CHAPTER 1

INTRODUCTION
 Introduction to the topic
The automobile sector plays a vital role in the
development of a nation. India is one of the largest and
fastest growing countries in automobile sector.
Automobile industry has become the back bone of the
Indian economy which employee’s 13 million individuals
in India. The automotive industry is contributing about
3.1 % of India’s GDP. India is one of the fastest growing
car markets in the world. India is expected to overtake
China by 2050 in terms of the number of units sold. India
has a huge domestic market and as of now it has a low
base of car ownership. Lower cost of production,
availability of skilled labour, surging economy, pro
industrial policy of the government made India to be a
huge attraction for car manufacturers across the globe.
Several foreign auto manufacturers like Ford, General
Motors, Honda and Hyundai have their DR. S.
JYOTHIRMAYE REDDY DR. B. VENKATESWARA REDDY S.
DURGA RAO own manufacturing bases in India.
Multiplicity of local taxes, high import duties on raw
materials, high taxes on services, lack of infrastructure,
poor after sales service, inconsistency in quality,
congested roads are becoming hurdles for the higher
growth rate of passenger cars industry.
The research covers customer satisfaction towards
Maruti and Tata Motor cars. The present study was
carried to identify the relationship between demographic
factors and customer satisfaction. The positive influence
of customer satisfaction makes the customers to be loyal
to the company.
INDUSTRY
PROFILE
AUTOMATIVE INDUSTRY
The automotive industry comprises a wide range of
companies and organizations involved in the design,
development, manufacturing, marketing, and selling of
motor vehicles. It is one of the world's largest industries
by revenue. The automotive industry does not include
industries dedicated to the maintenance of automobiles
following delivery to the end-user, such as automobile
repair shops and motor fuel filling stations.

The word automotive comes from the Greek autos (self),

and Latin motivus (of motion), referring to any form of
self-powered vehicle. This term, as proposed by Elmer
Sperry (1860-1930), first came into use with reference to
automobiles in 1898.

HISTORY
The automotive industry began in the 1860s with
hundreds of manufacturers that pioneered the horseless
carriage. For many decades, the United States led the
world in total automobile production. In 1929, before the
Great Depression, the world had 32,028,500 automobiles
in use, and the U.S. automobile industry produced over
90% of them. At that time, the U.S. had one car per 4.87
persons. After 1945, the U.S. produced about 75 percent
of world's auto production. In 1980, the U.S. was
overtaken by Japan and then became world leader again
in 1994. In 2006, Japan narrowly passed the U.S. in
production and held this rank until 2009, when China took
the top spot with 13.8 million units. With 19.3 million
units manufactured in 2012, China almost doubled the
U.S. production of 10.3 million units, while Japan was in
third place with 9.9 million units. From 1970 (140
models) over 1998 (260 models) to 2012 (684 models),
the number of automobile models in the U.S. has grown
exponentially.

Early car manufacturing involved manual assembly by a

human worker. The process evolved from engineers
working on a stationary car, to a conveyor belt system
where the car passed through multiple stations of more
specialized engineers. Starting in the 1960s, robotic
equipment was introduced to the process, and today most
cars are produced largely with automated machinery.
AUTOMOBILE INDUSTRY IN INDIA

In 1897, the first car ran on an Indian road. Through the

1930s, cars were imports only, and in small numbers.
An embryonic automotive industry emerged in India in
the 1940s. Hindustan Motors was launched in
1942, long-time competitor Premier in 1944, building
Chrysler, Dodge, and Fiat products respectively.
Mahindra & Mahindra was established by two brothers in
1945, and began assembly of Jeep CJ-3A utility vehicles.
Following independence in 1947, the Government of
India and the private sector launched efforts to create an
automotive-component manufacturing industry to supply
to the automobile industry.
In 1952, the government appointed the first
Tariff Commission, one of whose purposes was to
come out with a feasibility plan for the indigenization of
the Indian automobile industry. In 1954, General Motors
Ford, and Rootes Group, which had assembly-only plants
in Mumbai, decided to move out of India.
However, growth was relatively slow in the 1950s and
1960s, due to nationalization and the license raj, which
hampered the growth of the Indian private sector.
The beginning of the 1970s saw some growth potential;
and most of the collaboration license agreements came to
an end, but with the option to continue manufacturing
with renewed branding. Cars were still meant for the elite
and Jeeps were largely used by government organizations
and in some rural regions. By the end of the decade, some
developments were made in commercial vehicle segments
to facilitate the movement of goods. The two-wheeler
segment remained unchanged except for to increased
sales to the middle class in urban areas. There was
emphasis on having more farm tractors
But after 1970, with restrictions on the import of vehicles
set, the automotive industry started to grow; but the
growth was mainly driven by tractors, commercial
vehicles and scooters. Cars still remained a major luxury
item. In the 1970s, price controls were finally lifted,
inserting a competitive element into the automobile
market. However, by the 1980s, the automobile market
was still dominated by Hindustan and Premier, who sold
superannuated products in fairly limited numbers. The
rate of car ownership in 1981 was about one in every
thousand citizens – understandable when the annual road
tax alone cost about half the average income of an Indian
at the time.
During the 80s, a few competitors began to arrive on the
scene. Of the 30,487 cars built in India in 1980, all but 6
came from the two main players Hindustan and Premier:
Standard had led a shadow existence in the latter half of
the 1970s, producing only a handful of cars to keep their
license active.
The OPEC oil crisis saw increase need to install or
redesign some vehicle to fit diesel engines on medium
commercial vehicle. Until the early 1970s Mahindra Jeeps
were on Petrol and Premier commercial vehicles had
Petrol model options. The Defense sector too had most
trucks on Petrol engines.
From the end of the 1970s to the beginning of the 1980s
India saw no new models, the country continuing to
depend on two decades-old designs. This situation forced
the government to encourage and let more manufacturers
into fray.
In 1986, to promote the auto industry, the government
established the Delhi Auto Expo. The 1986 Expo was a
showcase for how the Indian automotive industry was
absorbing new technologies, promoting indigenous
research and development, and adapting these
technologies for the rugged conditions of India.
Eventually multinational automakers, such as, Suzuki and
Toyota of Japan and Hyundai of South Korea, were
allowed to invest in the Indian market, furthering the
establishment of an automotive industry in India. Maruti
Suzuki was the first, and the most successful of
these new entries, and in part the result of government
policies to promote the automotive industry beginning in
the 1980s. As India began to liberalize its automobile
market in 1991, a number of foreign firms also initiated
joint ventures with existing Indian companies. By 2000,
there were 12 large automotive companies in the Indian
market, most of them offshoots of global companies.
India levies an import tax of 125% on foreign imported
cars, whiles the import tax on components such as
gearboxes, airbags, drives axles, and is 10%. Therefore,
the taxes encourage cars to be assembled in India rather
than be imported as completely built units.
As of 2019, India is the 4th largest automobile market in
the world, surpassing Germany in terms of sales
PRODUCTS OF AUTOMATIVE
INDUSTRY
The industry’s principal products are

