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Analyzing The Growth Trends Of The Automobile

Industry: A Study Of Production, Sales, And
Export
Shivani Singh
Research Scholar
Faculty of Commerce
Banaras Hindu University
Varanasi
Abstract: The automobile industry is considered one of the high-performing industries in the world emerging
as the fourth largest automobile producer globally. Additionally, its strong forward and backward links with
other industries contribute significantly to the rapid growth of the economy and industry. In this paper, the
growth trends of the automobile industry are examined in terms of production, domestic sales, and export over
the last decade. Secondary data is collected for the period of ten years from 2011-12 to 2021-22. Data is
analyzed through various statistical tools like CAGR &AAGR.
The study conclude that segmentation-wise, the highest growth is found in passenger vehicles in the case of
production and sales whereas, in the case of export, two-wheelers accounted for the highest growth during the
study period. Simultaneously, the annual growth rate of production, domestic sales, and exports is showing
declining or negative results due to various circumstances like changes in BS emission standard norms,
demonetization, covid-19 pandemic, rise in unemployment, and other industrial slowdowns, etc.
Key Words - Automobile industry, Government initiatives, Production, Sales, Export
INTRODUCTION

A well-developed transportation system plays the most important role in the development of any
economy, and India is no exception. The automobile industry is considered a main pillar of the economy, with
deep forward and backward linkages. The automobile industry covers automobiles and auto component sectors,
which include commercial vehicles, passenger vehicles, three-wheelers, two-wheelers, and components. The
contribution of the automobile industry to the national GDP has increased to about 7.1%, 49 % of the
manufacturing GDP, and it also provides direct and indirect employment opportunities to over 19 million
people in the country. (Source: PIB).

There is another reality that, before covid-19 pandemic started, the growth of the automobile industry facing
a slowdown, if we look at the passenger vehicle segment, it was growing at a CAGR of 12.9% from 2005 to
2010, then this dropped by 7% in the next 5 year period from 2010-2015. After the impact of covid-19, this
was further dropped to just 1.3% during the next 5 year period from 2015-2020.
Similarly, the two-wheeler vehicle segment was growing with a CAGR of 9.8% during the decade of 2000 to
2010. In next from 2010 to 2020 the growth rate dropped to 6.4%. The same happened with three-wheeler
segment and commercial vehicle segment, the CAGR of both segments fell from 9.8% to 3.8% and 12.7% to
just 3% respectively. Covid -19 has thrown the industry into negative zone, it has also developed further
problems for the industry as overall automobile sales declined by (-)17.97% in April-March 2020 as compared

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to the same period last year (-)13.60% in April-March 2021 and (-) 5.36% in April-March 2022. After a long
wait annual growth rate raised to 13 % of passenger vehicles, 26% of commercial vehicles, and 20% of three-
wheeler except for two-wheelers,, and overall sales of automobiles come in the positive zone.

The automobile industry has become one of the high-performing industries of the Indian economy. It has
contributed to becoming India as 4th rank globally in terms of automobile production in 2022. The government
of India aims to emerge India as the leader in the manufacturing as well as research and development (R&D)
hub, in this regard, the other major programs/plans initiated by the Government include Automotive Mission
Plan (2016-26), National Electric Mobility Mission Plan (NEMMP) 2020, Make in India and Product linked
Initiative to robust and faster growth of vehicles to become the world leaders in the automobile sector.

1. Automotive Mission Plan 2016-26: has been planned to increase the value of the Indian automobile sector
to over 12% of its GDP, place it among the top three in the world for engineering manufacturing and exports
of automobiles and components, as well as generate 65 million additional employment opportunities.

2. The National Electric Mobility Mission Plan 2020 (NEMMP): initiatives to provide the vision and roadmap
for the faster adoption of electric vehicles and their manufacturing in India. This plan has been designed to
develop national fuel security, and also to provide affordable and environment-friendly transportation to attain
a coveted place among the world as global manufacturing leaders.

3. Product-Linked Incentive (PLI): scheme in the automobile and auto components sectors launched in April
2020, aims to give companies incentives on incremental sales from products manufactured in domestic units
and also to generate more employment and minimize the reliance of the country on imports from other
countries.

