The automotive industry at a glance

The global automotive industry is enjoying a period of relatively strong growth and earnings, but many regions are under threat of uncertainty. Car manufacturers are looking for better economies, ideal market conditions to have a successful stay in the industry. The automotive industry has some big players that have marked their presence globally and General Motors, Ford, Toyota, Honda, Volkswagen and DC are among them. It has also been suggested that the auto industry has accelerated further, after the period of globalization, due to easy accessibility and facilities between nations and mergers between the world’s giant automakers.

Furthermore, advances in industrialization led to increased growth and production in the Japanese and German markets, in particular. But in 2009, the global auto and auto sales industry experienced a sharp decline during the global recession, as this industry is indirectly dependent on economic changes in employment and spending, making it vulnerable. While demand for new and used vehicles in mature markets (for example, Japan, Western Europe, and the United States) fell during the economic downturn, the industry flourished in the developing economies of Brazil, Russia, India, and China. The momentum of world trade has allowed the growth of global commercial distribution systems, which has also inflated global competition among automakers. Japanese automakers, in particular, have initiated innovative production methods by adapting and modifying the American manufacturing model, as well as using technology to elevate production and provide better competition. The global automotive industry is dynamic and spacious, accounting for roughly one in ten jobs in developed countries.

Developing countries often turn to their local auto sector for economic growth opportunities, perhaps due to the extensive links the country’s auto industry has with other sectors. China is by far the largest sales market, followed by Japan, India, Indonesia and Australia. Sales figures from 2005 to 2013 indicate that vehicle sales in China doubled during this period, while Indonesia and India also benefited. However, there was a drop in sales during this time in Australia, New Zealand and Japan. Interestingly, this year the competition in the truck segment has become more intense, with the big three American automakers battling for supremacy in both performance and fuel economy. The Japanese are not giving up either, as both Toyota and Nissan launched new trucks in 2015.

India is the seventh largest producer of automobiles globally with almost an average production of 17.5 million vehicles and the contribution of the automotive industry amounts to 7% of total GDP. It has been estimated that, by 2020, the country will witness the sale of more than 6 million vehicles annually. India is expected to be the fourth largest automotive market by volume in the world, where two-wheeler production has grown from 8.5 million units annually to 15.9 million units in the past seven years and sales are expected to tractors grow at a CAGR of 8-9. %, in the next five years, making India a potential market for international brands. Since 100% of foreign direct investment is allowed in this sector, India is expected to have a rapid expansion to become the largest auto industry soon. While India is the second largest manufacturer of two-wheelers and the largest of motorcycles, it is also estimated that it will become the third largest car market in the world in 2016 and will account for more than 5% of global vehicle sales. . Since there are a large number of products available to consumers in various segments, providing a wide variety of vehicles of all types, manufacturers aim for customer satisfaction and loyalty.

Following the FDI policy, the entry of a number of foreign players with a reduced overall life cycle and faster product launches has become commonplace in the country’s automotive industry. The Indian auto market is seen as the potential market that may dominate the global auto industry in the coming years. In addition, large distributors and manufacturers are leaning towards the country due to the ease of financial regulations, as well as an environment so conducive to support in their projects.

With Narendra Modi’s Make in India campaign, the automotive industry is expected to see quite a few changes, where 800 Cr has been allocated in the budget to promote hybrid and energy vehicle manufacturing. This move is expected to lower prices and make these electric and hybrid vehicles cheaper and more environmentally friendly. This measure is also expected to reduce carbon dioxide emissions by 1.5% by 2020. This program will subsidize the purchase of new hybrid and electric cars, as well as other types of vehicles. It specifies incentives of up to Rs 29,000 for scooters and motorcycles, and up to Rs 138,000 for cars. Tri-wheelers, light commercial vehicles, and buses will also be eligible for incentives of varying amounts.

The used car sector in India has become one of the leading industries due to its easy accessibility and lower interest rate. But the growth in used car sales is less than that of new car sales, as people still prefer to buy new cars rather than buy used ones. A big reason for this could be the fact that there is a reduced supply of used cars, and the high prices of these used cars are pushing consumers to opt for low-priced new cars. But despite the lower growth compared to the new car segment, the used car industry has shown rapid and steady growth. According to industry analysts, used car sales are expected to increase in the coming years.

Until the last decade, consumers were involved in the unorganized sector of the used vehicle industry, there were no organized actors to assist consumers in buying used vehicles, and approximately 60% of used vehicle sales they were customer to customer where there is a trust factor. The remaining sales were managed by local distributors. But then in 2001, Maruti came up with the first used car sales company in 2001: Maruti True Value. Even though the auto industry has witnessed sluggish sales figures in recent quarters, the used or used car segment is growing rapidly and is likely to accelerate in the future. In fact, in the last fiscal year, more used cars were marketed, 10% more than new ones, according to the evaluation of Maruti Suzuki India Ltd. and Honda Siel Car India Ltd. With the participation of organized players, the market of Used cars have benefited from fair deals, warranties, better retail network, credibility, transparency, and easy availability of finance. All of these have made buying a used car easier. Organized used car showrooms provide the platform for prospective consumers to choose cars from various brands and segments. Car manufacturers have realized the potential of the used car market and are making conscious decisions to operate in the used car sector as well. In addition to displaying multiple brands, brand name used car retailers also offer a one-stop-shop for all inquiries and complaints. All major car dealerships have now established their used car segment retail showrooms, Maruti True Value, Ford Assured, Hyundai Advantage and Toyota U Trust are some of the leading used car dealerships.

The constant decline in fuel prices and the better financial policies in the last year are the factors that are expected to be the reasons for the increase in the number of new buyers in the market, which decreased 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 businesses. Most of these used car buyers are younger people who prefer to buy used cars that have lower prices and get a good bargain for the same. The Indian used vehicle market, which is still almost a quarter of the new vehicle market, is growing at a rapid pace. The used car sector is expected to grow between 15% and 18% in the next few years.

In addition, with the increase in the number of organized players, the confidence that people are placing in buying a used car has increased. These players not only offer a good line of used cars, but they also offer financing and an extensive vehicle verification service for 100% customer satisfaction.

The automotive industry is an important part of all economies, as it is interrelated with the growth of sectors of the economy. India, as one of the developing economies, is resolving to make its auto industry increasingly successful ultimately by linking it to overall development. With the Make in India campaign and the promotion of green vehicles, India is expected to soon become the largest auto industry in the world. The used vehicle industry is expected to make big profits with more and more people solving it along with the growth in the new car market. With more resources for buyers and sellers, the auto industry is expected to prosper meritoriously in the future to come, eventually leading the country forward.

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