INTRODUCTION OF AUTOMOBILE SECTOR It begins as early as 1769.

The automobile sector is one of the key segments of the economy having extensive forward and `backward linkages with other key segments of the economy. Indian Automobile sales growth rate would be 9.5 % by 2010. It contributes about 4 per cent in India's Gross Domestic Product (GDP) and 5 per cent in India'sindustrial production. This sector has generated about 4.5 lakh of direct employment and about 1 crore of indirectemployment. India holds huge potential in the automobile sector including the automobile component sector owing to its technological, cost and manpower advantage. India has a well developed, globally competitive Auto Ancillary Ind u s t r y a n d e s t a b l i s h e d automobile testing and R&D centers. India enjoys natural advantage and is among the lowest cost producers of steel in the world.
KEY PLAYERS Maruti TATA Hyundai Honda Ford GMSonalika International HMForce Toyota Kirloskar M&M FiatSkoda AudiMercedes Benz BMWVolkswagon Mitshubishi

THE AUTOMOBILE INDUSTRYININDIA 9 th Largest automobile industry. 2 nd largest two-wheeler market. 4 th largest in Heavy Trucks. 2 nd largest tractor manufacturer. Annual production of over 2.3 million units. The monthly sales of passenger cars in India exceed 100,000 units.

11th largest passenger car market and expected to become 7 th largest by 2016. Sale of passenger cars in India is likely to grow at an average of 14.9% each year to touch 2.1million marks by 2010.

CURRENT SITUATION OF AUTOMOBILE SECTOR Despite economic slowdown that has affected the automobile industry, production and exports of the sector went up last fiscal, said the Economic Survey 2008-09, and underlined that the industry employs over one crore people. While the overall automobile production went up by 3 per cent to reach 1.11-crore, exports increased by over 23 per cent to over 15-lakh. The domestic turnover of the sector stood at Rs. 2.19-lakhcrore, while exports totaled at Rs. 31,782 crore, taking the total size of the industry to Rs. 2.50-lakh crore during 2008-09

GLOBALIZATION IN AUTOMOBILE SECTOR In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans toexport 250,000 vehicles manufactured in its India plant by 2011. Foreign auto companies withassembly plants in India include, General Motors, Ford, Hyundai, Honda, Suzuki, NissanMotors, Toyota, Volkswagen, Audi, Skoda, BMW, Fiat and Mercedes Benz. India has overtakenChina in global auto exports of compact cars for 2009. Suzuki Motor Corp, Hyundai Motor Co,and Nissan Motor Co are making India a manufacturing hub for small cars.In 2007, India was ranked as the 12th fastest growing market in the world. Presently, India is the 2 nd largest two wheeler market in the world and 4 th largest commercial vehicle market worldwide.India is the 11 th largest market in the passenger car segment globally which is expected tobecome the 7 th largest market by 2016. Tata is all set to take its world trucks to South Africa,Mahindra & Mahindra is taking its Scorpio to US, Tata is developing an European version of itsultra low cost car Nano. Chinas largest automaker Shanghai Automotive Industry Corp. (SAIC) announced a collaboration to jointly develop and manufacture commercial vehicles through theIndian unit of General Motors Co. in the Indian market. Hero Group is holding exploratory talkswith Malaysian car manufacturer, Proton, for establishing a small car manufacturing facility inIndia. General Motors Co, US-based automaker, has joined hands with Indias Reva ElectricCar Co. to develop a small and affordable electronic car for the Indian market

Foreign Cars sold in India as Completely Built Units Audi: A8, TT, R8, Q5, Q7. Bentley: Arnage, Continental GT, Continental Flying Spur, Arnage. BMW: 6 Series, 7 Series, X3, X5, X6, M3, M5, M6 and Z4. Chevrolet: Captiva Fiat: 500. Honda: Civic Hybrid, CR-V. Hyundai: Tucson. Jaguar: XF, XK. Lamborghini: Gallardo, Mucilage. Land Rover: Range Rover, Range Rover Sport, Discovery 4, Friedlander 2. Maybach: 57 and 62. Mercedes-Benz: CL-Class, CLS-Class, S-Class, SL-Class, SLK-Class, M-Class, Viano. Mitsubishi: Pajero, Montero, Outlander. Nissan: Teana, X-Trail. Porsche: 911, Boxter, Panamera, Cayman, Cayenne. Rolls Royce: Ghost, Phantom, Phantom Coup, Phantom Drophead Coup. Skoda: Superb. Suzuki: Grand Vitara. Toyota: Camry, Land Cruiser, Land Cruiser Prado. Volkswagen: Touareg. Volvo: S80, XC90

