Evolving Industry Sector. Increase in Passenger Vehicle Exports:

Evolving Industry-Automobiles represent freedom and economic growth. Automobiles allow people tolive, work and travel in a way that were unimaginable a few years ago.

Automobile provides access to market, to job, etc. every Automobile trip endswith either an economic transaction and or some another benefit to the qualityof life.Continuous productinnovation & technological advancement-With the advent of E-Vehicles & alternative fuels such as Shell Gas, CNGand others, Automobiles companies are increasing R&D expenditure to drivethe next phase of growth through use of renewable sources of energy which maybe solar, wind, etc.Increasing demandof VFM Vehicles- Intense competition in thematured/developed markets has forced automobile manufacturers to targetdeveloping economies. But these developing economies have high demand for VFM (Valuefor Money) products.

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In the automobile industry, VFM vehicles are fuelefficient, high mileage vehicles because majority of consumers in these nationsprefer vehicles for commuting. On the other hand, developing nations need is ofvehicles for interstate travelling, and high-speed vehicles for long route withhigh engine power.Investment byForeign Car Manufacturers: India has seensignificant amount of FDI from the foreign origin car manufacturers over thelast decade. In all, the automobile sector has seen a cumulative Foreign DirectInvestment (FDI) equity inflows of US$ 8.217 Billion (?38, 571 Crore) in thissector during the period of 2000 to 2013 which is nearly 4.32 per cent of thetotal FDI inflows in the country and the portion of Passenger Vehicle segmentaccounts to more than 50 per cent of the total inflows in Automobile IndustrySector.Increase inPassenger Vehicle Exports: The economy isadversely affected due to a falling rupee but it is proving beneficial as faras the exports are concerned. This is being attributed as one of the reasonsfor growing exports in the sector.

The exports of passenger vehicles from Indiahas grown with a CAGR of more than 20 per cent over the last five years anddespite the slowdown in the economy during the last one year the exports havestill managed a growth of 9 per cent in 2013 with the manufacturers realizingthe slowdown in European markets and consequently developing the new ones. Inrecent years India has become the export hub for several global automobile manufacturers. Low Cost and CheapLabour: Cost competitiveness remains one of thekey characteristic of India with the availability of low cost labour andinexpensive manufacturing capabilities it is a key attraction for thebusinesses. In particular, India’s attractive labour costs can explain thephenomenal growth of its rapidly 44 growing manufacturing sector including theautomobile.

Although India has witnessed some increases in its labour cost, butit remains a highly attractive destination for investors who struggle to findthe same mixture of low cost and high quality.Growth shifting toAsian markets- Although American & Europeanmarket is the pulse of this industry, but the focus of shifting to developingmarkets like China, India & Other Asian Nations because of the increase ofdisposable income, changing lifestyle & stable economic conditions.


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