Indian Economy: Auto Sector in 2011-12

Over the years, India has joined in the race of manufacturing nations in many areas. Auto sector is one where India came from behind and today it as one of the largest selling market. India’s auto sector for the first time crossed two-million-mark of car sales. And even in the gloomy global economy, it grew. Auto sales, be it of the passenger cars, two-wheelers, or commercial vehicles, are good indicators of a country’s overall economy and the aspirations of the people. Besides creating employment in the manufacturing plants and auto components parts manufacturing facilities, it also enhances the engagement in service sectors such as dealers and after sales service providers at all levels.

The sector creates employment in big way for the grassroots level of population with its demand of drivers. In India while the top end car owners employ chauffeurs, even a good percentage of owners of the compact cars also still prefer to keep drivers. Each commercial vehicle creates an employment of about 5-6 persons, while the three wheelers create self employment for the people, as these vehicles are in use for transportation of passengers as well as goods.

Siam announced the auto industry sales figures for the last year.

The passenger car sale in the domestic market during 2011-12 was 2,016,115 units, and the projected passenger car sales growth at 10-12 per cent in 2012-13.

The total sales of commercial vehicles, in FY12 were 809,532 units, up 18.2 per cent. The segment is pegged to grow by nine to 11 per cent in FY13.

The three-wheeler segment saw a decline of 2.4 per cent at 513,251 vehicles in FY12, Siam has projected five to seven per cent growth.

The total two-wheeler sales were 13,435,769 units in 2011-12. Interestingly, it is the rural region that has kept the sector growing so fast. It showcases the aspirations of rural young men.

India unlike China performs well in export of vehicles of all types. During April-March 2012, the industry exported 2,910,055 automobiles registering a growth of 25.44 percent. For the first time in history car exports crossed half a million in a financial year.
Almost all the global auto makers who have set up manufacturing plants and some even the development centres, are doing good business. For some of their platforms, India has become their manufacturing hubs.

One can also take pride in the domestic players such as Tata Motors, Mahindra and Mahindra, Ashok Leyland, Hero MotoCorp, and Bajaj Auto that are on the road to become global players. It is evident from the growth in volume of production and their acquisitions abroad of manufacturing companies and R&D facilities.

Mahindra and Mahindra is process of setting up an advanced engineering centre for R&Din Chennai.

The Engineering and Research Centre (ERC) inside the Tata Motors‘ factory in Pimpri is the nerve-centre of the research and development effort. Today, Tata Motors has about 5,500 people working in R&D spread across India and the rest of the world.

But a more interesting is the story of Hero MotoCorp Ltd that is one of the largest two-wheeler makers of the world. It has gone for building its own R&D capability after parting from Honda of Japan. ‘Hero’s newly created 300-member strong research and development team will be working closely with the engineers from Erik Buell to develop motorcycles. Erik Buell is expected to provide design inputs while Hero will develop its own engine with the help of Austria-based AVL (Anstalt für Verbrennungskraftmaschinen List).

India’s auto sector is moving on the right course making almost all of the global manufacturers of passenger cars and commercial vehicles from the countries such as Germany and Japan to rush in India.

I, myself wait for Mahindra Mini Xylo to be launched to decide between that vs. Maruti Ertiga as my next vehicle.

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