A PROJECT REPORT

ON
FUNDAMENTAL ANALYSIS OF
INDIAN AUTOMOBILE INDUSTRY
IN MBA (FINANCE)

MOTILAL NEHRU INSTITUTE OF RESEARCH AND

BUSINESS ADMINISTRATION
UNIVERSITY OF ALLAHABAD

Under the guidance of

DR. ANVITA RAGHUVANSHI

Submitted by:
KM. ANJALI AMBEDKAR
MBA 2nd Year
2023-2025
 EXECUTIVE SUMMARY

The automobile industry, of the core sectors, has undergone

metamorphosis with the advent of new business and manufacturing
practices in the light of liberalisation and globalisation. The sector
seems to be optimistic of posting strong sales in the couple of years
in the view of a reasonable surge in demand. The Indian automobile
market is gearing towards international standards to meet the needs
of the global automobile giants and become a global hub.
A detailed analysis of automobile industry has been covered in
respect of past growth and performance. Under this project to better
understand the industry I have the Fundamental tools to make it
more authentic and meaningful. An E.I.C. approach has been
followed under the Fundamental Analysis: Economic Analysis,
Industry Analysis, Company Analysis as a part of Fundamental tool I
have undergone with the comparative analysis of TATA motors and
Mahindra & Mahindra.
 OBJECTIVE OF THE STUDY
➢ Fundamental analysis of Automobile Industry.
➢ Comparative analysis of two tough competitors TATA motors and
Mahindra & Mahindra.

NEED FOR THE STUDY

➢ To find out the impact of growth of the auto industry on the

performance of the economy.
➢ To understand this industry for the purpose of investment.
 INTRODUCTION

The automobile industry has a rich history that dates back to the late
19th century, with the invention of the first gasoline-powered
automobile by Karl Benz in 1885. This marked the beginning of
modern automotive engineering. The industry's growth accelerated
significantly with the introduction of the assembly line by Henry Ford
in 1913, revolutionizing mass production and making automobiles
more affordable. This innovation led to the rapid expansion of the
automobile industry, particularly in the United States, Europe, and
later, Asia.

Today, the automobile industry is one of the largest and most

influential sectors in the world, producing over 80 million vehicles
annually. Major players such as Toyota, Volkswagen, General Motors,
and Ford dominate the market, each with a strong presence across
various regions. The industry is characterized by intense competition,
constant technological advancements, and a wide range of products,
including passenger cars, commercial vehicles, and motorcycles.

Several key trends and innovations are currently shaping the future
of the global automobile industry. The growing demand for electric
vehicles (EVs) is a significant trend, driven by the global push for
sustainability. Companies like Tesla, BYD, and traditional automakers
are heavily investing in EV technology, while governments worldwide
are supporting this shift through incentives and regulations aimed at
reducing carbon emissions. Autonomous driving is another
transformative trend, with companies like Waymo, Tesla, and
traditional automakers developing and testing self-driving
technologies. Additionally, the integration of artificial intelligence,
machine learning, and IoT is making cars smarter and more
connected, with features like advanced driver-assistance systems
(ADAS) becoming increasingly common. The industry is also focusing
on sustainability, not just in terms of producing electric vehicles but
also by adopting green manufacturing practices that reduce
environmental impact.

Despite its growth and innovations, the global automobile industry

faces several challenges. Regulatory pressures, particularly in Europe
and North America, are driving the need for innovation in emissions
reduction and fuel efficiency, but compliance can be costly and
complex. Supply chain disruptions, exacerbated by events such as the
COVID-19 pandemic and semiconductor shortages, have caused
production delays and increased costs. The intense competition,
especially with the rise of new players in the electric vehicle market,
is pushing traditional automakers to innovate rapidly. Furthermore,
changing consumer preferences, including a growing trend towards
car-sharing services and a preference for eco-friendly vehicles, are
reshaping the industry's landscape.

