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The world automobile industry is enjoying a period of relatively strong growth and profitability, yet there are several sectors that are at risk of uncertainty. Car manufacturers look for better economies, market conditions that are ideal to be successful in the industry. There are some big players in the automotive industry that have made their presence felt globally and General Motors, Ford, Toyota, Honda, Volkswagen and DC are among them. It has also been suggested that after a period of globalization, the automotive industry grew further due to easier access and facilities between nations and mergers between the world’s giant automakers.
In addition, advances in industrialization led to growth and increased production, especially for the Japanese and German markets. But in 2009, the global car and automobile sales industry experienced a substantial decline during the global recession, as this industry indirectly dependent on economic changes in employment and spending weakened. While demand for new and used vehicles in mature markets (such as Japan, Western Europe and the United States) fell during economic downturns, the industry flourished in the developing economies of Brazil, Russia, India and China. Growth in global trade has enabled growth in world commercial distribution systems, which has also increased global competition among automobile manufacturers. Japanese automakers have introduced innovative production methods, in particular adopting and modifying American manufacturing models, as well as using technology to increase production and give them better competition. The world automotive industry is dynamic and vast, accounting for approximately one in ten jobs in developed countries.
Developing countries often look to their local automotive sector for opportunities for economic development, perhaps because the country’s auto industry has strong ties to other sectors. China is by far the largest market for sales, followed by Japan, India, Indonesia and Australia. Sales data from 2005 to 2013 show that vehicle sales in China doubled during this period, while Indonesia and India also benefited. However, sales declined in Australia, New Zealand and Japan during this time. Interestingly, competition in the truck segment has grown more intense this year, with the big three US automakers striving for supremacy in both performance and fuel economy. The Japanese aren’t giving up either, with both Toyota and Nissan launching new pickups in 2015.
India is the seventh largest producer of automobiles globally with an average production of about 17.5 million vehicles, with the auto industry contributing 7% of the total GDP. It is predicted that by 2020, the country will witness sales of over 6 million vehicles annually. India is expected to be the fourth largest automotive market by volume in the world, with two-wheeler production growing from 8.5 million units to 15.9 million units annually in the last seven years and tractor sales expected to grow at a CAGR of 8-9%. hopefully. %, over the next five years, making India a potential market for international brands. As 100% FDI is permitted in this sector, it is expected to expand rapidly to become the largest automobile industry in India soon. While India is the second largest manufacturer of two-wheelers and the largest producer of motorcycles, it is also projected to become the third largest automobile market in the world by 2016 and will account for more than 5% of global vehicle sales. Since there are a large number of products available to consumers across different segments, providing a wide variety of vehicles of all types, manufacturers aim at customer satisfaction and loyalty.
Post the FDI policy, entry of several foreign players with shorter overall product lifecycle and faster product launches has become a regular occurrence in the country’s automotive industry. The Indian auto market is seen as a potential market that could dominate the global auto industry in the years to come. In addition, large dealers and manufacturers are flocking to the country due to ease in financial norms as well as conducive environment to support their projects.
With Narendra Modi’s Make in India campaign, the automotive industry is expected to see some changes where 800 crores have been allocated in the budget to promote manufacturing of energy and hybrid vehicles. The move is expected to cut prices making these electric and hybrid vehicles cheaper and more eco-friendly. It is also expected that the move will reduce carbon dioxide emissions by 1.5% by 2020. The program would subsidize the purchase of new hybrid and electric cars, as well as other vehicle types. It specifies incentives of up to Rs 29,000 for scooters and motorcycles and up to Rs 138,000 for cars. Three wheelers, light commercial vehicles and buses will also be eligible for incentives of varying amounts.
The used cars sector in India has emerged as one of the major industries due to its easy accessibility and low rate of interest. But the growth in the sale of used cars is less than that of new cars as people still prefer to buy new cars rather than buy used cars. A major reason for this could be the fact that the supply of used cars is decreasing and the high prices of these used cars are forcing consumers to opt for new cars with lower prices. But the used car industry is showing rapid and steady growth, despite a lower growth compared to the new cars segment. According to industry analysts, pre-owned car sales are expected to increase over the next few years.
Until the last decade, consumers were involved in the unorganized segment of the used vehicle industry, there were no organized players to assist consumers in purchasing used vehicles, and about 60% of used vehicle sales were customer-to-customer where trust is a factor. The rest of the sales were managed by local dealers. But then in 2001, Maruti came up with the first company to sell used cars in 2001- Maruti True Value. Despite the automobile industry witnessing slow sales numbers over the last few quarters, the used car segment is growing rapidly, and is expected to pick up pace in the future. In fact, according to estimates by Maruti Suzuki India Ltd. and Honda Siel Cars India Ltd., in the last financial year, more used cars were transacted, 10% more than new cars. Benefited from fair deals, warranty, better retail network, reliability, transparency, easy availability of finance. All this has made buying a used car easier. Organized used car showrooms provide a platform to potential customers to choose from cars from different brands and segments. Car manufacturers have realized the potential of the used car market and are making a conscious decision to venture into the pre-owned car segment as well. Apart from showcasing a range of brands, branded used car retailers also provide a one-stop shop for all queries and complaints. All leading car dealers have now set up their pre-owned car segment retail showrooms, Maruti True Value, Ford Assured, Hyundai Advantage and Toyota U Trust are some of the leading used car dealers.
Steady fall in fuel prices over the last one year and better fiscal policies are factors that are expected to increase the number of new buyers in the market, which declined in 2013-14. But during this period, one segment that benefited from this decline was the used vehicle market, with increased awareness, financial reforms and organized firms. Most of the buyers of these used cars are young people who prefer to buy pre-owned cars which come at low prices and get a good deal for it. The Indian used vehicle market which is still growing rapidly accounts for about a quarter of the new vehicle market. The pre-owned car segment is expected to grow by 15-18% in the coming years.
Also, with the increase in the number of organized players, the confidence of the people has also increased, who are investing in buying pre-owned cars. These players not only offer a good range of used cars but also provide finance and comprehensive vehicle inspection facility for 100% customer satisfaction.
Automotive industry is an important part of every economy as it is related to the development of sectors of the economy. India as a growing economy is determined to eventually make its automobile industry more and more successful, linking it to overall development. With the Make in India campaign and the promotion of eco-friendly vehicles, India is soon expected to become the largest automobile industry globally. With the growth of the new car market as well as more and more people opting for it, the used vehicle industry is expected to make huge gains. With more resources for buyers and sellers, the automotive industry is expected to flourish in the coming future to take the country forward.
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