Under the automatic route, 100% foreign direct investment (FDI) is permitted along with full deli censing so
that investors can easily set up their manufacturing plant in India. Also, Government has developed
infrastructure like National Automotive Testing and R&D Infrastructure Project (NATRiP) centers as well as
a National Automotive Board to act as a mediator between the government and the industry. Under NATRiP,
five testing and research centers have been established in the country since 2015.

Graph 1: Domestic market share of automobile industry in India in FY 2022

Market share
4.09 1.49

17.53

76.89

Two-wheelers Passenger vehicles Commercial vehicles Three-wheelers

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Considering the domestic market share of the automobile industry for the year 2021-22, the sector was
dominated by two-wheelers segment with the share of 76.89 percent, followed by passenger vehicles accounted
for 17.53 percent of the market share, commercial vehicles at 4.09 percent, and a minimum share of 1.49
percent belongs to three-wheeler vehicles.

REVIEW OF LITERATURE
1. Gaddam (2013) the study has been conducted to analyse the production and sales trends of automobile
industry. In this paper the analysis of 13 years data of the industry, indicate that the sales of the industry is
quite satisfactory. The study found that the production of passenger vehicles with annual growth rate of 11.86%
more than other segment of vehicles during the study period from 1995-2008.
2. Sarangi et all (2014) the main idea behind the study is to understand and analyse the current and future trend
in Indian automobile industry during the study period of 2013-14 to 2015-16 using statistical approach. It is
found that after various ups and down in past years the result shows positive growth in all segments.
3. Singh (2014) the study has been conducted to understand the impact of changing policy on the growth of
automobile industry in India and also to reveal its export potential. This study comes to the conclusion that the
changing policy environment during the last three decades in the country has ultimately contributed in the
expansion and export intensity of the automobile industry.
4. Singh (2017) the study has been conducted to analyse the growth pattern and economic impact of automobile
industry on Indian economy. The result show positive impact of growth of Indian automobile industry on
economy in terms of GDP, export, FDI, employment etc. Automobile industry become an instrument in
shaping the country’s economy as a major employment provider, export generator, GDP contributor, FDI
earner.
5. Arya (2019) has studied paper titled ‘A Review of Growing Automobile Industry in India” discovered and
automobile industry become major contributor to economic development of country this industry contribute
7.1% of global GDP and provided employment among 32 million people directly and indirectly. This paper
focuses to study the performance and growth of Indian automobile industry, and its contributing factor for its
growth and current status of FDI. The study found that this industry is highly supported by factor such as
availability of skilled labour at low cost and low cost steel production.
6. Chandrasekar and Palanivelu (2018) the study has been conducted to analyse the trend and growth of
automobile industry. It was found that the automobile export from India increased considerably during the
study period, it was revealed that growth rate of export of all types of vehicles from India was more that the
growth rate of production of those vehicles.
7. Chattopadhyay and Mukherjee (2019) to study segmentation wise growth trends in terms of sales, export,
production and FDI inflows in automobile industry and its correlation with total output of automobile industry.
It was concluded that, there is strong market in terms of both domestic demand and exports of Indian
automobile industry. It became massive market with lots of potential over the last decade.
8. Melwani and Sitlani (2017) the paper attempt to study the export performance of Indian automobile industry
in all segment. The study tries to forecast the trend values for the exports in various segment of automobile
industry. The study found that the export in various segment has increased during study period and the
forecasted trend value through time series analysis.
9. Dhande and Magar (2018) the study has been conducted to understand the role of FDI in automobile sector
in India, and periodic change in this sector after announcing the new economic policy 1991 by the Government
of India. The study found that after liberalisation in automobile sector, inflow in FDI increased and this
rejuvenate the sector and presented the potential of Indian automobile market to whole world. The study
concluded that government of India’s Make in India plan gets positive supports after the entry of global
automaker and automobile sector become most important sunrise sector in Indian industry.

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10. Singh (2022) studied paper titled “ A review study of development of automobile in India” discovered and,
the paper focuses to examine the challenges that have led to automobile industry recent slump it examine how
the dynamic automobile market landscape affect customer preferences and spending. The paper found that,
customer happiness in crucial to the success of any business. The research wants to highlights the importance
of excellent maintenance as a way of giving pleasure to car users throughout the life of vehicle. This sector can
make smarter investment choices and boost both service quality and customer happiness.

