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 INTRODUCTION  

                                             The
Indian passenger-car industry has been on the continuous growth trajectory in
the recent past aided by different contributing factors of national development
namely robust economic activity, increased environmental regulations, emerging
organized retail industry, government’s increased focus on rural development,
and development of infrastructure including roads supported by availability of
funds for new projects as well as for easy vehicle financing for prospective
buyers. The industry seems to be breaking out of its conventional cyclical
trends and of the different size of cars. The small car segment has exhibited
robust growth in production and sales over the last few years.  

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The small-car segment had
always been the high growth segment of the Indian automobile market right from
the very first launching of the small-car in the Indian market by Mahindra
Company in 1947. The multiplied growth of the same today, in many ways,
reflects the psychographics and demographics of the car purchasing population
in India. As such, for many years, small cars have accounted for a major part
of the revenue of the fast expanding passenger-car market. But the best thing
about the demand for small cars is that there are upgrades possible even in
this segment – attending to the mature levels that the Indian car industry has
reached. Further, Indian consumers now want the latest technological and
functional features in such cars and are not ready to wait for long to get the
latest models from foreign car manufacturer as they did in the past. Now there
are enough loc and multinational players in the Indian market.  

There has been
significant relation to foreign players resulting in growth promotion. The
eight-percentage point cut in excise duty has revitalized this important
segment even more and opened up avenues and growth prospects for the new
players in the vast rural India. While the duty-cut is a welcome step, there
should be a long-term, consistent direction to the policy, so that automobile
manufacturers can plan their future product portfolio accordingly.  

Due to various changes in
the Indian economic scenario, India is one of the most promising of the world
economies and is well on its way to becoming a global economic powerhouse in
about a decade. It is also one of the fastest and most exciting automobile
markets in the world. It is not surprising at all that almost every global
automobile manufacturer is today keen on entering the Indian market.  

Demand in the Mahindra
car segment will drive up the overall sale of passenger cars within the next
two years, production capacity is expected to be twice the total demand for
cars. With the small car segment acquiring stability in terms of prices, the
action is shifting to the mid-size car segment. Sales in this segment will pick
up as new models come in and income levels rise but still it will take some
time for its sales to come anywhere close to the „economy segment?.  

Wider availability of
finance schemes by banks and financial institutions to buyers will also drive
car sales. Sales in the used-car market is also expected to do well as more and
more older models get replaced by newer ones at a faster pace. The coming in of
Euro III and IV norms of environmental concerns will also increase scrap page
rates.  

Export potential is also
hopeful and promising. With production surplus in the domestic market, India
will emerge as one of the leading car sourcing points in the Indian
subcontinent.

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