ADVANTAGES OF AUTOMOBILE SECTOR The various advantages of automobile sector are as follows: The fluctuating price of oil in the world market has helped in the sale of these new vehiclesas well as compact cars. People who once owned SUVs have also replaced these vehicles with those that havesmaller engines. It help in the annual contribution to the economic growth by 4 % t o t h e G D P a n d accounting for about 5% of the total industrial output Offers support to other industries such as iron, steel, rubber, glass, plastic, petroleum,textiles, oil & gas, paints & coatings, transportation industries. Rising foreign investments have led to the rapid growth in terms o f a u t o m o b i l e production and exports. Overseas companies are making huge investments and areinstalling extensive production capacities in developing countries Continuous investment in research & development has resulted in increased productivityand better quality automobiles, automotive accessories and parts. Increase in standards of living and purchasing power parity have resulted in the increasedemand of automobiles especially four-wheelers in developing nations, mostly in SouthAsian region. This sector provides employment to major chunk of human population in the world i.e. 25million. This industry not only provides millions of jobs to the people, but also producesbillions of dollars in terms of worldwide revenues. Adequate infrastructural facilities in form of power supply, machinery, capital, readyavailability of raw materials and labor help in the tremendous growth of this industry. They contribute 60 % of global production but 25 % of India Production United States automotive industry is strongest in the world. But things have changed. Dueto deals and agreements with foreign countries, new cars are competing with the local brands.Since these are cheaper and in some cases better, sales have suffered. Another advantage of the automotive industry is that it has generated new jobs. TheUnited States just like Japan and Germany have moved manufacturing operations overseas. Thisis because the cost of labor is cheaper and there is a market for those vehicles in those countries.

FUTURE PROSPECT OF INDIAN AUTOMOBILE SECTOR Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians. By 2010 India will take over Germany in sales volumes and Japan by 2012 The Indian automobile component industry is estimated to triple from USD 63 billion toUSD 190 billion within a span of six years by 2012. Industry analysts predict this industry to touch USD 13000 million mark by 2010, acumulative growth of 9.5% annually. It is said that for every Re 1 spent, the auto sector returns Rs. 2.24 to the Indianeconomy. HOW ECONOMY LOOK AHEAD Automobile sector in India has good domestic and outer market to cater. With the increase in the population in India there will be huge demand of passenger carsin future. According to a survey, till the year 2014-2015 three million units are projected.

It is forecasted that between the years 2008 till 2015 the CAGR of Indian automobile willgrow around 10%. There is huge demand of Indian automobile in other developing country in the world. Sothere is good market outside India also. With the increase in the competition in the automobile sector, major players are going tosetup their R&D centers in India. With the enter of the global players like Audi, BMW etc. it is a positive sign for Indianautomobile industry. CONCLUSION Automobiles are symbol of economic development and are one of the essential needs of todayscustomer. The Indian automobile market has changed tremendously since past few decadesand will change even further. Indian automobile industries have blossomed into a great industrysince the first car ran on the streets of Bombay in 1898. From the study of the Indian automobileindustry we conclude the following things. The Indian automobile sector is one of the keysegments of the economy having extensive forward and backward linkages with other keysegments of the economy. The forward linkage refers to its customer base, employment itprovide and backwa rd linkage refers to its supplier to the industry. According to Ministry of Heavy Industries & Public Enterprise (Government of India) automobile industry contributesabout 4% in Indias GDP. These sectors provide 4.5 lack of employment to the people of India.From the study of the Indian automobile industry we have find the following problem in thedevelopment of industry. Due to rise in inflation there is a rise in the price of the vehicles by 3% to 4% becausethe price of the raw material has gone up. Inflation has not only affected the production and sale of vehicles but also affected thecar dealers and the financers. As they get low rate of margins.