OBJECTIVES OF THE STUDY

The study has been conducted with the following objectives to analyze the growth trends of automobile
industry in terms of production, sales, export, and FDI inflow in the automobile industry, study period from
2011-12 to 2021-22.
1. To examine the growth trends in automobile production within the Indian automobile industry.
2. To analyze the growth trends in automobile sales within the Indian automobile industry.
3. To examine the growth trends in automobile export from the Indian automobile industry.

RESEARCH METHODOLOGY

This research work is descriptive in nature, and it is conducted to analyze the growth of the automobile industry
in terms of production, sales, and export.
Source of the data: The study is based on secondary data, the data has been collected through annual reports,
websites, and reports of Society of Indian Automobile Manufactures (SAIM), Department of Industrial Policy
and Promotion (DIPP).
Period of the study: The present study covered the period of ten years spanning from 2011-12 to 2021-22.
Statistical tools: Data is analyzed with the help of statistical tools like average, percentage, compound annual
growth rate (CAGR), and average annual growth rate (AAGR), besides table and graph used to present, analyze
and interpret the data.

LIMITATIONS OF THE STUDY

1. The study is based only on secondary data.
2. The study focuses only on the automobile industry.
3. Time is the constraint of the study.

DATA ANALYSIS AND INTERPRETATION

This section of the paper presents the trends of automobile production during 2011-12 to 2021-22. The total
industry produced 2,30,36,005 vehicles including passenger vehicles, commercial vehicles, three-wheelers,
and two-wheelers in April-March 2022 as against 2,26,48,272 in April-March 2021. The production of
passenger vehicles, commercial vehicles, two-wheelers, and three-wheelers shows an increasing trend in all
the years of the study period except 2018-19 and 2020-21.
The sales of all segments of vehicles were registered at 2,30,36,005 in 2021-22 respectively. There was a
declining trend started in 2018-19 and a negative trend in 2019-20 to 2020-21. There was a positive trend in
2021-22 which show a recovery in production. India become the second largest two-wheelers market in the
world, with major contributing factors like sales incentives, easy availability of low cost finance, etc.

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Table 1: Production trend of automobile in India

Automobile Production Trend

(Number of Vehicles)
Year Passeng
Annu Commerci Annu Three Annu Two Annu Grand Annu
er al al al Wheeler al Wheelers al Total al
Vehicle
growt Vehicles growt s growt growt growt
s h rate h rate h rate h rate h rate
% % % % %
2011 31,46,0 - 9,29,136 - 8,79,28 - 1,54,27,5 - 2,03,82,0 -
-12 69 9 32 26
2012 32,31,0 - 8,39,74 1,57,44,1 2,06,47,6
-13 58 2.70 8,32,649 10.38 8 -4.50 56 2.05 11 1.30
2013 30,87,9 - 8,30,10 1,68,83,0 2,15,00,1
-14 73 -4.43 6,99,035 16.05 8 -1.15 49 7.23 65 4.13
2014 32,21,4 9,49,01 1,84,89,3 2,33,58,0
-15 19 4.32 6,98,298 -0.11 9 14.32 11 9.51 47 8.64
2015 34,65,0 9,34,10 1,88,30,2 2,40,16,0
-16 45 7.56 7,86,692 12.66 4 -1.57 27 1.84 68 2.82
2016 38,01,6 7,83,72 - 1,99,33,7 2,53,29,3
-17 70 9.71 8,10,253 2.99 1 16.10 39 5.86 83 5.47
2017 40,20,2 10,22,1 2,31,54,8 2,90,92,7
-18 67 5.75 8,95,448 10.51 81 30.43 38 16.16 34 14.86
2018 40,28,4 12,68,8 2,44,99,7 3,09,09,4
-19 71 0.20 11,12,405 24.23 33 24.13 77 5.81 86 6.24
2019 34,24,5 - - 11,32,9 - 2,10,32,9 - 2,63,47,1 -
-20 64 14.99 7,56,725 31.97 82 10.71 27 14.15 98 14.76
2020 30,62,2 - - 6,11,17 - 1,83,49,9 - 2,26,48,2 -
-21 21 10.58 6,24,939 17.42 1 46.06 41 12.76 72 14.04
2021 36,50,6 7,58,66 1,78,21,1 2,30,36,0
-22 98 19.22 8,05,527 28.90 9 24.13 11 -2.88 05 1.71
Source: SAIM

