The Indian Automobile Sector Business Essay


The economic conditions in the world are changing in a rapid time. The last decade, in particular saw various economic changes in various countries. It was a tough time for not only the developed economies but also for the developing as well as the third world countries. The recent period of recession, whose effects can still be experienced, is the worst one for many European Nations along with The America. India, however, has also seen many ups and downs in this period of recession in almost all sectors. Though, having good regulators like RBI, India's strategy towards recession has not been positive enough towards the overall growth of the economy. The problem of rising inflation is another aspect which is taking serious concern day by day. The current study is aimed at finding out the effects of recession on automobile sector in India, in general and on Tata Motors Pvt. Ltd. in particular.

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Recession is the negative GDP of any country for two consecutive quarters. Recession is a phenomenon of decreasing demand for raw materials, products and services. Recession or crisis is the part of the business cycle. It is certain that they will occur sooner or later. Recession is the result of reduction in the demand of products in global market. Recession can also be associated with falling prices known as deflation due to lack of demand of products. Recession has been defined in the marketing literature as a "Process of decreasing demand for raw materials, products and services, including labour." In other words, Recession means, a temporary decline during which trade and industrial activity are reduced. But sometimes it continues for a very long period like in the case of the great recession of 1929 in United States. The current recession started in late 2007 in America and spread over the world in the year 2008. Recession moves rapidly from one sector to another and has an influence over almost all the sectors. The automobile sector in the whole world has also affected due to recession. In India, in particular, where there is a huge potential in automobile sector, recession causes long term impacts on the whole sector.

Recently a survey has disclosed a fact that there is a remarkable decline in family car segment in Indian market. The customers are opting not to buy cars for the purpose of personal use only, due to the rising prices of fuels in India. Particularly from the last few years, the fuel prices have been increased by the Central Govt. for a number of times. This has led the automobile sector to another great upset, following the harsh hit of recession. Most recently, the Govt. of India has decided to loosen up the regulations and control over the fuel in Indian market, which may influence even worst to the growth of automobile sector.

Indian Automobile Sector:

India is considered to be the fastest growing automobile market after China. It holds the second position in the emerging markets in the world. The automobile sector, producing commercial as well as passenger vehicles has an important role in the economy. It, therefore, has a lot of potential for domestic as well as foreign automobile companies. The whole transportation mechanism is based upon the vehicles produced by the various companies in India. Recently, many foreign based companies have entered into the Indian market, with the hope that they will get a good market share here. Maruti Suzuki, Tata Motors and Mahindra and Mahindra are the few Indian companies who produce cars and other vehicles for the Indian customers. The foreign based companies like Volkswagen, Ford, Chevrolet, Toyota, Honda and General Motors have entered into the Indian market in the recent period. This has raised a great challenge to the Indian domestic companies for their sustenance.

Despite of the challenges in the automobile sector, there are few opportunities also which need to be identified by the Indian companies. The high desire of individual mobility in India provides ample opportunities for the car market. Especially, demand for the small family cars is increasing day by day. Taking this into consideration, the family car producers have shifted gears in this direction. At the same time, the income level of the middle and high class families is also increasing, which is creating a good demand for the car market. The companies working in car manufacturing specially are targeting these middle class families in order to get maximum advantage. Despite of the fact that there are so many challenges ahead, the Indian giant companies in car segment are holding the keys of the automobile sector. Most recently, Tata Motors launched Tata Nano, the cheapest car in Indian market. It has recorded a tremendous response from the people and has gained a reputation of car of the middle class families in India.

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The SWOT analysis will be helpful in understanding the current scenario of the Indian automobile sector. The Strengths, Weaknesses, Opportunities and Threats to this highly reputed sector are to be essentially recognized for the purpose of this study.

Tata Motors Pvt. Ltd.:

Tata Motors Pvt. Ltd. is one of the most trusted brands in automobile sector in India. It has gained reputation because of its long existence in the market. Jamshedji Tata, the founder of Tata Companies has set up a milestone in the Indian Industrial sector. His descendent, Mr. Ratan Tata, has given new wings to the Tata Motors Ltd. The Tata group is working in various industries like, Power, Automobile, Steel and Hotels in India and abroad. Tata Motors is recognized for its quality policies and has maintained it throughout its long journey. The fuel efficiency in the cars is the main characteristic of this company. The car named Indica is one of the most popular cars in India, is a product of Tata Motors Pvt. Ltd.

Tata Motors produce verity of vehicles from small family cars to luxurious class cars and Sports Utility Vehicles (SUV's), from trucks to heavy bulldozers, from small passenger vehicles like Tata Ace to big passenger vehicles like buses and others. The present study is focused upon the small family cars produced by Tata Motors Ltd. in this particular segment; various companies have launched a number of cars in the recent years. This has created a good and long competition for Tata Motors Ltd. the highly anticipated Tata Nano car has gained a good confidence of the Indian customers in a very short span of time. Therefore we can say that there is an ample opportunity for Tata Motors Ltd. in small car segment in near future.

Title of the study:

"A Study of Recession on Indian Automobile Sector: with special reference to family car manufacturing of Tata Motors Pvt. Ltd."

Need of the study:

Automobile sector is a key component of any economy. There are a number of companies working in this sector, but significantly Tata Motors has a great impact on the Indian market. The study if aimed at finding out the impact of recent recession on the Indian Automobile Sector in general and on Tata Motors Pvt. Ltd. in particular as a big player.

The present study will provide a clear picture of the kind of impact recession can have over a vital sector of the economy. Therefore, the present study has a significant value in understanding the current global scenario of recession and its impact on Indian market.

Objectives of the study:

The present study is based on the following objectives.

To study the causes and effects of recession.

To study the impact of recession on automobile sector in India.

To study the impact of recession on family car segment of Tata Motors Pvt. Ltd.

To study the market share of Tata Motors Ltd. in family car segment.

To make analysis of Indian automobile sector with SWOT technique.

Research Methodology:

The present study is based upon factual information regarding recession and its impact on automobile sector. The present study is based on secondary data collected from books, research journals, and electronic media. Various samples and surveys conducted by various agencies will be considered as the source of statistical data. Mainly analytical work is expected in this study, therefore Descriptive methodology of research will be adopted.

The discussions are to be made in this regard with the eminent persons in this field will also help in providing the actual picture of the study.