Other problem is due to rise in the fuel prices which can affect the growth of automobilesector. Most of automobile run o diesel, petrol and gas. The rise in the price of this theefuel will create serious problem in future. SUGGESTION The government should make reduction in the fuel prices or they should give subsidiary. To reduce the production cost the automobile maker firms can cut the jobs. With the entry of global competitors in the Indian automobile industry it has result inadvanced technologies in the production and production process which has resulted inreducing the cost of production. With the development of alternative fuels like electricity, bio-fuel etc. it has result in theevolution of new kind of car called hybrid cars. This will help to neutralize the effect of high fuel price

Automotive Industry Analysis 2012 Cost & Trends

Automotive Industry in 2012 at a Glance Car makers such as General Motors, Ford, and Chrysler have been sparking headlines in the past few years over disappointing demand and sales results. While its true that these Big Three automakers have had to cut costs and redevelop their strategy, the automotive industry remains a significant contributor to the United States economy and has began to climb back from the difficult challenges they have faced in recent years. High oil prices in the mid 1990s caused many consumers to shift away from high fuel dependent vehicles like SUVs and Hummers that the US automakers were producing to lighter and more compact cars. Sales dropped dramatically as more and more people preferred the smaller and more fuel efficient Japanese cars to the more high powered American ones. The financial crisis in 2008 made matters worse as car sales further plummeted and the Big Three needed billions of dollars in government bailout funds. As of 2010, the automotive market contributed to approximately 4% of the United States GDP and employed millions of workers. Sales have risen 11% since last year and is expected to maintain stable growth for the next few years. These recent events have changed the landscape of the automotive market, but they have also created large amounts of opportunities for aspiring business owners to capitalize on the recent transformation of the automotive industry. What does the Automotive Franchise Industry Do? The automotive industry is involved in the process of designing, manufacturing, and selling motor vehicles. However, it is not just about selling cars to consumers. The services required to maintain and distribute cars after the cars initial sale are part of the automotive aftermarket, a 257 billion dollar market. These services include the car accessories and repairs vital for the automobile ecosystem to function. Interesting Automotive Franchise Industry Business There are very few instances in history where the automotive industry have experienced as big of changes as they are right now. Energy Cars As fuel prices remain high and there is greater concern for the environment, more energy efficient cars are increasing in demand. Moreover, as part of their bailout specifications, the Big Three automakers are required to quickly release more energy efficient vehicles to the market. This increasing popularity for hybrid and electric cars are going to affect the industry in big ways as it will create a new market for businesses to cater to these new forms of vehicles. People are holding their cars longer As the United States slowly recover from a recession, consumers are still tight on their budgets and conserving the amount of luxury goods they purchase including new cars and other vehicles. According to the automotive industry research firm R.L. Polk & Co., consumers are holding their cars, on average, for 63.9 months, which is up 4.5 months from the previous year. Additionally, the quality of cars have increased leading people to hold their

cars for longer periods of time without the need to purchase new ones. While this can lead to reduced car sales, it can increase the need for repair and maintenance as people choose to keep their older cars. Used Cars Interestingly, growth in used car sales are lower than new car sales as people are preferring to purchase newer cars as opposed to buying used ones. A big part of that has to deal with the fact that there is a reduced supply of used cars raising the price of these cars leading people to just buy new cars. Automotive Franchise Growth and Opportunities The size and importance of the automotive industry have created many opportunities for people to get involved. According to the Franchise Business Economic Outlook 2011, automotive franchise establishments are expected to increase 3.9% from the previous year. General automotive industry trends and an improving economy are revealing opportunities for anyone with a passion in the auto industry to get involved. In some parts of the automotive aftermarket industry, there is a significant advantage through franchising versus starting a shop on your own. In the oil change and lubrication market, the top few companies reap in a significant amount of the entire industrys profits. There are also other opportunities that exist where people can benefit from. Auto repair will continue to play a big role in the automotive industry. In addition to the routine car and repairs every car owner must go through, there is going to be higher demand for specialized parts and repairs required of hybrid and electric cars. Currently, there is a low supply of shops capable of fixing these hybrid cars despite its increasing demand. The auto repair industry includes numerous franchising segments including automobile body, transmissions, and oil franchises. The auto accessories market is a $32 billion dollar market with data showing 92% percent of consumers are willing to buy auto accessories. With consumers holding their cars longer and disposable income increasing, auto accessories are beginning to look like a prudent investment for car owners. The car rental market, which puts 1.6 million cars on the road, is currently seeing a bounce back from the damage the financial crisis created. Companies such as Hertz and Enterprise had to drastically cut costs and keep older vehicles in order to deal with the decreased demand in rental cars. As the economy improves, these companies are hiring more and switching their old cars for newer, fewer mileage cars. Choosing an automotive franchise Choosing among the different types of automotive franchise opportunities can be a difficult task. Like any franchise opportunity, the costs are going to depend on a number of variables including the type of franchise, location, and the expected return of your investment.The most common automotive franchise, general repair and maintenance franchises, has a liquid capital requirements that can range from $15,000 (Advanced Maintenance) to $350,000 (Express Oil Change) and contains a royalty fee of about 5%. Some more specific auto franchises like the auto body shop Aero-Colours and Color-Glo are more narrow as they have liquid capital requirements of $46,400 and $50,000 respectively. Thinking about how much liquid capital you have should be a factor in choosing the different types of franchises available.