Graph 2: Automobile Production in India

Automobile Production trends

40

30

20

10

0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
-10

-20

Number of vehicles (millions) Annual growth rate

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Domestic sales trend of automobile in India

Table 2: presents domestic sales of total automobile in India, it shows an increasing trend over the period 2011-
12 to 2018-19, the factor behind the growing demand was a rise in the income of the middle class. In the
financial year 2013-14, there was an unfavourable situation for the automobile industry, as decline in growth
rate can be ascertained in all the three segments except in two wheelers segment, which was due to state of the
economy. In the financial year 2019-20, registered negative growth rate in all the segments. The compound
annual growth rate of last 20 years is very low in case of domestic sales. So, the automobile companies should
think strategically to transform the prospects in to the customers and boost domestic sales.
The sales of all categories were registered at 1,73,76,624 in 2011-12 and 1,76,17,482 in 2021-22 respectively.
There was a declining trend started in 2019-20 and 2020-21 due to the impact of covid-19 pandemic.

Table 2: Growth trend of automobile sales in India

Growth Trend of Automobile Sales in India

(Number of Vehicles)
Year Passeng Annu Commer Annu Three Annu Two Annu Grand Annua
er al cial al Wheel al Wheelers al Total l
Vehicles growt Vehicles growt ers grow growt growth
h rate h rate th h rate rate %
% % rate %
%
2011- 26,18,07 5,13,25 1,34,35,76 1,73,76,62
12 2 - 8,09,532 - 1 - 9 - 4 -
2012- 26,65,01 5,38,29 1,37,97,18 1,77,93,70
13 5 1.79 7,93,211 -2.02 0 4.88 5 2.69 1 2.40
2013- 25,03,50 4,80,08 - 1,48,06,77 1,84,23,22
14 9 -6.06 6,32,851 -20.22 5 10.81 8 7.32 3 3.54
2014- 26,01,23 5,32,62 1,59,75,56 1,97,24,37
15 6 3.90 6,14,948 -2.83 6 10.94 1 7.89 1 7.06
2015- 27,89,20 5,38,20 1,64,55,85 2,04,68,97
16 8 7.23 6,85,704 11.51 8 1.05 1 3.01 1 3.78
2016- 30,47,58 5,11,87 1,75,89,73 2,18,63,28
17 2 9.26 7,14,082 4.14 9 -4.89 8 6.89 1 6.81
2017- 32,88,58 6,35,69 2,02,00,11 2,49,81,31
18 1 7.91 8,56,916 20.00 8 24.19 7 14.84 2 14.26
2018- 33,77,38 10,07,31 7,01,00 2,11,79,84 2,62,65,55
19 9 2.70 1 17.55 5 10.27 7 4.85 2 5.14
2019- 27,73,51 - 6,37,06 1,74,16,43 2,15,44,60
20 9 17.88 7,17,593 -28.76 5 -9.12 2 -17.77 9 -17.97
2020- 27,11,45 2,16,19 - 1,51,19,38 1,86,15,60
21 7 -2.24 5,68,559 -20.77 7 66.06 7 -13.19 0 -13.60
2021- 30,69,52 2,61,38 1,35,70,00 1,76,17,48
22 3 13.21 7,16,566 26.03 5 20.90 8 -10.25 2 -5.36
Source: SAIM

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The export trend of Automobile in India

