebt,anddemanduncertainty.
Loss of labour is an overt impact of manufacturing shutdowns. As
thecoronavirus spread, many companies had to resort to massive
layoffs,thatemergedasoneofthecrucialchallengesoftheautomotivemark
et.Nissan for example, closed its unit in Barcelona, Spain, after
reportinghuge losses. Many companies in Europe had to put their
workforce onshort-termworkduringCOVID-
19.Swedishautomobilemaker,ABVolvo,declaredlastyearthatitplannedt
olayoff4,100white-collarpositions in its company in
H2 2020.

Despite closing shop, automotive companies encouraged its

workforceto apply for unemployment benefits and other benefits.
For
example,whenBMW’sU.S.productionfacilityinSpartanburg,SouthCaro
lina,delayed its opening date until April 30 instead of April 12, the
Germanautomakerstatedthatitwillfurlough11,000ofitsemployeesattheu
nituntil the extension date, while also providing them with
healthcarebenefits.Althoughtheindustryisbeginningtorecover,dealingwi
ththeworkforce is likely to remain one of the consistent challenges
of theautomotive industry, as it will take quite a while before it is at
a stableposition again.
The onset of COVID-19 brought about an immediate halt in
currentproduction,disruptingsupplychainstheworldover.China,thatw
asimpacted by the pandemic at the outset, had almost two-thirds of
itsvehicle manufacturing affected due to the nationwide lockdown,
whichseverelyimpactedthesupplychain.Autosupplychainsare,moreofte
nthan not, spread across geographies; with every country imposing
itsown protocol post the pandemic, supply chain management took
amassive hit, emerging as one of the most vital challenges faced by
theautomotive industry during COVID-19.

Automotive supply chains have faced more than disorganization

anddisruption; they will now be under additional pressure, due to
thebottleneck in semiconductor manufacturing and the
reinstatement
ofelectricmobility.GeneralMotorsforexample,inJanuary2021,declaredth
atitaimstohaveacompleteportfolioofzero-
emissionvehiclestosell,by2035.Thepandemicclearlybroughtforththe
fragilityoftheexisting
,highlightingthatresilienceandtransparency
through digitization and other agile practices is the
onlywayforwardforautomotivecompanies.
Liquidity was the biggest challenge facing the automotive
industrylast year. The pandemic regime reemphasized that cash
is indeedking. Production shutdowns and slumping sales
gradually led toheavy financial losses, with OEMs operating on
minimal liquidity. Lackof funds is likely to result in many small-
time automotive companiesgoing out of business. Cash reserves
were on an all-time low duringCOVID-
19;thesituationisnotlikelytoreversesoonenough.

As financial automotive industry challenges continue to

reign,automakers will need to secure government support
measures tosecureliquidityassistance.Using
topredictreal-
timecashinfluxandestablishinga liaison with financial institutions
for investments in connectedtechnologies and automation are also
some options automakers cantap into as they deal with liquidity
challenges of the automotiveindustry.
The collapse of the economy, rise in prices, and the all-around
direstate of public health and financials brought about a
considerablechangeinthebuyingpatternsofconsumers.Tobeginwith
though,duringacriticaltimelikethepandemic,purchasingacarwasthelea
stofeveryone’sworries.Scarcefinancesanduncertainlyaboutthefuturele
d to consumers backing out of making vehicle purchases,
thatemergedasoneofthekeychallengesoftheautomotiveindustry.

Fortheonesthatcouldafford,buyingcarsfromdealershipsandofflineshow
roomswasnexttoimpossible,giventhestringentprotocolduringlockdown
s. To combat the same, post COVID-19, many
automakersattempted to go offline, offering short-term subscription-
based leasemodels for customers, making car purchases digital,
and
undertakingnumerousotherstepstorestoredecliningconsumerconfid
ence.

Although 2021 saw the resurgence of a percentage of the

consumerbase,overall,customerfootfallisstilllowandislikelytoremainon
eofthesignificantproblemsintheautomotiveindustryforafewyears.C
hanging customer behavior may, however, lead to
considerablealterationinbusinessmodelsofautomakers,usheringinane
weraforelectric mobility, connected cars, and automation.
Experts anticipate the automotive sector to be replete with risks
andchallengesforquiteawhile;itmaytakeyearsbeforepre-
pandemicsuccess levels for this industry are restored. In the years
ahead,automotive companies must work on resolving the existing
challengesthroughstrategicmeasures.Tobeginwith,optingfordigital
modesandbringingaboutconvenienceforconsumerscouldwork.Further
on,automakersneedtocompletelyshiftfromtheconventionalmanufa
cturingmodelstoautomatedworkingprocesseswhileensuring
flexibility.

Adoption of the latest technologies and bringing connected

vehicles tothe mainstream are likely to open up new income
sources
forautomakersintheyearsahead.Asgovernmentshelpoutbybringinginch
anges in emission laws, automotive companies work on creating
amore resilient supply chain, and more intense R&D programs
arecarried out to set new standards, the automotive industry could
slowlywitnessareboundwithinthenexthalfadecadeorso.