Passenger automobiles & light trucks

 Pickups
 Vans
 Sport utility
Consumer automobiles
 Delivery trucks
 Large transport trucks

STRENGTH
 Evolving industry
 Increasing demand of VFM vehicles
 Continuous product innovation & technological
advancement
 Growth shifting to Asian markets
 Increase in demand of luxury commercial vehicles
 Manufacturing facilities in Asian nations to control
cost.
MARKET SHARE OF AUTOMATIVE
INDUSTRY GLOBALLY
The global automotive motors market size is projected to
grow from USD 20.3 billion in 2020 to USD 25.7 billion by
2025, at a CAGR of 4.8%. The rising need for safety
features and convenience can be attributed to the ever-
growing demand for automotive motors globally.
The COVID-19 pandemic has led to the suspension of
vehicle production and supply disruptions. According to
experts, there is a slim chance of vehicle sale recovery in
2020. The automotive motors market, however, is
expected to witness a significant boost in the upcoming
years owing to gradual resumption of manufacturing and
rising automation in the coming years. Before that, lower
vehicle sales and abrupt stoppage in the demand will
result in the sluggish growth of the automotive motors
market in 2021.
The global automotive motors market is dominated by
major players such as Robert Bosch (Germany), Nidec
Corporation (Japan), Continental (Germany), Johnson
Electric (Hong Kong), and Denso Corporation (Japan).
These companies offer a wide variety of automotive
motors fulfilling all major functions in a vehicle. The key
strategies adopted by these companies to sustain their
market position are new product developments,
acquisitions, and partnerships & expansions.

MARKET SHARE OF AUTOMATIVE

INDUSTRY IN INDIA
Over the last decade the Indian auto component industry
has emerged as one of India’s fastest growing and
globally competitive manufacturing sectors. The
country’s auto component industry has also shown great
advances in recent years in terms of quality, spread,
absorption of newer technologies, skilled manpower at a
reasonable price, and flexibility.
Domestic automobiles sales increased at 1.29% CAGR
between FY16-FY20 with 21.55 million vehicles.
Overall, production of passenger vehicles, three
wheelers, two wheelers and quadricycle reached
1,875,698 units in April 2021.
Automobile export reached 4.77 million vehicles in FY20,
growing at a CAGR of 6.94% during FY16-FY20. Two
wheelers made up 73.9% of the vehicles exported,
followed by passenger vehicles at 14.2%, three wheelers
at 10.5% and commercial vehicles at 1.3%.
Government Initiatives
The Government of India encourages foreign investment
in the automobile sector and has allowed 100% foreign
direct investment (FDI) under the automatic route.
Some of the recent initiatives taken by the Government
of India are -

 In Union Budget 2021-22, the government introduced

the voluntary vehicle scrap page policy, which is
likely to boost demand for new vehicles after
removing old unfit vehicles currently plying on the
Indian roads.
 The Union Cabinet outlaid Rs. 57,042 crore (US$
7.81 billion) for automobiles & auto components
sector in production-linked incentive (PLI) scheme
under the Department of Heavy Industries.
 The Government aims to develop India as a global
manufacturing centre and a Research and
Development (R&D) hub.
 Under NAT Rip, the Government of India is planning
to set up R&D centers at a total cost of US$ 388.5
million to enable the industry to be on par with global
standards.
 The Ministry of Heavy Industries, Government of
India has shortlisted 11 cities in the country for
introduction of EVs in their public transport systems
under the FAME (Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles in
India) scheme. The Government will also set up
incubation centre for start-ups working in the EVs
space.
 In February 2019, the Government of India approved
FAME-II scheme with a fund requirement of Rs.
10,000 crore (US$ 1.39 billion) for FY20-22.