The table presents the export of automobiles from India. Total export of all categories was registered at
29,10,151 in 2011-12 and 56,13,033 in 2021-22 respectively.
Due to a slowdown in the European market, commercial vehicles and three-wheelers observed negative growth
rates of 13.64% and 16.48% in 2012–13, respectively. But passenger vehicles and two-wheelers experienced
favourable growth rates of 10.25% and 0.47%. In 2016–17, the demand for three-wheelers and two-wheelers
decreased by 32.77 percent and 5.74 percent, respectively, while the market for passenger vehicles and
commercial vehicles experienced positive growth of 16.18 percent and 4.99 percent, respectively. Three-
wheelers and two-wheelers experienced substantial improvement in 2017–18 and 2018–19, whereas exports
of passenger vehicles faced negative growth of 1.37 percent and 9.64 percent, respectively.
Commercial vehicles registered negative growth of 10.53 percent in 2017-18 and revive with a growth rate of
3.17 percent in 2018-19 and again declined by 39.58 percent in 2019-20 due to the impact of covid-19
pandemic. In 2020-21, the export of all segments registered negative growth at 13.03 percent but after this in
2021-22, a high rise in each segment can be seen at 42.90 percent in passenger vehicles, 83.37 percent in
commercial vehicles, 27.18 percent in three-wheelers and 35.56 percent in two wheelers segment. Overall
export in 2021-22 registered a high positive growth rate at 36.06 percent.
Table 3: Growth trend of automobile export from India

Growth Trend of Automobile Export from India

(Number of Vehicles)
Year Passeng Annual Commer Annual Three Annu Two Annu Grand Annu
er growth cial growth Wheele al Wheele al Total al
Vehicle rate % Vehicles rate % rs growt rs growt growt
s h rate h rate h rate
% % %
2011- 5,07,41 3,62,87 19,47,1 29,10,15
12 4 - 92,663 - 6 - 98 - 1 -
2012- 5,59,41 3,03,08 19,56,3 28,98,90
13 4 10.25 80,027 -13.64 8 -16.48 78 0.47 7 -0.39
2013- 5,96,14 3,53,39 20,84,0 31,10,58
14 2 6.57 77,050 -3.72 2 16.60 00 6.52 4 7.30
2014- 6,21,34 4,07,60 24,57,4 35,73,34
15 1 4.23 86,939 12.83 0 15.34 66 17.92 6 14.88
2015- 6,53,05 4,04,44 24,82,8 36,43,49
16 3 5.10 1,03,124 18.62 1 -0.78 76 1.03 4 1.96
2016- 7,58,72 2,71,89 23,40,2 34,79,16
17 7 16.18 1,08,271 4.99 4 -32.77 77 -5.74 9 -4.51
2017- 7,48,36 3,81,00 28,15,0 40,41,23
18 6 -1.37 96,865 -10.53 2 40.13 03 20.29 6 16.16
2018- 6,76,19 5,67,68 32,80,8 46,24,64
19 2 -9.64 99,933 3.17 3 49.00 41 16.55 9 14.44
2019- 6,62,11 5,01,65 35,19,4 47,43,55
20 8 -2.08 60,379 -39.58 1 -11.63 05 7.27 3 2.57
2020- 4,04,40 3,92,94 32,77,7 41,25,39 -
21 0 -38.92 50,334 -16.64 1 -21.67 24 -6.87 9 13.03
2021- 5,77,87 4,99,73 44,43,1 56,13,03
22 5 42.90 92,297 83.37 0 27.18 31 35.56 3 36.06
Source: SAIM

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CONCLUSION
The present study analyzed the growth trend in terms of production sales and export of the automobile industry
in India. The study found that growth in the number of vehicles in the case of production, sales, and export of
the automobile industry has increased over the last decade. Although total annual growth is showing fluctuating
trends. Segmentation wise highest growth is found in passenger vehicles in the case of production and sales
whereas in the case of export, two-wheelers accounted for the highest growth during the study period. Three-
wheelers registered negative growth in sales during the study period due to a straight fall in the year 2020-21.
The growth trend of automobiles has declined due to poor result in the growth of the two-wheelers segment in
the case of production and sales. The annual growth rate in production and sales of two-wheelers was also
continuing decline in the period of 2019-20 to 2021-22. It inferred that continuous negative growth rate from
three years of two-wheelers may slowdown in the overall growth of the automobile industry in the future and
may create hindrances in route of the automotive mission plan and target set up by the government of India.
There is need of improve the growth of two wheelers segment because this segment capture major portion that
is 77% composition in the industry leads to major contribution to the economic growth of India.
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