Factors responsible for the increase in the demand of automotives

The automobile industry of India is one of the largest automobile sectors in world and comes second after China. The automotive sector in India is growing at around 18 per cent per annum. Indian Auto industry has seen a phenomenal growth in the last 20 years. This is due to the convergence of a lot of positive factors. Automobile industry has been largely favored from a sharp increase in demand and has added extra capacity, then better research and developing facilities and technological advancement and distribution setup across the country. These are the following features that increase the demand.

-Rise in the industrial and agricultural output

Industrial and agricultural output increase has also reflected in greater the GDP and overall growth of the economy. Higher GDP means more purchasing power. Sales of vehicles for domestic and commercial consumption have seen high growth in recent years.

-Growth in the road infrastructure increases demand for vehicles

With the improvement of the highways and byways of India in the quality and connectivity will also increase demand for vehicles. Projects like Golden Quadrilateral order to make even remote areas available by roads. Some of the roads are of international standards. This has meant that road transport is a viable, profitable and fast for both freight and passengers.

-Rise in the Per capita income increases vehicles sales

With the Industrial growth in the country in various sectors the Indian middle class life has changed. The present generation is able to earn the same levels of salary that their parents have never thought of. This has raised the demand for two and four wheelers. Increase in the per capita income is also indirectly responsible for the retail boom and industrial boom for consumer durables. This has increased the demand for commercial vehicles to enable efficient distribution.

-Urbanization changes the face of Indian auto industry

Today the people from villages have come to the city and established themselves this has increased urbanization and the rise of nuclear families has also greatly increased the demand for the new migrants were educated vehicles. The nuclear families (many of them with two-earner couples) have a higher purchasing power. Currently, the rate of spread of urbanization is 30%, which is likely to increase by 40% in 2030 (UN). Urbanization has encouraged the development of infrastructure and is expected to spread at a rate of $ 500 million over the next 5-6 years.

-Increase in demand of automotives by Middle class

As per the living style of the middle class family and with raising standard in their life the demand for four wheelers has increased. Now almost all the middle class family possesses some type of vehicle.

-Attractive Finance Schemes for purchase of automotives

Almost all the nationalized and private banks have very tempting finance choices and low interest rates for purchase of cars and two wheelers. There are specialized companies that finance the commercial vehicles. All this has made the dream of owning a vehicle an easy reality

-Favorable Government Policies for the auto sector

Besides growing a healthy economy, the automobile industry in India has much to thank the government of the impressive growth rates. The Indian government has introduced several industry-specific programs.
The Indian automobile insurance 2002, measures introduced low entry barriers and investment incentives for state and local governments. To promote internal research and development, the Government has introduced policies that allow for weighted tax deduction to 150%.
National Automotive Testing and R & D Infrastructure Project (NATRIP) has been established in Rae Bareilly n, Ahmednagar, Pune, Manesar, Silchar, Indore and Chennai to strengthen the infrastructure for R & D.

-Lower production costs

In India due to the huge savings in the labor cost sourcing car parts and finished cars makes a lot of business sense to the auto manufacturers who have global presence. The enhanced design capabilities and continuous improvement in quality has been possible only because of the availability of skilled manpower like engineers and IT professionals.

The future of Indian Auto Industry

According to a report from United Nations Industrial Development Organization’s (UNIDO) in ‘International Yearbook of Industrial Statistics 2008’, India stands 12th amongst the top 15 automakers in the world. India is at the 4th position amongst the auto manufacturer of developing countries. The size of the Indian automobile industry will grow by 2016 is expected to 13%, to reach a mark of US$ 120-159 billion. Presently, India is in position of as the 2nd largest two wheeler market in the world and fourth largest commercial vehicle market at global. With allies in a strong economy, rising demand and financial backing, Indian auto industry is standing at the threshold of success.

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