Regionally, the dynamics of the automobile industry vary. North

America remains a mature market with strong demand for SUVs and
trucks, and it is also a leader in autonomous vehicle research and
electric vehicle adoption. Europe is renowned for its luxury cars and
stringent environmental regulations, playing a major role in the
global shift towards electric vehicles. The Asia-Pacific region, led by
China, India, and Japan, is the largest automobile market. China, in
particular, is the world's largest producer and consumer of
automobiles, with a significant focus on electric vehicles. Meanwhile,
India is emerging as a major automobile hub with a growing domestic
market and export potential.
 ANALYSIS OF THE AUTOMOBILE INDUSTRY

The automobile industry of India is one of the largest in the world

and one of the fastest growing globally. Over a period of more than
two decades the Indian automobile industry had been driving its own
growth through phases. With comparatively higher rate of economic
growth rate index against that of great global powers, India has
become a hub of domestic and export business. The automobile
sector has been contributing its share to shining economic
performance of India in the recent years. To understand this industry,
we need to analyze it by the following approach:

Fundamental Analysis:

1. Economy
2. Industry
3. Company

1. Economic Analysis
Economic analysis is a process whereby strengths and weakness of an
economy are analyzed. Economic analysis is important in order to
understand exact condition of an economy. It can cover a number of
economic issues that keep cropping up within a particular economy,
which is being analyzed.

Gross Domestic Product (GDP)

GDP or gross domestic product is one of the primary indicators used
to measure the health of country’s economy. It indicates the total
dollar value of all the goods and services produced over a specific
period of time. Generally, GDP is expressed as a comparison with the
previous year.
The role of Automobile Industry in India’s GDP has been
phenomenon. The Automobile Industry is one of the fastest growing
sectors in India. The increase in the demand for cars, and other
vehicles, powered by the increase in the income is the primary
growth driver of the automobile industry in India. The introduction of
tailor made finance schemes, easy repayment schemes has also
helped the growth of the automobile sector.
The economy of India is the fifth largest in the world by nominal GDP
of $3.53 trillion behind the US, China, Japan, Germany and third
largest by purchasing power parity (PPP) of $8.9 trillion. Also in 2022,
India’s GDP per capita was $2393 which was higher than the $1440
per capita GDP in 2012.

Real GDP growth rate trend in past 8 years

12%

10%

8%

6%

4%
GDP Growth Rate

2%

0%
2016 2017 2018 2019 2020 2021 2022 2023
-2%

-4%

-6%

-8%
Years
India’s service sector industry accounts for 53.3% of the country’s
GDP while the industrial and agricultural sector contributes 28.3%
and 18.4% respectively. The contribution of the auto industry to GDP
has risen from 4.14% in 2008-09 to 6% in 2021-22.

GDP

14%

34%

52%

Industry Agriculture Service

Employment
Agriculture is the predominant occupation in India, accounting for
about 42.86% of employment followed by service sector accounting
for 31.02% and industry for 26.12%.

Today, automobile sector in India is one of the key sectors of the

economy in terms of the employment. Directly and indirectly it
employs more than 10 million people and if we add the number of
people employed in the auto – component and auto ancillary
industry than the number goes even higher.
 EMPLOYMENT

26%
31%

42.86

Industry Agriculture Service

Exports
Being one of the largest automotive sectors, India had over 295
million registered vehicles since 2019. It was the largest producer of
two wheelers across the globe in 2022. The market within the
country was dominated by this segment also. In financial year 2022,
over 15.8 million units of two wheelers were sold domestically across
the South Asian countries. A decline in the sales volume of two
wheelers has been witnessed between 2020 and 2022.

Automobile export trends

(Number of Vehicles)
Category 2019-20 2020-21 2021-22 2022-23 2023-24
Passenger 6,62,118 4,04,397 5,77,875 6,62,891 6,72,105
Vehicles
Commercial 60,379 50,334 92,297 78,645 65,816
Vehicles
Three 5,01,651 3,93,001 4,99,730 3,65,549 2,99,977
Wheelers
Two 35,19,405 32,82,786 44,43,131 36,52,122 35,58,416
Wheelers
Quadricycles 5,185 3,529 4,326 2,280 4,178
Grand Total 47,48,738 41,34,047 56,17,359 47,61,487 45,00,492

Production
The industry produced a total of 2,59,31,867 vehicles including
Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two
Wheelers, and Quadricycles in April 2022 to March 2023, as against
2,30,40,066 units in April 2021 to March 2022.