Each type of franchise will have their unique factors that affect the demand for their services so its important to understand what those factors are. Understanding how the general industry trends are affecting each type of franchise is crucial to your decision of which type of franchise to buy. Some questions that you might ask are: 1. What if people prefer to buy newer cars as opposed to used one? Auto repair shops will have fewer demand for the time being, leaving them to fix existing cars on the road. However, as these new cars begin to age, demand for these shops will start to increase. 2. How does the new green movement affect which type of franchise to choose? Electric and hybrid cars will need some specialized care in handling these new forms of cars. Parts and Repair franchises who offer services that also helps these new cars will have an increased demand for their services. 3. How does the trend towards holding their cars longer affect which type of franchise to choose? This trend benefits the entire automotive aftermarket ranging from repairs and maintenance, accessories, and auto body jobs. Car washes also benefit as people need a way to keep their cars clean from the constant driving. 4. How can other industry trends affect different types of automotive franchises? Although its effects are sometimes negligible, some other industries can have a direct impact on the automotive franchise market. Car rentals, for example, are directly correlated with travel demand as more people use the airplane or go on trips, so does the demand for rental cars. These are some of the considerations to look at when determining what franchise you should pursue. Different Automotive Franchise Opportunities Automotive Repair Automotive repair is useful for any owner regardless of the age or type of vehicle. These franchises offer a wide variety of services that handles the maintenance of both the outside and inside of the vehicles. Car rentals are important for travelers needing a ride to their destinations. As air travel picks up, demand for car rentals are also expected to increase. Auto accessories are helping owners improve the look and style of their vehicles. As spending for maintaining cars increase, the auto accessories franchises directly benefit from this trend. Auto transmission checks and services are important to prevent cars from overheating and burning out its transmissions. There are different levels of protection these franchises can provide depending on the owners personal preference. Car washes are becoming popular as people hold their cars longer and want to maintain their cars in good a condition. These services may include full-service, exterior, or stationary automatic car washes. Auto body, paint, and glass repairs are necessary to mend damages from car collisions and any wear and tear on the surface of the vehicle. Motorcycles are a different beast than regular cars and require more specialized services which provides opportunities for people who understands the specific needs of motorcycles and wants to show their knowledge of them. Oil changes are routine maintenance procedures that car owners should be familiar with. The industry is highly fragmented with the 50 biggest companies controlling 35 percent of the entire industrys revenues which provides a good prospect for franchisees.

Car Rentals Auto Accessories Auto Transmission

Car Washes

Auto Body Motorcycles

Oil Change

The Future of the Automotive Industry The automobile industry is not going anywhere soon. As the trends in the automotive industry continue, there exists both old and new opportunities available for those interested in franchising to get involved. Car

maintenance, repairs, and body services are regularly going to be in demand regardless of whether people prefer to buy new cars or keep their old ones. The green movement has hit the automotive industry as all car manufacturers are focusing their attention on producing more environmentally friendly and fuel efficient vehicles. As this infant market matures, there will be a demand for services from businesses that understands how to cater to these specific types of vehicles. For potential business owners who have an interest in the automotive industry, partaking in an automotive franchise provides a good opportunity for everyone. Michael Liu is an Analyst for FranchiseHelp.com and is a graduate of the New York Universitys Stern School of Business.