Domestic Sales
Total Passenger Vehicle Sales increased from 30,69,523 to 38,90,114
units. Sales of Passenger Cars also increased from 14,67,039 to
17,47,376, Utility Vehicles from 14,89,219 to 20,03,718 and Vans
1,13,265 to 1,39,020 units, in FY-2022-23, compared to the previous
year.

The overall Commercial Vehicles sales increased from 7,16,566 to

9,62,468 units. Sales of Medium and Heavy Commercial Vehicles
increased from 2,40,577 to 3,59,003 units and Light Commercial
Vehicles increased from 4,75,989 to 6,03,465 units, in FY-2022-23,
compared to the previous year.
Sales of Three Wheelers increased from 2,61,385 to 4,88,768 units, in
FY-2022-23, compared to the previous year.

Two Wheelers sales increased from 1,35,70,008 to 1,58,62,087 units,

in FY-2022-23, compared to the previous year.

Exports
In April 2022 to March 2023, Passenger Vehicle Exports increased
from 5,77,875 to 6,62,891 units while Commercial Vehicle Exports
decreased from 92,297 to 78,645, Three-Wheeler Exports decreased
from 4,99,730 to 3,65,549 and Two Wheelers Exports decreased from
44,43,131 to 36,52,122 units over the same period last year.

Indian Automobile Industry at Global Level:

India is the world’s third-largest Automobile market.
The Automobile industry produced a total 28.43 Million vehicles
including Passenger Vehicles, Commercial Vehicles, Three Wheelers,
Two Wheelers, and Quadricycles in Apr 2023 to Mar 2024. India
holds a strong position in the international heavy vehicles arena as it
is the largest tractor manufacturer, second-largest bus manufacturer,
and third largest heavy trucks manufacturer in the world.

Automobile Sector resulted in 5.27% of the total FDI inflow as per the
Jun 2024 DPIIT Report.
The EV market is expected to grow at CAGR of 49% between 2022-
2030 and the EV industry would create 5 Million direct and indirect
jobs by 2030.
There is a shift in preferences of the customers as they have started
to move towards larger/more powerful vehicles across all segments:
 ‒ UVs (amongst PVs) – 52% in FY23 (vs. 49% in FY22 & 39% in
FY21)
‒ M&HCVs (amongst CVs) – 37% in FY23 (vs. 34% in FY22 & 28% in
FY21)
As per the Society of Indian Automobile Manufacturers (SIAM), the
Auto industry generates employment of 13 persons for each truck, 6
persons for each car and four persons for each three wheelers and
one person for each two-wheelers
PM E-Bus Seva deploys 50,000 e-buses across 169 cities with INR
57,613 Cr investment, saving 29.5B fuel litres and reducing 7.6M CO₂
tonnes annually.

India aims to double its auto industry size to INR 15 Lakh Cr by end of
year 2024.
In the Automobile market in India, Two-wheelers and passenger cars
accounted for 75.3% and 17.6% market share, respectively. Passenger
car sales are dominated by small and midsized cars.

Export of total number of automobiles in 2023-24 was recorded at

45,00,492 out of which two wheelers accounted for about 76.8% of
the total exports.

In Apr 2023 to Mar 2024, Passenger Vehicle Exports increased from

6,62,891 to 6,72,105 units, registering a positive growth of 13.8%.

In the Union Budget 2024, the government allocated INR 2671.33 Cr

to FAME II and also also announced an Exemption of import duty on
25 minerals which also include lithium, cobalt, and nickel which are
critical raw materials for battery manufacturing.
2. Industry Analysis

The current trends of the global automobile industry reveal that in

the developed countries the automobile industries are stagnating s a
result of drooping markets, whereas the automobile industries in the
developed nations, have been consistently registering higher growth
rates every passing year for their domestic flourishing domestic
automobile markets. Being one of the fastest growing sectors in the
world its dynamic growth phases are explained by the nature of
competition, product life cycle and consumer demand. The industry
is at the crossroads with global mergers and rerallocation of
production centres to emerging developing countries.

The automobile industry comprises of passenger cars; two wheelers;

commercial vehicles; and three wheelers. Following is the
segmentation that how much each sector comprises of whole Indian
Automobile Industry.

Domestic Market Share for 2023-24

Passenger Vehicles : 14.93%

Commercial Vehicles : 1.46%
Three Wheelers : 6.66%
Two Wheelers : 79.06%